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Feb 25, 2011

Broken promises and price rises

Welcome back to the politics of climate change, Australian style, which wrecks leaderships, sunders parties and induces bizarre alliances as a matter of course.

Bernard Keane — Politics Editor

Bernard Keane

Politics Editor

So, welcome back to the politics of climate change, Australian style, which wrecks leaderships, sunders parties and, like a kind of green haze, induces fury, ill-judgement and bizarre alliances as a matter of course.

Quite what the Government announced yesterday is hard to describe. It’s an agreement, though only with the Greens – Tony Windsor and Rob Oakeshott only “agreed” to its release – and then with only the vaguest of principles, with such minor issues as the level of the fixed price and household and industry compensation left TBA. Also To Be Advised was Labor Caucus, which was not asked to consider the proposal.

This provided new vigour for the Opposition’s long-running campaign on electricity price impacts. One has to say, however, that, it would have more credibility on the issue of electricity prices if it had been able to maintain a consistent line on the matter over the last two years. Having long campaigned on the electricity price impacts of carbon pricing, back in August 2009, the Opposition unveiled modelling by Frontier Economics, commissioned by Andrew Robb and Nick Xenophon, demonstrating that the Government’s CPRS would force electricity prices up by $260-280 a year.

After tearing itself apart over the issue and installing Tony Abbott as leader, the Frontier findings were abandoned and the Opposition adopted a new tack, claiming Labor’s CPRS would lead to a total increase in costs for households of $1100. A NSW electricity pricing regulator ruling was also used to claim the CPRS would increase electricity prices by 62% alone, although later in Parliament Greg Hunt cited another figure, “19% over two years”.

But at some point, perhaps as an example of rhetoric inflation, Hunt started claiming that the $1100 figure was for electricity prices alone, not all household costs, as a consequence of a $30 a tonne carbon price. That line of attack took him up until the start of this week. Unable to stand Hunt’s constant repetition of the $1100 figure, and the innumerate journalists who reported it, John Quiggin methodically shredded Hunt’s claims, showing that his $1100 line was out by a factor of 5.

Perhaps it was a coincidence that after this takedown, Hunt and his colleagues abandoned the $1100 line. This week, their electricity price claim was lowered back to $300 from $1100. Why? The Australian Industry Group had produced a report with modelling claiming a carbon price of $26 would increase electricity prices by $300 a year.

How Hunt got from a carbon price of $30 a tonne causing electricity price rises of $1100 to a carbon price of $26 a tonne causing electricity price rises of $300 a year is anyone’s guess.

What the Opposition never mentioned is that under the CPRS, low and middle income earners were all fully compensated for the price rises. In fact, many were overcompensated, just to make sure. The Opposition knows this perfectly well. Why? Well, cast your mind back to November 2009, when Ian Macfarlane and Penny Wong were negotiating an agreed position on the CPRS (passage of which, you’ll recall, Tony Abbott had been strongly in favour).

One of the issues was, naturally, electricity price rises. Eventually the Government and the Turnbull-led Opposition agreed to reduce electricity price rises by massively increasing handouts to the electricity generation sector. This meant they slashed compensation to households for electricity price rises – in effect transferring compensation from households to the foreign multinationals and incompetent state governments that run our electricity generation sector.

All that’s now superfluous detail, of course, in the race to claim that householders will somehow be out of pocket from electricity prices, by $260, or $300, or $1100, or whatever other number will spring to mind. No one remembers in the perpetual present of the media cycle.

The Opposition’s other line of attack has far more credibility – the gulf between what Julia Gillard and Wayne Swan said about carbon taxes before the election and what they say now. The contumely directed toward Labor is richly deserved, given the extraordinary cynicism and political stupidity that informed its election commitment. Perhaps Karl and Mark can cough up for some focus groups on how to square that particular circle?

The Right will hammer this endlessly — Alan Jones left even more froth on the microphone than usual this morning — although if Tony Abbott wants to talk about “people’s revolts” he might watch some Al Jazeera and examine some pictures of murdered Arab protesters first in order to understand why that might be a tad inappropriate at the moment.

Whether the “broken promise” line has any legs will be the first question of interest as we plunge back into the green haze. Are voters more likely to see the Government’s move as a breach of faith or a reversal of an extraordinarily dumb decision? And have we all got the emotional energy to reach the same heights of hysteria as in 2009?

Although there’s one minor problem with it all. It’s funny, but I don’t recall any such fury when the promise by both Labor and the Liberal Party to introduce an ETS after the 2007 election was deliberately broken, first by the Liberals in 2009 and then by Labor in 2010.

There’s very little consistency in either the Government or the Opposition when it comes to climate action.

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148 thoughts on “Broken promises and price rises

  1. Captain Planet

    Thanks Bernard, please keep the commentary coming on this, the single most important story of 2011.

    You criticise that the Opposition, “… would have more credibility on the issue of electricity prices if it had been able to maintain a consistent line on the matter over the last two years.”

    Why should they bother? When you can hoodwink huge swathes of ignorant, selfish and reactionary voters with reasoning as specious as “Great Big New Tax on Everything” it is hardly worth the effort to present a consistent argument, just make sure that your soundbites line up with one another this week, appeal to the lowest common denominators of fear of change and self interest, and watch the punters line up to back you.

    Abbott and the Coalitions gradual fall in popularity, according to latest opinion polling, gives me hope that a significant proportion of the electorate may be less easily fooled, after all.

    The lack of detail in the release yesterday strikes me as evidence that the Government is going about this process with an attention to detail (ironically) and planning which has been lacking from its policymaking of late. It is part of a coordinated and considered campaign to keep the public informed at all stages of what is going to be a long and (hopefully) careful process to thrash out the details. I think the delicate balance of power ensures that careful negotiation will be necessary to ensure this works. Rather than being condemned for providing little detail at this point, the government is to be lauded for its transparency. This is no accident – Gillard, it seems, has learnt from Rudd’s mistakes of autocratic, zero consultation policy making on the run. Let’s hope so anyway.

    The “broken promise” line is indeed the one which will get the Coalition furthest, and it is in keeping with the present Coalition rabble’s moral standard. It will appeal to the sexist conservatives to depict JG as a liar – the fact that John Howard was the ultimate master and overlord of the broken promise in recent political history, will be glossed over as gloating sexists whine to themselves about how JG “can’t be trusted”.

    There is a very good argument that JG’s statement about ruling out a Carbon Tax under a Labor government, is null and void. We don’t have a Labor government, we have coaltion of labour, greens and independants. This doesn’t excuse JG from culpability for political naivety – One should not make promises or rule things out, unless one is absolutely certain that no conceivable situation can arise in future, where one can be depicted as having “broken a promise”. This is really quite difficult, but therein lies the difficult path politicians must learn to tread, if they are to be viewed as having integrity. JG should have been a bit more circumspect in how specific she was with her commitments – the approach with the Carbon Tax release yesterday suggests that she, and the government, have learnt this lesson.

  2. John

    Julia Gillard has the ability to explain the economics of this carbon tax much better than Kevin Rudd ever could. The electorate will forgive her for her broken election promise just so we can move forward, progress sensibly, mitigate our economic losses and not lose any more PM’s, governments and opposition leaders.

    The electorate was and still is supportive of action on climate change. They executed John Howard for failing on climate change policy and they were prepared to execute Kevin Rudd for lacking the ticker to crash through a DD election for his CPRS.

    Alan Jones did his cause a great disservice by branding Julia a liar. The Australian electorate doesn’t like that degree of vulgar and personal attack on our PM.

  3. gaustin

    Nice article and balanced
    I love the comments and polls on several of the newspaper web sites.
    Its as if there was a rallying call to haters to comment and vote until you collapse from exhaustion.
    How can polls that opened late at night get near ten thousand votes by 7 a.m.?
    Let alone hundreds of negative comments in the same time period.

    Me thinks a small handful of folk who think the world has been cruelly unfair to them just went for it.
    And then without any embarrassment the radio hacks use this stuff as “evidence”
    Pity they don’t travel frequently to many countries and they would be embarrassed by the nonsense they are encouraging – oh sorry forgot that solidifies there audience share and the advertising spend.

  4. Johnfromplanetearth

    She is a liar? WTF!

  5. kraken

    Agree more with the comments than the article, although you are right about Abbott’ s antics. When you have Mitchell and Jones offside you must being doing something right, as there are few more odious players in the shock-jock pantheon. These radio goons are no better than the hacks that litter the air-waves in the US, preaching their brand of down-home nastiness, whipping the tea-party set up into a lynch mob. Here its the crypto-Hansonite set, the permanently credulous pygmy intellects that tune into these fools for their daily fare of fear and loathing. It won’t be long before they establish a link between a price on carbon and the downfall of Western civilisation…

  6. Liz45

    Bernard, I reject the nonsense about Julia’s alleged ‘promise’ as though she’s completely gone back on ALP policy or commitment to climate change action?

    Let’s look at the facts ; Labor tried 3 times to have the CPRS passed. The Libs are the ones who’ve ‘flip-flopped’ over this, in particular, Abbott. He’s as Greg Combet asserts, a ‘political opportunist’? I don’t believe that Abbott gives a toss about this country or the people in it. He got rid of Turnbull and the non-partisan agreement on action on climate change; and he and his colleagues are the ones living a lie. Every time I hear Greg Hunt’s protestations I want to scream – another one who’s only interested in his power and the Coalition’s. The business sector knew this was coming, their whining makes me sick! They don’t give a damn about anyone either, just today, and today’s profits!

    On the other hand, Kevin Rudd’s electoral victory was due in a large part to support for action. He lost his way and allowed himself to be pushed onto another path – to his detriment. Labor and the Independents and the Greens were elected as the govt and they consistently had a policy on climate change, not the Opposition. The Greens increased their vote, and together with Labor’s is a strong answer by the electorate, that they favour their policies over the Coalitions. I wish someone would point this out to Abbott; I wish someone would persist with the question of whether Abbott would remove the tax on carbon if elected. He’s refused to answer the question on several occasions. A decent journalist would persist with that question until he answered it, or just cut the interview. I’m fed up with the focus on Julia Gillard while Abbott gets off almost unscathed! He can’t even say whether he agrees with his Treasury spokesperson Hockey on his point, that once in place for 12 months a Coalition govt would find it difficult, impossible even to remove!

    I just went them to get on with it. I’ve supported this action for years, and am sick of the bs.

  7. puddleduck

    Why, why, why does no one talk about agriculture, specifically livestock and animal industries, and the significant contribution they make to greenhouse gas emissions and climate change, through methane (x80 the impact of carbon dioxide), and nitrous oxide? Land clearing, deforestation, massive application of fertiliser to increase feed yield, to grow grain that could be fed to human animals? Protein production via animals is ridiculously inefficient – requiring some 7lb of feed to produce 1lb of beef, for example. To that, add the manure that comes out of intensive (and intensely cruel) factory farms, plus all the antibiotics.
    Then, there’s aquaculture – fancy a fish that’s been swimming in its own faeces while it’s been fattened up on wild fish – just as inefficient as growing livestock.

    It’s about time we had this debate in Australia, before we are left behind. The world simply cannot afford its increasing dependence on animal products. The coalition says farmers will never be affected by any climate change system. That’s madness.

  8. Jimmy

    Captain Planet – You said it all.

    Puddleduck – Have you even seen a farm? How many pounds of feed does it take to produce one pound of puddleduck (something tells me it will be les efficient than beef) not to mention the manure and antibiotics.

  9. freecountry

    Note what that Frontier Economics report actually said:
    [The improvement in the economics of the CPRS (which we recommend) is mostly due to a reduction in the economic distortions arising from Government’s revenue churning (which) occurs, for example, when the Government charges electricity consumers for the full cost of greenhouse gas emissions from electricity production and then returns the money it collects to various groups it believes are deserving of Government support to compensate for the financial hardship arising from the CPRS. If this reallocation of funds is made an in-built feature of the trading scheme, rather than a distinct exercise that relies on the Government to intercept and reallocate permit funds, this ensures lower electricity price increases, which is better for the economy.
    Furthermore, if the reallocation of funds is an in-built design feature of the trading scheme it further removes the Government from the carbon market and this will give investors greater certainty since the hand out of permits will not be at the discretion of the Government, as it is in the CPRS. This will increase the probability that investors will commit the funds to build the infrastructure necessary to efficiently achieve the emissions target.]
    Translation: the CPRS as presented to the Senate was a self-defeating policy with some of the downside (complexity, distortion, compliance costs) of a neutral ETS, as well as a high level of rentseeking opportunity, and none of the environmental upside. Bury it in unconsecrated ground, and use a completely different approach this time.

    Do not provide compensation directly to sectors such as industries or households. Instead, recycle the carbon-tax revenue through the economic mulching machine by lowering the company tax rate. As I explain here, that mulching machine will make Australian households $1.40 richer for every $1.00 recycled in across-the-board reductions of company tax.

    Aussie battlers can then choose to spend the extra $0.40 on the higher electricity bills, or they can look for ways to reduce their electricity usage, and pocket the difference.

  10. Liz45

    @PUDDLEDUCK – Let’s wait for all this premature nonsense to get out of the way, then hopefully we’ll discuss all the important issues relating to climate change. I agree with you about farming. A steak is a very expensive way of getting some protein – in comparison to lentils or some other equivalent. I wonder how many trees have been cut down since colonisation for farming use? Scary isn’t it?

    Incidently, Abbott’s nonsense about growing trees – I understand it takes 5 yrs before said trees do anything constructive re climate change. Of course, he doesn’t say anything about not cutting down native forests or being against Gunn’s proposed pulp mill etc. He’s worse than an idiot – he’s a dangerous idiot! A Rhodes Scholar??????I doubt it! Perhaps he’s just pure evil then!

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