The government today wheeled its dreadful CPRS into the political deep freeze, continuing its pre-election deck-clearing of anything that doesn’t suit the narrative it wants to sell voters between now and August.
Given it had no chance of passing the damn thing through the Senate, there’s perfectly good reason for the government to put it aside. But its real goal is to neuter the opposition’s campaign on price rises engendered by the CPRS. The coalition has been working for some time on a campaign to make sure small businesses understand they’ll be hit by significant price rises for electricity under the CPRS. There’s little or no compensation for small businesses for the rises in the CPRS, because they’ll be expected to pass the rises on to consumers, who will be compensated.
Still, it took the government a while to get its lines right on the issue when the coalition ran a preview of the campaign in question time in February.
The fact that in putting it aside until 2013 means the government will save just under $950 million between now and then shows just how nonsensical the opposition’s “great big new tax” line is. Some tax that would have pumped nearly a billion dollars into the economy — and that was just for starters.
It bears remembering just where we started from in all this — Kevin Rudd and John Howard going to the 2007 election with a shared commitment to an emissions trading scheme. After the Nelson interregnum, Howard was succeeded by a man more determined than virtually anyone else in Parliament to take action on climate change. And yet somehow, the Prime Minister and Penny Wong managed to botch it.
And they really botched it, first by letting every rent seeker in the country come in for their chop, and then by thinking climate change was a great weapon with which to split the coalition, rather than a “great moral and economic challenge”.
It’s a singular achievement for which Rudd and Wong can take credit — with some thanks to Tony Abbott and Nick Minchin and the rest of the coalition climate crazies.
The Greens, perhaps with one eye on holding the balance of power from July 1, have urged the government to again consider their interim carbon levy proposal, which would cap permit prices and slash handouts to polluters to 20% of revenue (rather than 27% of revenue, where it starts, before rising above one-third of revenue in later years).
However, that ignores the political reality that the government has gone cold on climate change because it failed to sell its CPRS properly and denialists, engaged in a systematic economic war on future generations, have leapt into the gap.
Sadly, this is the perfect time to be implementing an emissions trading scheme, with the economy again poised to enter an extended boom led by the resources sector. Any negative impacts on polluters of the scheme — and the Grattan Institute has conclusively shown that impacts will be almost trivial — would be minor compared to the benefits of strong economic growth. Australia’s emerging economic challenge is to manage high levels of growth. The introduction of an effective ETS would provide an additional tool for policy makers dealing with too much demand and unbalanced growth.