Monday, August 10, 2009

First, Malcolm Must Convince His Own Colleagues

Today’s briefing by Malcolm Turnbull is not the coalition’s policy on emissions trading. Despite newspaper headlines designed to give the impression of a policy announcement, what we actually witnessed was the announcement of a report from a consultancy engaged by the opposition along with independent Senator Nick Xenophon. The report presents economic modeling by Frontier Economics and a range of recommended alterations to the carbon pollution reduction scheme proposed by the government. It is the emissions trading policy that you have when you don’t have an emissions trading policy.

The recommendations themselves fit well with the Malcolm Turnbull view of the world, and provide a framework which is supposed to be twice as green for two thirds of the cost, while saving heavy polluters the inconvenience of paying their own way. In that respect it sounds a bit like the magic pudding, but there are some features which will be appealing not only to big business but also to people who are worried about paying an extra $260 a year for their electricity. And that’s where Mr. Turnbull could be onto a winner.

Nobody wants to pay more for their electricity if they don’t have to, and while many people might be prepared to pay a higher price if it is for the greater good, Mr. Turnbull’s message is that they can achieve a better result while paying less. Who is not going to welcome that? The report by Frontier suggests that by allowing electricity generators to produce greenhouse emissions up to a so called “baseline” level before having to pay for permits, the cost of electricity would rise by substantially less. More importantly, it would result in less need to compensate pensioners and other low income people, making the process more efficient by removing the so called “churn” of higher subsidies to pay for higher prices.

Equally appealing to a large section of the coalition constituency is the recommendation to exclude agricultural emissions from the scheme, while allowing credits for biosequestration, which many people believe is much easier to achieve than the much vaunted geosequestration. On top of all that, not only can the Frontier recommendations save coal miners, save farmers, save pensioners and save jobs, it can also put a smile on the faces of the Greens by doubling the unconditional target for emissions reduction from 5 to 10% of 2000 levels by 2020. Everyone’s a winner in Doctor Malcolm’s Carbon Trading Snake Oil Show.

Of course, the real fly in the ointment is that despite all the song and dance, it isn’t actually coalition policy. It is a set of recommendations from a consultant’s report. Of course, it is intended to give us all the impression that the coalition has a policy and that the opposition parties are united on the platform. But the truth is they are not. The truth is that there is no agreed opposition policy for an emissions trading scheme. At this point, many of the Nationals, including Barnaby Joyce the leader in the Senate, and one or two Liberals, are still saying that they don’t believe their should be any carbon trading scheme. There remains a wide range of diverse opinions in the opposition, and the true test for Malcolm Turnbull now will be whether or not his own opposition colleagues will fall into line, rather than whether he can bring the government to the negotiating table.

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