No. I’m not referring to “hiding the decline” or other scientific falsifications, rather rewriting of the narrative around the carbon tax. This morning we read:
Finally, abolishing the carbon price costs about $6 billion a year. As Ross Garnaut has pointed out, the carbon price wasn’t just a sound environmental policy; it was also an important fiscal policy. Scrapping the carbon price has blown a huge hole in the budget, and the government has chosen to make up the revenue by cutting health, education, pensions and social payments. This means fewer resources for a child in a disadvantaged school, for indigenous legal aid, or for a young man who loses his job in Devonport.
That’s Andrew Leigh spruiking the carbon tax – apparently forcing poor people to pay more for their electricity and/or shiver through winter is good for inequality. To be sure it equalises the poor today with the poor of yesteryear and while it is somewhat impressive that the former government was able to sell such a policy, it can hardly be described as being progress.
I seem to recall, however, the Gillard government claiming that the carbon tax was revenue neutral, because they were spending all the money. A new definition of the term revenue neutral, to be sure, but that was the claim. To the extent that is true, then Andrew Leigh’s claim is wrong – repealing the carbon tax doesn’t blow a hole in the budget, it reduces the size of the budget. To get an idea of the net impact of the carbon tax and associated policy on the budget Alex Robson traced out the fiscal impact of the various policies in his 2013 paper Australia’s Carbon Tax: An Economic Evaluation.
Looks like the carbon tax policy resulted in more expenditure than any revenue it was likely to raise. Before we leave this point – that outcome is the policy design, not the ex post outcome.* That also means that repealing the carbon tax does not reduce any revenue available for increased welfare spending such as “resources for a child in a disadvantaged school, for indigenous legal aid, or for a young man who loses his job in Devonport”. To the extent that the Abbott government had been willing to repeal the carbon tax policy in toto it would have freed up resources for increased welfare payments.
On a related matter, Andrew Leigh has a go as Maurice Newman:
Maurice Newman … thinks inequality doesn’t matter — or if it does, then the solution is weakening labour laws and cutting the top tax rates.
Newman is entirely correct – inequality doesn’t matter, but if it did the best solution is for people to get a job. The only thing government can do to ensure that people can get jobs is to make it easier for entrepreneurs to employ and profitable for entrepreneurs to employ. That means labour market flexibility and lower taxes.
* To the extent that repealing the carbon tax does now result in a net budget loss to the government that’ll be because the tax didn’t raise as much revenue as expected, the ALP over-compensated, and the Abbott government hasn’t repealed the policy in total. In other words, the net increase in government spending is ALP policy from 2011 – Andrew Leigh can hardly complain about that.