Penny Wong has today joined Wayne Swan in turning a blind eye to the mounting evidence that the Treasury modelling of Labor’s carbon tax is based on completely flawed assumptions of the world carbon price.
Page 29 of the Treasury document Strong Growth, Low Pollution Modelling a Carbon Price states that “world carbon prices are expected to range from A$29 to A$61 in 2015-16” in nominal terms. However, current prices are closer to A$9 and are not expected to recover in the foreseeable future.
Despite this, yesterday Wayne Swan told House of Representatives question time that “there is no hole in the model the government has full faith in the modelling”.
Today, Senator Wong agreed, telling Senate question time that “I have consistently said that we stand by the Treasury modelling.”
Both Wayne Swan and Penny Wong are burying their heads in the sand and are ignoring the reality that having modelled the carbon tax on a world carbon price way above the reality means the impact on Australian industry will be more severe than forecast and the budget revenue will, ultimately, be weaker than forecast.
The absurdity of their ignoring these realities rivals that of an Alice in Wonderland story.
Just as Alice asked “what is the use of a book, without pictures or conversations?” the Australian people should be asking Wayne and Penny “what is the use of economic modelling without accurate assumptions?”
Indeed, Wayne and Penny appear to have taken the approach of the Queen of Hearts who said “sentence first verdict afterwards”. The more Australians see of this carbon tax the harsher a sentence it will appear to be.