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Federal

Apr 27, 2010

CPRS into the deep freeze

There used to be a bipartisan agreement on the need for an ETS. Now we're further away from one than ever before.

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.

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51 comments

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51 thoughts on “CPRS into the deep freeze

  1. mboz101

    Yet again our elected representatives prove themselves to be small-time, cynical, tawdry politicians concerned only with staying in power to suck on the taxpayer teat. Where is the courage and boldness that real leaders show in the face of such great moral challenges? There is none to be found amongst this mob.

  2. David Sanderson

    The ETS is a massive failure for Labor in general and Rudd in particular. Both design and attempted implementation were both dreadful. Out of the whole debacle only Turnbull comes out of it with any credit.

    Labor still thoroughly deserves re-election because of its other achievements (and because the alternative is so miserably inadequate) but the tolerance for Rudd playing games with really important reforms has evaporated.

  3. Kevin Cox

    The government can do something significant about climate change without increasing taxes, without increasing the price of fuel and without increasing the budget deficit.

    It can give those of us who want to do something about the problem interest free credit. We agree to only use this credit to invest in ways of reducing green house gases in the atmosphere. We agree to pay back any loans we take out from the earnings on our investments.

    This will work because the cost of renewables and energy saving investments is mainly interest costs and almost every investment we make will be profitable. The government, by suggesting it to the Reserve Bank, can issue as much credit as it likes and it can charge as much interest as it likes for the credit. There is no law or regulation that says this cannot be done if the board of the Reserve Bank agrees to it.

    The citizenry takes on the equity risk of the investments and repays the loans. The government has to do very little except allow us to get on with the job, earn some money and pay some taxes.

  4. Marcus Ogden

    “The Greens, perhaps with one eye on holding the balance of power from July 1…”
    Come again?

  5. Liz45

    If Labor was fair dinkum about climate change, and reducing greenhouse gas emissions, it would call a double dissolution and hope for a Senate that is supportive, or perhaps getting together with The Greens and devise a better piece of Legislation that doesn’t give so much money to the big polluters! Too simple?

  6. shepherdmarilyn

    When will you lot get one thing through your thick skulls about who the polluters are? It is us, we the public who are the big polluters.

    Power is not stored, it is only supplied on demand and we demand and demand and demand and then whine about the power bills.

    We whine about petrol prices and keep driving (not me I have never had a car), we whine about everything and we do nothing but expect the guv’mint to do it for us.

    Why don’t we stop whining and start doing our own work. Put on an extra jumper instead of heating, walk instead of driving.

    Make it a goal to cut our own bills by 25% and see what happens instead of this incessant, ignorant bleating.

    When people boycotted products using CFC’s in the late 80’s the companies pretty damn quick changed over.

  7. Chris

    “… and then by thinking climate change was a great weapon with which to split the coalition, rather than a ‘great moral and economic challenge’.”

    Can someone please explain to me how the government engineered the coalition split on this issue? The split was a consequence of the what happened, but the government’s objective was to get coalition’s support, as demonstrated by all the sweeteners that went into the final package to get the coalition on board.

  8. David Sanderson

    Chris, Rudd encouraged a split by running dead on the issue. If he had campaigned solidly for it then he would have helped create a groundswell of support that would have helped the pro-ETS Lib camp prevail and avoided the split down the middle that occurred.

    Many of the anti- ETS camp within the Libs are pure opportunists – Abbott is perhaps the most cynical of this lot. If they had seen a groundswell of support for the ETS they would have backed it. The legislation would have passed and either Turnbull or Hockey would now be the Liberal leader.

  9. Liz45

    @SHEPHERDMARILYN – POint taken! You’re right of course!

  10. Rush Limbugh

    who cares, Climate change is complete fucking bullshit anyway.

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