Finance Michael Pascoe: Scott Morrison set precedent for carbon levy
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Michael Pascoe: Scott Morrison set precedent for carbon levy

carbon levy
Scott Morrison has form when it comes to introducing a levy on highly profitable companies, Michael Pascoe writes. Photo: TND
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There is a recent precedent for the federal government to introduce a $1-a-tonne levy on fossil fuels – and it was set by Scott Morrison.

As Treasurer in 2017, Mr Morrison successfully legislated a new industry-specific tax he forecast to collect $6.2 billion over four years.

Of course he did not call it a “tax” – governments are rather allergic to that word, much preferring fee/levy/surcharge/toll or whatever other euphemism comes to mind.

In this case, it was called the Major Bank Levy.

“This levy will ensure that Australia’s largest banks make an appropriate additional contribution to the Australian community, in recognition of the unique position and advantage they hold within the Australian banking and financial system,” Treasurer Morrison said.

The levy is paid by the ‘Big Five’ – CBA, Westpac, ANZ, NAB and Macquarie.

“Both by domestic and international standards, the major banks are very profitable and the cost of the levy represents a small share (estimated at around four per cent) of profits,” Mr Morrison said.

Budget 2017
“This levy will only affect our five largest banks with assessed liabilities of $100 billion,” Treasurer Scott Morrison said in 2017. Photo: AAP

In other words, our big banks were making a motza and could afford to pay a bit more tax than any other companies in recognition of the privileged positions they occupied and fat profits they were making with the government’s assistance.

Mr Morrison was happy to trim those profits by four per cent.

“Passage of the Major Bank Levy legislation demonstrates that the Turnbull government is getting on with the job of delivering its 2017 budget, which made the right choices to secure better days ahead for Australians.”

That wasn’t the only tax increase Treasurer Morrison sought in 2017.

He successfully legislated an increase in the Medicare levy from 2 to 2.5 per cent, in theory to help pay for the NDIS but in practice just to be tipped into consolidated revenue.

He made the increase the centrepiece of his post-budget speech, becoming emotional in the process as he referenced his brother-in-law who suffers from multiple sclerosis.

But there was a problem with increasing that tax – electors could see it and feel it, unlike the bank levy. A year later, Treasurer Morrison scrapped it, saying he had found the money elsewhere.

Which is why the Australia Institute’s proposal for a levy of $1 for every tonne of carbon pollution by Australia’s coal, oil and gas producers fits the bank levy mould very neatly indeed.

The institute’s petition calls for the levy to go into a National Climate Disaster Fund to help pay for some of the increasing costs of climate disasters, disasters exacerbated by Big Carbon.

The reasoning Mr Morrison applied for his bank levy works even better for a carbon levy.

Coal, oil and gas prices are soaring, our miners and drillers making super windfall profits thanks to President Putin.

Big Coal would barely notice a levy of $1 a tonne and much of the levy would be paid on exports, not the domestic market.

Given that the coal, oil and gas are owned by the state, the case for snipping a little of the super profits is stronger to begin with.

To paraphrase Mr Morrison: “This levy will ensure that Australia’s big carbon companies make an appropriate additional contribution to the Australian community, in recognition of the damage their products do and the advantages and subsidies they enjoy from the Australian government.”

But instead of Big Carbon making any additional contribution, it continues to be assisted by the Morrison government.

A feature of last year’s budget was $50 million in subsidies towards eventual fracking in Northern Territory’s Beetaloo Basin.

On Monday Resources Minister Keith Pitt announced strong bidding for a number of petroleum exploration licences off the coast of Victoria, Tasmania, WA and the Northern Territory.

New offshore exploration areas. Source: Department of Industry Science Energy and Resources

Mr Pitt cashed in on the Ukraine war to trumpet the exploration.

“The invasion of Ukraine is also demonstrating that energy security, including oil and gas, is an increasingly important component of national security and sovereignty,” he said.

It is the policy of Big Carbon and the Morrison government to rush production before renewable resources takeover and fossil fuel projects become stranded assets.

It makes sense to levy their super profits while they are still making them.

Michael West Media reported the offshore bids were one of two environmental questionable releases made by the government on Monday night.

The other was a joint effort by Mr Pitt and Environment Minister Sussan Ley to spend $62 million on removing the need for project-specific approval under environmental laws, “designed to further speed up environmental approvals”.

You want to speed up fossil fuel production when there are super profits to be pocketed.