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Gillard, Labor and Carbon Price : How to Win

February 27, 2011

In 1987 the dollar was falling and Labor was facing an election. Treasurer Paul Keating advised his colleagues not to retreat from economic reform. He said that to have the ALP defeated twice in a little over a decade because of economic management would have left it in an irrecoverable position. The government held the line of economic management and was re-elected.

I have argued previously that it is better for the Gillard government to adhere to an ETS and be defeated than to prevaricate and be defeated. She may as well fight – like a Keating, Hawke or Whitlam. As the debate over carbon pricing is joined, she can think of the battles over Medicare and economic reform as inspirations. To lose would be to lose honorably but with the party a viable concern, able to win back next time around. To prevaricate again over climate is unthinkable.

But Labor can win this debate.

“This is the policy we would have had if Tony Abbott’s mentor, John Howard, had won the 2007 election,” she is entitled to say. And then hit them with a raft of Turnbull quotes about the need to price carbon. And quote the policy details that Turnbull had signed off in 2009.

Then quickly put in place the protective and compensatory measures that are going to be part of any package. Fund them partly by trimming some of the business compensation measures that were part of the 2009 package negotiated with Turnbull, as I suggested below. Some businesses will be upset but those that lobbied the Coalition to oppose the package ( and won ) like the Minerals Council can’t complain – they should have known that if they did in Rudd’s package a re-elected Labor government and a Green Party-dominated Senate would have another go and the next version would not have to be so (excessively ) business-friendly.

The government needs a council of war, advisers to help it get the arguments right and win the propaganda. On the agenda for the first meeting should be 1) the long list of calls from business for carbon price certainty 2) the economic arguments that uncertainty caused by the absence of a scheme is lifting the price of power and 3) the list of Howard quotes in support of pricing carbon.

They are the government’s killer facts. You only win debates with killer facts.

5 Comments
  1. February 27, 2011 11:53 am

    For anyone supporting this burden on the Australian people and the companies and businesses that employ people I ask this – if Australia were to reduce its CO2 emissions to zero (from the less than 1% of world wide emissions currently) do you believe it will make any difference to the impact of climate change (even assuming that the link between man made CO2 and the climate change is true)? If you do then by what logic? If you don’t why do you want to penalise this country and its people while the major emitters are doing so little in comparison. Electricity prices already have risen 40% for no good reason.

  2. February 28, 2011 8:29 am

    60% of greenhouse gas emissions are made by small countries like Australia so when they act against GHG emissions it has a big impact and the big polluters, China/India/US/Brazil will have to come to the party or risk being isolated.

    So yes, Australia taking a strong stand is very worth it!

  3. John C permalink
    February 28, 2011 10:32 am

    @Wayne

    No, but an Emissions Trading Scheme would allow our economy to move to sustainable levels of pollution.

    Instead of continuing investment in dirty technology, developing procedures and training our workforce accordingly, which would need replacing at a very high (and increasing with every year of inaction) cost upon a global agreement, we can absorb the cost of moving towards the equilibrium of an economy that correctly prices the externalities of greenhouse gas emissions over time, avoiding the economic shock which most of the world will face.

    The growth of China and India will continue for decades, and demand for our resources with it. We will be a wealthy nation for decades to come, with or without action on climate change. Having an affluent country actively regulating greenhouse emissions will make an international agreement more feasible, and being an early adopter gives us significant diplomatic leverage to negotiate a global agreement on OUR terms.

    Carbon pricing also induces increased alternative energy R&D from both the private (through greater incentive) and public (though the revenue raised) sectors, giving us significant competitive advantage in clean technology in an global emission-regulated future. If we are among the pioneers of binding cap-and-trade countries, we will also be a long way ahead of the curve in developing carbon markets, which will be of great significance in the financial landscape of the future, and increase our strength as a regional financial hub.

    If you accept that the world will eventually act on climate change then carbon pricing before a global agreement is absolutely sound policy. The alternative of waiting for the world to catch up is populist rubbish on behalf of conservative parties, it is an incredibly short-sighted policy position and a huge missed opportunity in terms of increasing its political and financial significance (and with it prosperity for the people) in the future.

    If the world doesn’t act on climate change then we’ve only got a few generations of our civilization continuing unabated so the economic growth we forgo today is pretty useless anyway.

  4. Rod permalink
    February 28, 2011 4:07 pm

    I ‘m not savvy on climate change but from what I read, see and experience it is happening, we are contributing to it and we can or try to make a difference.

    I was skeptical a while back when the need to conserve water and energy was the go as I thought well if everyone saves and conserves then the utility companies are going to take a hit on their revenue and they are going to want to get it back some way.

    But we can make a difference,a s the earth hour has shown,an aussie initiative that is now global, clean up Australia started with one man in a small area and is now global, movember started locally and is now across the world, Canada I think raised more funds than us.

    I think I read NZ has a carbon price , smaller nation than us, someone starts the ball rolling and others join in until that ball just keeps on rolling and splats all the negative do nothings.

    It seems to be labor that has to take the big hard decisions that the conservatives wimp out on. I hope they stick to it and stick it to them.

  5. Greg permalink
    March 1, 2011 5:41 pm

    The point you raise about the MCA is a good one. I could never understand why the MCA didn’t take the deal it had struck with Rudd/Turnbull. Even blind freddy could have seen that the Greens were likely to get BOP in the Senate and make it harder to get a “pro-business” arrangement. This is going to cost the miners big time. The mining companies should demand their membership fees back from the MCA – and get rid of that Mitch Crook.

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