The best that can be said for the Coalition’s direct action plan is that they don’t intend to spend much money. I have been hoping that the direct action plan would be quietly shelved when the carbon tax gets repealed. But news reports today suggest that is unlikely to happen.
In Launceston today, Mr Hockey said the Coalition would not be issuing handouts to business but “if there individual businesses that will be affected, we will deal with them on a case-by-case basis”.
“We have allocated funds under our direct action (policy) to deal with initiatives that have been underway,’ he said.
The government has jumped on that statement suggesting that a coalition government would have to pay compensation for abolishing the carbon tax. I suspect not – it would be very strange if the Commonwealth had to pay compensation every time a tax rate or threshold was changed. That wouldn’t be a trivial problem – every time the corporate tax rate is changed and/or the personal tax rate is changed the value of dividend imputation credits changes.
So what is Joe Hockey proposing? Well right now a whole bunch of economically non-viable firms are viable because the price of electricity is artificially increased by the operation of the carbon tax. If and when that tax is abolished those firms will fail. But the Coalition will provide some of them with a subsidy to prevent that from happening.