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Carbon policies reflect failures of leadership

The Age

Wednesday February 16, 2011

ALL too often, good policy is trumped by so-called "good politics". Exhibit 1 is the costly, ineffective muddle that is climate policy. An Age analysis has found that over the past decade the Howard, Rudd and Gillard governments spent about $5.6 billion on climate programs for little result, at an extraordinary average cost of $168 per tonne of carbon emissions abated. Not only has public money been lavished on schemes that were dreamt up as eye-catching election promises, but the public goodwill required to achieve emissions targets has been tested.By 2020, both Labor and the Coalition aim to have cut greenhouse emissions to 5 per cent less than in 2000, but the Department of Climate Change estimates emissions will be 24 per cent higher under current policies. The forecast confirms the folly of doling out taxpayers' money to selected projects rather than biting the bullet and adopting an overarching carbon-pricing mechanism.The basic case for emissions trading is simple: a market mechanism offers the most cost-efficient way to achieve mandated targets. This was the basis of a 2003 cabinet submission by then treasurer Peter Costello and environment minister David Kemp, only to be rebuffed by prime minister John Howard. In 2007, the Shergold review offered similar advice, warning that "policies in the current mix impose significant economic costs for relatively modest outcomes". Under electoral pressure to act, the Howard government accepted the advice and both sides of politics went to the election promising emissions trading schemes. Yet when new prime minister Kevin Rudd moved to honour this promise, the Coalition responded by replacing Malcolm Turnbull, a supporter of the policy, with the openly sceptical Tony Abbott. The Coalition combined with the Greens who believed the scheme's targets were too modest to block the legislation. After a couple of attempts, Labor timidly retreated.Today, Julia Gillard is the latest national leader who appears to have realised that there is no adequate alternative to a comprehensive carbon-pricing mechanism. At this Friday's meeting of the multiparty climate change committee, the government will present a hybrid model: a fixed carbon price developing over time into an emissions trading scheme. If Mr Abbott lazily rails against a "great big new tax", he should be given short shrift.Even after all the policy failures and backdowns, in the latest Age/Nielsen poll 46 per cent of voters support a carbon price, with 44 per cent against. Support for emissions trading was as high as 60 per cent, which suggests the Gillard government could regain the upper hand politically if it has the courage of its convictions and argues the case for a carbon price. Australians have already paid $5.6 billion for 17 largely inconsequential programs. The initial cost of abatement of emissions under the scheme blocked in parliament was to be $20 to $25 a tonne of carbon. Abatement costs for most of the biggest programs over the past decade, with total funding of $4.6 billion, were six to 20 times greater than that. In all, the 17 programs will produce less than a 10th of the cuts in emissions needed to achieve the bipartisan target for 2020.Piecemeal government intervention hasn't worked. The Coalition's current policy, paying for specific emissions reduction projects, offers more of the same. At the same time, Labor has provided little cause for confidence that it has enough political will to atone for its spineless abandonment of the cause it had advocated so strongly. Climate change has been a political football for so long that the instinct to keep playing short-term politics is very strong. The level of public disillusionment is correspondingly high. Whoever leads the way with a policy to deliver substantial emissions cuts may find that this is the way to restore their standing. After all, when Australians were last presented with an unambiguous promise of decisive action they voted resoundingly for it.

© 2011 The Age

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