Before the last election John Howard was emphasising that emissions trading and emissions targets were the most important decisions a government would ever be called upon to make. Rudd I think agrees and it has gotten through to his troops. Laurie Oakes reports Martin Ferguson as saying:
“It represents the most fundamental change that has ever occurred in Australia’s economic history.”
According to Ferguson, the scheme puts the big economic reforms of the Hawke-Keating era, as well as the introduction of the GST, into the shade.
As Oakes says, Wow!
For Brendan Nelson, it’s dead set easy when it comes to fuel:
Federal Opposition Leader Brendan Nelson laid down his marker by the end of the week, announcing on ABC Radio’s AM that the Coalition would propose compensating Australians, including small businesses, in full for the costs incurred as part of a emissions system.
That’s a fair summation by Lyndal Curtis of what Nelson said in an interview on AM on Thursday which is a bit easier to read on the Liberal Party site.
To be sure Nelson does understand that the emissions trading scheme needs to actually cost people something, otherwise it would be pointless churning. He said:
The fact of it is that if we go – as we will, as we must, as we will and we will pay a price as a nation as we should for a genuinely global response – one of the consequences of that will be an increase in the price of energy, electricity bills for households and petrol and fuels that we use.
So the pointless churning only applies to fuel used by ordinary Australians and small businesses. Nelson reckons there is a principle at stake here - protecting Australian families. Oakes calls it for the political stunt it is:
But hey! There are votes to be won. This is politics, and principle does not get a look in.
Oakes thinks Rudd has set himself a difficult task, not just in getting the ETS right but in persuading the populace that it is necessary and implementing it as promised in 2010, which happens to be an election year.
Actually Oakes missed the ‘get out of jail card’ available to Rudd. He could call a double dissolution election in 2009.
Rod Cameron on Lateline thinks Rudd is still “highly credible and highly popular” out in voter land where it counts. Cameron says Rudd should refuse to play Nelson’s game of degraded ‘retail politics’, should proceed with the grand vision on climate change, but because of the pain involved should proceed on time. If he delays until next year it will be too late in the electoral cycle.
Hewson, that brilliant political strategist, spent a lot of the air time talking mostly nonsense. For Hewson policy development seems to be simply sitting down and writing it, so he criticises Rudd for not proceeding with the vision he doesn’t think he has in the Budget. Even Nelson understands that we have to wait for Garnaut’s modelling.
Neil Mitchell of Fairfax Radio as reported towards the end of this segment of The World Today sees great virtue in knee-jerk policy development when it suits his tabloid radio purposes, by carrying on like a meat chop (the ABC’s Alexandra Kirkland called it “persistent questioning”) by demanding from Rudd how much extra petrol was going to cost. Did he ever talk to Howard like that?
Do these shock jocks realise the damage they are doing to deliberative policy development in the political arena? Notice too how Kirkland elides Rudd’s considered response in favour of Mitchell’s rubbish.
Rudd may eventually consider that the burgeoning price of fuel alone will limit demand for fuel and offset increased costs under the ETS fully by reduced excise. If he does, according to Glenn Milne today Rudd will be falling in behind the Coalition, who are trumping Rudd on all fronts it seems. But Milne still thinks petrol is “an ‘inelastic’ product – in other words hard-pressed families will absorb price increases because a car is a necessity of life.”
Milne clearly doesn’t watch the evening TV news on our ABC or he’d know that prices are already affecting demand.
One way or another Rudd has indicated that there will be compensation for those who need it most. He might do worse than consider an option outlined by Bruce Robinson, convenor of the Australian Society for the Study of Peak Oil and Gas on The World Today on Friday. He suggested
a petrol allocation scheme so that everyone gets a certain amount per capita but people in remote locations or the outer suburbs get more than someone who like me, lives by a train station close into town. People whose health requires them to use a car should get more than people who are fit enough to ride a bike.
If you have tradable gasoline rights, you’re allocated a certain amount. If you use less you can sell it on the open market electronically via your magic card or by the computer. And if you need more you can buy it. And that seems to be a very effective way, if it was coupled with an allocation system that was equitable.
That would take transport fuel out of the emissions trading system, but there would be a very definite cap to this scarce resource. The rich would get what they want, the poor would presumably get fit and the transfers would take place without government involvement.
It might even be a trial for this kind of scheme to be used right across the economy as George Monbiot is recommending.
Frankly I don’t know what’s best in this area, taxes or trading schemes and if trading what parameters and methodology is best. They say Garnaut is strategic in his thinking and I’m pretty confident he will model a range of options for the Government to choose.
Rod Cameron did say that the voters liked Rudd because he kept his promises. He thinks Rudd could take a hit in popularity early in the term in order to do the right thing for the ultimate good of everyone and the planet. Rudd’s only option is to stick with the broader vision. (See also Mark’s post.)
Nelson’s vision is to do the modelling and to then do exactly nothing until the likes of China and India come on board “on equal terms.” That, friends, is a recipe for doing nothing at all until perhaps 2020. Certainly there is no chance that India and China will participate on equal terms in the first post-Kyoto period after 2012.
Some vision!
Cameron thinks Nelson is not worth taking any notice of because he’s only a place holder. But remember Turnbull has done 180 degrees on this one and Coalition shadow ministers are all over the place. In fact Kim and Crikey may well be right, “the party of greenhouse denialism is back in town.”
Good post, Brian.
It wouldn’t surprise me if some thought isn’t being given to that. The new Senate is going to be an odd beast, and might benefit both from having some of the overhang of Coalition Senators cleaned out, and being reminded that the game of delaying or overturning legislation - particularly financial legislation - has its limits. And appealling for a new mandate to implement necessary reforms etc. might also be a clever move. A DD and a government win might be enough to kill off the tactics of obstruction and populism on climate change.
Mark wrote:
Wow, I admire you’re confidence. I thought that Gippsland was a bit of a harbinger of what poor economies can do to governments, even recently elected ones. While it seems there is great enthusiasm that “something should be done” about climate change, nobody wants to do it themselves. If we are spared the cost of carbon emissions due to bleating about working family budgets (and yep, that’s me too) then behaviour won’t change no matter how much of the price of energy is notionally devoted to carbon emissions.
I think the government would be well served by a staggered approach to implementation carbon taxes to soften people up. The best place to start is probably petrol, because it’s obvious and regular, unlike electricity pricing which is painful once every three months and forgotten. But the idea that we can have carbon pricing, but no change of price (and no change of behaviour) is distressing in the extreme. It’s just as bad a recipe for doing nothing as Nelson’s twaddle about waiting for India and China.
I seriously doubt Rudd is stupid enough to follow any advice from new car owner George Monbiot. Further, rationing is inferior to pricing as a choke on demand. People are in a better position to set their own priorities than any government agency would be on their behalf.
The only way to sell a policy as ugly as any new energy tax is to give all of it back to the punters as income & company tax cuts. That’s the left’s only hope they have to sell a policy that’s even more suicidal than WorkChoices.
Leaving aside gratuitous cheap shots about Monbiot, Craig Mc, you may well be right. But what policy does the right in this country have to sell anyone on climate change?
As said, the denialists are back and cheap retail politics is the MO.
David, probably the point should be made that petrol is more price inelastic, I’d have thought, in regional and rural areas because of the distances that need to be covered and the paucity of public transport, and also the position of various industries in the supply chain at a point where the contribution of fuel is more obvious is another factor. Add in the brown powered coal stuff in Gippsland, and you’ve got almost a best case scenario for running a negative populist campaign - and that’s exclusive of all the other local factors many others have mentioned with regard to the by-election.
There are some regional Labor seats where similar dynamics might arise, but if you don’t make the argument, you don’t know, and let’s not forget Rudd was still in “retail politics” mode - or apparently so - at the start of the Gippsland campaign. The message only really got tweaked properly in the last week or so.
You can also lose seats you hold (and of course Labor didn’t hold Gippsland and never had) and gain others, as different issues play out differently geographically and demographically. There have been quite a few elections where governments have won though losing badly in some regions or some states by picking up new support elsewhere to a greater or a compensating degree. A ten seat margin doesn’t mean exactly the same ten seats.
I think it would be politically disastrous for Labor to cave on climate change, and I’m sure they know that.
It’s also worth re-emphasising that very electorally unappealing and unpopular policies - privatisation, the GST, all manner of deregulation - almost everything badged as “reform” - have not been sufficient to cause governments to lose if they’ve been justified as in the nation’s long term benefit, by a plausible government and with a lazy or weak opposition alternative.
In my opinion, if Labor gave up on the climate change agenda we may as well not have thrown out the Howardistas.
I can’t see them giving up on climate change unless they become totally cynical and pragmatic. I can’t think of one minister who is a genuine denialist, not even Ferguson whereas on the other side you have Minchin and Robb as pure unadorned denialists. The only ones who are definitely clued in are Turnbull and Hunt. There may be others, but I can’t think of them.
A fair whack of the Gippsland electorate spends its time tending to the Latrobe Valley’s brown coal generators.
They will be the first to go when the ETS kicks in (as they should, they’re diabolical for greenhouse). No other electorate is going to cop it harder from emissions trading. This is unfortunate for those people (and, as Garnaut has said, helping those people out is a simple matter of fairness), but, heck, if nobody got hurt from doing something about greenhouse we’d already have acted.
“Do these shock jocks realise the damage they are doing to deliberative policy development in the political arena?”
I’m sure they would regard the question as naive and immaterial.
They are the voice of Teh People and (in their own minds) are far more influential than any mere politician.
Its also a problem for those, generally low income people like cleaners, who work shift work at odd hours when there isn’t reasonable public transport (if any). A quota system sounds interesting to me, though I think there is the potential for the poor to get ripped off by better informed speculators. Differential quotas would also discourage higher density living which I think we need a lot more of in order to reduce emissions.
Lately I’ve been very encouraged by some of Rudd’s statements essentially saying that petrol does need to be part of a trading scheme. So I don’t understand why ministers are then coming out saying that petrol won’t necessarily be part of the ETS. Its almost like they’re trying to send one message to people concerned about the environment and a totally different one to the people more concerned about petrol pirces.
Robert, that’s spot on, I think. I must confess that Gippsland is a long way from here and I wrote most of the post on Saturday. On Sunday morning I came in on the end of Laura Tingle, I think, saying something about coal miners and Gippsland on The Insiders, but I didn’t realise the full import.
It’s bad luck in a way that Gippsland was Gippsland and had a bi-election just at this critical point in considering climate change policy. Michelle Grattan was saying this morning that Nelson was so richly rewarded for his execrable behaviour that he would keep on doing it (my words). Unfortunately his own tenancy of his current position may have been extended also.
Chris (a different one) wrote:
I’m still rather confused. What’s the point of an emission trading scheme, or carbon taxes, if they don’t change behaviour? That some sectors of the economy are going to cop it more than others isn’t news. Perhaps those cleaning jobs are better done during the day when public transport *is* available, or whatever the receipts are from carbon taxes should be put towards improving public transport, but the only thing that’s going to drop our carbon emissions is less driving and less usage of things like brown coal. The cleaner won’t drive less (and we won’t drive less) unless there is pain involved somehow. You can’t wish it away by taking with one hand and giving back with another.
I think pipingshrike has pretty much summed it up.
Working on climate change policy development: Ronda Jambe
Working on climate change policy development: Joan Quiggin
By 2010 the
northern passage will be a well used sea lane.
Two more summers, two more chances for a rapid climate flip.
This is a big big issue and it would be nice to get the policy shift close to right first time, to my mind it is obvious there is serious policy development going on and the Rudd government are doing the work to get it right. It very much looks as if the Liberals will still be in disarray, back where Howard was years ago. It will be interesting to see where the Nationals are by then, being the “farmer’s” party there is a small chance a few members might have told that things are changing in weather land.
This, “we have to do it now because if it is not done by 2010 it will be too late and the voters will toss us out” assumes that by 2010 it won’t be even more obvious that we have a serious problem. The more serious the problem looks the wider the tight rope.
At this point in time the mainstream political press looks like a bunch of chattering galars, with the village idiots over in the corner marked Liberals joining in. It really is a bit sad that they can’t get away from going on about irrelevant nonsense.
The other issue here is the way the green movement wastes its priorities. Climate change is the critical issue of the moment, but so much time is wasted on high profile by basically irrelevant issues like saving the whales, and pulp mills. These attract a lot of media attention, but really in comparison with climate change or the Murray river being allowed to die are basically unimportant.
My comment was in reference to areas where the petrol is price inelastic. Companies don’t want cleaning services run during the day when office workers are present. Low wage cleaners will have the choice of giving up their jobs or effectively having less take home pay. From what Rudd has been saying he wants to protect the lowly paid from much of the impact of an ETS and have the rest of society bear most of the burden. To do that you need to identify and compensate the right people (eg cleaners in this situation will need more compensation compared to low paid retail workers).
If you fix the public transport system so it does run adequately for these people then you don’t need to compensate them. But with sprawling suburbs this can be really difficult to do easily. Eg having large, mostly empty buses running around at night will be both expensive and worse for the environment than having people drive their own cars at these times.
The Murray river needs whales or cute fury animals to attract attention
There might not be any denialists, but they’re all survivalists. There’s not a polly in the game that isn’t.
Robert Merkel wrote:
The Hunter region is also likely to swing hard against Rudd if the ETS is introduced prior to the election.
There are several possibilities:
1. Rudd goes early (with a DD in 2009)
2. Rudd postpones the ETS until after 2010
3. Rudd completely caves to populist pressure from the Coalition and kills the ETS
4. Rudd writes off regions like Latrobe and the Hunter and presses ahead with the ETS prior to the election.
I think we can dismiss 4 already. This is not a courageous politician.
3 is certainly possible, especially if petrol prices continue to rise.
1 & 2 would turn the election into the “ETS election” much like the 1998 election was the GST election.
The only easy option is 3. That’s what my money’s on.
Really, the only chance of getting the ETS up is solid bipartisan support, and Nelson has already trashed that.
It is all very disappointing. I still think that we all have to really really try to talk to as many people we can in our walks of live about climate change, and get them to see how important it is to take action. If the 15% of the population who really understand the crisis convert 3 people each, then we can build a majority for real change.
It is very very scary, and Brendan Nelson is a pandering short term coward.
I couldn’t agree more. We might have got the ETS through during the boom times of a few years ago, when petrol prices and interest rates were lower, but its going to be next to impossible now.
The “pressure on working families” rhetoric is completely incompatible with putting a price on carbon … and Rudd dug that hole for himself.
” The “pressure on working families” rhetoric is completely incompatible with putting a price on carbon ”
Not if you give the money back to them.
My guess is that Rudd will cut petrol excise by at least as much as the carbon price will add to petrol prices.
He will then argue that he has got the ETS up and running (which is what really matters over the long haul, and it’s a long haul problem we’re dealing with) while taking the pressure off working families, yada yada yada.
Of course in the meantime electricity prices will go up by much more than they would have with petrol in the ETS, but hey, that’s politics.
Well that makes me wonder if its a viable strategy. The opposition will see that coming and put just as much populist pressure on the government on electricity prices as they did on petrol. Cue images of working families too afraid to turn on the heater in winter, roasting to death in summer etc….
I think that there is some confusion out there over the difference between a cap and trade ET scheme and a carbon tax. The Cap and trade scheme caps emissions and permits are auctioned or allocated in equal amount to the cap. The ET scheme doesn’t rely on increaseing prices to drive down consumption, rather, the cap sets an absolute limit. The price of the permits within the scheme are set by supply and demand and reductions in emissions will reduce demand and hence the price of carbon. A carbon tax on the other hand does rely on price increases to drive down consumption and the trick is setting the tax at the right level to reduce consumption and emission to the correct level.
Including fuel in an ET scheme should make the cost of permits cheaper overall because any reduction in use of fuel consumption will lower overall demand for permits which can be used to offset emissions regardless of source. Provided the continuing high fuel prices (in the absence of an ET scheme) deliver demand reductions there is probably no need for fuel itself to increase as a result of the ET scheme. This outcome could be acheived by reducing the excise by roughly the amount that carbon is estimated to be traded at under the scheme. This is what some in the LNP have suggested but haven’t articulated why it makes sense (probably because they just lucked on it and they don’t understand why it is a reasonable response). That said, there is probably a need to reduce fuel consumption by more than the prices alone are doing and, while an extra 5 c or so a litre probably wont make much of a difference while the fuel price is low (say less that $1.50/L, I suspect that there is a large cause/effect realtionship in regards to fuel price and consumption reductions as the price gets above this sort of threshold. Accordingly, a partial offset of ET price increase through an excise reduction is probably sensible but it would be better to give rebates to low income earners and pensioners and let those of us on higher incomes absorb the costs or reduce consumption.
The problem is articulating this response and getting though the BS the LNP are putting out and getting a lot of coverage on.
Bottom line: The average voter-the ones you guys love to sneer at- don’t buy the whole climate change/looming disaster issue.People don’t understand it and don’t care. Is the world going to heat up by one degree in 50 years or am I going to lose my house/ job next week.It is a no brainer.
After the alcopops tax hike fiasco(and spun as a health issue), any tax on carbon is going to be viewed with extreme suspision.
Carbonsink is right . Rudd will cave.
Hey chrisl, I actually think that it’s you who are sneering at the ‘average voter’, who would have more of a grasp of the issue than you clearly do, with your false dichotomy that reveals quite a stunning ignorance of the choices facing us.
I don’t have an opinion about climate change (I ain’t a science type), but I do know that assuming makes an ass out of u and me. False dichtomies suck because one rarely recognises themselves in them.
I think there is ample scope to sell an ETS as a national reform. If Labor really geared up and sold it with images of stranded polar bears, the dying Murray and visits from Al Gore then I think they should be able to do quite well. The figures on higher oil and petrol prices really are quite small when you compare it with the bigger costs in most people’s budgets … as the Climate Institute analysis has proved. The likelihood is that petrol prices will stabilise at some point - even if its above $2/litre - and at that point, after a few months, voters will take a deep breath and get used to it.
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When you compare the increase in petrol to the increase in rents, the former pales into insignificance. Yet considering the hot air expended about petrol in the last few weeks, you wouldn’t know it …
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Labor has a lot of room to move on this issue, and I think is in far less long-term danger than the Coalition, which seems to be quite happily trashing its “economic credentials” in the current debate …
Hey adrian; The 45 km eastlink freeway(free for a month) was opened in Melbourne yesterday. Given your assertion that the average voter has a good grasp of the greenhouse gas issue what do you think happened?
A.Everybody stayed away
B.There was a 90km trafic jam all day.
But Chrisl, the publicity about EastLink was astounding. John Brumby has claimed it will “transform the state.” No wonder drivers were curious.
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And guess what? There were no tolls yesterday, or for the next month. So a substantial number of those drivers were clearly in some real sense tourists.
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I think the average voter does viscerally undertsand climate change. Earth warming up = bad thing. It’s really not that hard to explain. You only have to look the current water debate to see this.
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Sure, people love their cars and air conditioners and flatscreens. They also love lots of things which are bad for them, and for the broader society. Cigarette taxes and restaurant bans aren’t popular amongst smokers, but after some initial grumbling they now enjoy broader support in society. Likewise random breath testing. Eventually I expect road pricing and carbon taxes will enjoy the same support.
Ben Eltham : The Sunday program on Channel 9 ran an on line poll after their climate change item:Are you prepared to pay the economic costs of cleaning up carbon emissions?
The results are currently 89% against.
Bring on the polar bears and Hollywood movies.
Lindsay Tanner was calm and steadfast on the 7.30 Report tonight. A good sign. He made Kerry O’Brien look a bit flaky by comparison.
Back at 5 Mark said:
A bit extreme, I think. Julie Bishop was about to majorly stuff up schools for starters. I think we’re much better off in education, health infrastructure anf foreign policy for starters, having dispatched the Howardistas. Jenny Macklin is doing pretty well from the bits I hear.
The only area where we aren’t doing so well are the arts, heritage and I fear water.
chrisl, the Lane Cove Tunnel had a try before you buy period too.
Less than a year later, the backers have written off most of the initial ‘value’ http://www.smh.com.au/news/national/low-traffic-forces-lane-cove-tunnels-backers-to-write-off-millions/2008/03/18/1205602385127.html
Brumby got really carried away with his spin on Eastlink
No wonder the punters wanted to see for free what their $4b had got them.
Not a train in sight, and 25% of households in Dandenong don’t have a car.
Future sustainability - by burning million of tons more oil?
Future liveability - when it is choked by traffic jams that now plague every other Freeway in Melbourne every morning, and often most of the day? (and was on opening day too).
Future productivity - when all the cars get in the way of the trucks, and everyone sits waiting in traffic for hours instead of being at work or home with the family?
Millions of tonnes of CO2 will result from vehicles using this and other freeways during their 50 year service life - and there is no emissions free alternative other than electric cars (assuming they have access to renewable energy for charging). Bring on the trains!
Rudd’s biggest issue on climate change is getting the states that are hopelessly addicted to fossil fuel (gas, oil and coal) to actually reduce emissions. Currently, they are still going up across the board.
Roads like this are part of the problem, not the solution.
And the Eddington Report says we need more billions of dollars of road tunnels to “link it all up”, which was what Citylink was supposed to do . . .
Robert Merkel wrote: “A fair whack of the Gippsland electorate spends its time tending to the Latrobe Valley’s brown coal generators.
They will be the first to go when the ETS kicks in (as they should, they’re diabolical for greenhouse). No other electorate is going to cop it harder from emissions trading.”
This is interesting indeed, and undoubtedly the Latrobe Valley coal mine workers etc are keenly aware of the black (brown?) marks their industry earns. There are many other voters in Gippsland BTW, such as dairy farmers, pastoralists, teachers, fisherpersons, timber workers etc.
But let’s look at this from a slightly different perspective. I don’t see it as solely a local, regional [Gippsland] problem at all. Guess where the vast majority of the filthy brown-coal-fired electricity flows? To Melbourne homes and industries. So the Latrobe Valley mine workers and associated contractors etc have every right to look down the Princes Highway to Melbourne, and sing out: “We’re all in this together!” Unless of course Robert and the good folk of Melbourne have already built the wind turbines, installed the solar panels, organised the geothermal heat sources to keep their city and industries going without Loy Yang. Or do they plan to buy stacks of ‘cleaner’ power from New South?
If ET kills off the Latrobe Valley power industry, it’ll choke off Melbourne too. Won’t it?
My guess is, brown-coal-power will become VERY expensive, putting pressure on the urban [and Gippsland] poor particularly, and making the desal plant (South Gippsland) look pretty damn silly. Latrobe Valley power will at most have to phase down. Not turn off.
cheerio
Ambigulous, back on this thread Robert pointed out that the otherwise virtuous Germans were actually building brown coal fired power stations. The reasons seem to be various, but they undoubtedly include the mining constituency.
I did come across a comment that the mining unions in Germany were central to the story of the creation of the SPD, the left-centre Social Democratic party.
Assuming that Rudd will get no help from the Coalition there will be some interesting conversations with the swing voters in the Senate when Rudd tries to put his legislation through. It’s one reason why he will go for broke. the Greens will expect something they can sign off on. It’s also one reason why a double dissolution can’t be ruled out.
I don’t think that new coal fired power stations in Germany have actually been decided, or work commenced on them yet.
There is apparently a battle in progress between those who want them and those who don’t.
The news articles around on this topic are not definitive on this yet - they are basically stating positions rather than outcomes.
Peterc, as I said on the other thread there are a number of issues in play. Energy security is important to the Germans who don’t like depending on Russian gas. The SPD are sticking with their policy of actively phasing out nuclear, which means that there is a problem with base-load power. There is brown coal mining in the East, which is Merkel’s patch. Finally, under German law the privatised power companies can do what they like provided they meet technical and normal planning requirements and no government can stop them unless the Feds change the law.
Which, it seems they won’t because of some of the above-mentioned factors.
The deadlock might be broken if Merkel’s Christian Democrats win the next election in a manner that they can ditch the SPD and hook up with the Free Democrats in 2009. Then the no nukes policy might go, which would allow a different approach to brown coal.
On coal from an article by Renee Viellaris in the Courier Mail today:
Not good.