"That's why Abbott is not merely right to put a cap on the program, he could go one better and dump it entirely."At an abatement price many multiples of that costed, the $3.2 billion budget for Direct Action won't make much of a dent on emissions -- the Australia Institute suggested it would yield about 18% of the needed abatement, based on Australian National Audit Office figures, meaning Australia's emissions would rise under Direct Action, rather than fall. Moreover, Direct Action will likely fund energy efficiency projects that companies would have proceeded with anyway due to their overall cost-effectiveness. Abbott's commitment that not a single additional cent will be spent on emissions abatement is thus a clear abandonment of the 5% reduction target. It is, however, the correct call in fiscal terms: Direct Action will be a grossly inefficient use of taxpayer funds. To meet the 5% target will require a five-fold increase in the program's budget -- and bear in mind that, assuming bureaucrats are doing their jobs correctly and awarding grants to the most efficient projects first, the more money available to a program, the poorer the average quality of the recipient projects. That means the average cost of abatement will rise with every increase in program funding. But surely some abatement is better than no abatement? Especially if an Abbott government has removed a carbon price and, as seems likely despite Hunt's denials, watered down the Renewable Energy Target? In fact, in the absence of systemic incentives to improve energy efficiency or shift to to renewable energy sources, a grants program like Direct Action simply becomes more business welfare, as handouts to farmers and companies to do what they would have done anyway, subsidies for absurdly inefficient projects or rewards to political mates. One of the most expensive forms of abatement, ethanol fuel subsidies, which generated abatement at a cost of several hundred dollars a tonne, was the basis for one the worst scandals of the Howard government, when it bent over backwards to look after the interests of Manildra's Dick Honan, with then-prime minister John Howard lying to Parliament about it. That's why Abbott is not merely right to put a cap on the program, he could go one better and dump it entirely. It's always been clear he doesn't believe in climate change, or more likely simply doesn't see it as a significant issue. The most intellectually honest and fiscally defensible position Abbott could adopt is to demonstrate that Turnbull was right, and dump it.
Direct Action a gross waste, and Abbott’s right to cap its funding
Tony Abbott is right to cap his worthless Direct Action plan on carbon emissions. If only he'd go further and dump it altogether, writes our man in Canberra.