So in attempting to take some time off after the 2020 Summit, I forgot to write about my one big idea that came to me during the Summit but, of course, was never aired as I was in the wrong group for it. It was this: the way to sell the public on high petrol prices as a way of reducing emissions would not be to impose a tax on it but to fix the price of petrol at, say, $2.50 per litre, for the next 3 years and raise it by some fixed amount thereafter.
What is the rationale? Well, we know that people do not like petrol price fluctuations (as per the whole Fuel Watch thing). Also, we know that the vast amount of price fluctuations are cost driven. So if we set the price of petrol at $2.50, pegged, we would be sending all the right environmental signals and we would have the government assume the risk associated with cost fluctuations. At $2.50, the government would still be raising more revenue but it would also be absorbing price fluctuations.
How we would ensure that the government wasn’t being ripped off? Let them negotiate the petrol price on behalf of consumers. Any retailer who didn’t want to play ball could just accept a say, 100% tax. I think this would be constitutional as retailers could opt out of the scheme.
There are probably all sorts of practicalities to work out. But I think with regard to petrol, the government is going to need to think what it can offer voters drivers as a quid pro quo for climate change policy.