Household subsidies and imposed regulation within the “Clean Energy Futures” scheme will reduce the effectiveness of carbon pricing and cost the environment in the long run.
A University of Melbourne study has found that the contentious scheme may not be as effective as initially thought, and that household assistance would unnecessarily increase the cost of a carbon pricing mechanism.
However, Professor Peter Lloyd suggests that despite the costs of subsidisation, the scheme is still a better alternative to not taking action at all.
“The carbon price even with the tax cut alters the relative prices of more or less emission-intensive goods and services,” said Professor Lloyd.
Anthony Muscio
Systems Analysist and Designer
Whilst it is true that compensation increases the total cost of the carbon price it may be a price to pay for public acceptance, though in time I hope rationality will prevail and people will reduce emissions behaviors for the Planets sake.
Of course it is important to understand that the tax payer is not necessarily receiving any additional cost imposed.
Another apparent fallacy is that if you receive compensation you have no reason to reduce your own emissions further through energy efficiency. The fact is the price rises for which you are compensated for are related directly to your consumption. Through energy efficiency "you can have your Compensation and eat it as well".