The government has released modelling showing the effects of the CPRS on household incomes, demonstrating that many low income earners will, on average, be better off financially.
Predictably, this disclosure has added fuel to the fire of complaints from the right about its evils.
In the circles Tony Abbott moves in, redistribution is a dirty word.
That, of course, ignores the fact that everything governments do in tax, benefits, and allowances of whatever kind is redistributive. That includes all the Howard era tax/welfare transfers. It’s not as though Labor has some sort of evil socialist agenda and Kevin Rudd and Julia Gillard are socialist wolves in sheep’s clothing, much as some might like to entertain such fantasies.
It’s no doubt right to say, as Andrew Norton does, that Abbott’s shift in the Coalition’s position to opposition to the CPRS (matched with vague promises of costless emissions savings) exposes the detail of the ETS to more debate. That may not be a bad thing, though it would also be a good thing if its ineffectiveness in achieving its ostensible aims were the focus of the debate. That’s not likely to be the case in the headline election year debate, as Abbott’s move switches attention to hip pockets.
However, anyone who followed the design of the CPRS from the start would be well aware that the government had already anticipated this line of attack. As the modelling Peter Garrett released shows, Kevin Rudd deliberately ensured that compensation for low income earners was much more generous, and ongoing, than similar Howard era packages; the GST, for instance.
Secondly, unlike income tax (though somewhat similarly to the GST), the effects on household finances are variable, depending on consumption patterns. This, after all (again leaving aside the failure of the CPRS to materially affect corporate emissions, at least in the short term), is the point – a price signal on emissions across the economy, including to the household sector.
Politically, as Garrett’s rhetoric today indicates, it’s designed to allow higher income earners who may have some cost increases to feel either warm and fuzzy about ‘doing their bit for the planet’, or to modify their consumption patterns. Those who will see it as a nasty impost in this demographic are probably already Coalition voters, and my suspicion is that the responses to polling questions about making a financial sacrifice are more likely to be genuine among upper middle to high income earners.
Many of Abbott’s ‘battlers’ will actually make a buck.
In short, I wouldn’t be jumping to any conclusions that flicking the switch to an argument over the affects of the CPRS on individual and household balance sheets necessarily gives the Coalition the advantage most commentators seem to have been assuming it does.
Isn’t there an issue that a lot of people think that they are richer, or will soon be richer, than they actually are? Or was that a pre-GFC/Howard era mindset?
I’m quite sure that my relatively low-carbon life is not going to be greatly affected at all.
The Libs have an enormously basic schism and that is that the big-business in which they unquestionably believe doesn’t operate on the ideology of ‘individual enterprise’ on which the Liberal Party pretends to push(Menzies yada yada yada!!!). This means experts like Rudd and Gillard, not to mention the swathe of very capable people they have in support, have many grip points from which to extract the element of maximum pain!
Should be a bonza 2010!
Shouldn’t they then just introduce an across the board carbon tax of, say, 5%, with income tax compensation for low income earners. Part of the problem with ETS is that few people buy the idea that Macquarie Bank buying up forests in Papua New Guinea from a corrupt local chieftain is somehow saving the planet. Now that Malcolm Turnbull is sidelined (perhaps temporarily) and the Greens won’t budge on their ambit claims, why not just introduce a simple “doing our bit to save the planet” tax?
Hang on a minute, weren’t we all told that our power bills are all going to head upwards under a new climate friendly Australia?
My power bill was $1600 a quarter for the last two quarters.
And now suddenly “new conomic modelling” suggests that many of us are all going to be better off..???
Why do I smell a rat…
The tax and trade debate is strangely resurfacing despite the voluminous reports highlighting the benefits of trading to achieve least cost abatement with capped limits rather than the open ended cost increase/emissions increase of a tax. In order to acheive a global response the mechanisms of trade must be deployed (along with other measures) transparently and efficiently. More focus should be placed on the CDM exec board and improving processes and accountability. Mac Bank REDD spec investment should be applauded as a way to reduce emissions and maintain threatened ecosystems.
“My power bill was $1600 a quarter for the last two quarters.”
God, reb , what are you doing in Hobart? hydroponics?
Terry said:
No, because then the “Great Big New Tax” line would be effective. There would be nobody in the system with an interest in preserving it and it would be as full of holes and porkbarrels as the CPRS — and of course it would not be tradeable across frontiers. There would also be no guarantee of a cut in emissions. There would be more certainty about the future whioch would mean less early action. That’s why the enemies of mitigation like it.
And 5% would not be enough … you’d need at least 40%.
In addition, they’re hardly going to do as massive a backflip as would be necessary to go down the carbon tax route.
My electricity bill has increaded on average about $50 a quarter, and $250 dollars or so for the winter quarter, Rudd’s compensation will just cover over half of the recent electricity price increases from last July, and not cover those coming next July in NSW. Just sayin’.
It’s been going up way in excess of CPI since Anna privatised electricity retail in Queensland, of course, but Paul, the compensation isn’t meant to be a general subsidy for energy prices but for the specific effects of the CPRS on same.
True Mark, but don’t you think a lot of the electorate will just see CPRS compensation being eaten up by outrageous electricity price increases, and therefore not notice it that much? Rudd is going to have to market this one very carefully. (from the sounds of it, Qld. is as bad as NSW. Don’t know about the other states.)
Possibly, Paul, but on the other hand, the Howardian experience appears to demonstrate that you don’t lose any votes by sending people money. I think Rudd has deliberately taken a leaf out of Howard’s book in the design of the compensation scheme.
Mark, Rudd isn’t a socialist, he’s a communist. A Cricket Mum told me so last year, so it must be true.
Ha, Joe, that’s _exactly_ what I was going to write!
I am conflicted about this. Firstly, I feel that the illusion that climate change will be cost free is moronic, and the sooner quashed the better.
Secondly I would suggest that Tony knows the whole thing is a crock, but would have gotten this kind of research from his Republican buddies – so the goal here is really a branding exercise.
I feel like if Rudd buys into this dialogue to heavily, he risks legitimising it. Keep Abbott on the un-serious, margins of this debate.
If my memory serves me correctly the details of the assistance package are in the White Paper. People whose income is less than $20,000 per year get much less than people whose income is between $20,000 and $100,000.
@13 – Chookie, of course!
@14 – patrickg, while I agree, it’s a bit difficult when the media regularly lead with whatever Abbott’s rubbish is. Both ABC and SBS news tonight introduced their stories on this not with the government releasing the modelling, but with Abbott’s charges.
@15 – Peter, I have a feeling there were some changes made when the bill was amended.
Yeah, Mark, that’s where my confliction comes from! By not responding, you could argue Rudd’s leaving the discourse to be controlled by Abbott. The bizarre thing is, with all the coverage Abbott gets, it’s never around any evidence he’s produced, it’s just opinion crap; the abc should be above it.
He’s walking on a knife edge (with the public, not the libs), though. Every time you talk about assistance to the public, you can talk about how much more assistance big business is getting. Of course, the libs can’t respond because they’re wedged tight. It’s a great attack line for the Greens should they decide to pursue it, however.
Someone should remind Tony that the main reason that our infrastructure ran down during the Howard era was a reluctance at both state and federal level to charge the taxes necessary to provide the level of government service people wanted. Most of us were pretty sick of the “taxes are bad, bad, bad” message. Putting the tax label on CPRS may not get the response that Tony is hoping for – it is all coming across as sleazy argument for taking the soft option at his stage. He should also remember that Australian re-elected Frazer, Hawke, Keating and Howard despite their willingness to take hard decisions that voters accepted as necessary.
However, by its very nature, a fair percentage of the money paid for new carbon permits is going to be absorbed by admin costs, speculator profits and bribes to industries that are already making obscene profits. Sure, the government can compensate the poor for CPRS driven cost increases but this doesn’t mean that CPRS is a very cost efficient way of driving down emissions or collecting “additional tax.”
What the government should fear is an attack that:
1. Compares the direct approach with CPRS for dealing with specific opportunities to reduce net emissions.
2. Challenges the government to specify what specific changes CPRS is expected to drive during the next 10 years.
3. Demands data on expected admin costs as a percentage of funds raised by the sale of permits.
The government would be very vulnerable to an opposition that comes up with a simple, direct action plan for significant reductions by 2020.
http://news.smh.com.au/breaking-news-national/ets-changes-a-minor-cost-to-budget-20091124-jfpd.html
And Tony still runs the line that it was some backdoor Labor/socialist ‘income distribution scheme’. More likely to shareholders and environmental vandals.
Indeed, joe2.
$1600 a quarter for electricity? You’d need a plasma tv in each room and a back yard aluminium smelter to run up a bill that big.
The difference is, Mark, that Howard’s “modelling” of the impact of the GST was based on the Hot Chocolate principal ie “Everyone’s a winner, baby!” Sure, this was a case of data mining or – if you like, scenario hunting to find the three winners in the economy. And I’m wondering why Penny didn’t follow a similar formula. And I don’t wanna appear partisan here but it’s not like Labor’s above producing a political document. Something smells funny here …
It still comes back to raising prices to discourage consumption.. It may not carry the label of “tax” but it does carry out the functions of one. Large sums of money harvested, some skimmed some redistributed.
I would also love to see the federal/state responasbilities put to rest as well. For to long both parties have blurred the boundaries when it has suited them instead of just a flat “thats a state/federal job not ours”.
There is no point to an ETS if everyone ends up with the same consumption ability. The “low income will be compensated” is all very good, but why then “churn” the money raised back to everyone else? (minus some).
I think the number of people who will fit this pattern is commonly significantly overestimated. The number of people who voluntarily subscribe to green power would indicate that few people get the warm and fuzzies from paying any significant amount of money to do their bit for the planet.
reb @ 4 – >80kWh/day – thats quite an achievement! Perhaps some of your electrical appliances are broken?
Mole @ 25 – and where compensation exceeds the costs then there is the real risk that the power consumption will actually increase making the situation worse.
I see this morning, Tony’s now calling the modelling “suspicious” and the ETS a “slush fund”. I can’t believe this guy has been in politics for so long, he’s coming across totally incoherent. Which is it, Tony, a tax or a slush fund?
And also: When did the public start complaining about free handouts again? Abbott should know: Howard’s pork barreling saved his party on numerous occasions. These guys are playing it even more dumb than I expected.
Patrickg, Tony Abbott is many things, possibly this includes politically & philosophically diametrically opposite to you. However incoherent he is not.
Commentary insight on this site is at times on a sub-Kath&Kim level, but even so, the difference between “compensation” under Rudd’s ETS and Howard’s handouts are glaring. You will find yourself further & further behind public opinion if you stick with that line, for the punters know the difference. Turnbull was rolled because the punters know the difference, I wonder will Rudd also be rolled because of it?
Once again, Steve, you reflect the beating heart of the nation, as demonstrated by how closely the polls are following your opinion.
Nope … Abbott is incoherent as will shortly be shown in “the only poll that matters”
Fran
Part of the governments problem is that they can’t afford to pork barrel at the next election. Call it what you like but CPRS is a magic pudding that will give the government lots of money to distribute. Even better if all this pork barreling depends on CPRS and will lost if those grumpy old conservatives come up with a more practical that doesn’t require all that churning to work.
What scares me is that we may be lumbered with Abbot as prime minister if, as I expect, their simple direct action proves to be far easier to understand and more cost effective than CPRS. Just in case we have forgotten what Abbot is all about see Abbot pledges to turn asylum boats back
I thought John Winston Howard was the Man of Steel. Of, course, if Tones wants to be … what is the old saying? “First time, tragedy, second time, farce.”
Why do I get the impression 2010 is going to be a fascinating year. It can’t just be because is is likely to be the beginning of the decade that is likely to set the tone for the rest of the 21st century, can it?
*smug*
my electricity bill for summer is about -$120. About to go further into credit with Victoria’s 60c/kwh rebate.
Due to government idiocy in giving me an $8000 subsidy on my PV system.
A few observations:
A CPRS – like a carbon tax – will change relative prices – more energy intensive goods and services will become relatively more expensive. The fundamental assumption of consumer economics is that when some goods and services become more expensive than others, then consumers shift their spending patterns to consume less of the more expensive items. So even if households are fully or more than fully compensated for price increases they will still have an incentive to change their behaviour, i.e. use less energy. The exceptions are those who are so budget constrained that they can’t reduce their energy consumption, and those who are so rich that they couldn’t care less.
Now when I say fundamental, I mean fundamental. If you reject the idea that a CPRS even with compensation will change consumer behaviour, then you are rejecting basic microeconomics. Now some of the people who come here might reject the axioms of microeconomics but one of the weirdest things about this debate is that some of the people who consider themselves economic rationalists do not appear to understand this. There was a posting at Catallaxy for example a few weeks ago that was based on the idea that compensation would mean that people wouldn’t change their behaviour. Some financial journalists also do not appear to understand this.
I’m not so sure about this but my understanding is that a CPRS – unlike a Carbon tax – does not give the government any money – all the action is in the trading in the private sector and the government doesn’t collect any more tax revenue. So to decribe a CPRS as a great big tax is misleading – it’s true that energy prices will increase under a CPRS but the money doesn’t go to government. So the problem is that government won’t get additional money from the CPRS but its compensation scheme will cost money, so the budget deficit will increase.
Liberal Party must install this man as the new Federal leader as a matter of urgency, Nick Adams is the conservative’s Messiah.
http://www.ashfield.nsw.gov.au/page/nick_adams.html
Interestingly CMMC … he’s into things “ethinic” …
Wasn’t he the bloke who did a lengthy speaking tour in the US, claiming to be Australia’s greatest orator, or sometning similar? And hasn’t he been dismissed from Council for refusing to come back from America and missing too many Council meetings?
It looks like a wreck to me, honey.
http://www.nickadamsinamerica.com/#
“The government has released modelling showing the effects of the CPRS on household incomes, demonstrating that many low income earners will, on average, be better off financially.”
You cannot believe such idiocy. In any case its possible to make the poorer better off without taking the science frauds approach to CO2. It would be cheaper to make people better off without destroying the economy with the cap and kill.
Peter Whiteford:
What you said above was almost correct, but you are still some way short of a consistent position.
The government really doesn’t have any money of its own. It’s really just a clearing house for transfer payments of one kind or another. Perhaps you meant to say that the CPRS would, in cash flow terms, be revenue negative and you would be right. An appealing metaphor for government in relation to the circulation of money would be a river in which beavers operate. They can disrupt the flow of water along the stream, and perhaps create some local changes in the riparian system but they can’t alter the total volume of water in the river.
I’m always deeply suspicious of motivational speakers. WTF would anybody want to be motivated for? Its all part of this horrifying Ayn Rand capitalism intended to make people who are content with doing nothing feel guilty, surely?
I got moderated.
On New Year’s Day, too. Time to crack a bottle of champagne.
Didn’t younger Howard suffer terribly because Access Economics screwed up the costing for the Opposition’s policies at the ’87 election? Or was that ’90?
I can see something in the same vein happening this time around—by saying never ever to either an ETS or a carbon tax there is bound to be a bloody big whole somewhere in their manifesto. If such exists, and is identified, then at that point speculation about the more rigorously constructed government numbers will cease to be so important for electoral purposes.
“If you can’t govern your party” etc.
No. Turnbull was rolled because several thousand Liberal branch members and other assorted senior citizens deluged Lib MPs with arguments furnished them by such famous Non-Punto-Australians as Parrot Jones and A. Bolt.
Liberal Branch members are Senior Citizens, and (despite sufficient interest in politics to join a political party) are unable to make up their own mind, and are able to be manipulated en masse by a couple of media personalities?
Nickws, we have a choice. We can believe you were jesting, or that you believe your above statement.
If you were jesting, don’t give up your day job for a career in stand-up comedy!
If you were serious, you’ll be well accustomed to people slowly backing out of the room, all the while maintaining eye contact with you and speaking slowly, in conciliatory phrases!
Peter Whitford: I know economists are in love with the idea that price manipulation is the answer to everything. However, demand/price curves for basics tend to be pretty flat and demand/price curves for status items can even have demand increasing as price increases.
Think about changing the fuel consumption of new cars: The average car consumes about 1500 litres/yr of fuel so a 10 cent price increase would add $3/week to the fuel budget. Hardly a choice driving increase for someone who can afford to buy a new car. Lets face it – the decision to pay the price premium for a Prius cannot be justified in terms of fuel costs without a truly massive increase in the price of fuel. A massive increase that would punish the poor who can’t afford the effect that this would have on their travel, food etc. costs. If we want real changes in the average fuel consumption of new cars it will make far more sense to use regulation while leaving the price of fuel unchanged
The only thing I don’t like about direct action is that it is being pushed by the conservatives while Labor remains obsessed with CPRS.
Steve@29, please see this admittedly self-interested observer and note the fifth- and fourth-last paragraphs:
“Tony himself has, in just four or five months, publicly advocated the blocking of the ETS, the passing of the ETS, the amending of the ETS and, if the amendments were satisfactory, passing it, and now the blocking of it.”
The guy is an absolute flake. He’s got an economics degree and worked at close quarters with Hewson, Howard and Costello – yet he has no opinions on economics at all. Note I did not say “opinions with which I disagree” – I said, and I mean, that Tony Abbott is a flake. Andrew Peacock was a much more substantial figure than Abbott, as was/is Kim Beazley.
Mark@12: Oh yes you do. You can’t believe the Bob Ellis case that Beazley lost in 2001 and Latham in 2004 simply because Howard was shovelling cash at people. I’d also point out to you the result of 2007 when the then government was spending $50 million or so on publicly-funded ads, without letting up on the shovelling.
AndrewE @48, I note your comments on Tony Abbott, the relevance is what?
SATP, I think he just trying to tell you, since you missed it ealier, that Tony is a useless gobshite.
http://www.urbandictionary.com/define.php?term=gobshite
Steve@49, here is the first paragraph of your post@49:
“Patrickg, Tony Abbott is many things, possibly this includes politically & philosophically diametrically opposite to you. However incoherent he is not.”
Incoherent he is, Steve. You were what’s known as dead wrong in making such a statement: the direct opposite of what you said is in fact the case. More here, if you can bear it, but suffice to say that Tony Abbott is actually a weak and vacillating politician rather than the coherent, forceful leader that you and many in the journosphere would regard him as.
Indeed Andrew E
The willingness to utter with gravitas the first inanity that enters one’s head prompted by those who can pull one’s strings does not make one a conviction politician, unless one wants to define this as being convicted of being an airhead with delusions of relevance.
Or we could just believe that I actually wrote about a mere several thousand Lib branch members and assorted geezers, given steel/urged on by a great ideological activist push—this great representative punterocracy you somehow think rolled Turnbull in the name of the silent majority.
Hell, there could have been more individuals involved in the great Turnbull-against-King stack in Wentworth back in ’03.
Your bottle shop has had more customers so far this summer than there were anti-Turnbull letter writers, SATP. So, yeah, I feel comfortable impugning the intellectual independece of that several thousand.
[Sarcasm, truly pertinent sarcasm]I’m sure you’ve never ever written about Leftwing sheeple or rent-a-crowds.[/sarc]
(What the hell is it with Oz conservatives having such a low opinion of actual politics? How do they think politics actually works when their only organisational theory is how there is no such thing as society?)
The ‘uncommitted’ column in the cumulative Newspoll says it all: the Fibs are worried about their supposed trump card!
Bye-Bye to the metrosexual crack-smokers of the Howard era….. I don’t think anyones going to miss ya!