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Flood Levy Commonsense

January 28, 2011

Of course it is to be supported. Governments must run surpluses when revenues are growing strongly. There is no alternative. If we have a surging economy, with the Treasury filling up, we can’t possibly be running up debt – that is, be running a deficit. That is the very definition of a banana republic.

It only lasts a year, it protects low income earners and it goes straight to obvious, “shovel ready” rebuilding.

The clutch of green subsidy projects are completely unnecessary if you have a simple, straightforward price on carbon delivered through an Emissions Trading Scheme. With that pricing mechanism you don’t need a mess of fiddly little support schemes picking someone’s favorite technology for taxpayer subsidy, instead of letting the market fall in behind those that are most feasible.

Politically, the levy gives Labor something of substance to rally for and its leadership something to crusade around. See my comments below on the lessons that Disraeli and Gladstone present for contemporary leaders.

And Prime Minister Gillard and Treasurer Wayne Swan can make the issue work for them in Queensland as a bit of solid policy differentiation.

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