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Federal

Nov 24, 2009

Households bail out business on dud CPRS

Australia’s biggest polluters will enjoy vast windfall gains under the compromise offered by the Government to extract support from Malcolm Turnbull for the passage of its CPRS.

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Australia’s biggest polluters will enjoy vast windfall gains under the compromise offered by the government to extract support from Malcolm Turnbull for the passage of its CPRS.

As expected, big polluters, the coal mining industry and electricity generators will all receive additional and extended compensation that will inflicted more than three-quarters of a billion dollars on the Budget between now and 2020.

However, the bulk of the additional compensation will be taken from households, with a transfer of nearly $6 billion from households to polluters out to 2020.

The core elements of the compromise are:

  • an extra $1.3 billion to emissions-intensive, trade-exposed industries to 2020 by the retention of the “global recession buffer” beyond five years, thereby making permanent what was intended to be a temporary measure, for a problem that never materialised.
  • A free, unexplained handout of more than  $600 million to the LNG industry to 2020.
  • A $150 million assistance package for the food processing industry, to which the coalition had sought to give EITE status.
  • An assistance package for the coal industry to cost an extra $1.5 billion to 2020, involving 60% free permits for “gassy” coal mines with high levels of fugitive emissions
  • An extension of assistance to electricity generators from five years to 10, providing an increase of 75% in the number of free permits generators will receive  and costing over $3 billion, coupled with measures to address “systemic” risks in the sector through additional assistance, including through loan guarantees (currently uncosted).  This is intended to address the sector’s oft-repeated concerns that it can’t rollover large debt currently due to “sovereign risk”.  There will also be some trivial incentives to encourage investment in low-emissions technology.
  • Assistance for large and medium businesses with increased electricity costs, costing $1.1 billion
  • Some new measures to pretend voluntary action will count toward abatement targets.
  • Agriculture permanently exempt but with the capacity to generate offsets from 2011.

The total cost of the compromise package $1.1 billion over Forward Estimates and $6.5 billion to 2020.  Compensation for households will be reduced by $910 million over FEs and $5.8 billion to 2020.  The fuel excise offset remains in place. This is a table of what it will cost the Budget.

091124_CPRS-changes-18

Comment:

The government’s compromise package is more or less as expected — a lot of extra money for big polluters such as the LNG industry, electricity generators, and coal miners, funded by households.  In effect it is a giant switch of assistance from households to business, with the intention of ensuring electricity prices don’t rise by that much in the first place.  Electricity generators have done very well, with a 75% increase in assistance and the possibility of loan guarantees and other props for their aged, polluting facilities, but it is still far, far short of the tripling of assistance they have been demanding, with the threat of turning out the lights if they didn’t get it.  Coal miners will not be entirely happy either, but the “gassiest” mines will now get 60% of their permits free.

It also covers nearly all of the bases identified by the coalition, including help for the food processing industry.  It doesn’t go near the quantum of assistance at the heart of the coalition’s demands, but it goes a damn long way towards it — which is why Malcolm Turnbull is currently trying to convince his party room to accept the deal.

As for the environmental impact, well, forget about that.  The CPRS in yesterday’s form would have done nothing to curb Australia’s emissions, and this won’t either.  That, of course, is not the point.  Just be pleased it’s only ripping $770 million out of taxpayers’ hands over the next 10  years and handing it to the dirtiest whingers in the country.

This has been the worst policy process in Australian history, and it is likely to climax with the Labor and Liberal parties agreeing to hand over still vaster sums to rent-seekers, opportunists and blackmailers.

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37 thoughts on “Households bail out business on dud CPRS

  1. Bill Parker

    There IS something rotten in the state of Denmark (AKA Australia). Why do we let the bastards screw us so relentlessly? We just had a massive jump in electricity prices in WA. Looks like another one is on the way and for what exactly?

  2. Mr Denmore

    Why bother? This is all about symbolism and wedge politics. Once again, the public interest comes last and (most of) the media fails the public by reporting the story from a tactical rather than a policy perspective.

    You just can’t be too cynical when it comes to climate change politics in this country. It raises short-termism to new heights, or depths.

    I do feel sorry for Turnbull, though. He has the misfortune of being in charge of a party, that like the Republicans in the US, has been taken over by the lunatic right-wing fringe.

    If I were him I’d leave them to it and start a new Liberal Democratic party.

  3. denise allen

    If this goes through I will burst into tears….in fact I already have knowing that it more than likely to pass. I feel sick to the stomach and cannot believe they have allowed the big polluters to win – yet again…just disgraceful.

  4. Liz45

    DENISE – I will too! I think of what the planet will probably be like when my grandkids(ages 23-7) have their children, and I feel sick – really sick, heart sick, that the ALP has allowed itself to be ‘done over’ and they’re going to cop the hardship and decaying planet! All the bullshit leading up to the ’07 election? I fell for it too! However, I could never vote for the other mob???

    I hope that the Coalition don’t agree, that the Senate votes against it, and Rudd calls a double dissolution; with the result being, that more Greens are elected. Our last hope now! It’s very sad, and I’m bloody angry as well! Bastards!

  5. Jesuite

    Hmm. This CPRS has been rotating like a charcoal chicken over the coals for a while now and its rather obvious that all we’re left with is pure carbon dinner.

    BUT – What did anyone expect? It is plainly obvious the impetus was to pass something before Copenhagen, because Rudd, being the internationalist that he is wants to pre-empt this sucker, even if it is a turkey, and he wants to put any trussed up white meat on the plate for the global community to dribble over.

    Isn’t it an essentially good thing at least in the long term, that compromise has been made, greenie shafting has been had, and legislation will maybe pass? Because in the future this CPRS thing will hopefully going to be cooked into something serious by the reality of global warming. One might be happy some sort of legislative framework gets through and it’ll be fine tuning the feathers that will be the hard part of making this CPRS sting like it ought to.

    We know its a turkey, but better a turkey now than in 10 years time. It’s thanksgiving soon folks. And maybe the US (who really matter) will reciprocate with a CPRS turkey of their own. But at least we can say we cooked it badly first.

  6. CHRISTOPHER DUNNE

    Or, let’s play devil’s advocate here: the Greens could have actually offered to negotiate rather than stand on a moral high chair blowing raspberries of indignation, and Steve (“I’m an engineer with a learning disability”) Fielding could have been bribed with:

    1. No legal abortions
    2. No homosexual unions
    3. No sex education in government schools

    (Pick the least balmy one, or invent one of your own)

    …and Nick (“I’m in it for South Australia”) Xenophon could have been offered:

    1. Some free desal plants for Adelaide
    2. A thousand percent tax on pokies
    3. Presidency of the Senate

    ….once again, take your pick, or invent your own.

    Just possibly, maybe, if all of the above worked, the Greens and Independents could have passed a better scheme emissions trading.

    No?

    Oh well, we’ve got a bastard child of the loony left and the loony right, and ourselves to blame. The rent-seekers greased up the right and the loopy left are still on their moral high chair playing with their food.

    Sigh.

  7. shepherdmarilyn

    The rent seekers sure are out but the whiners still don’t get it. Stop polluting. Turn off the frigging lights, the appliances, don’t drive to the shop.

    It is not one or two companies polluting Australia and the atmosphere, it is 21 million lazy pigs.

    If we don’t use so much electricity the coal fired stations don’t burn as much coal.

    See? Don’t drive as much, less petrol pollution.

    It ain’t rocket science yet Bernard still doesn’t get it.

  8. Daniel

    “Nick (“I’m in it for South Australia”) Xenophon”

    A senator representing the interests of the state that elected him?!? Holy crap, what a crazy idea.

  9. CHRISTOPHER DUNNE

    Daniel, it was meant to be ironic! See bribe #3! LOL

    The ETS is not just about S.A. either, in case you hadn’t noticed.

  10. adr0ck

    A couple of q’s if anyone can help:

    – Do the handouts change depending on which target they use? i.e., if the conditions for the conditional and maximum.?
    – What mechanisms are they proposing to use to ‘pretend’ voluntary action counts?

    Cheers,

  11. CHRISTOPHER DUNNE

    Forget Xeno the Warrior of Good Causes, we’ve just had Andrew Robb emerge from depression (or was it coma?) to enact an episode of mania in the party room:

    The Coalition’s former emissions trading spokesman, Andrew Robb, has dropped a bombshell inside today’s party room meeting and called for the Coalition to defeat the Government’s amended emissions trading scheme.

    (SMH)

    …and what a performance!

    I’m almost, (well, close), to feeling sorry for Turnbull.

  12. Most Peculiar Mama

    In light of one of the greatest scientific scandals ever – you are strangely quiet on that one Bernard – the ETS/CPRS/WHATEVER is not worth the Etch-A-Sketch it’s written on.

    Although I must admit to a perverse delight in watching the writhing and wailing of the Climate Zealots and Garden Faeries as their orthodoxy goes BOOM!!

  13. Mr Denmore

    The other forgotten issue here is the impact of all this unnecessary largesse on the budget bottom line. Strangely, the fiscal warriors in the Coalition see no issue with government handouts if they are being used to bribe their carbon-producing mates.

    So we end up with a CPRS that fails to do anything significant about global warming, while buggering up the budget.

  14. JamesK

    Households bail out business on dud CPRS says Bernard Keane.

    Is that just households who will now not lose the 24/7 reliable source of electricity from the power grid if the Liberal Party room back Rudd’s offer?

    Or will off grid solar and wind powered households have to pay as well?

    Because that wouldn’t be fair would it?

  15. Most Peculiar Mama

    “…Strangely, the fiscal warriors in the Coalition see no issue with government handouts if they are being used to bribe their carbon-producing mates…”

    Considering Labor super funds are majority shareholders in these “carbon-producing mates” this is little more than a stupid, ill-informed, typically Marxist rant.

    Rudd had no money to pledge if it wasn’t for the previous governments prudence.

  16. Mr Denmore

    “Considering Labor super funds are majority shareholders in these “carbon-producing mates” this is little more than a stupid, ill-informed, typically Marxist rant.

    Rudd had no money to pledge if it wasn’t for the previous governments prudence.”

    Firstly, the listed coal producers are owned by a diverse group of shareholders, including large institutions. How you can claim otherwise is mystifying.

    Secondly, to describe the previous government’s counter-cyclical splurging of resource boom-driven tax take as prudent betrays your own economic ignorance.

    The Howard-Costello government surfed an unprecedented boom and sprayed money around indiscriminately buying off rich superannuatants and other fatcat rent-seekers.

    Now your redneck, medieval mates are pandering to the biggest polluters and an economically insignifcant rural rump.

  17. thirdborn314

    This is not a level playing field for business – there shouldn’t be any handouts whatsoever, if small business can deal with price rises then so should big business. We all have to comply with other legislation such as OH&S so why need keep the playing field level.

  18. JamesK

    The Howard-Costello government paid of a $96 billion Commonwealth debt.

    Costello increased the birth rate to closer to replacement levels.

    Costello set aside $60 billion to meet the future cost of public sector superannuation.

    Costello left Rudd $20 – 30 billion for Rudd to splurge.

    Even so Rudd has now a Commonwealth debt of twice the debt that the Howard-Costello government inherited.

    All in less than 2 years.

    [Edit]

  19. JamesK

    Jeez I forgot. Costello reduced taxes.

    But then Mr. Denmore knows that’s a bad thing. Right?

  20. CG

    The evidence from Europe is that free permits don’t stop the carbon price from flowing through to the consumer. The EU-ETS initially provided 100% grandfathering of permits to firms, and they simply passed the full cost on. Consequently, if what you’re after is a scheme that is environmentally sound, the number of free permits or other assistance is not relevant. (mind you, if you resent the idea of windfall gains for big polluters, then still feel free to get annoyed about the extra compensation).

    Point is that the scheme is no less environmentally credible today than it was yesterday. The problem, from the environment’s perspective, is that the target remains at 5%. There is the argument, that said, that if Rudd’s right that an Australian scheme will give the international negotiations impetus, and that the target under the scheme will only go up to 15% or 25% if there’s a strong international agreement, then it follows that the amendments today may actually yield an environmentally stronger scheme.

    As I say, though, its still ok to get angry about the windfall gains for the foreign-owned polluters.

  21. Mr Denmore

    James K, Costello didn’t do anything but introduce a GST. He sold himself as the great reformer, but all the difficult decisions were made by Hawke and Keating.

    As to debt, who says that is bad?? We have just been through the biggest global economic crisis since the 1930s. Most governments are running debt-to-gdp ratios of 70, 80, 90 per cent or more. Ours is less than 5 per cent. Both the RBA and Treasury have endorsed the approach taken by the Rudd government.

    Costello had China to thank for the relative soundness of our fiscal position pre-2008. But if he had the guts to take on Howard from the left, directed some of that windfall into investing in infrastructure and convinced the doubters in the coalition to do something practical about climate change, we might not be having this ridiculous debate now.

    Instead, the Liberal Party is being run by a bunch of redneck hillbillies, heads-in-the-sand medievalists and still-fighting-the-last war paranoid culture warriors who see those mobilising for real action on climate changes as part of some communist conspiracy.

    Costello did nothing, achieved nothing and failed to live up to his principles.

  22. Barry 09

    The Rat and Smirk only paid off the debt $96 Billion by selling off $250 Billion in our assets.But still left $50+ Billion Debt when they were Kicked out in 07. Jamie k ,cossie reduced tax for the wealthy. Jamiek, are you really piers ? and Mama must be the Bolt wanker.

  23. Max

    Wow, Rudd sells our future and the climate down the river and he looks like a environmental hero thanks to the climate lunatics in the Coalition. And the media fails big time (Bernard exempted).

    The coal lobby is still speaking louder than the climate movement. We need people to show Rudd and co that it isn’t good enough.

    Walk Against Warming is being held on 12 December this year, mid way through the Copenhagen talks. I hope there is a big turnout to show both major parties that these pathetic climate policies are an electoral loser in the long run.
    http://www.walkagainstwarming.org

    What happens in a couple of years when the CPRS has done NOTHING to cut emissions and climate change is becoming more manifest? Oh, yeah it is all locked in and if we try to change it we’ll be sucked dry again by the rent seeking polluters demanding more compo. Nice policy work ALP. Following the great work of your NSW branch with the Cross City Tunnel and alike.

  24. Venise Alstergren

    SHEPHERD MARILYN: Sorry my friend but you are the one who doesn’t get it. Living, as we do, in a democracy, the only way we can get the general public to modify their behaviour-here I’m not talking about the people who read Crikey-is to force change upon them, which us why clone upon clone of footy lovers clutter the landscape, why we tolerate fifth-rate architecture, why state governments refuse to instigate fire-proof housing in bush-fire prone neighbourhoods.

    Most of all it means why the Australian people have generation after generation, after generation of politicians who would be hard-pressed to run a chook raffle. In case you hadn’t noticed, the politicians of Oz are almost exclusively drawn from the ranks of the legal fraternity. People who are trained to say NO!The sun may be shining on an early Summer day. Say to a lawyer ‘Isn’t it a lovely day?’ He or she will say no.

    What we are seeing at present in parliament is a gigantic eight-ring circus, where the clowns are suddenly being re-engineered at a rate to make the Sorceror’s apprentice look like an amateur. Chaos is what is happening right now, with the awesome sight of the Liberal Party feeding on its own tail at a speed which is barely ahead of its own head. As a side issue we have the Greens who are always way ahead of the populace about seeing the true path to be taken, but have a devastating habit of remaining stationary because they invariably field the least able candidates. The National Party, who, fundamentally, are the most honest Party in politics. All they want is ‘The Lot’, and they’ve never pretended otherwise.

    Then we have the Lion-tamers, who’ve been practising on kittens. For the fist time in Oz parliamentary history the Labor Party finds itself in almost complete mastery of the political process, and they are determined to remain there, no matter how much of the tax-payers money they have to shell out to big business, churches, anyone whose vote means more en bloc than any individual.

    Bernard Keane’s only crime is that, when faced with all of the above, he resorts to despair.

    You judge him far too harshly.

  25. JamesK

    Well Mr. Denmore is no voice of sanity in the God-forsaken’ wilderness that is post Communist progressive leftist liberal mass dystopic insanity is he?

    A Matrix-Morphean welcome to the Desert of the Real:

    “The insanity has took root in most democracies of the the Western Cultural Tradition in the early part of the 21st century.

    We don’t know who struck first, us or them. But we do know it was us that moved to vote the insanity in.

    At the time, we had cheap coal fired power.

    Left became right and up became down.

    In the world down under ‘smug sycophant’ Denmores ran counter-intelligent diversionary confusion to Rudd’s blind ‘big bully’.
    Whilst topside Rudd in turn ran ‘smug sycophant’ to the UN’s ‘big bully’.

    The economy ran self-righteously, determinedly and lemming like toward the precipice.

    Were it not for Tony Abbott, Andrew Robb and Nick Minchin the UN would have had its evil way; civilization would have been uninvented and free peoples everywhere would finally have been ruled in their best interests and become the sheeple that all leftists truly always have been at heart.”

    I like happy endings….

  26. AR

    Can Krudd really be so Machiavellian as to
    1) lure Turncoat into a deal which will a) lose him his own position to the nasty lurkers of the Party room and (b) destroy any chance of intelligent life evolving in, or joining, the Party for a couple of generations
    2) lose the tories the election in disgust at their pusillanimity and ineffectuality
    3) so depress & dismay anyone of more than double digit IQ that they’ll retreat from the electoral system to grow carrots and forage in the wilderness
    4) ensure that when the faeces intercaces with the air movement devices, the BigBoy$ will look after him?
    Or, who cares, they are all as bad as each other and we have only ourselves to blame for decades of wilful lotus-eating.
    Whomsoever one votes for, the Government ALWAYS wins.

  27. Darren Holmes

    If the climate change sceptics are right, we will waste billions with this scheme. If they are wrong, and that seems to be the balance of probability and certainly opinion, we will waste a lot more. A chance at a better future.

  28. Glen Beck

    If climate skeptics are right this CPRS will be a massive waste of money and achieve nothing,

    Of they are wrong the tempratures will likely change very little and nothing bad will happen.

    If the government is right, they will create a massive new tax on consumers, then tax us further by handing out tax dollars to major comapanies to pay for this massive new tax that will likely have little to no effect on the climate.

    If they are wrong we are stuck with the tax, stuck with our tax dollars going to large companies for something that dosnt exist.

    Why the fuck did we choose cap and trade. Tax Carbon at the source, at least we can erase this system if everybody is wrong. Cap and Tax was the only way.

    remember our prime minister hated neo-liberals and free market economics, then he imposes a massive new financial centre for free markets to plunder.

    Im begging that parliament gets hit by a meteor and we can elect some new scum bags, cause these ones are suck badley.

  29. jeebus

    It seems unjust and anti-competitive that the government would cut the popular solar investment subsidy program for regular people, only to announce these much larger subsidies for power companies and miners.

    Also, where is the investment money for creating a smart grid to make the inevitable transition away from fossil fuels?

    We need a grid that can shift and accommodate loads when millions of batteries (vehicles) are plugged in. One that also allows people to sell the power they generate for a competitive price, as they do in Spain.

    Such a great opportunity for reform appears spoiled by naked corporatism.

  30. Rodger Davies

    Maggie Thatcher fought the coal unions long and hard to close down Britain’s coal industry and now they mainly use gas for electricity generation. Our coal industry is apparently essential to all our wellbeings, according to those who listen to the lobbyists and the Institute of Public Affairs. The sooner it is closed down the sooner we can get on with 21st century power generation. The businessmen running it are only interested in wringing every last dollar out of coal regardless of the consequences.

  31. JamesK

    It looks like Malcolm Turnbull is no great leader.
    Pity. He is honourable and a conviction politician.
    Its his loyalty to the party that’s under question now and he can’t last.

    A cut above Rudd but then who isn’t?
    Conviction used be a prerequisite in Labor leadership although most of ’em loathe him.

  32. Bullmore's Ghost

    ^ Roger Davies: Was coal Britain’s largest export item?

  33. Barry 09

    Turnball will lead this liberal party to the next election and will be paying for it. Dog whistles are not cheap any more. They will dump him after they lose.

  34. Moira Smith

    All this, and yet those of us who have the nerve to sit on the pavement outside a cafe smoking a cigarette are about to be banned in the ACT … because we present a threat to other peoples health. We truly have got our priorities screwed.

  35. james mcdonald

    Moira, it’s the rise of the Lee Kwan Yew style of government. Don’t like stepping in chewing gum? Two ways to solve it: (1) ban littering, (2) ban chewing gum. There was a time Australians could see the difference, but now people just say, oh, option 2 is more effective.

  36. james mcdonald

    Roger Clifton, Thatcher broke the British coal industry because (1) it was a subsidised, nationalised industry that was losing over £700 million a year, (2) the union was the strongest in the country and was able to shut the country down any time it wanted to, (3) British coal was poor quality and more expensive than imported higher quality coal and she wanted free trade. To compare it to the Australian coal industry is ridiculous. If you think you’re going to simply break the backs of the coal companies here, you are in La-La Land and you better find yourself an alpine retreat with a good water supply and a lifetime of canned food.

  37. james mcdonald

    Roger Davies I mean, not Roger Clifton

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