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2011-03-30

Garnaut understands business realities

Comments on Dennis Shanahan “Garnaut ignores business realities”, 30/03/2011, http://www.theaustralian.com.au/national-affairs/commentary/garnaut-ignores-business-realities/story-e6frgd0x-1226030335593

On this issue of compensation or no compensation to power companies, Garnaut is correct and right.

He should be applauded and supported whole heartedly on this point. Any suggestion that he does not understand businesses is a self serving spin from power companies and just ignores the fact he was the chairman of the former Lihir Gold as recently as a few months ago before it was taken over by Newcrest Mining.

Any argument in terms of effects of carbon tax on asset value is purely serving the interests of those companies that were aware of climate change and the likelihood of actions to reduce or limit emissions, including potentially a carbon tax.

If they were to be compensated, how should the consumers be compensated for higher energy prices due to actions on emissions?

No matter how a compensation scheme including for consumers is designed even when all the revenue from the carbon tax is returned to consumers exclusively that would leave each and every consumer's norminal income unchanged, it cannot change the fact that their purchasing power will be reduced when they have to consume energy at a higher price.

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