Wall St was down 94 overnight, its biggest fall in a month, while the local market is down 66.
Swan’s Frontier moment shows just what Turnbull is up against
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Here’s an example of why this Government is so far ahead of what is admittedly a rabble of an Opposition. On Sunday morning, Wayne Swan announced a further $8b in support for residential mortgage-backed securities, extending it to small businesses who had mortgaged their residential properties and promising to examine the feasibility of delivering part it through a fee-based liquidity facility rather than direct investment. Christopher Joye has an excellent analysis of the policy here and its broader significance. Joye has previously urged the Government to consider guaranteeing RMBS and commercial mortgage-backed securities but supports Swan’s commitment. As Joye notes — and this is an important point missed by the rest of us — the initial $4b commitment by the Government to the RMBS market last year (it later expanded to $8b) was opposed by Treasury and the RBA. They may have later warmed to the idea, but the notion that Kevin Rudd and Wayne Swan are mere proxies for Ken Henry on economic matters does not, at least on this issue, stand up. Later that same day, Swan’s office provided a note to members of the Press Gallery on the CPRS proposal modelled for the Coalition and Nick Xenophon by Frontier Economics. The note suggested Treasury analysis had uncovered a “$3.2 billion black hole” in the Frontier proposal. Frontier’s Danny Price responded in Crikey yesterday. No further material has been forthcoming from Treasury or Swan’s office to back up the claims. There is much to criticise in the Frontier proposal. It is even worse than the Government’s CPRS model, in that it relies more heavily on importing permits so that Australia can increase its emissions while purportedly meeting its agreed emissions abatement target. A global market in emissions permits is one thing. Using PNG and Indonesia as a source for excuses to simply go on polluting just like we have been is another, especially if imported permits aren’t worth the carbon they’re written on. To date, I’m not aware that Penny Wong and Greg Combet have pointed this out about the Frontier model. That may be because the CPRS itself relies on being able to buy in foreign-sourced permits to enable Australia to actually produce more emissions than permitted under whatever commitments it makes internationally or unilaterally. Instead, the note from Swan’s office, which purported to find a hole in the household compensation figures, seemed more about the timing. The Frontier proposal was only in the debate for five minutes and has not been discussed for two months, having become merely one of what has now become a number of Coalition efforts to resolve its CPRS problems (think the Pearce Report commissioned by the Coalition earlier this year, Senate inquiries, work commissioned from Brian Fisher and Turnbull’s “nine principles”, which now form the basis of the amendments developed by Ian Macfarlane). It seemed a peculiar moment, then, for the Government to drop the “discovery” of a financial black hole, except that it made life even more difficult for Malcolm Turnbull, who had to defend against the claim by pointing out it wasn’t Coalition policy. It wasn’t exactly a strong defence, but Turnbull was correct to say it was a matter for Frontier Economics and Treasury. It looks more and more certain that Turnbull will get his way in the partyroom on Sunday — an outcome some in the media have assiduously tried to call into doubt. The ideal outcome for the Government, however, would be that Turnbull is rolled, leaving his leadership dead in the water. The $3.2b black hole claim kept the focus on the Opposition for yet another day and would have given ammunition and heart to Turnbull’s critics within the party. This is, supposedly, a Treasury flat-out on critical economic issues, where a single official with one part-time staff member was tasked with running the entire OzCar program, and cracked under the strain. What they’re doing looking for flaws in a consultant’s assumptions — $3.2b is pretty small stuff in the scheme of things — is a mystery, especially if the proposal isn’t being advocated by the Coalition as a basis for negotiations with the Government. But “Pressure on Malcolm Turnbull will intensify …” and “Turnbull is facing another climate crisis” were some of the more satisfying lines in the press coverage for the Government on Monday morning. As a constructive contribution to debate on how to get a better ETS, it was a non-starter. As a way of maintaining pressure on its beleaguered opponent, well, it was a success. Nothing is left to chance with this mob. No detail is too small that it can’t be deployed in the remorseless bombardment of the Opposition. |
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9 Comments
“may be because the CPRS itself relies on being able to buy in foreign-sourced permits to enable Australia to actually produce more emissions than permitted under whatever commitments it makes internationally or unilaterally.”
Becoming a net importer of credits and exporter of carbon certainly isn’t workable if everyone does it. But everyone won’t do it; most countries are not high-volume exporters of coal, oil or gas.
Coal is still going to be burned even under a best case scenario following Copenhagen. The biggest global carbon reductions in the medium term might end up being achieved by various forms of sequestration (mainly biological), rather than by closing down all of the coal power stations.
If net cross-border flows of permits and fossil fuels take place, isn’t that all within the spirit and intention of the ETS model?
The joke is that while $3.2 B sounds like a big number it is within the margin of error for any model.
The trouble with importing permits is that its a band-aid solution. Those excess permits to import won’t exist in 15-20 years time when the global carbon budget really bites. What we do is avoid the necessary changes until later. Kind of like running a perpetual deficit where you keep borrowing to meet the shortfall, then one day you find that no one has any spare cash to lend you.
Wouldn’t it be better for Labor to have a weakened Turnbull continue as leader of the Opposition than pressure the Liberals to change to what might be a stronger opponent? Admittedly the alternatives don’t look promising, but surely the Liberals will eventually elect winning leader and Labor would want to defer that as long as possible. I’m just thinking of 1974 when Labor destroyed the inconsequential Bill Sneddon to be replaced by the more formidable Malcolm Fraser.
Treasurer Ken Henry and his assistant Wayne Swan along with pals the MSM and even the inconsequential Bernard Keane sure leave nothing to chance………. indeed.
BERNARDK: “if imported permits aren’t worth the carbon they’re printed on”. Neat one.
GAVIN: Can you think of anyone in the Opposition who would be capable of taking over if Malcolm Turnbull dropped dead tomorrow. I know the technical part, the Nationals and all that cr/ap, but who would you name as a person who could pull the party back together again, in order to become an effective opposition?
Can you think of anyone in the Liberal Party who would accept the poisoned chalice? Apart from the mad monk who would destroy it completely, of course.
Can anyone think of a leader apart from Turnbull? I can’t, and I loathe the man. But the sooner Rudd gets some solid competition from the dead ducks that Howard left, the better off Oz will be.
Maybe but PM Kevin ‘science’ Rudd or ‘Science’ for short, is so insecure in the value of his own ALP party he has to appoint a pro Iraq war former leader of the Opposition (Nelson) instead of finding someone equally qualified from his own side or indeed neutral. That shows a deep faith in opportunism, and cynicism and reliance on adaptability in a sea of chaotic events.
Which is all very well, except it lacks principle, conviction and a deeper sense of judgment about transparent strategy and commitment, which gives confidence to followers. By the same paradigm self inflicted chaos can arise easy enough from within his own ranks and by definition within his blind spot (like his gallstones - adapt to that champ, how is the health generally? Much cholesterol in the rocks?) unrelated to an ineffective Opposition.
And then such an ethos will involve projecting the same ‘make up the rules as you go’ onto everyone else because we humans tend to think everyone thinks like we do. So those with conviction, with principle and with judgment will become increasingly antagonised, and so Rudd will sew the seeds of his own demise. Time is the master of us all including ‘Science’.
VENISE: I have no idea who would be a good leader of the Libs. But in 1995 the Libs seemed to have no one to replace Downer’s imploding leadership so they recycled poor old Howard. How improbable he seemed as the saviour in the first month!
I think for a Liberal, Turnbull is about as good as it gets. Has a far better understanding of economics that Swan, and I believe a stronger commitment to climate response than either Rudd or Wong. He leads a dysfunctional, squabbling, childish team of narcissists, and gets little credit for achieving as much coherent party positioning as he does. His skills in policy exceed his skills in politics, which may yet see him demoted to shadow treasurer if — if — a credible alternative leader drops out of the sky between now and the election.
GAVIN: I think something just walked over my grave, shiver, shiver. However, there is truth in what you say.