Blog Archives
Carbon Tax Repealed, Hyperbole Revealed
Today the Abbott Government were, 10 months after their election, able to see the repeal of the former Labor Government’s carbon tax pass through the Senate. Finally the Coalition was able to deliver on their most solemn commitment to the Australian people in 2013. It has not been an easy road to this point for the Coalition, not just in the area of carbon pricing, but in general. Understandably then, the relief of today’s events among Coalition MP’s and Senators was palpable.
But not all political players were happy. The Greens led the way with the condemnation of the government and understandably so. It was at their insistence that the former Labor Government introduce a price on carbon in return for their support in minority government. The ALP also voiced their concerns with the events of today. Their position being that Australia needs an Emissions Trading Scheme.
As often happens when controversial things occur in politics, there was not much restraint shown in the language used to describe what happened in Canberra. Hyperbole got a real workout. Both politicians and social media indulged in making hyperbolic statements.
The trouble is, whatever your viewpoint on this, or any other issue, hyperbole does little to further your cause. It makes you look overly emotional and can turn people off your cause. Simple language without outlandish claims works best when trying to communicate serious points. Few people like feeling as if they are being preached to. It is better to feel you are part of a solution than it is that you are part of a problem.
By far the most overblown and indeed overused claim today was that the repeal of the carbon tax would doom the planet. It was said by many that our children and their children should be told it was Tony Abbott and his government who should be held responsible for the state of the planet in their lifetime. This is just plain wrong.
What one nation does in isolation will not curb or exacerbate global warming in any significant way. What the international community as a whole chooses to do, or at least the vast majority of countries, will have an impact.
What one nation does in reversing action on curbing emissions will, on the other hand, have a significant impact on their own natural environment and the health of their citizens.
This so far might sound like an endorsement for so-called ‘direct action’. It is not. That policy is incredibly expensive.
What Australia needs is an Emissions Trading Scheme, or ETS. We almost had one not all that long ago. It was not perfect, but it was a very good start. And it would have saved a lot of political trouble for multiple players in the years after it was dumped. And it would have been reducing emissions long before Labor’s carbon tax began operating.
The debate around climate change and how to tackle it will continue. And that leaves open the possibility that minds will change. The key is that emotion is largely taken out of the debate, while still being able to calmly discuss the potential consequences of global inaction.
Not the Asian Century White Paper
Tomorrow the Prime Minister will launch the Australia in the Asian Century White Paper. This document, which will plot a way forward for Australia in what is already considered to be the “Asian Century”. It will act as the government’s version of a SWOT analysis. The paper will examine the real internal strengths of Australia and external factors that lead that do contribute to our strengths as we continue to engage in the region. The paper will also look at our weaknesses in terms of trade in particular, but also security. The paper will look at the opportunities for Australia in the Asian century, with whom we can engage more to our benefit. Finally, the document will also look at the threats in the region.
In a way, the Asian Century White Paper is behind the times. Trade with Asia already makes up about 70% of Australia’s international trade. This makes it appear clear, as do public statements, that the blueprint is more about the rise of China and to a lesser extent India, than it is about looking at the strengths, weaknesses, opportunities and threats that exist in the Asia-Pacific area. As such, the possibilities of greater relations with the “Asian Tigers” and rapidly growing Asian economies will likely not receive much press.
This examination will look mostly at the bilateral activities Australia undertakes currently, could enhance or could begin to participate in and less at the specific domestic policy directions necessary to cope with living in a strong and prosperous Asia.
Undoubtedly, the Asian White Paper will say that China is the country, above all others to focus our energies on. You would be hard-pressed to find many who would say otherwise. We need China and they need us. Our commodities are prized by China and we source cheap goods from the Asian powerhouse, now the second biggest economy in the world after overtaking struggling Japan. To this end, concluding Free Trade Agreement negotiations with China is an absolute must.
Some will have you believe that China also serves as one of the great uncertainties of the Asian Century. “Reds under the beds” is not a worry that should be occupying the mind’s of our people. China’s continued growth will almost certainly be one of peaceful empire. Their growth is because of the embrace of market economics and China is communist in name and some aspects of internal behaviour only. The military build-up in China is entirely consistent with the growth of the country as a world power and countries like the United States of America have nothing to fear except for loss of economic dominance. 
In terms of Japan, our second largest trading partner, the future of the economic relationship at least is not as certain. The economy of Japan has been battered by high levels of debt, natural disasters and unstable economic leadership. In saying this though, the relationship with the nation of islands should be maintained with caution and buttressed by increasing economic cooperation with other nations in the region. However, it is in our interests to continue to proceed with free trade negotiations with the Japanese.
Trade relations with South Korea continue to be strong with the nation, as of 2011, being our 3rd biggest export market. We have commenced Free Trade Agreement negotiations with Korea, but the discussions have hit the final hurdle. The agreement was supposed to have been concluded by now, but negotiations are ongoing.
Our next biggest market, is also our second biggest opportunity as the growth of Asian economies explodes. That nation is India. This is a nation with economic growth to rival that of China. While India is not in a position to rival China in terms of the size of her economy, India does provide opportunities. This includes, somewhat contentiously, uranium exports which are now being negotiated and also the restoration of Indian confidence in Australia’s safety for the large overseas student and tourism market the nation of the subcontinent can and has provided. Finalising the Australia-India Comprehensive Economic Agreement is also a necessary step in continuing to open up India to Australia and vice versa.
There are other nations of Asia in the list of our top 10 training partners too. In fact, Asian countries make up more than half of those nations. Also in the top 10 is Taiwan, Singapore and Thailand. With both Singapore and Thailand we have established Free Trade Agreements. However, in the case of Taiwan, there is no economic agreement being negotiated, awaiting approval or in force. Perhaps an opportunity lies there, perhaps we are frightened to pursue one for fear of causing China offense or perhaps our priorities are not mutual.
There are also other Asian states that are outside of the 10 biggest Australian trading partners with which we have already or are in the process of negotiating or approving FTA’s. There is an ASEAN-Australia-New Zealand Free Trade Agreement which includes Brunei, Myanmar, Cambodia, Indonesia, Laos, Malaysia, Singapore, the Philippines, Thailand and Vietnam. This includes nations such as Singapore, Thailand, Indonesia and Malaysia with whom we either have individual FTA’s or are in the process of either negotiating or seeking domestic approval for.
In a broad sense, continuing to pursue the recently commenced negotiations over the Trans-Pacific Partnership Agreement is also a must and will only enhance economic relations with both Asia and other parts of the world.
So in terms of economic cooperation in the Asian region and into the Asian century, the task is not really to establish new markets, but rather to consolidate and build upon those already available to Australia. In the case of the services sector in particular the task is returning it to the vitality we know. Particularly in the case of tourism this will be a lot easier when the price of the dollar lowers and economies recover.
In terms of economic engagement with Asia and the focus that it is given, it is a positive but has the potential to be a negative from time to time. Putting too many eggs in the Asian basket might expose us to regional shocks. So far, with the economic activities we undertake in Asia though, we have managed to avoid major damage to our economy when other countries in the Asia-Pacific have not been spared. But the possibility of exposure to risks should still be in the front of the mind’s of our policy-makers.
New Zealand and the other Pacific Island nations must also factor into the Asian equation. They are as much a part of Asia as we are. New Zealand is our greatest ally in the Asia-Pacific region, a long-term friend and economic partner and we will continue to share and grow our economic relationship and broader bilateral relations with her.
In terms of security, the most volatile place in the Asian region, the place that has the potential to most impact on our security, is Indonesia. Enhancing current cooperation with Indonesia on counter-terrorism efforts is a must. However, this must not be at the expense of combating homegrown terrorism on Australian soil.
It is certain that we will be seen to be deeply connected with the USA . We can, will and should make clear that our actions in the region will be peaceful and aimed at trade and our ongoing security, rather than offensive actions and manoeuvres that constitute a threat.
In terms of China, as stated earlier, it has been quite easy for some to classify the economic growth and consequential militarisation of China as a threat. This eventuality though, as stated before, appears hard to fathom. On the other hand, disputes involving China and her nearer neighbours, currently festering, do have the potential to develop into problems for those nations. By and large, these are conflicts Australia can remain independent of.
With regard to people movements, Indonesia as well as Sri Lanka and Malaysia will remain central to our efforts in cutting down on irregular people movement. We would be foolish to ever imagine that we as a country or even the wider Asian region could solve the complex issue that is asylum seeker movements.
Later on in the Asian century it is also reasonable to keep in mind the potentially significant movement of people in our region brought about by climate change. The scale of this is hard to calculate, but the prospect must be factored into equations. Australia as a rich and prosperous country would be expected to take up the majority of the resettlement burden in such circumstances.
Overwhelmingly the opportunities for Australia in the Asian Century are good. The positives far outweigh the negatives. We must however be careful of too much dependence on the region and too much nation specific interaction within the Asia-Pacific.
We must think, for the century ahead, well beyond commodities and to sources of renewable energy. An ongoing and healthy services sector is also a must as resources begin to diminish.
There is the possibility of regional instability, but much of that should not have consequences for Australia. The major threat will continue to be terrorism with hatred fomented and potential non-state actors trained in Indonesian camps in particular.
We will be seen as one of America’s deputies in the Asia-Pacific, along with South Korea and Japan as well as New Zealand to some extent. In reality though, this should not colour the way we interact in our geographical region nor the way in which our peaceful advances are received.
People movement will continue to be something Australia experiences for as long as there is security and economic concerns in nations around the world. Later in the century this will probably be exacerbated by climate change, particularly in the low-lying areas of the Asia-Pacific.
Australia must not be happy with the status quo. Moving towards greater engagement and cooperation not just in Asia, but the world, is the answer to making the most of the opportunities and the threats that we and the region already experience and may encounter in the future.
Language Changes as Fluid as the Changes to the Tax Itself, If Not More
The carbon tax, price on carbon, carbon price, fixed price carbon reduction scheme, call it what you want has by far been the most talked about public policy decision made, with the prodding of the Greens in order for minority government support. It has been the subject of political debate ever since Prime Minister Gillard uttered those words “there will be no carbon tax under a government I lead” just a short time out from the August 2010 election. The political to-and-fro over the carbon price has been ferocious with the Opposition making their disdain for such a policy, one they once supported, a central feature of the discourse of the last two years.
Over recent months there has been much discussion and debate over specific elements of the carbon price. We’ve seen the floor price dropped so that our framework, once transitioned to an Emissions Trading Scheme, could be linked to the European Union ETS in a common carbon market.
There had been much talk and pleading from different quarters, calling for the floor price to be dropped ahead of the floating price which begins in 2015. However, we were repeatedly assured by the Gillard Government that the floor price would remain while simultaneously it seems, the government were in discussion with the Greens, convincing them that abandoning the floor price would be okay.
Then there’s also the other not so small matter of the ALP deciding to abandon plans to buy back and secure the closure of the five dirtiest coal-fired power stations.
Both these decisions bring an amount of uncertainty to the usefulness of the scheme, with these facets of carbon pricing seen to make it easier and more certain that the carbon reduction benefits of such a policy would be realised. Now, that task of reducing emissions and the hopes of raking in sufficient revenue to pay for the compensation and other benefits of the Clean Energy Future appears to be on very shaky ground. If the aims are to be achieved, they will now be done the hard way.
These moves imply that the Labor Party were worried about the policy, particularly the public perceptions of the price on carbon, which has since improved markedly. They make a government already low in confidence and in the polls publicly appear uncertain of their prospects, scared of the electoral defeat which is still highly likely, some time after July next year.
This slippery and slidey approach to the carbon tax policy has also been mirrored in the use of language by the Coalition. The same messages and implications have broken through from the altered usage of words to describe the pollution reduction scheme, as were received through the dumping of the floor price and the decision to not close down the dirtiest power stations.
In fact, the language to negatively describe the carbon tax has changed more than the policy itself.
First we had the Opposition describing the carbon price as a “cobra strike”. This characterisation said to people that the impacts of the carbon price would be immediate and deadly for certain sectors and the economy and the population more broadly, the venom spreading fast across the economy and gradually breaking down bodily (economic) organs.
Next up was the description of the carbon mechanism as being a “python squeeze” on the economy. This screams slower suffocation of the organs of the economy, but still ultimately says that the patient will die but the death might well be slower. It also gives an air of avoidability, that suffocation can be more easily overcome than a deadly poison coursing through the veins of the economy.
The latest expression to be used by the Opposition Leader is that the price will be like an “octopus’ embrace”, its tentacles grabbing hold of various parts of the Australian economy, far and wide, as well as the people. Presumably though, it’s not a Blue-Ringed Octopus as they’re poisonous.
Curiously, if a Blue-Ringed Octopus wasn’t in mind with this example, it’s the only one that doesn’t imply that death is a near certainty.
Either way, both the language to deride the climate change policy of the Labor Government and the policy itself have undergone changes, with the shifts in both sides ostensibly implying the same thing, uncertainty over their relative positions.
Government Still Emitting Mixed Messages and Potentially Leaking Revenue
Carbon pricing is happening, it’s been legislated and that legislation has commenced. The fixed price period began almost two months ago now, on July the 1st. But today things have moved forward as far as the floating price, the emissions trading scheme which will commence in just under 3 years time after the fixed price period ends. The Australian Government has today announced that they’ve reached an agreement with the European Union to link their respective schemes which means Australia joins with 30 other nations in a common market for carbon credits.
But there’s also been a step backwards from existing Labor Party carbon pricing policy, there will no longer be a floor price, that’s gone as part of the pact with the EU linking Australia and European Union countries. This new market, though heavily regulated, will be the largest carbon market in the world, but by no means does it cover anywhere near the majority of the globe and its population. The European ETS covers just over 500 million people and Australia will add a further 22 million people living under the carbon market.
For the first 3 years of the emissions trading scheme, Australians will have access to European carbon credits but not vice versa. European businesses being able to purchase carbon credits in Australia will be allowed to occur from 2018.
Aside from the broken promise over the carbon price, the biggest point of contention since the decision was made in minority government to pursue the carbon price was over the floor price.
The floor price was instituted by the government supposedly to provide certainty to business and to avoid the price of emissions becoming too low. This price was to be set at $15 per tonne from 2015 when the market-based trading scheme will start. We were told, just as recently as last week that the floor price would happen, though reports had surfaced that the ALP were considering backing away from this element of their climate change policy.
Essentially now, the common market with the European Union will determine the price, any price it likes, and if the EU example is an indication, that price has the potential to go quite low, well and truly under the $29 per tonne that the Treasury modelling banks on for the year 2015-16. This means the revenue projections are surely under serious threat.
But Greg Combet doesn’t think so. The Climate Change Minister today said that the long-term average over the past 4 years of the European ETS has been $23 per tonne of carbon emissions. But whether that’s enough to achieve an effective price of $29 in 2015-16 alone is fanciful. This is especially so with a European economic community in chaos financially, a common market that has seen their permits go as low as single digits per tonne of carbon emissions.
Worse still, this backdown on the floor price is in effect an admission that the Gillard Government was wrong with its legislated policy direction. Rightly or wrongly, it will be construed as the government admitting that a floor price would have hurt Australia and our competitiveness and the people dealing with the flow-on costs of the scheme and that could easily have further negative implications at least temporarily for the struggling ALP.
For an administration struggling with expectations, the mixed messaging and second backflip this month doesn’t bode well in trying to run consistent messaging in areas of public policy and that just makes the government look confused and scared.
By far the biggest damage will be to revenue and that will in turn make promises much harder to deliver, though maybe they’re not too worried about that given the chances that they’ll hold the purse-strings at the start of the floating price are slim. Oh, and the fact that the trading scheme might well not be there under a Liberal Government. But who knows, it’s certainly much, much harder to repeal now.
aussiepollies 