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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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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