…feel the long-term trajectory.
There’s already a great deal of insta-reaction to the Clean Energy Future online – you can try Climate Spectator or Crikey for some analysis if you like. Or you could start by reading the actual policy document.
There is a great deal of pork here directed at the coal, steel, and coal-fired electricity sectors – though some of the direct “industry assistance” is actually outside the multi-party climate change agreement, and as such will presumably require the Opposition to get it through Parliament. Farmers get all of the upside of carbon farming, with none of the downside of paying for their own emissions. The exemption of transport fuel is a distortion which will have to be dealt with later – as the plan stands, diesel used for rail transport is covered by the carbon tax, while diesel used in trucks and buses is not! And so on.
But the pork is temporary. The pricing of carbon is – unless we get an Abbott government with control of both houses of Parliament in 2013 – permanent.
Elsewhere: Garnaut’s statement on the package.
More: Quiggin’s insta-view – generally favourable, and making the point that the industry assistance doesn’t remove the incentive for those companies to decarbonize.
ABC graphic to make the whole thing clearer:
http://www.abc.net.au/news/events/climate-change/carbon-pricing-explained.htm
I don’t think an Abbott govt would be able to unpick it, Robert, particularly as he would have a hostile senate. I reckon there’ll be a lot of pressure on him from the business community to STFU once the sky fails to fall in.
Never mind the pork..roll out the barrel..sorry couldn’t resist, but I like it.
I’m still doubtful of how much benefit this arrangement will be for reducing carbon, but I’m pleased at the tax changes. A fairer tax/welfare scheme seems to be the immediate winner for the ALP – if they can sell it.
David, it’s not beyond the realms of possibility that a thumping Coalition victory would give them outright control of the Senate.
Am I the only one who switched to the ABC to watch the PM’s address only to find that the information on the ABC Website was incorrect?
The Program Guide listed the address for 6.31pm. By tuning in earlier than I thought necessary I caught about the last 4 mins of the PM’s speech and then found myself watching Tony Abbott. How did this slip-up occur?
I hadn’t plan to listen at all and was lying comfortably in front of the heater listening to Aung San Suu Kyi giving the Reith lecture on News Radio when we were rudely interrupted by Julia Gillard. What a difference in voices! Poor old Julia – so contrived and false sounding.
I keep feeling better and better about the tax changes ….. if only the ALP can get the message across – that this is an ALP policy response (well, and thanks to the Greens too, but perhaps they shouldn’t muddy the message with that)
Can anyone foresee any amendments proposed by the greens?
On a quick look I have not yet seen a list of the ~500 companies which will be in the scheme (ie, producing 25,000 tonnes of carbon dioxide equivalent p.a.). I would be even more interested to see the list of companies which were in the 500-1000 group initially slated for the permits.
My understanding is that the Greens won’t be moving substantive amendments to what’s been agreed in the multi-party committee.
So as long as the legislation correctly reflects what’s been agreed, they’ll pass it, as will Oakeshott, Windsor and Wilkie.
Dumb question: If I’m on 100% GreenPower will my electricity bill increase?
Lorax – as people are ‘encouraged’ to add solar panels to their houses, expensive upgrades will be needed to the system to cope …. the price of being part of the grid will go up and up and up
Lorax – You’ll probably get to pay both the carbon tax and the green power premium
Of course the danger is that with the introduction of the carbon tax people will be tempted to drop green power subscriptions as they’ll feel they’ve already paid.
Lorax, that’s a difficult question.
Theoretically, the premium for GreenPower should go down.
There’s a section on voluntary action in the scheme. While the fixed price applies, there’s no issue, but once the full-blown ETS starts if the government doesn’t cut permit allocations available at auction in response to voluntary actions they amount to, in effect, a subsidy to polluters.
The policy document states that the government should cut allocations in response to voluntary action, though how this will work in practice when the voluntary action isn’t buying and ripping up permits is left up in the air.
The question of what’s a voluntary action in the context of a carbon price is an interesting one.
Prediction – Australia will produce more CO2 in 2020 than now. As for the 2050 target – ha ha ha.
There will be no international agreement that is environmentally, economically and politically effective.
If the truck owners had even the smallest amount of brain they would immediatly source as much of their fuel from bio -diesel as they possibly can. Since various types of bio- diesel have been around for yonks it should not take long to ramp up production.
Whats the bet that they simply sit on the side of the road and throw tanties?
I’m hoping that the carbon tax might revive Green Power as a marketing tool for energy retailers – it is a competitive market after all, and if one retailer ups their Green Power pricing with the carbon tax, everyone can switch to another retailer – surely there will be some (at least one!?) retailers who opt to use Green Power to pick up new customers by keeping prices low.
Huggy@16, I think throwing tanties neatly describes the reaction of most of the Australian business community.
Morons can’t figure out that a) most of them can pass on the cost down the food chain, b) change represents an opportunity for most businesses, c) for the vast majority it’s a very small proportion of their cost base, and d) that cost base is being thrown around by much bigger factors than a piddly little carbon price.
Or, more to the point, many are conveniently ignoring these factors and are simply trying it on to get some more of that sweet, sweet government moolah.
@15 very good OBR. Now that you’ve nailed your colours to the mast with a bald prediction for 2020, will you be a good sport and concede that no further utterance is needed from you on this subject for at least the next 9 years? You can come back and say ‘I told you so’ in 2020.
Deal?
So far the Libs response has been incredibly weak; “Bad tax! Bad tax!”.
The issue is that this will pass both Houses and even if the Libs control the Senate after the next election, I suspect it would be terribly difficult to roll back.
RobertM @18,
Exactly the case.
I think that you need a much much bigger megaphone with which to broadcast that good sense.
In terms of policy, I think this is a pretty good one. I’m not going to argue about letting the perfect get in the way of the good – this is better than Rudd’s CPRS. Is it politically astute? Well given Australian political debate at the moment, that’s a hard one to answer. Works for me.
I do hope the pork isn’t temporary. It ain’t the pork that worries me. Its the Australian public confusing the carbon price increases with the regular electricity price increases that have nothing to do with the carbon price. The renewables stuff is potentially magnificent.
There is a problem, of course, and its Gillard. She was so soporific on ABCTV/RN this morning I turned the TV off. Seriously. Will people listen or has she done her dash in terms of credibility?
@16
Indeed.. why waste all that arable land on food crops.. silly idea!
Paul, by “pork” I wasn’t referring to compensation for low-income earners. I was referring mainly to the industry assistance, which is mostly pork.
It’s certainly a triumph for Gillard that she could get agreement from the the motley collection of Greens and independents.
Ken Parish puts it well:
“And, for schadenfreude afficionadoes, that treacherous prick Rudd will know in his guts that a bloke with his personality and skillset could never have pulled it off in a million years. And so will the rest of the Labor Caucus who’ve had to deal with his prima donna antics on a daily basis.”
I am glad that something is at last being done. My concern is whether it will make a difference. I am really worried that it is far too late and the same persons that are complaining like crazy about the costs (finacial) will still be complaining when the predictions start coming true (as if they aren’t already). And of course they will blame the govt, which in part is fair enough, but gee whiz.
Why is it that the majority expect to have it both ways. Fix the problem now (whatever it is, healthcare, education, climate change), but don’t make me pay for it.
There is a problem, of course, and its Gillard. She was so soporific
I know, right? That weird sing-song slow motion voice she puts on to the public comes across as _so_ fake and condescending. Just talk like a normal person, for god’s sake!
As for Ken Parish, if those “genuises” in the Labor party had never knifed Rudd in the first place, this complicated ballet would have been totally redundant. Talk about Pyrrhic victory.
Qantas have just announced the cost of the Carbon Price to their bottom line to be $150 million. So taken as factor against their gross revenue of $7.9 billion for this Carbon Intensive Industry, this amounts to a percentage cost of 1.9%.
So your $1000 airfare to Vanuatu will cost you $20 more approximately.
Eh? I thought the Desil Rebate was ‘on hold’ til 2014?
Keeping Petrol out of the Scheme, at least for the time being, was a triumph of policy over practicality. Petrol is ‘only’ ~16% of our emissions, but increasing the price (or, rather, appearing to increase the price) is an electoral no-no.
Gillard’s manner never bothers me. But then I never thought Kim Beazley was prolix either.
You wouldn’t believe the misinformation and smart-arsed hysteria on the local ABC radio this morning. Democracy is not in good shape.
Abbott’s best chance of changing this is in a double dissolution, whereby he could also change the NBN and bring in all his other evil schemes.
The best comment so far is from Tony Windsor:
The ABC commissioned tha Gratten Institute to cost the impact on some food items. The average was 1% or less. Totally consistent with the announced 0.7% CPI lift.
Windsor is good on just about everything. Makes me wonder how he spent so much time in the National Party.
Lorax @ 15 – re: green power
No, electricity retailers should not be increasing the price of green power in direct response to the carbon price -and the ACCC will be given additional extra powers to scrutinise potential rorting (ie passing on imaginery costs and using the pretext of the carbon price).
Robert’s comments on how green power will contribute to voluntary action are also broadly correct. For more detail:
However I think what I think is not clear (at least to me) is if green power will increase of cost due to market demand, ie your retailer can get more for it as companies look to buy it to offset their carbon price liabilities.
Sorry Lorax, clearly I meant your comment @11.
No problem, thanks for all the answers.
myriad @ 74 – I think the way that GreenPower is sold will lead to overall price increases though. For example, they tend to be sold either so the user buys a certain amount of kWh per quarter of green power or pays for a percentage of their actual power usage to be sourced from green power sources. However, this calculation is done separately from the ordinary power cost calculation.
So people on GreenPower schemes will pay more for the base power cost (because of the carbon tax) and then the GreenPower which may not go down (may even go up with extra demand) will still be added on top of that. This will happen unless the electricity restructure how they sell green power to consumers to take into account the carbon tax already paid by the consumer when selling green power.
As I mentioned it before it will be interesting to see if residential purchasing of GreenPower drops in response to the introduction of the carbon tax because people will believe they’ve already paid for their electricity generation pollution.
My quick roundup of initial online reactions for Global Voices: Australia Unveils Carbon Pricing Package
This tweet from @dannolan stands out!
‘You can’t spell ‘carbon tax’ without SOCIALIST EUGENICS-LADEN MALTHUSIAN DEATH-PACT #cp’
Chris, you might well be right about it discouraging GreenPower usage, but frankly voluntary action is a piddle in the ocean.
I don’t have statistics to hand, but IIRC there are a couple of hundred thousand households nationwide who’ve taken GreenPower up. Great, but even 5-10% of households isn’t going to get us anywhere near where we need to go.
I got called stupid for asking about price increases due to this tax. Apparently I didn’t understand economics and should look up “competition” on wikipedia. So are the economic geniuses who told me that (lookin’ at you, DD) going to explain to me why Gillard is compensating people for price increases? Or maybe she doesn’t understand her own policy…?
Kevin Rennie:
This also from @dannolan:
A Carbon Tax? You know what else is made of carbon? Life. So a tax on life from a deliberately barren atheist? Interesting
Set those alarm clocks late in this case as Julia Gillard will be the sole guest on Q&A tonight. Personally I won’t be watching can’t handle even a five minute interview with her.
Also she will be guest hosting The 7pm Project on Tuesday night. Bob Katter guest hosts the show tonight, Tony Abbott on Wednesday night, Friday night will be hosted by Adam Bandt and Thursday night hasn’t been confirmed yet.
http://www.tvtonight.com.au/2011/07/julia-gillard-tony-abbott-become-guest-hosts-on-7pm-project.html
Chris, I said it wasn’t clear to me, not everyone.
Ie it may well have been modeled but I haven’t seen it.
Also don’t forget that local govts are actively looking to reduce their emissions and they buy into green power. I spoke to a council today that aims for carbon neutrality in a few years. They will continue to green power & are significant consumers whose combined purchase in 2012-13 could retire some permits. We have had letters from many councils strongly supporting voluntary action to retire permits as their contribution.
Myriad, councils won’t be able to buy and retire permits until the fixed-price period ends in 2015.
Gillard was excellent tonight. Clear, concise and articulate.
RM@18, I think the issue there is that competitive opportunities are only good for the competitive. The business lobby groups represent the established, those businesses that may be under threat from competitors. Businesses that are able to grasp new opportunities are probably not the ones lobbying for no change. It appears many of our business leaders are more rentiers than entrepreneurs, their culture of entitlement demanding we patronise them on their terms.
@ 46, indeed she was, Fine. Pretty much word perfect. And a continual stream of positive Twitter feeds.
BilB @ 29, Qantas said they will have to put up domestic prices by all of $3.50 each.
Brian,
That Qantas price change suggests that Qantas will absorb some of the cost initially and smooth the transition. There is also no need for there to be a price change until july next year.
What I am expecting is that there will be very little price change at all. For example Woolworths and Kmart (not food stores) should not be changing prices at all as the imported content (completely unaffected by the Carbon Price except for distribution costs) of their product is likely to be near 90% so these stores which have been profiting out of sight from the strong Australian dollar.
I never thought Beazley was prolix either Brian! But once a mneme is in the ether about a personality it’s darn near impossible to expunge.
Gillard displayed the patience of Job tonight answering some of those questions. One person complained that the government’s communication on the issue was too complex for the public to follow. They didn’t think Gillard should even use the word “carbon” as it is too scientific. So I have no issue with Gillard trying to speak slowly and clearly. Just wait – she may soon have to resort to drawing pictures in crayon.
By the way I heard a glued on (Alien style) Coalition supporter being interviewed on the ABC being interviewed as a “sample” ordinary person, who said that as a panel beater his costs would be unbearably higher. He did not appear to hear me yelling at him (the tyranny of distance) that most of his parts are imported, only his paints, thinners and electricity would go up in price. Even his labour (fully compensated) would not change in cost.
“Teck Resources Ltd., the Vancouver-based miner, is expanding its coal operations in the province and the tax isn’t dissuading those plans. Still, it competes with Australian coal miners, selling coal to steel makers in Japan and China. Australia doesn’t have a carbon tax but politicians there are debating an introduction.”
British Columbia in Canada has had a carbon tax for three years.
http://www.ctv.ca/generic/generated/static/business/article2084989.html
Robert, have a closer look at what I excerpted from the appendices:
In the fixed price period, the Government will measure GreenPower purchases on an annual basis and take these into account when setting the initial pollution caps. As pollution caps are to be set by 31 May 2014, only those GreenPower purchases measured at the time of making regulations will be counted in the initial caps, that is, GreenPower purchases for 2012‑13.
So my reading of that is that significant green power purchases by entities like local governments in 2012-13 will have the effect of reducing permits as part of the initial cap. (The council I talked to – Yarra City Council- is intending to be carbon neutral in 2012 out of interest).
Therefore significant voluntary action in 2012-13 I think can reasonably be expected to influence what the Climate Change Authority recommends to parliament as the cap.
Sorry, blockquoting for my second para failed.
Yep, makes sense myriad. Thanks.
Gillard displayed the patience of Job tonight answering some of those questions.
Agreed, the questions were mind-numbingly stupid for the most part. Not even constructive negativism. I loved the clearly middle class fellow who spoke of his worries about “being taxed into poverty because I’m not on welfare”.
a) I fail to see how $3-$4 a year could possibly tax you into poverty. I wonder if he understands one interest rate rise will eclipse what he pays in carbon tax in a whole year, in a single month?
b) I love how he completely ignores that if you are genuinely working class or in poverty, this scheme actually gives you more money.
Gah. Most of the questions were that idiotic. When that girl at the start was saying “You’re not being patronising enough!”, I was like, yeah right. By the end, I was questioning my previous confidence that the Australian public had applied a collective IQ somewhere about 50 to this issue.
Gillard is always way better off-script than on, I think. I thought she was way stronger in QandA than in the address.
She’s terrible when she’s making speeches and much better when she’s talking to people, which indicates why she’s managed her way through the negotiations so far.
But, some of those questions. OMG!
Just remember, folks, half the population has double digit IQs. That’s a lot of the reason why I no longer bother watching Q’nA, and it’s something I have to remind myself of daily at work …
Gillard was great, the audience was pathetic, and Tony Jones was Tony Jones – glib, attention seeking, antagonistic.
I also thought the PM was very impressive on QandA last night.
And I was also blown away by the inane questions – taxing me into poverty because I’m not poor enough to get compo line – oh my.
The lad at the end was spot, WTF is Abbott getting away with this – “socialism” ? Or Hockey’s sovereign risk line. Why isn’t everyone laughing at them?
spot=spot on