Families slugged by NewsCorp Innumeracy #NewsCorpFail

According to Steve Lewis in the Daily Telegraph

CONSUMERS will be slugged with price rises on everyday items like milk, cheese, chocolate and pizza’s as the carbon tax puts the squeeze on retailers and producers

(the apostrophe in pizza’s suggests News may have cut the subediting budget a bit too far). He illustrates with a picture of a mother of three who is currently paying $300 a fortnight for groceries.

Steve can’t say how much, and neither can his sources, though they are happy to give scary quotes. So, instead he quotes some big-sounding numbers derived from the Dept of Climate Change analysis. Woolworths, for example, will pay around $73 million a year in higher electricity costs. That certainly sounds like it would put a dent in the household budget. As the old saying has it, a million here, a million there, pretty soon you’re spending real money. That’s where Lewis leaves the story

But those of us capable of primary school arithmetic can take things a little bit further. There are 20 million or so people in Australia, so the cost amounts to aroun $3.50 a year, or 7 cents a week for us. For the archetypal (if unrepresentative family of four) that’s around 30 cents a week or 60 cents a fortnight (an increase of 0.4 per cent for the mother in the example). Looking at the illustrative photo, that’s rather less than the difference between the Kleenex tissues in the shopping trolley and the home brand alternative.

For a validity check on the impact, we could look at Woolies’ total sales of around $18 billion a year. A cost increase of $73 million is approximately 0.4 per cent. Of course, this doesn’t really get to the right answer either, because it doesn’t take account of changes in the wholesale cost of goods (so-called Scope 3 emissions).

But doing the analysis at an aggregate level fixes this pretty well. A tax at $26/tonne will raise around $10-$12 billion, depending on exemptions and particularly on the treatment of petrol. That’s about 2.5 per cent of total household expenditure on goods services, meaning that the gross impact of the carbon tax will be about a quarter that of the GST (note however, that the GST was offset, for goods, by the removal of Wholesale Sales Tax). The increase will be greater than this for energy services (electricity, gas and so on), and therefore must be less on non-energy goods. Overall, it’s safe to predict that the impact on grocery bills and similar items will be around 1 per cent.

Over the fold, I’ll do the cents per week exercise for all of Lewis’ examples when I get a moment

58 thoughts on “Families slugged by NewsCorp Innumeracy #NewsCorpFail

  1. @Red
    I’m 28, which is old enough to know that the people best placed to answer economic questions are in fact economists. If you want to convince anyone here, you’ll have to drop your reflexive anti-intellectualism and give some coherent economic reasons against this policy.

    The problem with business leaders “that bring in the dollars, that go toward paying for, you know, academics and stuff” is that when they run energy intensive businesses, they are technically referred to as *interested parties.*

    This means that whatever their thoughts on what is best for the system as a whole, they will advise those in power to pursue a policy designed to personally benefit them. In fact, there is no reason to expect business leaders to have insight into the general good at all; their experience is aimed at pursuing every legal opportunity to maximise their private benefit. The fact that this works so well is testament to the strength of laws inhibiting behaviour that produces negative externalities. When a new such externality is discovered, it is not to the perpetrators that we turn, but to dispassionate, socially minded experts. It is of course desirable to listen to a range of such experts, of different political views, and have them disagree vigorously with each other in the spirit of open scientific enquiry. However, if you can’t find even one of these people to agree with your position, it’s time for a rethink.

  2. *interested parties*

    Reminds me what Jack Lang used to tell a young Paul Keating:

    “Always put your money on self-interest son, it’s the best horse in the race. It’s always a trier”

    And something Keynes said:

    “Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone.”

  3. Red,


    “It’s a cumbersome tax. It works against Australia’s comparitive advantage. It taxes production. And the net result will be it’ll slow down segments of the Australian economy resulting in much less revenue for the government than predicted”

    Over and over and over again does not make the statement true. The fact is that it has a very marginal effect on the economy, business, and individuals. JQ has made the case that its total effect on the economy is 1%. By comparison the recent series of climate impacts have slowed economic growth very markedly. Your failing here is that you have not made the connection between these two, and therefore do not understand that these climate impacts are accelerating and will cripple our economy completely.

    The fact is that periodic fluctuations in the price of petrol have more economic impact on their own that this carbon pricing device. The true impact of the carbon price falls on the principle carbon emission gateways where they will have the greatest influence.

    Having said that there is a lot that can be done to make sure that the proceeds of the carbon price are not wasted and have the greatest influence on eliminating carbon emissions in the shortest period. That should be the focus of your outrage, not the mechanism itself.

  4. It is interesting to see the manner in which Piers Akerman (on ABC’s The Insiders) tries to slide past Dame Elizabeth Murdoch’s commenting on AGW, and supporting a carbon tax on that basis. He claims she has been “used” (by dark forces?) and been put in the position of putting her signature on a piece of paper, on a subject she is “too old” to physically be out and engaging in the robust political debate.

    In other words, noone but Piers is allowed to have an opinion, or presumably a vote, on this issue. Well, except for the Bolter, in Piers’s more generous moments. Piers Akerman is a piece of work, that is for sure.

  5. I dunno.

    I think News Corp Australia are currently writing “Somewhere in New York a Media Mogul is Silently Screaming Episode 2”. The summer blockbuster of 2013.

    Episode One, was where they looked a compliant social democratic gift horse (Rudd Labor) in the mouth and wound up with a nasty bite from a new set of green teeth.

    Currently it looks like the geniuses at News Corp are putting out a sure fire overheated economy, rising interest rates and bogan revolt in 2013. They are terrifying the poor innumerate swing voters into saving every penny now as a hedge against the terrifying carbon catastrophe to come. Timing it perfectly so the average punter will be cashed up and comfortable come election year.

  6. Judging by the letters page in The Australian and the comments on news.com.au, this tax is not liked by anyone.

    Given the current division in opinion in Australia, I was a little surprised to see all fourteen comments on one Murdoch article was strongly against any action on climate change. I’d like to calculate the statistical likelihood of this being an accurate reflection of readers’ opinions but I don’t have enough information.

  7. Funny how a recent poll in the SMH was running at something like 65% (of respondents) agreeing that climate was being influenced by man-made contributions. Or something.

    Could it be that letters to the editor at the Oz get filtered ?

    The Murdoch press is a pox.

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