The Carbon Tax is Dead and There is Nothing Credible to Take Its Place
What a complete and catastrophic failure of the political system.
After climate policy helped dispatch three prime ministers and two opposition leaders, and dominated three election campaigns and eight years of polarising political debate, it has come to this: we have no national climate policy.
After all that vitriol and hyperbolic attack and all those reports and modelling and studies, and all last week’s drama, we are back to exactly where we were before John Howard reluctantly said he would introduce an emissions trading scheme in 2007. (He later said he did it only because of political pressure, and never really believed in the idea.)
We know more than ever before that global warming requires urgent international action, and we still know that a market mechanism is the most efficient way to respond. But we appear to be politically incapable of doing anything about it, other than watch people yell at each other.
It is, of course, possible to reduce emissions by means other than a carbon price. Tough regulations or carefully targeted and rigorously assessed government incentives can also do the job.
But the government’s alternative “Direct Action”, as it stands, is no such viable alternative. The legislation that gives it any rigour may or may not pass the Senate.
And there is evidence Direct Action – which hands out competitive grants to those volunteering to reduce emissions, but imposes no overall limits on greenhouse pollution – will cost far more to achieve far less than the carbon price would have, with the cost being levied on taxpayers rather than on polluting industries.
It is possible the amendments being negotiated with the government by independent senator Nick Xenophon might make the scheme slightly more credible, but not by much.
The government did win an election promising to “axe the tax”. But did the voters who backed the slogan really intend that Australia be left with no climate change policy at all?
Did they really think they would be $550 a year better off? That was treasury’s best guess of the one-off price increases due to the tax, but the inflationary effect turned out to be less than treasury estimated, and to the extent that prices across the board did go up there is no evidence that anything other than electricity and gas prices will be coming down. That lamb roast didn’t get any more expensive when the tax was imposed in 2012 and it won’t be getting any cheaper today. So many doorstops, so little substance.
As eight years’ work by thousands of people disappears with the Senate’s vote, many may have cause for regrets.
Labor deliberately constructed its initial 2009 emissions trading scheme with a view to getting it through parliament with the votes of the Coalition, rather than the Greens, but then applied maximum political pressure to then leader Malcolm Turnbull. When he was ousted and the scheme was voted down, Labor lacked the courage to take it to a double dissolution election. Opposition leader Bill Shorten expressed some of those regrets last week. He didn’t mention any regrets Labor might also have for then effectively vacating the debate for so long.
The Greens must surely have some big regrets, since they voted down the 2009 scheme because it “locked in” the inadequate 5% target, only to discover that five years later 5% is still the target, but the nation has no credible means of getting there.
And those in the Coalition who actually think global warming is a thing must deeply regret that Abbott’s “axe the tax’ juggernaut has rolled over the aspects of the original Direct Action plan that might have made it more credible over time.
But that’s all in the sorry pages of recent political history now, and the absence of any credible policy is the big and pressing question for the future.
Whatever happens, Direct Action will probably only matter for a short time – because even if it manages to reduce Australia’s emissions for a few years, its cost will quickly become prohibitive as Australia is required to reduce its emissions further. That point was made repeatedly by Malcolm Turnbull back when he still talked about these things, and has been repeatedly borne out by modelling (done by third parties because the government hasn’t done any, preferring as prime minister Tony Abbott said during the election campaign, to just “have a crack”).
Which means those concerned about climate change, and the need for Australia to do its fair share of the international task of reducing emissions, need to regroup and re-prosecute the case for some kind of market mechanism or some other effective policy.
A good place to start would be the widely accepted, but misguided, idea that the point of comparison for our efforts on this issue vis a vis other countries is whether or not they have an ETS. No, the point of comparison is the target by which each country agrees to reduce their emissions. The most efficient way for us, or anyone else, to get there is up to us. We would look to what other countries but it does not have to be the determining factor.
Clive Palmer’s alternative emissions trading scheme is now delayed and looking increasingly meaningless. It would put the existing architecture into a kind of zero-price “sleeping beauty style” hibernation, with the independent Climate Change Authority getting a last-minute stay of execution so it can advise on when it should be re-awoken. But the conditions for reawakening are becoming so onerous, it is unlikely to matter.
Those concerned about climate change will have to re-prosecute the case over time, as international action accelerates and Direct Action is found to be wanting. It is a sad and sorry place for Australia to be after such a long and rugged process.
Perhaps the last word should go to those well-known job-destroying, economy-hating, green-left anarchists in the federal treasury, whose comments in the "blue book" prepared in the event of a Coalition victory in 2010 were released under freedom of information.
Treasury described a carbon-pricing mechanism as "the only realistic way of achieving the deep cuts in emissions that are required".
They went on: ''A market mechanism can achieve the necessary abatement at a cost per tonne of emissions that is far lower than alternative direct-action policies. Moreover, many direct action measures cannot be scaled up, and, for those that can, the cost per tonne of abatement would rise rapidly, imposing further costs on taxpayers and consumers. All of this serves to underscore the conclusion that the sooner an emissions trading scheme can be implemented the better.
"Too much time has already been wasted, for which the Australian community will necessarily pay a high price."
Four years later we are still wasting time, and the cost continues to climb