Feral cats amongst the carbon canaries

Jul 21, 2012
Essential Research

Tony Maher over at the Construction Forestry Mining and Energy Union has a piece in the Daily Telegraph worth reading.

Feral cats amongst the carbon canaries

TONY MAHER Tony Maher is Construction Forestry Mining and Energy Union national president.

It’s a truism that Labor has done a dismal job selling its carbon pricing scheme. But that doesn’t tell the full story of how the 2012 carbon tax became so politically toxic. A key ingredient is the widely held perception that it is a Greens scheme developed under duress, with Labor held hostage to its Birkenstock-wearing overlords.

Most Australians in the suburbs and regions think if the Greens support something it must be bad for jobs, cost too much and be no fun at all.

Actually, the carbon pricing scheme of 2012 is substantially the same as the carbon pollution reduction scheme proposed by Labor, supported by the Liberal Party under Malcolm Turnbull and blocked by the Greens in 2009. If anything, the 2012 version is browner than its predecessor.

As the weeks roll on after Doomsday (July 1), the carbon price scheme is proving well designed and is working exactly as intended. It is not causing job losses because it was carefully designed not to cause job losses.

Billions of dollars have been allocated as free permits to heavy industry, precisely because the objective is to help keep them in business while investors adjust. No sector has been overlooked.

Likewise, the carbon pricing scheme has not fed into excessive price rises. The tiny price rises are exactly those predicted by the government.

This is not good luck. It is a result of careful design to cushion consumers and businesses. Labor listened to businesses, welfare groups and unions — designing tax cuts and welfare payments accordingly, while excluding petrol from any impost.

It’s no surprise that Tony Abbott can’t find a price increase horror story.

A question raised by many is — if business and consumers are both wrapped in cotton wool, what’s the point?

The point is it is a signal to investors making decisions today on assets that will last 20 to 50 years. It is not designed to force consumers to use significantly less energy — there will be other energy efficiency programs for that.

It is not designed to close heavy industry. It gives heavy industry — our mines, smelters and factories — an incentive to improve performance over time. It will drive investment in more efficient and lower emission products and processes.

The carbon tax is structural economic change — a change in the market which is gradual and smooth — by design.

The scheme proposed by Kevin Rudd in 2009 was substantially the same.

Both schemes were an emissions trading schemes with a fixed price at the start — oneyear fixed price in 2009 and three-years fixed price in 2012. Both schemes provided industry assistance through free permits.

In fact, the 2012 version includes more assistance to heavy industry. The 2009 scheme allocated $7.3 billion to power generators over 10 years. The 2012 scheme allocates $5.5 billion over five years.

The 2012 scheme includes an extra $300 million for the steel industry. It also gives more to coal — up from $750 million to assist with capturing fugitive methane emissions in 2009 compared to $1.3 billion in 2012.

Both schemes have the same targets — a 5 per cent reduction being the default. Targets supported by Labor and the Coalition but strongly opposed by the Greens are locked in by the 2012 scheme.

The 2009 scheme only excluded petrol for three years. The package the Greens voted for excludes petrol indefinitely.

The Greens point out that the Clean Energy Finance Corporation is an important new development. It is. It is a great new industry policy supporting manufacturing and that’s why unions and industry lobbied for it. This wasn’t the reason the Greens gave when rejecting the CPRS in 2009.

In 2009 there was bipartisan support for an emissions trading scheme. Tony Abbott wasn’t the leader as the Coalition contributed to the scheme’s design. It was the Greens who stopped it in the Senate, wanting higher targets and less compensation to heavy industry.

In 2012 they supported a virtually identical scheme, with the same targets and more assistance to heavy industry.

The Greens intransigence in 2009 has had profound knockon effects. The 2012 scheme, fundamentally the same but understood by the public as a Greens-negotiated deal, has fuelled the perception it is an extreme measure. It has helped Abbott turn an economically responsible, modest carbon scheme with public support into a hydra-headed monster.

No matter how effectively Greg Combet explains the scheme — and when he gets the chance he does it very well — the Greens factor is a barrier to popular acceptance.

Selling the carbon tax is hard. Selling the Greens is impossible.

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