Carbon pricing is a health protection policy

311 MJA 195 (6) · 19 September 2011 nticipating the Austral ian Government’s announcement of a carbon tax, the Royal Australasian College of Physicians (RACP) stated that, while it accepted the need to take action on climate change, it recommended caution about a carbon tax because it could exacerbate health inequalities.1 Some in the media inferred that the RACP’s primary concern was the potentially negative health impact of a carbon tax.2 It is reasonable for health professionals to be concerned about the welfare of low-income households, because people in these households usually spend a disproportionate share of their income on energy and food. However, the larger policy issue is the incontrovertible evidence that climate change is occurring3 and will have profoundly negative health impacts.4,5 A longer lens tells us that a carbon price is especially in the interests of those with low incomes, whose lives will be more disrupted by climate change than will the lives of the wealthy, and among whom the negative health impacts will be greater.6 If the level of global warming is to be constrained below 2°C, all countries must take extraordinary policy actions. This temperature increase is the optimistic “guardrail” beyond which we are unlikely to be able to maintain the climatic stability on which our current civilisation depends. It is far from clear that we have the global geopolitical will to prevent warming in excess of this 2°C level. Because climate change is occurring at the same time as we have passed the peak of conventional oil supplies,7 and unconventional methods of oil extraction involve even more greenhouse gas emissions, all developed countries must now take urgent and effective policy action on climate change to protect human health and planetary ecosystems. Taxation is one of the most powerful policy tools available to governments, but it is also one of the most politically controversial. Individuals who pay a particular tax are not necessarily those who will benefit from the revenue raised. Carbon taxes and other environmental taxes cannot be seen in isolation; such taxes should be judged by their overall distributional effect, as the revenues are disbursed through transfers or government expenditure. Putting a price on carbon will inevitably cause increases in energy prices, and failing to compensate low-income households for these increasing costs would be regressive and could lead to low-income households having to make unhealthy choices about whether “to heat or to eat”. However, governments with a clear strategic intent to reduce health inequalities have many policies available to ensure that their overall policy package is progressive, as well as effective in cutting emissions. At the same time as the Australian Government announced the carbon tax, they announced other tax changes, with more than half the money raised by the carbon tax to be redistributed to households by way of tax cuts and increases in pensions, allowances and family payments. The taxation, benefit and expenditure arrangements in developed economies constitute an integrated system, and the outcomes of any policies should be assessed by effects on overall measures of income and wealth distribution. For example, the roll-out of the United Kingdom’s Decent Homes Programme — requiring homeowners and landlords to bring their houses up to a decent standard — has made a positive contribution to lowering energy costs for low-income households.8 Similarly, American research has shown that home energy assistance programs for lowincome households can reduce nutritional and health risks among children under 3 years of age.9 In New Zealand, in contrast to the recent Australian housing insulation debacle, successive governments have subsidised insulation and more effective, non-polluting heaters. This popular policy was based on evidence that these measures increased the energy efficiency of houses and lowered the household’s energy expenditure.10,11 There were also broader social and health benefits that outweighed the costs of subsidising these programs by local and national governments.12 A Carbon pricing is a health protection policy