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Sep 28, 2010

Climate committee is better without the Coalition

The Climate Committee announced by the Government yesterday will benefit from the absence of a disruptive and untrustworthy Opposition.

Since climate change kicked its way out of the policy morgue to which both major parties had consigned it, there’s been more progress toward effective action on climate change from Parliament than at any time since the end of 2009 and, really, since 2008 when the Rudd Government started pre-emptively caving in to the demands of industry to neuter its CPRS.

Until the election delivered a minority government, we were on course for complete inaction on climate change for this term, a policy silence broken only by the insistence of the major parties that risible policies like a citizens’ assembly, or soil carbon (more correctly titled “soil magic” by Lenore Taylor) amounted to effective action on commencing the restructuring of our carbon-addicted economy.

Now, courtesy of Labor being reluctantly dragged back to the idea of being serious about climate change rather than treating it as a political wedge, there is a process that conceivably leads to a carbon price mechanism with support from at least one independent — Tony Windsor, who is on the committee — and the Greens, and one developed with input from business via an advisory group, that could be legislated after the Greens take the balance of power in the Senate on 1 July.

The process may fail to produce a consensus; business representatives, for example, may continue to argue that we need a carbon price, but not one that might actually do anything or affect their costs. It’s fair to say there’s quite a bit of scepticism on the part of some Cabinet ministers about the utility of the committee. Nonetheless, it provides a path to a carbon price where, until 21 August, none existed for the foreseeable future.

The only recalcitrants are the Coalition, and as more high-profile businesses join the calls for a carbon price, that recalcitrance means the Coalition will lock itself out of a role in shaping what should be the most significant economic reform of this decade. The committee is being attacked as some sort of infernal innovation, a “repugnant”, “secret” thing that breaches, in the words of Greg Hunt yesterday, “110 years of parliamentary practice” and a breach of Julia Gillard’s pre-election commitment that there will be no carbon price in this Parliamentary term.

Conventional wisdom is that politicians breach such promises at their peril, and clearly the Coalition thinks that it is on a winner by pointing out what is an obvious case of not honouring a commitment by the Government. But the last nine months suggests that every time Labor took a step away from a carbon price — convinced that it was being politically savvy and minimising the risk of being damaged on the issue — it shed support. It shed it mainly to the Left, giving a huge boost to the Greens, and it shed a little support to the Right, from people convinced Labor stood for nothing.

As yesterday’s Essential Report showed, there remains very strong support for “quick action” on climate change among Labor and Greens voters, and 37% of voters overall see it as very important, versus 27% who regard it as less important (a quarter think it is “somewhat important”). Even 20% of Liberal voters see quick action as very important.

On that basis, if only in terms of what will now be a years-long struggle against the Greens, Labor may be quite happy for Tony Abbott to persistently point out that Labor is moving ahead with a carbon price. That clearly is what voters want to see.

The Coalition are also putting on some confected outrage that the committee is only open to members who believe in man-made climate change and support a carbon price. Reduced to basics, that means you have to be rational and economically-literate to participate, and if Tony Abbott wants to declare his MPs are neither, that’s his lookout.

In truth, though, there’s no point in involving the Coalition. It’s not really about the fact that Tony Abbott believes in global cooling. We saw last year the extent to which the Opposition can be trusted on climate change action, and we’ve had continual demonstrations that Tony Abbott will walk away from any agreement, verbal or written, that becomes inconvenient for him. Even if an Abbott-led Coalition somehow agreed to a carbon price mechanism, there’s no evidence that such an agreement would be adhered to and the Government would be foolish indeed to take Abbott’s oft-broken word on such an issue.

The Opposition is, however, very sensitive to the line that it doesn’t support a market-based solution. Its “direct action” policy of billions of dollars of handouts to polluters is, it insists, a “market-based approach”, although Hunt yesterday described it, confusingly, as a “third way” and compared it to the water market, perhaps forgetting that lots of other purchasers than governments buy water. What the Coalition proposes on electricity is indeed a market, a market in which there is one buyer, the Government, and only one seller.

Only International Power can sell “abatement” from Hazelwood. Only TRUenergy can sell abatement from Yallourn (TRUenergy’s parent, China Light and Power, is looking to get out of Australia anyway). There can’t be a “market” in soil magic because it’s barely at carbon capture and storage-level viability, you can’t measure what you’re “buying” and independent experts say the Coalition’s proposed price of $8-10 per tonne of sequestered emissions (necessary for the Coalition policy to add up to anything approach a 5% reduction by 2020) is a quarter or a fifth of what would be needed to make it viable for farmers.

The only other card in the Coalition deck is its argument that a carbon price will drive up electricity prices, which are going up anyway due to the uncertainty engendered by the failure of Labor and the Liberals to establish one. The Coalition skips over that increasing electricity prices is the entire point of a carbon price, given the goal of changing behaviour and driving investment into lower-emissions technology. Under the CPRS, most households would have been fully or even over-compensated for the increase in electricity and other prices, so they would not have been net worse off, but the effect of a higher price signal would have been felt by households and industry – demand for electricity is moderately elastic in response to price increases, though seemingly more elastic at certain times of year than others.

Given the untrustworthiness of an Abbott-led Coalition, and the fact that it has wandered into a policy dead-end of fanciful solutions and endlessly-repeated rhetoric, its non-participation in the work of moving toward a carbon price isn’t really a problem. Everyone else — the independents, the Greens, Labor, the business community, NGOs, welfare groups and economists — have serious work to do on the issue.

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61 thoughts on “Climate committee is better without the Coalition

  1. David Sanderson

    “Confected” has become the word of choice to describe most things to do with the Abbott Liberals.

    They are on a confectionery sugar high at the moment but how long can it last?

  2. Jimmy

    You get the impression that Gillard has got the best of both worlds, she has invited Abbott in to show she is trying to work in the “new paradigm” but doesn’t have to put up with him on the committee wrecking things. That said it would have been good to get Turnball and the Greg Hunt that believed in an ETS on the committee.

  3. shepherdmarilyn

    Hunt must be the biggest hypocrite in the parliament today.

  4. Dr_Tad

    I agree that this committee *should* be one only to those who want to act on AGW.

    However, it shouldn’t only be open to those who are in favour of carbon pricing as a central aim. Rather than being “economically literate”, those obsessed with carbon pricing (sadly including BK and the Greens) are merely being hopeful that neoclassical economics will deliver here when there is not much evidence that it will.

    I fear that we will get a carbon price and 2-3 years from now people will wake up realising that it was too little, too late. By then the social consensus that we must act may be up in smoke too.

    In that sense, it matters little if the Coalition are involved or not. The bigger problem is the committee’s raison d’etre.

  5. Jimmy

    So Dr, if not a carbon price then what? Direct action will not get the job done by itself! The fact that we may be acting later than we should of shouldn’t stop us acting at all.

  6. Scott

    I disagree BK. To get a carbon price over the line and into law, a structured stakeholder dialogue is the only solution, with all primary and secondary stakeholders represented. And it’s hard to do that when business representatives in parliament (i.e the Libs) are outside the room.
    If Labor are really serious about this committee producing an outcome, they should appoint two more business representatives to the committee as a proxy for coalition interests.

  7. D Smith


    Why should Labor appoint business representatives to the committee? They asked the LNP to attend but the Libs decided not to be a part of it. If the outcome is something that big business isn’t happy with let them take it up with the infantile Libs.

  8. Dr_Tad

    Jimmy, Abbott’s direct action is a joke because it is not about shifting the capitalist economy away from its central dependence on carbon emitting production.

    The kind of direct action I envisage would be the rapid building of renewable energy industry, mass public transit, retrofitting buildings and/or more climate-friendly construction, etc, etc.

    That would be massively job-creating but expensive and there would be no just solution but to make big business pay more tax. But state industries (where private actors were unwilling to accept the government’s terms to join in) also create value because they also produce sellable goods and services, so in the longer term they would do all the things private companies do… innovate, create efficiencies, even (gasp) make profits.

    Once all this was being rolled out, non-renewable power production would be shut down, private car use limited, etc. Lifestyles would improve under the new arrangements. The state could also guarantee retraining and meaningful jobs for those dislocated from the “old” industries. None of those protections are guaranteed in a market-based approach, even if it were more successful than I predict it will be. It would also create a social consensus for climate action as a social good.

    Of course it would really upset those who currently make untold wealth from the current arrangement. It would restrict their “freedom” to profit from the mess they have gotten us into.

    I like this plan, from the trade union group of the UK Campaign Against Climate Change. Neoliberals need not apply. 😉

  9. Scott

    @D Smith

    I’m sure they will. But remember how Gillard was able to get an outcome on the mining tax..engagement with business. Engagement works. Do you want this committee to be another Copenhagan, or do you actually want a quality outcome?

  10. D Smith


    I see your point. Although the latest version of the mining tax doesn’t go nearly far enough. Gillard basically gave the miners what they wanted. Even the miners came out saying they were prepared to pay more than what Gillard negotiated.

    No matter what the outcome of the Climate Committee, Big business will say it’s anti business, the Libs will say it’s going to hurt all businesses, bankrupt moms and dads, lead to socialism and marxism, and end all life in Australia as we know it, and the MSM will say “yeah, what the libs and big business said”.

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