Rudd's carbon plan threat to our sovereignty

If you thought Julia Gillard's broken carbon tax promise was bad, Kevin Rudd's plan to let European politicians and bureaucrats set the carbon tax rate is worse.

Everyone knows Julia Gillard's broken promise — ''there will be no carbon tax under a government I lead''.  Yet Gillard and Rudd both voted to impose a tax of $23 per tonne of emissions last year, which increased to $24.15 yesterday.

Now it is reported that Rudd wants to swap the carbon tax for a floating price emissions trading scheme.  But, despite the name change, the impact of both is essentially the same.

Both impose a tax by forcing businesses to buy permits that reflect their emissions.  Because so many emissions in Australia result from electricity generation the cost flows through to consumers in higher electricity bills.  A business that doesn't pass on its full costs goes broke, so every business's final carbon tax cost is paid by consumers through higher prices.

At the moment the government directly sets the price of a fixed-rate carbon tax.  What Rudd is proposing is switching it to be set by the government indirectly through a floating price in an emissions trading scheme.

But the government will have little control over the rate of a floating carbon tax.  The rate will be set by Europe's carbon market.

The Gillard government allowed European permits to be traded in Australia's carbon tax market.  That's why it is expected the price of a floating carbon tax is expected to plummet from $24.15 to a little over $6.

The reason it will drop so much is because Europe's carbon tax market covering an economy of 500 million people will consume Australia's of 20 million people.

A 2011 World Bank report concluded that 97 per cent of the global carbon market was run by Europe.  That means Australia is handing national sovereignty over its floating carbon tax rate to European politicians and bureaucrats out of Brussels.

That's fine if Australians think European politicians and bureaucrats have the best interests of our economy at heart.  That seems unlikely.  Rudd's objective of floating the carbon tax rate is to reduce criticism from business and the cost on consumers.

There's an easier way of doing that — abolishing the carbon tax altogether.

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