So the government’s long-awaited Green Paper on emissions trading isn’t as tough as the Greens would like: the coal mines are to remain open and private motoring is not to become a crime.

Nor is it as specific as industry would prefer: the actual numbers about caps and deadlines will have to wait until Treasury completes its modelling in October. In the meantime, of course, the various stakeholders can submit their own wish lists, threats and special pleadings; indeed, they have already begun to do so.

The government hopes to have its own, more explicit, White Paper ready before the end of the year, but even that will not be definitive: there will still be plenty of time for what Kevin Rudd euphemistically calls argy-bargy before the finished product hits its final hurdle in the senate, where the government will require the support either of the greens and the independents, or of a sizeable slice of the coalition. On present indications it is unlikely to get either without a big fight.

But having said all that, the Green Paper is not a bad start — certainly not the surrender to industry the greens are portraying. For starters it is reasonably comprehensive; agriculture is still out, but transport is definitely in, with the truckies given just one year to adjust. Private motorists will not have to start paying carbon tax for three years.

But this does not mean, as many commentators have claimed, that the price of petrol will be frozen. Cuts in excise will compensate for the new tax, but not for the normal supply-and-demand rises we have seen over the last 12 months. As these continue, the pressure on motorists to modify their behaviour will mount.

So will the pressure on governments to provide adequate public transport, and this is where the major weakness in the Green Paper becomes apparent: too much of the incoming revenue from permit sales has been allocated to compensation for polluting industries, leaving insufficient for the reform and repair of infrastructure. Indeed, the government has been so generous in its offers of compensation that there will probably not be enough new money to cover even that, especially in the early years when the trading price of carbon is being phased in at low levels.

The main reason has been the government’s failure to follow the recommendations of the Garnaut report and limit industry compensation to those competing for exports, at least while their overseas competitors are not subject to similar restrictions. These are of course included, although some of the worst polluters — the aluminium smelters — are already screaming for more. But so are the big coal-fired electricity generators, which have nothing to do with exports, but everything to do with politics.

In New South Wales, of course, the Labor government is trying to sell them off; if they suddenly had to buy emission permits they would be worth far less to the embattled Morris Iemma. And in Victoria, the whole state relies on the filthy brown coal-fired generators of the Latrobe Valley; making these uneconomical would devastate the government of John Brumby. Bringing them inside the tent has caused a huge anomaly: Rudd has been forced to invent a new criterion, which is that the heaviest polluters will receive compensation, but those whose emissions fall below an arbitrary threshold will miss out.

In other words those who have ignored all the warning signs and have made no attempts to clean up their acts over the years are to be rewarded for their selfishness and stupidity, and those like the natural gas industry, a far less damaging source of fuel, and some of the newer oil refineries which have embraced expensive new anti-polluting measures, will be penalised. This, of course, will be the source of much argy-bargy.

At least it appears that the government has the right people to conduct it. It is pleasing to note that the relevant minister, Penny Wong, was allowed to deliver the Green paper all by herself. If Rudd, notoriously a hands-on control-freak, is now trusting his ministers to this extent, the team will become much more functional. Also, the public still seems pretty much on side.

But an ominous sign is that as we get down to a serious costing of the whole exercise, the climate change sceptics are staging something of a comeback in the media. Their science is no better, but their argument that tackling the problem is simply too expensive and risky for a small player like Australia and that doing nothing might actually end up as the cheaper option has an undoubted appeal to the hip pocket nerve. It is to be hoped that Brendan Nelson is not tempted down this populist path; climate change is one area where we need the opposition to stay serious and sensible.

Unlike Cardinal George Pell, who used World Youth Day to urge Christians into a breeding war with the rest of the world; in addition to Peter Costello’s one for him, one for her and one for the nation, Catholic families are now expected to have a few for God. Pell pronounced himself a bit of a sceptic, meaning he had trouble believing the scientists while absolutely clear about such well-proven concepts as virgin birth, life after death and turning water into wine and wine into blood. He was not, however, able to end the drought.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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