The newspapers are full of the problems facing the aluminium industry. The basic problem as I see it is that the government has adopted a policy – the carbon tax – that should see the industry closing down (or at least massively reduced in size) but doesn’t want to admit to it. The AFR reports Bill Shorten explaining why the Treasury modelling doesn’t really show the industry collapsing (emphasis added).
Employment Minister Bill Shorten also rebuffed concerns based on the carbon tax modelling.
“It’s how you use that modelling – and that modelling depends upon the rest of the world doing nothing,” Mr Shorten said. “And the reality is the rest of the world is moving to lower emissions, greater carbon efficiency.”
An equilibrium global permit price emerges to clear the global permit market.
The modelling assumes an eventual shift to a lower cost coordinated international policy framework, recognising that this is ultimately in all countries’ best interests. By 2016, a more coordinated international policy regime allows countries to trade either bilaterally or through a common central market. As a result, a harmonised world carbon price emerges in 2016.
That must be the exact opposite to what Shorten is saying.
Update: Should point out that this is Bill Shorten MBA (Melb) misrepresenting the Treasury modelling.