Yesterday, the newspapers reported that the government was considering a plastic bag tax. I wrote that I thought that was a good idea. However, by the end of the day, for no apparent reason, the government had ruled it out.
Today, the newspapers are reporting that there is a proposal before the government for a ‘traffic tax.’ Many have proposed this before and the Australian Automobile Association’s plan is similar to others. It proposes to reduce registration fees and then use electronic tolling to charge motorists by use with lower charges for off-peak use and when people have environmentally friendly cars. In Finishing the Job, Stephen King and I proposed a similar system although we wanted to ease the pain on the poor by offering credits when motorists took public transport. John Quiggin and I pushed that recommendation further last year.
So I am clearly in favour of this idea. But I write this with some nervousness; will it be ruled out by the end of the day? I must say that usage charges for motor use is as close to a no-brainer as you get with environmental policy. How the government responds will be a test of how serious it is in dealing with climate change sooner rather than later.
The government is considering a tax on plastic bags. The rationale is clear: they cause waste with costs that neither supermarkets nor shoppers currently internalise. Apparently, there is some skepticism that this will actually result in a desired change in behaviour; the argument being that it could just become a straight out tax.
Fortunately, the Irish did the world a favour and introduced a similar tax back in 2002 (a 15 cent Euro charge). And the results have been studied. For instance, a paper published in Environmental and Resource Economics found that:
The effect of the tax on the use of plastic bags in retail outlets has been dramatic—a reduction in use in the order of 90%, and an associated gain in the form of reduced littering and negative landscape effects. Costs of administration have been very low, amounting to about 3% of revenues, because it was possible to integrate reporting and collection into existing Value Added Tax reporting systems. Response from the main stakeholders: the public and the retail industry, has been overwhelmingly positive. Central to this acceptance has been a policy of extensive consultation with these stakeholders. The fact that a product tax can influence consumer behaviour significantly will be of interest to many policymakers in this area. This paper analyses the plastic bag levy success story and provides insights and general guidelines for other jurisdictions planning similar proposals.
This is as strong as an endorsement as you are ever likely to get. Basically, in Australia, retailers argue that the reduction will only be about 30 percent. The Irish experience suggests that that is a dramatic under-estimate. The only potential bad news is that there won’t be much revenue for possible uses on environmental clean-up. But let’s face it, that is the best bad news one could hope for.
[Update: Peter Garrett has ruled out a bag levy. Terrific. ;( ]
So Melbourne’s trains are going to be free before 7am. Good stuff. Now how about extending the sensibility to our roads and lower Citylink tolls off-peak and raise them during peak traffic times. The same congestion logic applies.
Nothing like a couple of hours without electricity during a heatwave to remind you of our reliance on it. In Melbourne yesterday, the major interconnector between NSW and Victoria went down because of bushfires. This took out 2000MW of potential power imported from NSW just as demand soared above 9000MW in Victoria. Here is the graph from NEMMCO. Continue reading “Powerless over power”
Insanity reigns in Melbourne as the drought continues and we move to Stage 3 water restrictions. What these restrictions do is dictate how we use water. The most imposing is that we can only water our gardens on two days a week (for us, as an even numbered household that means Tuesday and Saturday). But not just any watering just watering with a hose. And not just any hose but a hose with a trigger attachment. And not just any time that day but between 6am and 8am and between 8pm and 10pm. Continue reading “No rain in Melbourne but insanity”
Warwick McKibbin is a professor of economics at ANU. For years he has been against the Kyoto protocol; not because of its motives but because he was concerned that it locked governments into a process with improper incentives. (His website on these issues at www.notwrong.com). Peter Martin profiles him here.
Instead of Kyoto, McKibbin wants to outlaw carbon emissions from business entirely. Continue reading “An environmentalist against Kyoto”