Scaremongering over the carbon tax just a lot of hot air

The proliferation of information (spin really) about climate change and our own carbon tax doesn’t mean that it has become more understandable.  In fact, the opposite rings true.

Who really knows what happened in Durban last month, except that the Kyoto Protocol has been taken out of its casket and put on critical life support; the Gillard government got a breath of fresh air; some carbon-cutting decisions will be made in 2015 and then again in 2020; and $100 billion per year (yes $100 billion every year) will be spent on a Green Climate Fund.  Our contribution – if financing is direct – towards this fund will be between $2 billion and $3 billion per year.

Oh, and of course, there will be an even bigger United Nations climate change summit next year.  This time it is in Qatar. Qatar and a climate change summit is a perfect fit if you ask me as it has – well, according to Wikipedia – the world’s largest per capita production and proven reserves of both oil and natural gas.  Qatar also has the highest and fastest-growing GDP per capita in the world.  The main drivers behind this rapid growth are the production and exports of liquefied natural gas, oil and petrochemicals.  How bloody ironic!

Most don’t know that these talk-fests have been going on since the mid-1990s, when they were informally known as the Earth Summit.  Also ironic, again if you ask me, is that the 18 annual conventions held to date have delivered nothing but hot air.

Closer to home, the carbon tax is now law.  Starting from July 2012, a carbon tax of $23 per tonne will be levied on the 500 biggest polluters in Australia.  This will rise by 2.5% per year until an emission trading scheme kicks in.  The 2015 starting date for such a scheme is now somewhat up in the air, given the Durban outcome. Nevertheless, Climate Change Minister Greg Combet has declared that “Durban has delivered”.

Now depending on whose figures you use, it is suggested that about 10% of your carbon footprint is attributed to your own transport, another 10% is embedded in your home and another 17% or so goes into running that house.

The tell-tale figure is that about two-thirds (63%) of one’s carbon footprint is in what you consume.  So if you want to do anything about climate change, then you should focus on what you consume.  For example, our home household electricity bill – when using one of those online carbon tax calculators – will rise by about $300 or 10% in 2012-13.  The air-conditioning and pool filter are the two biggest culprits.

For the construction industry, the impact of the new tax falls into two categories: cost and demand.  In both cases it is difficult to determine the impact of the carbon tax with any great clarity.

In terms of cost, the new tax will affect the price of building materials and in theory, overall construction costs should rise.  But here is the stupidity of the whole thing, many of the trade-exposed industries, such as cement, steel, aluminium and glass-making qualify for up to 95% shielding from the carbon tax.  So while the MBA and HIA claim that costs will rise by as much as 2% or around $6,000 to build the average new home from July 2012 (and by as much as $13,000 over the life of a 25-year home loan), I do think the financial impact will be much less and more likely than not, negligible.

In fact, the two 0.25% recent rate cuts have delivered the average home owner twice as much savings (close to $28,000) in the interest payments over a 25-year period.

In addition, if you are building a home you can request a number of easy, cost-effective ways to reduce the amount of embodied carbon and energy contained within a new home.  This, too, will reduce its cost.  For example, you can specify fly-ash as a substitute for cement in concrete, which drops the embodied energy like a stone without – as I am told by Kevin McCloud from Grand Designs – affecting a building’s structural integrity (whatever that means).

The effect of the carbon tax on housing demand is even more complex.  The scaremongers suggest a fall of about 17,000 new starts (about 12% on current demand) once the carbon tax starts from mid-next year.  But I don’t think it will have much impact on new housing starts at all.  In fact, it might get things moving again, especially if suppliers get innovative about building materials and the end housing designs on offer.  Again, the key to minimising the impact of the carbon tax is to reduce consumption.  New houses are much more energy- efficient than old, established homes.  More might start buying new homes over old ones again.

Now, for those malcontents who keep trying to push me down a “carbon tax will make new housing much more expensive” path – rack off.  Just because I think that a carbon tax and the whole climate change industry is a gross misuse of our time and money, and that we have much bigger things to resolve in the world than pretending to do something about an issue over which we have no real control – outside of China, India and America playing ball that is – doesn’t mean that I will roll over and spruik the housing industries’ dogma.

Nobody is listening anyway.  The number of respondents to online carbon tax polls rarely number in treble digits these days.  Blog replies rarely exceed 10.  Only 12 months ago literally thousands replied.  Tired of it all?  Or just more concerned about other things, like staying employed, paying the mortgage and keep ahead of the utility and school fees?

Both, me thinks.

PS Personally I would be more interested if I got the complete Grand Designs series for Christmas like I asked Santa for.  Well, maybe next year.

Michael Matusik is the director of independent property advisory Matusik Property Insights. Matusik has helped over 500 new residential developments come to fruition and writes the weekly  Matusik's Missive.