If the Opposition wasn’t making a such spectacle of itself, the debacle over the Government’s ETS would be a major issue. Fortunately for the Government, a House of Representatives inquiry that began under the cover of the stimulus package debate was killed off last night while the Liberals were beating each other up.

This is the sort of thing that happens when there is no credible Opposition.

Wayne Swan, showing a hitherto unnoticed sense of devilish wit, complained that the inquiry had been “politicised”. As if this or any government would ever establish a House of Reps inquiry without a clear political agenda.

Given everyone, including government figures, were mystified by the establishment of the inquiry, it is apt that its termination only raises more questions than it answers.

Clearly the Government is worried about the reaction to its abysmal ETS. According to sources in the environmental movement, Department of Climate Change bureaucrats have been in contact with the Climate Institute and the Australian Conservation Foundation in recent days to discuss their concerns about the current ETS model. That the Government waited until it had finished its extensive consultations with polluters and consequent softening of its model before bothering to check with NGOs suggests a certain political tone deafness. Other environmental groups have suggested the Government is willing to talk to the Climate Institute because it is “conservative and “unrepresentative” of the movement, although both the Climate Institute and the ACF have savaged the proposed scheme’s high emissions cap and generous corporate handouts. If the Government hopes to convince high-profile NGOs to fall into line on the scheme, it might be disappointed.

And, oddly enough, despite having spoken to NGOs, the Government has yet to talk to the Greens, who will have a far more direct say in the passage of the legislation.

The sheer size of the regulatory framework being established might also work against a rapid assessment of the scheme once it does reach the Senate. Industry sources involved in discussions with the Government talk of a vast mass of regulatory detail being developed, building on the hundreds of pages of National Greenhouse and Energy Reporting regulations and guidelines already in place for mandatory reporting of emissions. This partly reflects the desire of old Public Service hands to avoid a repeat of the experience of the Keating Government’s infrastructure bonds, which were intended to encourage infrastructure investment but were so poorly designed they were successfully rorted for years after the program was terminated by financial engineers in Macquarie Bank. Expecting the Senate to sign off on the framework without detailed investigation would seem to be optimistic.

In contrast, a carbon tax might be no more effective at reducing emissions, but it would be a damn sight simpler. For the next few years, carbon credits are unlikely to be particularly costly, suggesting the Government will earn less revenue than expected from the ETS. Luckily there’s a huge Budget surplus to dip into to pay for all the compensation and handouts promised.

Meantime, despite the Government bending over backwards to accommodate our biggest polluters, they’re still lining up to bag the scheme and predict that the Four Horsemen of the Apocalypse will arrive in its wake. That’s the thing about blackmailers – they always come back for more.

Between the financial crisis, and its readiness to give in to industry, the Government has gone from a position of strength on climate change to being in a hole, and it is continuing to dig. Maybe it can’t think of anything else to do.

Peter Fray

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