News this week of Labor’s ‘secret plan’ to reintroduce a carbon tax unleashed some familiar attack dogs in the news media – commentators who would love to see the next election fought on carbon pricing, rather than on real economic issues.

This is beyond foolish. Perhaps the only good thing to be said about the carbon tax-dominated election of 2013 was that Australia was still in a position to be able to afford making such sideshows into front page news.

The Gillard government’s dreaded carbon tax was given wildly disproportionate attention at the expense of more pressing debates – the ones that will either rescue Australian prosperity, or not.

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So let’s dispense with the carbon tax debate as quickly as possible.

The Gillard government’s Clean Energy Futures package raised $4.1 billion in its first year.

In a vain attempt to make the policy popular, Labor gave around half of that back to lower socio-economic groups through pensions, tax cuts and benefits. Those groups have the highest propensity to spend such funds, so roughly $2 billion was returned to the economy as private consumption.

The other half was used to leverage private investment in renewable energy. Climate change mitigation can either be done by reducing consumption of energy from sources that affect the atmosphere’s heat-trapping properties, or by replacing them with less polluting power sources.

The Gillard government’s carbon tax wasn’t all that popular. Photo: Getty

Starting that project in 2011 via the Clean Energy Futures package, on top of the bipartisan Renewable Energy Target, was wise. Our kids won’t be able to afford that energy transition if it has to be done overnight, and existing technologies at existing prices mean the time to act is now.

Remember, too, that the $4.1 billion raised in the first year of the ‘carbon tax’ was at a high fixed price.

If the scheme had not been replaced by the Coalition’s Direct Action scheme, which pays just under $14 a tonne for carbon abatement, the scheme would now have created a floating-price market.

As Europe’s 10-year-old carbon market shows, floating price schemes are better than fixed-price schemes (such as an actual carbon ‘tax’, or direct subsidies as in the Coalition’s plan) in adjusting to economic circumstance.

When the economy is soft, the carbon price falls. During a boom, it is able to capture more revenue which can be used to accelerate the transition to cleaner energy sources.

So there are two reasons to resist the apparent move to put carbon back on the front pages of the nation’s newspapers.

Firstly, although Labor’s carbon pricing scheme was clunky and imperfect, it followed much sounder economic principles than the bureaucratic Direct Action scheme.

Secondly, if we really do revive the fatuous debates over ‘whether it’s a tax or an ETS’, we will be squeezing out debates that are economically more significant – by an order of magnitude, no less.

For instance, close to $40 billion is being handed back to wealthier Australians this year in the form of ‘tax expenditures’.

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Yep, that’s 10 times the revenue raised by the Gillard carbon scheme, or 20 times larger if you compare it to the half of the Clean Energy Future money the government actually kept.

That’s not to say that capital gains tax concessions, negative gearing, or superannuation tax concessions aren’t well loved by the wealthier Australians who overwhelmingly benefit from them. They are.

But when the government cannot fund its health, education and even pension commitments, and has a budget deficit that is also roughly $40 billion a year, addressing these leaks in tax system before the budget sinks should be front of mind.

So too should the productivity-sapping problem of land values, and the high cost to households and businesses of owning or leasing that land.

This is usually discussed as a ‘housing affordability’ crisis, but it is also an economic crisis.

Why are we arguing over carbon tax when thousands of car production jobs are being lost?

While homeowners have cheered the ever-increasing stock of mortgage debt secured against the nation’s homes (because the resulting capital gains make them feel richer), servicing that debt is a drag on economic activity.

A nation that borrows to invest in productive assets such as factories, R&D labs and infrastructure is likely to get richer. A nation that borrows more and more to buy and re-buy existing housing stock will, ultimately, not.

In light of the soaring cost of housing in Australia, and the massive financial and social costs it imposes on families and businesses, the carbon tax can be seen for what it is – a gnat’s bite on the rump of the elephants in the room.

Finally, could we really go to an election drunk on carbon politics, when the end of the mining boom’s construction phase is sending tens of thousands of workers home from resources projects? Could we really keep up the carbon hot air when tens of thousands more jobs are being shed due to the closing down of the auto manufacturing industry?

This last issue, perhaps more than any other, should be a flashing warning light for the future of Australian productivity.

When the Australian dollar hovered between 105 and 110 US cents, the government gave the last two global auto manufacturers their marching orders because they were ‘uncompetitive’.

What short-sightedness. That industry, along with tourism, education exports, food processing and others, has now found the low-dollar reprieve it needed – our dollar is now trading at 73.6 cents.

These are the debates we need to have as we enter the biggest structural transformation of the economy since the Hawke-era reforms of the mid-1980s.

Reducing carbon emissions is important. It is affordable. But it just isn’t on the same scale as the real economic challenges ahead.