First Continent to Raise a Tax to Cover the Costs of Climate Change

January 27th, 2011 by Susan Kraemer

Australia’s new Prime Minister Julia Gillard has just levied a tax to pay for the catastrophic flooding of the last two months that drowned areas larger than France and Germany combined.

The Australian floods temporarily shut the coal mines that are most responsible for climate change but they also washed away the rail lines to carry that coal to market, and damaged bridges and roads and destroyed thousands of buildings across three major states. Total damage is estimated at over $10 billion.

The Australian government itself faces another $5.6 billion in flood costs. Gillard’s new tax will run for two years and flood victims are exempted.

The tax brings up the question: just how are nations in the future going to pay for the increase in frequency of catastrophic damage as the result of climate collapse?

Australia seems to be about a decade ahead of this continent in the effects of climate change. It has already had 14 years of drought, with state-wide wildfires as a result, followed now by monsoon-like rains, which began unpredictably in what used to be the dryer season this year.

But these kinds of climate disasters are in our future too. These are exactly the kinds of events that climate scientists (from James Hansen in the early eighties on) have been saying will become more common here too, as carbon dioxide levels rise.

How are we going to pay for the damage from an increasing number of droughts, wildfires, floods, hurricanes and below-zero blizzards due to Arctic melt, all the result of climate change?

Insurers are getting increasingly skittish about the odds. The insurance industry relies on predictable risk levels.

Florida coastal property insurance costs are already up 6-fold. After Britain’s 1,000 year floods, the Association of British Insurers has suggested that property insurance may not even be available in the future.

In the past, America has had a more public-spirited consensus on sharing the burden of disaster costs, and FEMA helped. But FEMA could be quickly overwhelmed by the scale of events towards the end of this century. In the face of survival, public generosity seems to be strained to breaking point.

Indeed, as if to head off such a responsibility in the future, already Republican Senator Mike Lee has just called for the end of FEMA.

Under the GOP plan, states would be on their own to fend for themselves in disasters like Katrina and and the 500-year Iowa floods that drowned Cedar Rapids in the record breaking Great Flood of 2008 and again in 2010.

The GOP Senator said that FEMA is not in the Constitution, so it must be dismantled. But money must come from somewhere in a crisis.

History will show that Republicans and their Astroturf sub-party the Tea Party, both in the pay of the fossil energy industry, actively caused climate collapse, by preventing policies that grow clean energy to prevent it.

But, it seems that now they do not want pay for it. It will be costly. Someone will have to pay. Australia is the first government to retroactively raise a tax, on everyone, to cover the costs of just one year’s event. But there will be more years like this.

We are entering interesting times.

Image: London, from Postcards From The Future

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About the Author

Susan Kraemer writes at CleanTechnica, CSP-Today, PV-Insider , SmartGridUpdate, and GreenProphet. She has also been published at Ecoseed, NRDC OnEarth, MatterNetwork, Celsius, EnergyNow, and Scientific American. As a former serial entrepreneur in product design, Susan brings an innovator's perspective on inventing a carbon-constrained civilization: If necessity is the mother of invention, solving climate change is the mother of all necessities! As a lover of history and sci-fi, she enjoys chronicling the strange future we are creating in these interesting times. Follow Susan on Twitter @dotcommodity.

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DrC

Small Amendment: The tax is due applied on incomes over $50k and is currently only planned for ONE financial year (2011-2012). The tax is minor, ranging from 0.5% (over $50k) and 1% over $100k…
Barbara

i have forgotten to mention is that Julia Gillard has implemented this tax, but she has also taken the funding that was supposed to be used for the prevention of climate change and used them to rebuild infrastructure after the floods. that seems a little bit ironic…
Barbara

this Australian weather event is caused by La Nina and both the intensity and frequency of these events is influenced by climate change.
- http://cleantechnica.com/author/susan Susan Kraemer
  
  And record ocean warming
  http://climatesignals.org/2011/01/record-sea-temperatures-drive-record-rains-for-australia/
  
  As it is doing in Indonesia, warmer ocean, record floods
  http://climatesignals.org/2011/01/unusual-philippine-flooding-driven-by-changing-weather-patterns/
  
  And also in Brazil, floods corelated with warmer ocean temperatures
  http://climatesignals.org/2011/01/record-sea-temps-fueled-heavy-rains-and-flooding-in-brazil/
Red Jeff

It is my understanding that ‘H’ and ‘J’ are very, very near each other on a keyboard… when you fact-checked your opinion piece did you really mean “Jansen” or is there a THC-party going on at this site?
- http://cleantechnica.com/author/susan Susan Kraemer
  
  I meant climate scientist James Hansen
  http://en.wikipedia.org/wiki/James_Hansen
Red Jeff

This is perhaps the most asinine story I’ve ever read on global warming. I’m Canadian, but to blame your Republican party while Democrats held power in both Houses and the Presidency is simply to defy logic. If the Republicans had held the power of those offices would the global warming legislation have passed???

Then again it’s drought, it’s flood, it’s heat, it’s cold… it’s everything to everyone.
- http://cleantechnica.com/author/susan Susan Kraemer
  
  As a Canadian, perhaps you don’t know that we have Minority Rule in our Senate. any time Republicans can muster 40 % of the Senate they can prevent legislation from coming to a vote since 60% must agree to hold a vote, any vote. All 40 of them do exactly that ( now its about 46) in order for people to think that the Democrats are ineffectual. McConnell has said that is the plan. We held 60 seats for several months in 2009, after Franken was finally seated, but then Kennedy died.
http://www.twitter.com/megcevans Meg

Erm, you forgot to mention that Gillard has cut funding to climate related initiatives to pay for the flood recovery, including:

– a $550m cut in funding for Carbon Capture & Storage (CCS) initiatives & the Solar Flagships scheme over the five years to – formally abandoning the cash-for-clunkers election promise (saving $429m);
– saving $55m through cuts and deferred funding for Kevin Rudd’s Global Carbon Capture & Storage Institute;
– abolishing the Green Car Innovation Fund ($234m);
– capping funding for solar hot water and heat pump rebates (saving $160m this financial year and next);
– not proceeding with the ‘Green Start’ household environmental assessment program saving $129m over this year and next);
– capping annual grants for LPG conversions (saving $96m over 2011-12 to 2013-14); and
– limiting expenditure on remaining solar PV rebates under the Solar Homes and Communities Plan (saving $85m this financial year).

The only concerning part of that list are the funding cuts and deferrals to the solar flagship program. Nonetheless it makes the suggestion that the flood tax is being raised as a response to climate change seem, well, wrong.
- http://cleantechnica.com/author/susan Susan Kraemer
  
  That is too bad. Do you have a link?
  As the world faces more climate disasters, the money is going to have to be gotten from somewhere.
http://www.the9billion.com John Johnston

Sadly, this is not the complete story in Australia in relation to paying for the floods. Yes, a tax will be levied. However, the govt is also significantly cutting some climate change action programs, such as solar and CCS research, to pay for the flood damage.

Perhaps the massive Australian coal exporters cold chip in to cover some of the damage? On that front, last year the government attempted to implement a 40% super mining profits tax on the biggest mining companies. The companies launched a massive public advertising campaign against the new tax, saying it would hurt jobs and the economy. It worked, and even contributed to the last prime minister being ousted. Such is the power of the coal companies in Australia.

Meanwhile, Australia doesn’t have much of a cleantech industry to speak of, compared to other countries who are on a wiser path. That’s despite have incredible renewable resources waiting to be tapped.
http://www.gregorynorminton.co.uk Gregory Norminton

Jock, it’s precisely the failure of Australia to heed the warning signals that will lead to its impoverishment:

http://climateprogress.org/2011/01/14/abc-news-australia-floods-extreme-weather-global-warming-climate-change/

No western country has felt the heat, yet, as intensely as Australia. You’d think this would lead to a concerted effort to extricate the country from its highest-emitter-per-capita status. Instead, Tony Abbott denies the problem even exists, Julia Gillard throws money destined for clean energy at the damage, and there’s a relentless tide of antiscience writing from Murdoch’s media.

Australia has a small population proportionate to its size, it has a lot of sun, a lot of desert, a lot of wind. What’s stopping it from becoming a model low carbon economy? Politics. And a disingenuous insistence that ‘climate change has always happened.’ Yes, it has: but never at this speed and amplitude.
- Rick
  
  While it is true that ‘this particular weather event’ cannot be linked to anthropogenic emissions, that is not really the point. The point is that scientists predict this type of weather catastrophe will occur at an increasing frequency and severity due to climate change.
  
  http://www.hacaustralia.com/carbonsignal/?p=1571
  
  Stripping money out of clean energy programs to pay for the damage is perverse. Did the US cut back on defence spending to rebuild Pearl Harbor?
  - http://cleantechnica.com/author/susan Susan Kraemer
    
    Hah. Sometimes I think I should just have a stamp with ‘while any one event… nevertheless… consistent with..’ etc, I am so sick of that caution. They predicted this kind of event w increasing frequency. That is what is now happening. Done.
Jock

Oh Please! Statements such as this do more harm than good for the climate change discussion. To say that Australia’s recent drought and more recent floods were the result of climate change is oversimplistic and wrong. Australia has been experiencing climate variability for thousands of years, as indicated by coral core records. What is alarming is that our infrastructure and agriculture were completely unprepared for this variability. This is not about climate change, its about our failure to appreciate that the world is a dynamic place. Our systems need to be more resilient and adaptive, climate change or no climate change.
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