The Gillard Government’s Carbon Tax legislation passed the Lower House yesterday, by the slenderest of majorities. Next month it will pass the Senate, in which the Australian Greens hold the balance of power. The eighteen bills of which this legislation is comprised will thus become law by Christmas, and the first taxes are set to be levied from the middle of next year.
Now I’m going to explain to you why none of this really matters.
The first reason is that this is a major structural reform in the Australian economy for which the Gillard government has no popular mandate. During campaigning for the 2010 election, Julia Gillard ruled out a Carbon Tax imposed by Labor.
The Coalition were, of course, opposed to any such tax, leaving the Greens as the only party supporting it. This means, in other words, that 88% of Australians at the 2010 election voted for parties opposing the tax. Following the election, facing a hung parliament, Gillard in her desperation for power, did a deal with the Greens and three independent MHRs: Andrew Wilkie (see previous thread), Tony Windsor (third from left, above) and Rob Oakeshott (right, above). Gillard—and by extension, the parliamentary party she led—clearly believed the end (power in the short term) justified the means (breaking faith with the Australian people in the long term).
Polling both before and since the 2010 election show the Australian public have been consistently opposed to the tax, by a margin of between two and three to one. This is despite Gillard spending massive amounts of taxpayers’ money on a media propaganda campaign to convince them otherwise:
As a people, for historical and cultural reasons, we Australians have an inherent mistrust of authority, a mistrust which is amplified by an order of magnitude when we are being patronized in this manner. Since the announcement of the Carbon Tax, Labor’s primary vote has fallen nationally to 29%. This is not a figure that fluctuates much in ephemeral opinion polls—it is a long-term structural shift in the Australian political landscape, as I detailed back here. At 29%, Labor can never again hope to form government in its own right; they have been wedged by the Greens, and rejected by the political centre of the electorate whom they have betrayed. As I have written earlier, this is a profoundly negative development in Australian democracy.
Reader benfrommo raised the point in the previous thread that, at the behest of the Greens, measures have been written into the legislation to render it profoundly difficult, if not actually impossible, to repeal. In granting carbon trading permits to designated emitters, Gillard is creating “value” ex nihilo (a dubious practice in any case, much like printing money), and elevating such permits to the legal status of chattels, which any future government will, on the face of it, have to buy back. I’ve responded to Ben as best I could, though I am sure the coalition’s legal team will devise mechanisms far more substantial than simply linking to a collapsed overseas market price.
Andrew Bolt has summarized all the above points thus:
- We didn’t vote for this tax
- We don’t want this tax
- We can’t get rid of this tax
It doesn’t get much more undemocratic than that.
The second reason this tax is doomed to fail is that Tony Abbott has served notice to the electorate and the business community that he will repeal the legislation, and dismantle its vast associated bureaucracy, as a matter of first priority as soon as he forms government. The only question remaining is when that will be. Over the past weeks I have detailed here at LibertyGibbert, scenario after scenario under which the Gillard government could fall next week, next month or next year. At the very best—and all the stars of Labor’s fortune would have to be aligned for this—Gillard will last until the 2013 election, at which point Labor face annihilation at the polls.
Reader Kitler asks, won’t Abbott be nobbled? Well, no. The Liberal party’s financial power base lies with the big business end of town. Unlike in the United States, where high finance seeks to make billions from carbon trading, here they are uniformly opposed to the tax. The element of Australian big business that stood to gain from carbon trading is represented by former Opposition Leader Malcolm Turnbull, Federal Member for Wentworth (the electorate covering Sydney’s wealthiest eastern suburbs). Prior to entering parliament, Turnbull from 1990 to 1997 was Managing Director and later partner of Goldman Sachs Australia. He is the wealthiest parliamentarian in Australia’s history; some estimates of his wealth put it at a value exceeding that of every other current MHR combined!
Following the 2008 global financial crisis, that element of big business lost pretty much all political influence and credibility in Australia (indeed, Turnbull’s presence has helped transform the term merchant banker in this country into a piece of Aussie/Cockney rhyming slang). Big business’s views in this country are better expressed by the Australian Trade and Industry Alliance, who are running a media campaign of their own:
To explain what happens next, I have to give you a bit of Australian civics, so bear with me here. The Australian system of government is a modified form of Britain’s Westminster system. The modifications reflect the historical reality that our nation is in fact a federation of six former British colonies, all of whom wished to retain some measure of autonomy under a united Federal government. Our Founding Fathers in the 1890s therefore made a close study of the United States’ congressional model, before devising an Upper House—named, here as there, the Senate—in which the states received equal representation, regardless of population. The Senate is therefore known as “the states’ house”, as opposed to the Lower House (the people’s house) which, like the British House of Commons and the U.S. House of Representatives, is comprised of members representing electorates of roughly equal population, thus expressing—ostensibly, anyway—the will of the people.
To pass a bill into law involves a series of checks and balances—essentially, a trade-off between states’ rights and the popular will. The Senate, having received a bill from the House, can write amendments or reject it outright, and send it back to the House. To obviate excessive Senate obstructionism, Section 57 of the Australian Constitution stipulates that if the Senate rejects the same bill twice within a three-month period, the Prime Minister may seek from the Governor-General a double dissolution of both Houses and a general election of both the House of Representatives and the Senate.
Why does this matter? Unlike the United States, where the terms of office of both Senators and Congressmen are fixed, our Constitution specifies only a maximum term: for the Lower House, it is approximately three years (the exact length depends on the availability of a legally suitable election date) whereas for the Senate, Section 13 of the Constitution decrees that half the Senate are elected for a term of six years, and the other half for three. However, in the case of Lower House elections which occur outside of the 12-month period laid down for Senate elections, the synchronization of Lower and Upper House elections becomes disrupted.
Now, at the 2010 election, in the Senate, 40 of the 76 seats were up for election (a “half-Senate” election). The Australian Greens, previously with only three seats, won one seat in each of the six states, giving them a total of nine; however, the new six Greens senators did not take their seats until 1 July this year, at which point they held the balance of power in the Upper House and were thus in a position to impose on Gillard the Carbon Tax—the same tax which Gillard, as Education Minister, had advised PM Kevin Rudd to drop as it was electoral suicide. Are you starting to see how she is being blackmailed?
But if the Gillard government falls before one year prior to the expiration of its natural term (that is, before December 2012)—and I have detailed in the last few months on this blog, the means by which this is likely to happen—then the Greens will find themselves in a terrible predicament. An Abbott coalition government coming to office before this date will not have the numbers to repeal the Carbon Tax. The Greens know their numbers in the Senate are an accident of history and are unlikely to be repeated in the forseeable future.
What are the Greens to do? Do they act as political pragmatists, espousing “the art of the possible”: side with Abbott (whom they loathe), vote down the Carbon Tax they extorted from Gillard and betray and disillusion all those Australians (predominantly young and impressionable) who voted for them, in order to maximize the length of their current hold on the balance of power?
Or do they act on principle, uphold the Carbon Tax, block Abbott’s repealing bills and give him the constitutional trigger he needs for a double dissolution, booting the Greens out of their seats before time, and forcing a general election which polls consistently show will consign Labor to oblivion and the Greens to irrelevance?
It’s a game of chicken: for Abbott, a test of nerve; for the Greens, a test of character. And for Labor? It isn’t a test of them at all. They’ve already been tested; and now, their chickens are coming home to roost.
Excellent summary. Ozboy….. Great post.
Ditto. Pity JD hasn’t picked up on it or if he has he is waiting on events.
Tony Abbott has today gone one step further, warning businesses not to buy post-dated emissions permits as a Coalition government will render them worthless.
Federal Treasurer Wayne Swan, in an extraordinary outburst, declared Labor would refuse to recognize any Coalition mandate to rescind the tax. Oh well, at least Labor have dropped any pretence to be concerned with democracy.
This is getting serious.
Interesting to say the least in regard to the latest from Tony Abbott. This piece of information renders parts of my article on this redundant since if he does accomplish what he promises that he will make sure that those scam artists who just purchase “post-dated emissions permits” will not be unduly or unscrupulously compsensated. The idea that the Government will be forced to pay them for this might very well make the entire process slightly risky for people and as such it will probably happen at a much smaller scale. This is a good thing and it was crucial for Mr. Abbott to do this in order to allow the possibility of the removal of the law. So good news there.
The labor party seems to be in a very bad position with this new stance with their declaration here. I can only imagine that the labor party is basically dead in the water as nothing but a minority party in the future. How interesting that one of the legacies of the first female PM of Australia is to destroy her own party?
Funnily enough Ben, the first elected “female” PM of N.Z. did exactly the same thing to the Labour Party in this country, before retiring to the U.N..
We face the possibility of a single party government under an MMP electoral system; that’s novel for us.
braunson MMP is that a form of proportional representation?
I’ll answer that one for Braunson (who probably feels that venturing onto an Australian website this weekend is a bad omen) 😆
Mixed-member proportional representation, or MMP, is the electoral system most commonly associated with Germany, and introduced recently to New Zealand. I won’t go into details here, but the Wiki article on it is fair and accurate.
Its advantages include (and IMHO, are limited to) an accurate representation of the will of the people. On the face of it, anyway. But how many people actually vote for ungovernability? It’s really only justified in countries where there’s not a tinker’s worth of difference in policy between the major parties.
The disadvantages include a minority government unable to implement a coherent and consistent policy, and being beholden to minor parties, who thus receive a disproportionate share of influence. I hesitate to add for fear of invoking Godwin, but this was how the National Socialists came to power in Germany in the 1930s – Oz
Oz: I made a similar point to your last one on MMP on another blog: that a system that favours a multiplicity of (small) parties encourages extremism and faction (the two go hand in glove). I even mentioned the Weimar Republic and the National Socialists, so we are clearly on the ‘same page’ on that!
Of course the American system was deliberately constructed to allow strong choices between main parties, which discourages the proliferation of bickering petty splinter groups. As I argued previously elsewhere, strong major parties (ideally, just two) actually provides voters with, simultaneously, the most decent representation and the best chance for self-rule: decent representation, since a major party must be a ‘big tent’, tolerant of a range of views within its general platform; and allowing self-rule because when there are two big tents they can afford to be distinct (what we have is a fork in the road, not merely a twig on a tree).
Whether the present attempt to embed a carbon tax into the Australian political system is successful or not depends to a large extent on how well it can be exploited by business. It is a consumption tax, producers can get permits to emit, the cost of emissions is passed down to the buyer of any product or service that generates emissions. As such at the very least it increases the gross turnover of any business with the opportunities that brings.
If business comes to view a carbon tax as the cheapest option – with the possibility of benefits – to regulation of CO2 emissions then any new government with a wish to remove the tax may well find it is opposed by a stronger political force than a few Green senators…
The link Ozboy gave earlier leads onto other reports that claim the carbon tax is the least costly way of making cuts, and this view of the UK policy with the ongoing existence of a carbon trade system already in place.
Although it fails to mention all the associated problems of hedging, shorting and regulatory capture that such systems create, as well as the more recent prevarications….
But the main reason that I regard a carbon tax as a minor aspect of this is that taxation rates in modern democratic nations are inherently constrained. All such societies gravitate to a similar percentage of GDP that is appropriated and distributed by civic authority. Increasing one tax rarely increases the total take by the same amount. Allowances and associated subsidies always dilute the take. Complex changes in spending and investment as individuals and business respond to the new tax often reduce the take of other apparently unrelated sources of government income also offsetting the effect.
I fail to see how any new tax can be construed as an attempt by government to significantly change its level of control over an individual. The ownership of wealth is finite. Increase tax and as more goes to government there is less wealth to tax. Unless the way in which the government redistributes that wealth enhances its overall production. The Utopian dream of both communists and free market libertarians. Although with opposite methodologies.
In practice, modern democracies can do little more than tinker with around 5% of the total take, altering the source and sinks of its distribution of government income. The carbon tax is a marginal approach to the problem – if you accept the problem exists !!! -GRIN-
Abbott will have a difficult choice if the carbon tax is embedded in the government-business taxation and regulatory system. Because it is a tax impacting consumers it may be electorally popular to rescind it. But business may see it as the cheapest way for them to cope with the costs of reducing CO2 emissions and oppose any alternative.
That would lead Abbott with the option of removing any attempt at regulating the CO2 emissions. While this might be superficially attractive to business, the rising cost of fossil fuels will pose a temptation to gain from alternatives by taking a government subsidy for reduced use which might make the governments’ crony-capitalists less eager for deregulation if it also means removal of subsidies.
Many international companies are also involved in emission reduction schemes like carbon permit trades and will view these as an inevitable component of future business, and a carbon tax as the most beneficial form for them.
If Abbott removes a carbon tax and any emissions regulation he is betting his political future on no global warming. Triggering new elections and wiping out the Greens on the back of hatred of the carbon tax and removing any emissions regulation/cuts will remain popular just as long as the climate fails to change. Que? Climate has never failed to change. So the next election will be the definitive test of your hypothesis.
The science and issues behind AGW have been discussed here and widely to rebarbative extremes and it is unproductive to rehash the opposing views. But the ‘Green’ movement is not going to fade if decadel averages continue to exceed each preceding decade. The global political response will drag nation states, however reluctantly, along with it just as it did with international agreements on emissions causing acid rain and ozone depletion.
If the warming and climate change fail to materialise then the environmental cost of CO2 emissions will be insignificant and Abbott wins, the Greens become a political irrelevance.
If climate change continues, the monsoon agricultural systems of S E Asia collapse and the Bangladeshi refugees/migrants all 50 million of them? are just a fraction of the problem raised by a warming ecosphere then the political influence of ideologies that claim to have a solution will become very powerful!
This is situation where the climate dog wags the political tail…. -g-
Apologies for the inline comments Izen, made for the sake of clarity, but which these days I normally reserve for the badly-behaved.
But it’s an interesting collection of thoughts you’ve given us. Here are some more:
Are you aware that no-one is talking about actually reducing greenhouse emissions to any meaningful extent? Our government’s own modelling suggests that under the Carbon Tax regime, at least three-quarters of all “reductions” are going to come from purchases of foreign carbon credits. From countries with rather dubious carbon accounting practices in any case. It’s all about appearances, and to a lesser extent, currying favour with the UN (KRudd has the Secretary-General’s job in his sights).
You’re right, if we get (for the first time) incontrovertible proof a) of CAGW, and b) of actions that will mitigate it to a significant degree, those promoting such solutions will be given a lot of attention. But those are some almighty “ifs” on the way to that conclusion, and as you said, we aren’t canvassing those today.
A Carbon Tax is going to reduce greenhouse gas emissions in the same way that cigarette taxes stopped people smoking. Which they didn’t. That’s because people need energy to maintain their standard of living, even more than they need an addictive drug like nicotine.
The Greens aren’t going to fade away, but not for the reason you think. Firstly, because they aren’t “greens” at all. They’re socialists, who care about as much for the environment as did the governments of the Soviet Union, China and North Korea. This isn’t some blinkered, right-wing paranoia, it’s a statement of fact, which I’ve demonstrated on this blog many times before. Hopefully they will eventually drop environmentalism and find some other vehicle in their endless pursuit of political power. This will leave the environmental movement to those (like me) who not only are genuinely concerned with mankind’s trashing of the planet (and we often do), but are prepared to roll up our sleeves and actually do something about it, as opposed to joining protest marches, singing folk songs and whining that someone else should fix the problem – Oz
Have you seen this report yet? There’s lots of maths and stuff… (But they haven’t heard about your storage system)….
Must be something wrong with it….Otherwise I’m fighting against something that lost before I started….How dumb is that?
The core argument seems credible. That having to alter the generation rate from inefficient gas turbines that can offset the speed and depth of wind variations negates the few percent from wind.
It doesn’t seem to deal with the cost of variable generation because demand is variable. The -everyone puts the microwave on in the advert break -problem. The capability has to be there to deal with variations in generation and demand. The wind turbines are just one more element.
The problem le Pair identifies is one that diminishes rapidly the greater the contribution of turbines and windfarms to the overall generation.
But this is a big problem for ALL forms of generation. Most coal, gas and nuclear plant is most efficient when run at ~100%. But demand varies, managing that variation is a major problem for generation systems, the favourite solution is a hydroelectric system that can start fast, and during low demand can pump water back up to the top reservoir using the big plants running at 100%.
This is why smart grids are the new tech. A de-centralised network grid distribution system would transfer the problem of variable demand from the generators who could provide baseload, and the smart grid would balance that with local and regional sources. The big advantage comes when a significant number of recharging electric cars are connected, or houshold energy sources, then they become a storage system, charged up when demand is low, available as instant backup when demand peaks.
The big problem is we don’t have a good means of storing electrical energy.
C le Pair turns up with all the usual suspects, (Pielke, Watts etc) so he is on a particular ‘side’. His analysis may suffer from just as much comfirmation bias as the ‘other’ side is often accused of. I still think his analysis is probably about right. Marginal contributions to generation tend to come with marginal costs that can offset the apparent gains. Technological advances can solve some of that, and will undoubtedly become employed as efficient energy generation and distribution becomes necessary with greater demand and higher fuel costs. Doing a quick background check got me a ggl translation of a Netherlands report. I’m not sure if it loses or gains in translation, but clearly the guy is no ‘mainstream’ scientists! –
“Director Le Pair leaves research funding
“Top research schools are the worst thing there is’
Kees le Pair leaving in finance STW technique. The director goes sailing with the big mouth. But until he good anchor light, he remains angry about the Dutch science policy, “Herman’s top research schools must immediately stop.”
Hi Ozboy, I hope to get around to a fuller response later, but just to cover a few quick points –
Ozboy-“Are you aware that no-one is talking about actually reducing greenhouse emissions to any meaningful extent?”
Yes. I have said before that I see very little chance of significant emission control, never mind reduction because the global political system is inadequate. And as a global problem it requires a global response.
Adaption is the inevitable consequence, the chances of significant mitigation are minimal.
Ozboy-“You’re right, if we get (for the first time) incontrovertible proof a) of CAGW, and b) of actions that will mitigate it to a significant degree, those promoting such solutions will be given a lot of attention. ”
You are more of an optimist than I am. If agricultural systems fail and societal collapse drives migration it MAY favour those who advocate ‘green’ policies. It may also favour the isolationist and zenophobic.
Ozboy-“The Greens aren’t going to fade away, but not for the reason you think. Firstly, because they aren’t “greens” at all. They’re socialists, who care about as much for the environment as did the governments of the Soviet Union, China and North Korea.”
The green movement is undoubtedly exploited by socialist ideologues. The watermelon analogy.
But it does go further than that. However delusional quasi-spiritual respect for ‘Nature’ may be it is an ancient and new aspect of the belief systems of a significant number of people. They do not hold these emotional beliefs because they match a socialist economic dogma.
I am afraid you are going to be surrounded by people who think the depth of their sincerity, protest songs and occupying a street are valid responses to environmental problems for a while yet. You are better of looking to co-opt industry into rolling up their sleeves and protecting the planet on the basis they want to have a decent place to do business….
hi Izen. Thanks for your view, and summery. The big difference that I see In this study, is the assumption that wind follies have a life of about 15 years. While the developers have been working on the assumption of 25 years….But nobody knows. It’s one big experiment, at our expense. If 15 years turns out to be the more realistic figure (and there is some evidence for this) And the maths in the study is correct, based on correct figures…..This is one big cock up. Created, I have to say, more by politicians than anyone else.
And I have to admit, the (miles) better team won last night. The Brauns will be rightly celebrating today, and the All Blacks look a shoo-in against the Froggies next weekend.
Has everyone seen this great cartoon?
Says it like it is about research funding!
Ah yes, the great Pickering. He was a mainstay of Australian cartooning for many years, and his annual Calendar (featuring politicians of the day in their birthday suits and exaggerated “bits” was always eagerly looked forward to. Fen, you’d really like this guy – Oz
meltemian says: October 17, 2011 at 10:24 pm
“Has everyone seen this great cartoon?
Says it like it is about research funding!”
It may confirm your suspicions of a vast conspiracy to shape the science by political forces, but it dosn’t really stand up to scrutiny when the actual process of grants and funding for research are examined.
It is certainly true that governments may try to manage scientific research for political reasons, the wonderful report of C le Pair ‘sailing with big mouth’ is of someone complaining about the Dutch government favoring research institutions with a good record of respected peer reviewed research rather than technological innovation. He favors applied research over pure.
And there are fashions and fads in these things. I remember a time in the 80s when cancer was the ‘big thing’ the joke was that you could get funding for ANY biological research – even into Horseradish peroxidase! – just by tacking on the claim that; “This research may have implications for the treatment of malignant disease.”
Science research funding in most rich nations is organised to try and reduce the amount of variation with representatives from academe, industry and government judging research applications on agreed criteria. But given that research does not come with garanteed outcomes, thats why there is research, it wouldnot be possible to exclude one type or direction of research in the way implied. Until it is done, a study of proxy temperature records from lake sediments for example is not automatically going to support or damage the current understanding of past climate.
And nobody is going to get research funding for work on the radiative transfer equations. They are the basis for the extra 1-3 W/m2 from rising CO2, but are ‘settled science’ in that the radiative transfer functions are used in so many other technological contexts that it would be like investigating Ohm’s law while surrounded by electronics!
Under Bush in the US of course there is an argument, and evidence that any bias in funding allocation was AGAINST AGW rather than for it. There is a well documented record of the Bush administration censoring or surpressing data, scientists and research that supported AGW and undermined the Bush position. –
Since Obama things might have been expected to improve, but the recent Kafka-esque farce with Eric May witch-hunting Charles Monnett for the polar bear data shows some of the anti-environment administrators are still in place after regulatory caputure during the Bush years. –
Right up to the present, the Right-wing extreme in the US at the state level is responding, (adapting?!) to the most extreme year of drought in its recorded history by suggesting prayer, and surpressing accurate reporting of the state of the climate. –
Now even with all this evidence for the OPPOSITE of preferential treatment for climate science in the US, it might still be asserted that the lack of ‘sceptical’ science is due to funding bias.
Except on the rare occasions when ‘sceptic’ do publish it has invariably been rubbish as seen with the recent work from Spencer and Braswell, or Lindzen and Choi, or Soon and Baliunas…
There is a clear pattern that the science that comes out of the sceptical side is rapidly refuted, falsified or retracted. Nothing from sceptics has yet got established as sound, USEFULL science on which further advances are based. The over a century of climate science now has the coherence and consilience that comes from a mature and well developed field of research.
I would want to avoid going round the same old AGW conflict yet again… but bringing up the carbon tax rather invites it….
The carbon tax is only ever going to be a marginal, mainly PR, exercise in any emissions reduction scheme. WINDOW dressing unless coordinated with other policy.
But to try and avoid cluttering up the OZ-bar with more AGW back-and-forth, perhaps we can agree to disagree that there are 3 possible scenarios.
1) CO2 causes a minor change in climate, insignificant compared to ‘natural variation’ the skeptics are vindicated and the world can go merrily on using fossil fuels including the enormous amounts of shale gas which become available.
2)CO2 causes ongoing and significant warming, agricultural systems degrade and collapse, many of the ‘catastrophic’ predictions of the ‘Greens come to pass…
3)The actuality is ambiguous… The climate continues to warm significantly, but a couple of major volcanic events cause a decade of cooling and the problems with world agricultural production are as much to do with over-stretch and water shortage in the face of growing demand as attributable to climate change.
Obviously I think the first of those options is by far the least likely – including the possiblity of significant shale gas extraction compensating for peak oil.
But ignoring the actual probability of any option, the second two will involve future societal collapse which will be unaffected by whatever level of carbon tax is, or is not, imposed.
The most likely future path if agricultural systems are strssed to breaking point is that China will maintain its own development by the old expedient used by Spain, France and Britain in the past, – Empire. They already have Tibet, when food crisis cause the fall of Bangladesh and other S E Asian States it will make sense for China to step in and ‘rescue’ these failed States. Its a common historical pattern, a strong neighbour ensures that a Nation does not dissipate entierly, it gets colonised by the neighbour which uses the new resources they have gained to prop up and repair the problems they have of diminishing returns on societal development in their OWN system.
I think the geo-politics that might emerge from big problems of whatever cause in agriculture, and stresses in the major developing societies with big populations is more interesting, and more relevent than any attempts to impose a marginal carbon tax on Australia by a small coterie of Greens in the goverment.
You’re right Oz!….i hadn’t seen his work before……. How did he get away with his calendars? 🙂
This from the Sydney Morning Herald back in 1975 – Oz