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2020

April 21st, 2008

The 2020 summit kept me too busy to blog. Looking back on the weekend I have a range of impressions.

* Rudd’s opening speech was inspiring, one of the best I’ve heard from him. The same was true of the opening ceremony as a whole.

* As numerous speakers said, the sense of new possibilities and a new openness to ideas has been one of the striking outcomes of the change of government, to an extent that has certainly surprised me.

* In many areas, including the water and climate change sessions, the real message was not so much the need for new ideas (though there were some good ones) but the need to act much more urgently on what we already know

* From the government’s point of view, the Summit had a couple of effects. One was to shake up the policy agenda, giving Rudd the chance to pick up a lot of ideas that are broadly consistent with Labor’s policy platform but got crowded out of discussion in the course of me-too election campaigning. The other is to raise expectations that the government will actually achieve things in areas like climate change and indigenous policy, rather than putting a better spin on marginal changes to the policies inherited from Howard.

* It was already obvious that, with Howard gone, and Labor in office, the Republic issue would return to the agenda. It’s something we have to come to anyway, and is just awaiting the right mood of national optimism. To sustain what is bound to be a fairly lengthy debate, we need more than the natural optimism of an electoral honeymoon. For that reason, I hope, and expect, that concrete moves towards a Republic will be deferred for a while, until the government has some concrete achievements to celebrate.

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  1. gandhi
    April 21st, 2008 at 08:03 | #1

    What about Iraq? Not a single mention that I have seen, not even in reports on Security discussions:

    Despite the presence of high profile military figures, including former defence chief General Peter Cosgrove, there was little consideration of traditional security matters.

    Well of course not. Because as we all know, these things are far too important for the public to be involved.

  2. Spiros
    April 21st, 2008 at 08:44 | #2

    The conventional wisdom is that the republic won’t happen while the Queen is in situ. This is probably right. There is a lot of respect and affection for her, but very little for that tosser Charles.

    Since it appears that the Queen intends to leave the Palace feet first, let’s hope she doesn’t live as long as her mother.

  3. Spiros
    April 21st, 2008 at 08:54 | #3

    Salusinsky gets it uncharacteristically right in the Oz

    “the summit was less a seminar on national identity than a showcase for Kevinism (and Country Road). Rudd’s modus operandi seems to be to allow a thousand flowers to bloom, then carefully cherry-pick those that suit his agenda.”

  4. Muskiemp
    April 21st, 2008 at 09:26 | #4

    “the summit was less a seminar on national identity than a showcase for Kevinism (and Country Road). Rudd’s modus operandi seems to be to allow a thousand flowers to bloom, then carefully cherry-pick those that suit his agenda.�

    What a brilliant Idea.

  5. Persse
    April 21st, 2008 at 09:35 | #5

    I think we will put off the Republic debate for a while. We have to resolve the divide between those (like me) who just want to change over the stationary, and those, and I think they are the majority, who want to elect the head of state (shudder), in some manner. I tend to think that the compromise may have to mainly come from people who think as I do.
    Tried to follow some of the debates on ABC 2 while doing a bit of gardening. While I caught on to some interesting ideas, it was hard to follow – so I am looking forward to reading a more detailed report. Noticed some of the usual suspects like Bill Heffernan ranting on about turning the far north rivers to flow southwards. This sort of thing is like a disease with NP types.

  6. Salient Green
    April 21st, 2008 at 09:46 | #6

    Bob Katter’s contribution to the summit was this poisonous little flower.

    “Bob Katter, the independent member for Kennedy in outback Queensland argued for the creation of two new Australian states, North Queensland and North West Australia in which to house a booming population and new primary producers.
    “If you took out the capitals and coastal towns in the golden boomerang around the south and south east of the country you would still have 90 per cent of Australia left and hardly any people in it,� he said.
    “It is immoral that we are not using that land and putting people in it. About 80 million of our neighbours go to bed hungry and yet we sink their boats when they try to come here. We need the put people into northern Australia.â€?”

    Until this I had a lot of respect for the man but now I can see he is just another cornucopian who wants his own empire up north where the beautiful rainforests try to clean our polluted air and humans go mad in the ‘wet’.

    How is it that, with all the evidence of peak oil, resource depletion, over-fishing, climate change etc, otherwise intelligent people still see the natural world as somewhere to put more people? This flower would best be left to wilt.

  7. April 21st, 2008 at 10:45 | #7

    I assume Kevin Rudd staged this show to engage with intellectual elites around the country – not an unworthy objective given that governments don’t have a monopoly on good ideas. Anyway he seems to have won at least one supporter as a consequence.

    The problem with catering to elites is that it fosters illusions about what interests people in a democracy generally. The reports on the republic issue suggested that Rudd saw the defeat of the referendom 10 years ago as a constraint to be overcome by a careful conditioning of the population this time around.

    Another interpretation is that people voted sensibly last time around on the basis of a preference for retaining historic links to Britain or that they simply thought that an element of political trickery must lie behind pushing what to most of them would be a low priority policy.

    Hopefully it is a sense of such that makes you wish to defer raising the republican issue anytime soon.

    I had a different interpretation generally of the 2020 show although I wasn’t there and could only watch bits on the tele. It seemed to me to provide a mirror image of Kevin Rudd’s devotion to symbolic gesture, cliche and a preference for shadow over substance.

  8. Persse
    April 21st, 2008 at 10:49 | #8

    Have been reading the report on the summit. Not convinced that its worth is in the substantive policy suggestions. Bit too heavy on rhetoric, rather than the practical. Which is to be expected, I suppose.

    Perhaps the main benefit is simply the process itself.

    One concern I have is that this is a consensus driven outcome.

    Given that the formidable challenges ahead may require ideas that are unpopular, discounted or simply too challenging. It may be that reaching a broad consensus view is an unhelpful bias.

    Do we get to hear about the minority views from this summit? – they could be the important ones. Though, no doubt, many submissions will have been counted out for good reasons.

    Like mine that we scrap the AC power network and replace it with a high voltage DC network. :)

  9. Salient Green
    April 21st, 2008 at 11:27 | #9

    Persse, I know that power losses are less with DC. Can you give me any idea what is involved in changing over? At what point does the DC return to AC? What would would it cost and what would the savings be?

  10. gordon
    April 21st, 2008 at 11:27 | #10

    I suppose if you convene a roomful of republicans they will recommend a republic. Wow.

    As I’ve commented before, changing to a Republic won’t make anybody a better person; it won’t make us richer; it won’t improve our sex lives; it won’t make it rain and it won’t reverse our alarming slide into a society of haves and have-nots.

    The republic may be the only issue on which Australia’s chardonnay socialists can all agree, so it’s always a good excuse to open a bottle. Smiles all ’round. And maybe a lot of valuable networking opportunities for people looking for Govt. jobs and contracts.

    What a crock!

  11. swio
    April 21st, 2008 at 11:48 | #11

    I’m scratching my head about the Republic thing. From where I stand it is a strange thing to make a high priority.

    Can anybody point me to some detailed coverage of the outcomes from each stream? The initial report on the official 2020 page is very light on details and the MSM coverage is so light about actual policies proposed as to be almost vacuous (as usual). All the blogosphere coverage seems to consist of either whinges or fairly vague generalisations. I know the blogger participants must be exhausted so no fault in that but I would like a bit more detail from somewhere.

    There will be an official report but that is two weeks away, which is forever in internet terms. Is there somewhere I can simply get the agreed recommendations of each stream?

  12. chrisl
    April 21st, 2008 at 11:54 | #12

    hc. Lets face it, we live in the age of symbolism.
    We can wear red bandanas,shave our heads, march over bridges, feel very good about ourselves and not have to get out of our middle -class comfort zones.
    Perfect

  13. rog
    April 21st, 2008 at 11:55 | #13

    My understanding is that the dominant issues were the republic and abolishing the states; due to the complexity of the legal structure neither of which will be easy to undertake and unlikely to be ever achieved.

    As David Marr said, its was a bit of a yak amongst like minded people.

  14. April 21st, 2008 at 12:37 | #14

    The Security group’s write-up in the initial report PDF suggests that there were basically two opposed sides who used very similar language to drive radically different agendas. Surprise.

    The advantage to Rudd is that he gets issues out in the open, sees how much passion various talking points can generate, and controls which issues flood the media over coming weeks.

  15. April 21st, 2008 at 12:38 | #15

    I notice the Republic issue was heavily pushed by the News Ltd bloke, so no surprise it is getting lots of air time.

  16. April 21st, 2008 at 14:59 | #16

    From Annabel Crabbe liveblogging the 2020 gabfest:

    Let me cheer you up with a few more tales from the Economics group. It’s a McKinsey kind of operation in there; apparently when the participants arrived they all had to write one big idea on a piece of paper then walk around holding it above their heads so as to attract like-minded folk. Hilarious. Apparently Lindsay Fox was walking around with “Internodal Transport” above his head for some time.

    So … if you had to come up with a sign for the economics group what would your “big idea” be in ten words or less?

    Mine would read: TAX CARBON, NOT INCOME

  17. Steve Hamilton
    April 21st, 2008 at 15:45 | #17

    I would be interested to know John, what you thought of the performance of your co-chairs. I watched a little bit on the weekend, and while all of the other streams seemed to involve quite interactive and open discussion, the climate change/water/sustainability stream seemed to be dominated by Penny Wong barking orders and extinguishing free thinking. On TV there seemed to be a marked difference in “vibe” between yours and other streams; seeing Penny Wong perched above everyone else with her seemingly “dictatorial” style was a little disconcerting.

    Cheers

  18. wizofaus
    April 21st, 2008 at 16:22 | #18

    carbonsink, are you seriously proposing to scrap income taxes? I’m all for decreasing income taxes in the lower brackets and making up the revenue loss with carbon taxes, but any tax scheme that leaves those on the lowest incomes worse off is not one I would want to see.

  19. April 21st, 2008 at 16:31 | #19

    carbonsink, are you seriously proposing to scrap income taxes?
    No, of course not, but Terje would probably support such a proposal. (No, really).
    I’m all for decreasing income taxes in the lower brackets and making up the revenue loss with carbon taxes, but any tax scheme that leaves those on the lowest incomes worse off is not one I would want to see.
    Yes agreed, but that’s bit hard to fit on a sign.

    My point is, the one big idea that needed to come out of this summit is a big shift away from income taxes and towards carbon taxes, or at least a price on carbon.

    The one politician giving this serious consideration is Malcolm Turnbull. If Turnbull became leader and this became official Liberal policy at the next election (unlikely, but you never know) I’d vote Liberal … and I’ve never voted anything by ALP/Green in my life.

  20. April 21st, 2008 at 16:33 | #20

    carbonsink, are you seriously proposing to scrap income taxes?

    No, of course not, but Terje would probably support such a proposal. (No, really).

    I’m all for decreasing income taxes in the lower brackets and making up the revenue loss with carbon taxes, but any tax scheme that leaves those on the lowest incomes worse off is not one I would want to see.

    Yes agreed, but that’s bit hard to fit on a sign.

    My point is, the one big idea that needed to come out of this summit is a big shift away from income taxes and towards carbon taxes, or at least a price on carbon.

    The one politician giving this serious consideration is Malcolm Turnbull. If Turnbull became leader and this became official Liberal policy at the next election (unlikely, but you never know) I’d vote Liberal … and I’ve never voted anything by ALP/Green in my life.

    (apologies for the double-post … how about a preview button ProfQ?)

  21. wizofaus
    April 21st, 2008 at 17:19 | #21

    Actually I agree – if Turnbull took charge of the Liberal party and turned it into a genuinely small-liberal party prepared to take a rational approach to environmental issues, they’d have my vote over the ALP anyday.

    Anyway, it seems the momentum is unstoppably towards cap & trade schemes, despite the slightly underwhelming evidence from Europe of their likely effectiveness.

  22. wizofaus
    April 21st, 2008 at 17:21 | #22

    (on and ditto on the preview feature please – with forced preview before submit. Then I might have noticed my missing ” l” after “small”.

  23. April 21st, 2008 at 17:51 | #23

    wizofaus: I’m agnostic on the ETS vs carbon tax issue. I don’t really mind as long as there is a price put on carbon that’s high enough to discourage consumption of fossil fuels. But as you say, the momentum towards an ETS is unstoppable.

    If you follow the Turnbull link above you’ll see he is proposing using the revenues from the ETS to reduce other taxes, including income tax.

  24. TerjeP
    April 21st, 2008 at 17:52 | #24

    Yes abolishing income tax and replacing it with either a higher GST or else a broadly based energy tax (or carbon tax) is something I would support. However you would need to tweak welfare and I’d still argue for a lower tax take overall. In fact the key reason I would prefer such a tax structure is because it would place more political constraints on creating and maintaining oversized high taxing government. Of course elliminating payroll tax would be a good alternative to reducing income tax and probably more politically viable.

  25. April 21st, 2008 at 18:27 | #25

    Further to my comment #7 para 2.

    It is interesting to note – see this document circulated to Summit Show attendees (here)- that support for a move to a republic has declined since 1995.

  26. Persse
    April 21st, 2008 at 18:53 | #26

    SG

    http://www.sciam.com/article.cfm?id=a-solar-grand-plan

    From the Scientific American website encapsulates the idea. The essential point as far as AC/DC is that modern high power electronics give the ability to manipulate both with a high level of efficiency.

    The restrictions on DC that lead to Edison losing his historic battle with Tesla no longer apply.

    Efficient transport of electrical power is dependent on high voltage, the higher the more efficient.

    The traditional advantage of light weight and cheap motors is less with advanced electric motors today.

    In the article, I found particularly impressive the concept of compressed air storage in convenient locations (already done by the gas industry) and using the compressed air with natural gas(in much smaller quantities to drive a turbine than a conventional gas power plant).

    However the sums involved in establishing a solar etc infrastructure take the breath away except when you compare it to not doing it.

  27. rog
    April 21st, 2008 at 19:03 | #27

    Either summiteers cant read, or dont want to read, or are in denial (or all the above)

  28. wizofaus
    April 21st, 2008 at 19:17 | #28

    Terje, there’s a very big difference between an energy tax and a carbon tax. I can’t see any justification for an energy tax, and it would surely have a significantly depressive effect on economic growth.

    I’m curious what political constraints you think scrapping income tax would have on maintaining high-spending government programs. After all, significant tax cuts haven’t stopped Bush et al from running what is surely the highest-spending government of all time.

  29. jquiggin
    April 21st, 2008 at 19:20 | #29

    This is cherrypicking on your part Harry. The same graph shows that opposition to a republic has also declined since 1995 – the 1995 survey found almost no-one indifferent. Support for a republic declined a few percentage points in the last years of the Howard government, but remained well above opposition.

  30. rog
    April 21st, 2008 at 20:51 | #30
  31. April 21st, 2008 at 20:52 | #31

    “I had a different interpretation generally of the 2020 show although I wasn’t there and could only watch bits on the tele. It seemed to me to provide a mirror image of Kevin Rudd’s devotion to symbolic gesture, cliche and a preference for shadow over substance.”

    Settle down Harry. I think we need to give Rudd at least 12 months in office before making judgement.

    I agree with JQ, Rudd needs to get some runs on the board before prioritising the Republic debate. Such a debate can wait for a second term.

  32. rog
    April 21st, 2008 at 21:09 | #32

    It’s probably worth noting the divergence between the 2020 graph and the actual vote in 1999 where 55% voted ‘No’ – the graph says that in 1999 34% said ‘No’

  33. jquiggin
    April 21st, 2008 at 21:20 | #33

    #32 Umm, perhaps you’ve forgotten, but this was because lots of supporters of a directly elected president voted “No”.

    However, in the interests of seeing Rudd remain PM until 2020 (at least) I encourage supporters of the Liberal party to demand strict adherence to monarchism from the party and particularly from anyone who aspires to lead it :-) . Honestly, guys, why are you rushing to pick up this tarbaby?

  34. frankis
    April 21st, 2008 at 21:25 | #34

    It’d be nice to think that we might try to achieve something some time soon. Here’s a vote for the idea of taxing “bads” such as carbon emissions, with offsetting easing of taxes on “goods” such as wage and salary income.
    William Nordhaus:

    Taxes are almost a four-letter word in the American political lexicon. But the discussion of taxes sometimes makes a fundamental mistake in distinguishing different kinds of taxes. Some people have objected to carbon taxes because, they argue, taxes lead to economic inefficiencies. While this is generally correct for taxes on “goods� like consumption, labor, and saving, it is incorrect for taxes on “bads� like CO2 emissions.

    Taxes on labor distort people’s decisions about how much to work and when to retire, and these decisions can be costly to the economy. Taxes on bads like CO2 are precisely the opposite. They serve to remove implicit subsidies on harmful or wasteful activities. Emitting CO2 into the atmosphere for free is similar to allowing people to smoke in a crowded room or dump trash in a
    national park. The purpose of emissions taxes is to remove the implicit subsidy. Carbon taxes enhance efficiency because they correct for market distortions that arise when people do not take into account the external effects of their energy consumption. If the economy could substitute taxes on bads like pollution for goods like labor, there would be significant improvements in economic efficiency.
    http://www.econ.yale.edu/~nordhaus/homepage/dice_mss_072407_all.pdf (PDF)

    Which can you count more efficiently, more certainly and more accurately – carbon as it flows from a few large pipes and mines or carbon as it vanishes out of exhaust pipes and smokestacks all over the world?

    On the equity issues of a uniform global tax rate for carbon Nordhaus also offers this:

    Many important details would need to be negotiated on burden sharing. It might be reasonable to allow full participation to depend upon the level of economic development. For example, countries might be expected to participate fully when their incomes reach a given threshold (perhaps $10,000 per capita), and poor countries might receive transfers to encourage early and complete participation. If carbon prices are equalized across participating
    countries, there will be no need for tariffs or border tax adjustments among participants. The issues of sanctions, the location of taxation, international-trade treatment, and transfers to developing countries under a harmonized carbon
    tax are important details that require discussion and refinement.

  35. rog
    April 21st, 2008 at 21:26 | #35

    One of the outcomes was this; “Stage 1: Introduce an Australian republic, via a two-stage process, with Stage 1 ending ties with the UK while retaining the Governor-General’s titles and powers for five years. Stage 2: Identifying new models after extensive and broad consultation.”

    This would mean that the PM appointed GG would be the monarch whilst alternatives are sought. I cant see that one getting of the ground in a referendum – from memory the people want to vote for the head of state.

  36. frankis
    April 21st, 2008 at 21:31 | #36

    You characters attempting to persuade yourselves that Oz sans little Johnnie still really and truly loves to swear its loyalty to an English monarchy – you’re sadly serious aren’t you. Move on doodz, Johnny Howard’s been moved on.

  37. rog
    April 21st, 2008 at 21:32 | #37

    It’s a 2020 tarbaby JQ. Without public support via a referendum to alter the constitution the idea of reforming governance will be still born

  38. rog
    April 21st, 2008 at 21:39 | #38

    The ARM recommend a plebiscite to establish the direction re republic and then, if successful, plebiscites to determine the mode of government. This was not the 2020 proposal.

  39. April 21st, 2008 at 21:55 | #39

    John, According to Rog’s table – opposition to a republic hasn’t declined.

    Opposition to republic 1995 was 34%
    Opposition to republic 2007 was 36%.

    My claim, ‘Support for a move to a republic has declined since 1995′.

    Support for a republic in 1995 was 47%.
    Support for a republic in 2007 was 42%.

    On this basis my claims are correct.

    There were many in the Liberal Party who supported a republic and many who opposed it. No-one would seek to tie the party down on this one.

    My main point was that the views of 1002 delegates meeting in Canberra do not create conditions for believing a groundswell of opinion is returning for a republic.

    Nor do the published opinion polls – quite the opposite.

  40. April 21st, 2008 at 21:59 | #40

    Further to my point #1 above, here’s Juan Cole today:

    It is an index of the despotism to which the United States has fallen victim that we must hope for other, more civilized countries, to try our war criminals. Why can’t public officials be prosecuted for violating the Bill of Rights’ guarantee against cruel and unusual torture? Why can’t an International Military Tribunal be set up as at Nuremberg?

    Was anybody discussing that at 2020? Why not?

    Aussie SAS troops drew first blood in Iraq, Aussie officials were present in torture sessions, Aussie lawyers, politicians, media and military voices loudly supported the US re-interpretation of the Geneva Conventions, the Howard government silenced dissenting opinions in the intelligence community, we have backed US War Crimes to the hilt (including the claimed right to further “pre-emptive” wars and the habitual targeting of civilian areas)…

    And to all intents and purposes, given the continuing official silence on these issues, we remain beholden to the US neocon vision. We still pretend the invasion was legal!

    How do we move on with these horrendously important issues unresolved?

    I don’t get it.

    I don’t get it.

    I don’t get it.

  41. Steve Hamilton
    April 21st, 2008 at 22:00 | #41

    I agree. I think the majority of people really couldn’t care less. Hence the summit being labeled as “elitist” as it doesn’t reflect the feelings of normal, everday Australians.

    Cheers

  42. frankis
    April 21st, 2008 at 22:10 | #42

    Keep it up Harry, you can be the last monarchist to switch out the lights at the palace if you’re good. What you won’t be likely to be doing is gaining new converts to the great cause.

  43. April 21st, 2008 at 22:35 | #43

    Terje, there’s a very big difference between an energy tax and a carbon tax. I can’t see any justification for an energy tax, and it would surely have a significantly depressive effect on economic growth.

    Personally I can’t see much justification for a carbon tax except as a means of cutting income tax but I suppose thats beside the point. All taxes depress growth. If you removed income tax and introduce an energy tax (or carbon tax) I can’t see the latter as being worse than the former in growth terms.

    I’m curious what political constraints you think scrapping income tax would have on maintaining high-spending government programs. After all, significant tax cuts haven’t stopped Bush et al from running what is surely the highest-spending government of all time.

    I didn’t mean to say it would stop them spending. It would however make it harder politically to keep on taxing so much and easier politically to cut taxes. Essentially because you can’t wedge one income class against another.

  44. April 21st, 2008 at 23:39 | #44

    Personally I can’t see much justification for a carbon tax…

    Oh I don’t know, ummmm, lemme see, I knew there was a reason …. oh yeah! to prevent the destruction of the planet.

    You know, that might actually be more a important goal than reducing tax and smaller government.

  45. Steve Hamilton
    April 22nd, 2008 at 00:10 | #45

    The core issue is whether you go with quantity regulation with tradable permits or price regulation with taxes. It all depends on the nature of the environmental damage. Over time, climate change is being seen as a threat with increasing urgency; this has largely put to bed the idea of “carbon taxes” per se, and enhanced the focus on quantity regulation, albeit with tradability.

    Of all people, I’d expect someone with strong pro-environment views to much prefer carbon regulation over a carbon tax; after all taxes leave the extent of pollution in the hands of largely unpredictable individuals, while regulation ensures a solid, definite level of pollution, regardless of the distortive and detrimental effects on individuals and overall efficiency (although tradability offsets this somewhat). Or at least that’s my understanding of the issue.

    Cheers

  46. frankis
    April 22nd, 2008 at 08:28 | #46

    Steve, people with “strong pro-environment views” won’t get what they need by being anti-market or economically irrational. The likely effectiveness of regulation and taxation in achieving a decrease of our carbon emissions can certainly be argued. Against arguments in favour of cap and trade regulation I’d firstly pose that when the dominant rentseekers today are so keen for it this must tell you something significant – it has at least one major flaw that they believe they’ll be able to exploit to their profit. For instance I think a cap and trade scheme intended to be enforced at the consumer level must be more easily rortable than a carbon tax at well and mine-head would be. I don’t want to see players getting rich by gaming a cumbersome regulatory system as it fails to produce real, provable, improvements in global carbon emissions. I think we should aim to raise increasing fractions of our taxes from “bads”, in this case killing two undesirable things – market gamers and reckless carbon pollution – with each stone.

  47. John Greenfield
    April 22nd, 2008 at 09:24 | #47

    John, I’m deleting this and anything further from you that contains references to “Luvvies”. If you can’t make your point without this tiresome stuff, please comment elsewhere – JQ

  48. April 22nd, 2008 at 09:30 | #48

    John Greenfield #47,

    Your comment is almost a verbatim repeat of today’s editorial in the Australian. Funny that.

  49. John Greenfield
    April 22nd, 2008 at 09:38 | #49

    Please read the comments policy and the post on Trolls before commenting further – JQ

  50. gordon
    April 22nd, 2008 at 10:07 | #50

    Frankis (#36) – as gandhi (#40) notes, our problem with Empire is no longer with the UK, and hasn’t been for a long time. Our Imperial problem is now with the US. If you started a movement for National independence from Washington (and consequent withdrawal of Australian military from Iraq and Afghanistan) I’d join up like a shot. Such a movement might actually have some substance. But maybe Australian republicans are actually supportive of the US “alliance� and its illegal and inhuman consequences.

  51. frankis
    April 22nd, 2008 at 10:27 | #51

    Well, I’m no monarchist despite feeling real respect and affection for our good Queen Elizabeth and her family. This would be respect and affection lacking in my feelings for the Cheney/Bush Whitehouse and all who sail with ‘em, fer sure ‘n certain.

  52. sleet
    April 22nd, 2008 at 10:40 | #52

    @JQ
    It’s nice to see there are those with a positive view of the event. I was a bit disappointed after my discussions with another attending UQ academic indicated strong cynicism.

    Also, I’d be interested to know what the general mood seemed to be after the summit’s conclusion. Many were initially concerned that the summit was just one big political stage-play, and I imagine quite a few participants attended with such doubts. Was there any general change in this perspective by the end of the weekend? Did they feel like the government was being genuine?

  53. gordon
    April 22nd, 2008 at 17:23 | #53

    Steve Hamilton (#45): “Of all people, I’d expect someone with strong pro-environment views to much prefer carbon regulation over a carbon tax…”.

    Absolutely. Let’s remember that the carbon trading scheme only found its way into Kyoto at US insistance. Then the US walked away, leaving the rest of us lumbered with it. The Montreal Protocol (covering ozone-depleting chemicals) is hardly ever raised as an instance of successful control of dangerous atmospheric pollution by regulation, yet it could and should have shown the way.

  54. Steve Hamilton
    April 22nd, 2008 at 20:21 | #54

    I think the idea though is that there are 3 options;

    Tax/subsidy
    Quantity regulation
    Quantity regulation with tradability

    The idea is that quantity regulation is better at gauranteeing a definite level of reduction, but may have adverse consequences, while a tax is likely to be inferior in terms of gauranteeing a definite level of reduction, but may be less likely to have adverse consequences.

    Adding tradability to quantity regulation is supposed to give you the best of both worlds as you still guarantee a definite level of reduction, but you allow the greatest reductions to be made by the firms who can most efficiently achieve them. Hence the rationale behind the proposed ETS in Australia.

    I’d probably just suggest that banning CFC emissions is a somewhat less wide-reaching proposal than banning CO2 emissions; one would expect the possible “side-effects” of the latter to be far more significant.

    Cheers

  55. April 23rd, 2008 at 09:47 | #55

    I’d probably just suggest that banning CFC emissions is a somewhat less wide-reaching proposal than banning CO2 emissions; one would expect the possible “side-effects� of the latter to be far more significant.

    A masterly piece of understatement Steve … and a fine post I might add.

    We could probably ban food, water and air as well, but chances are it would be ineffective.

    With CFCs there was an obvious, cheap, effective alternative that was already available. That is not the case with fossil fuels. We are trying change the very foundations of modern civilisation, you can’t just ban it.

  56. wizofaus
    April 23rd, 2008 at 10:28 | #56

    Terje, I think the quote from Nordhaus above accurately captures the benefits of a carbon tax. As for the idea that “all taxes depress growth” – if this were literally true, then removing all taxation would give the fastest possible economic growth. But anyone who believes that economic growth would continue for very long without a properly-funded government to maintain the integrity of the environment necessary for a modern market economy to function in is, to put it mildly, a little naive (or deluded).
    Further, it also assumes that governments are invariably worse at deciding how best to invest capital than private companies, which seems a quite unprovable claim to me.

  57. April 23rd, 2008 at 11:22 | #57

    wizofaus @ 56: Oh they’re deluded alright!

    As to the energy tax vs carbon (emissions) tax debate: I think the key difference is that we want to penalise the ‘bad’ (carbon emissions) by taxing it, and encourage the ‘good’ (energy production) by not taxing it. If you simply tax fossil fuels it doesn’t directly encourage technologies that produce fewer carbon emissions per unit of fossil fuel burned. (of course it does make the fossil fuels more expensive thereby encouraging more efficient use of fossil fuels with the side-effect of lower emissions)

    Granted it is considerably more difficult to tax carbon emissions at the tailpipe than it is to tax fossil fuels at the mine/well.

  58. April 23rd, 2008 at 12:15 | #58

    Ross Gittins makes a fool of himself today by cheering on the fact that Australia profits from the enemy of the human race.

    On the second page he makes this curious comment:

    (The news will, however, discomfort people who’re convincing themselves it’s a sin to sell coal and those who imagine global warming will somehow halt the poor countries’ economic development. Remember that most of what we’re selling the Chinese goes to make steel, not electricity.)

    As I understand it, if you burn coal for steel production or electricity generation, you still produce a similar amount of CO2. I know that some of the carbon in the coal is fixed in the steel alloy but most of it is released as CO2. Please feel free to correct me if I have that wrong.

    Australia has made a deal with the devil and the devil is coal. Its like we’ve harvested a bumper crop of opium poppies and the economists are applauding the high price of herion and telling us how much richer we’ll all be (ugh!). It may be a radical view now, but I am utterly convinced this is how we will view this dark period in Australia’s history in … oh, around 2020.

  59. wizofaus
    April 23rd, 2008 at 13:05 | #59

    Actually carbonsink, taxing carbon emissions at the tailpipe is simply – the amount of CO2 produced from a litre of petrol purchased is quite easily calculated. So a tax on petrol is effectively a tax on CO2 emissions, seeing as petrol has no use other than for burning for energy. If someone magically invents a method of extracting and storing the CO2 emissions generated by an internal combustion engine, then we’ll cross that bridge on the unlikely chance we come to it.

    And yes, Gittins should check his facts more carefully. There’s no question very significant amounts of CO2 is emitted as part of the steel production process.

    If the vast majority of the profits we were currently making from coal were being ploughed back into developing replacement jobs and technologies, I don’t think anyone would object too much to the degree to which we will still rely on coal exports, but as long as coal-producers and exporters have an obligation to shareholders to return maximum short-term profits to them, that’s not likely to happen.

  60. April 23rd, 2008 at 13:30 | #60

    the amount of CO2 produced from a litre of petrol purchased is quite easily calculated

    Sure that might work for cars, but say you taxed coal by the tonne and not CO2 emitted by the tonne, how does that encourage investment in CCS? A powerstation with CCS would actually use more coal per unit of energy produced, than the powerstation without CCS.

    BTW, I’m not advocating CCS. IMO its a load of boll*cks, but I do think its important we levy the tax the right thing.

    That raises the issue of coal exports. With the near zero likelihood of a price being put on carbon emissions in any of our major coal markets (except Japan) I think our only option is to impose a carbon tax at the port. Every Australian should be outraged at the obscene profits our big miners are making out of destroying our kids future.

    How about a coal export funded ‘future fund’ that ploughs money into clean energy? Hey, we’ve had future funds for just about everything else, how about something really useful?

  61. Steve Hamilton
    April 23rd, 2008 at 13:54 | #61

    carbonsink: Nice analogy with heroin.

    wizofaus: You got it in 1.

    The amazing thing about fuel economy is it’s perfect correlation with CO2 emissions. The only way to reduce a car’s CO2 emissions is to reduce it’s fuel economy. So if you want to tax carbon emissions, you just raise the tax on fuel; pure and simple. The issue with fuel taxes is that short- to medium-term demand for petrol is extremely price inelastic; meaning that you’d have to apply a relatively massive tax in order to have the required effect.

    There’s a couple of interesting points here:

    First is the fact that in the past decade Europe has significantly discouraged CO2 emissions in vehicles (whether it be through higher taxes, regulation, and the subsidising of diesel). This has lead to a massive boom in diesel passenger cars in Europe, as they have a much lower fuel economy (20-30%) than an equivalent petrol engine. In focusing on the long-term issue of CO2 emissions however, the EU has inadvertantly encouraged emissions of much more dangerous (in the short term) gases such as NOx and particulates etc (diesels produce much more of these gases than do spark ignition engines). The short- to medium- term health impacts of such a situation have the potential to be significant.

    Secondly, in the US right now there is widespread debate going on along the lines of the conversation we’re having in this very thread. The Congress has passed a bill that will mandate (quantity regulation) a specific average fuel economy target for US carmakers by the year 2020. This is an ammendment to the decades-old CAFE (Corporate Average Fuel Economy) bill. However, carmakers have suggested that such regulations have the potential to significantly raise the cost of producing vehicles (many have suggested that it’s in the ballpark of $5000-$8000 per vehicle). Some carmakers are significantly better positioned to handle the required shift to lower fuel economy than others (GM, Chrysler and Ford are particularly disadvantaged given their comparatively high share in the SUV and Pickup Truck markets).

    Many have argued for the CAFE ammendments to be scrapped in favour of a fuel tax; ie. that in this instance price regulation might be preferred over quantity regulation. However, I’d argue that both options are flawed. Fuel taxes won’t do much good due to the inelasticity of demand for fuel, and quantity regulations will have an excessively negative effect on consumers with some carmakers forced to pass on higher cost increases than would otherwise most efficiently be the case.

    What I would propose is that they maintain the current CAFE ammendments, but introduce the ability for carmakers to trade their CAFE’s with each other. You’d be gaurunteed of a certain reduction in emissions (which the scientists are telling us is an increasingly urgent thing to be doing), you’d have a rapid shift to the new level of emissions, and you’d minimise the cost to consumers. Once again, quantity regulation with tradability saves the day.

    Cheers

    PS. For those who are unfamiliar with the CAFE bill, it basically mandates that the average fuel economy of all the cars a carmaker sells in a given year must meet a certain predetermined level. The ammendments passed recently call for an average fuel economy of something like 6.7L/100kms, which is pretty stringent given that a Holden Commodore consumes around 10.9L/100kms and a 4 cylinder Toyota Camry consumes around 9.9L/100km. The penalties for breaches are significant, but carmakers can get concessions for providing E85-capable vehicles and other measures.

  62. wizofaus
    April 23rd, 2008 at 14:20 | #62

    carbonsink, there’s no reason petrol can’t be taxed based on litres used, but coal taxed based on tonnes of CO2 produced. In the form, litres used is the most accurate way we have of determine CO2 emissions.

    And yes, demand for petrol is somewhat inelastic in Australian and the U.S. because the alternatives are so crappy. In Europe where the alternatives are often preferable anyway (faster, more reliable etc.), high taxes have successfully brought down petrol demand considerably.
    So I agree that fuel taxes on their own aren’t enough to lower demand, you need to combine it with a program to improve and promote alternatives to driver-only transport (including everything from bicycles to telecommunication), and an information campaign about basic ways to improve fuel efficiency.

    I would also like to see the fees & taxes associated with being new vehicles significantly lowered, and offset with per-km insurance charges.
    At the moment, buying and insuring a new car is a huge cost, but and the costs to using it frequently after that are comparitively very small. For instance, it might cost me $40000 to buy a decent new vehicle with better fuel economy (say, 5L/100km), including registration/insurance etc., but my only cost in driving it is ~$1.50/L, so driving it 5000km vs 20000km a year is a difference of a mere $21 a week. If on the other hand, it cost me only $35000 to buy the vehicle and get it on the road, but it then cost me ~30c per km to drive, the difference between driving it 5000km and 20000km a year becomes a far far more substantial $87 a week, and the incentive for me to minimize the use of my vehicle is quite significant.
    (Anyone want to double check my maths there?)

  63. frankis
    April 23rd, 2008 at 14:22 | #63

    “hospital pass alert”
    Maybe our own good Professor might venture an opinion on the tax or cap_and_trade, or tax and cap and trade, question? I looked around to see whether you’d admitted to any preferences before making my earlier comments John, but didn’t find anything.

  64. April 23rd, 2008 at 14:32 | #64

    the EU has inadvertantly encouraged emissions of much more dangerous (in the short term) gases such as NOx and particulates etc

    Not that I want to start up the diesel vs hybrid debate again, but the NOx and particulates issue has been largely solved and so-called ’50 state’ diesels will be on sale in the U.S. later this year. As I understand it, the next EU emissions regulations will be in line with the ultra-strict Californian standards.

    CAFE is great, but what I’d really like to see (given that raising fuel taxes is politically impossible) is a system of ‘feebates’ for private motor vehicles. This would reduce the sticker shock for hybrids and diesels, and increase the price of gas-guzzlers. It would be based on grams of CO2 emitted per kilometre. The zero point would be chosen so that its revenue-neutral (as Kev requested).

    Lets say the zero-point was 180g/km. If a car emitted 200g/km you’d pay (say) $500 a gram extra at the dealership. i.e. an extra $10,000. If the car emitted 160g/km, you’d pay $10,000 less.

    The zero point would be moved downwards every year to the new revenue neutral point, as people buy more low emissions vehicles.

    A similar system could be applied to household appliances, which might prevent people buying cheap electric heaters rather than expensive gas heaters, heat pumps or even (gasp!) insualtion.

    I really think ‘sticker shock’ is a huge issue when it comes to purchasing energy efficient products. People would love to ‘do the right thing’ but can’t bring themselves to pay the extra money up front, even if it might save them money in the long run.

  65. April 23rd, 2008 at 14:41 | #65

    carbonsink, there’s no reason petrol can’t be taxed based on litres used, but coal taxed based on tonnes of CO2 produced.

    No of course not.

    BTW, would a feebate scheme for new vehicles help you buy an ultra-efficient car? The feebates could also apply to insurance taxes and registration costs (if we had any half-decent state governments that is).

    Another wild and crazy idea: make all public transport under 10kms free. I reckon ticketing is a big disincentive for occasional public transport users, who just want to pop down to the shops now and again.

  66. April 23rd, 2008 at 14:48 | #66

    My kingdom for a preview button!

    carbonsink, there’s no reason petrol can’t be taxed based on litres used, but coal taxed based on tonnes of CO2 produced.

    No of course not.

    BTW, would a feebate scheme for new vehicles help you buy an ultra-efficient car? The feebates could also apply to insurance taxes and registration costs (if we had any half-decent state governments that is).

    Another wild and crazy idea: make all public transport under 10kms free. I reckon ticketing is a big disincentive for occasional public transport users, who just want to pop down to the shops now and again.

  67. Steve Hamilton
    April 23rd, 2008 at 16:17 | #67

    The main issue I’d have with this feebate system (and the CAFE system) is there is no real direct relationship between the tax/subsidy and emissions. The method of regulation is indirect; ie. you are slugging people with a charge (presenting people with a subsidy) just for buying a car with high (low) fuel economy. What you want to tax or subsidise is the emissions, not the vehicle purchase.

    To illustrate my point, a simple example; under your system, let’s just assume a vehicle with fuel economy of 10L/100km’s has a tax of $1000 attached to it, while a vehicle with fuel economy of 5L/100km’s has a subsidy of $1000 attached to it (suggesting a neutral point of 7.5L/100kms). If the person who buys the low-fuel economy vehicle travels say 30,000kms per year, while the person who buys the high-fuel economy vehicle travels 15,000kms per year, then even though the two drivers are emitting the same amount of CO2 per year (as they are consuming exactly the same quantity of fuel per year), one driver is $2000 better off than the other.

    In other words, there’s that old addage of using the most direct instrument possible. In this instance, you’re taxing car choice, not emissions, even though it’s emissions that you really want to effect, not car choice. This is the real compulsion behind a fuel tax – it’s by far the most direct way to internalise the externality.

    Cheers

    PS: OT; How do you create those purty quotes?

    Is it in the usual [QUOTE] xxx [/QUOTE] way?

    PS#2: Who need’s 2020 when you’ve got us :p.

  68. wizofaus
    April 23rd, 2008 at 16:21 | #68

    It probably wouldn’t make me personally buy one, largely because of my wife’s taste in cars (she has a thing for luxury European models, and the ones we can afford are usually at least 5 or 6 years old), but I certainly agree that any scheme that helps lower initial costs (but increase ongoing costs) is worth pursuing.
    An alternative might be that lending institutions factor this into their loaning practices (i.e. it should be arguably easier to get a $40000 loan for a car that’s going to cost $1000 a year to run, vs a $35000 loan for a car that’s going to cost $2000 a year to run), but obviously not every borrows substantial amounts of money to buy cars, and I’m not even sure how you could structure incentives to lending institutions to encourage such a practice.

  69. April 23rd, 2008 at 16:35 | #69

    This is the real compulsion behind a fuel tax – it’s by far the most direct way to internalise the externality.

    I agree entirely, but I can’t see any politician of any flavour raising fuel taxes anytime soon, can you? Granted, the price of crude is doing the job the politicians can’t or won’t.

    I take your point about the buyer of the gas-guzzler possibly emitting less, but short of a feebate system, how do you get it into the average punter’s head that buying an inefficient product will cost them in the end? I see this particularly with the aforementioned electric heaters. They’re cheap as chips to buy, but cost a mint to run.

    wizofaus: A feebate could potentially bring down the price of a diesel Audi/Beemer/Merc by tens of thousands.

    P.S. Use blockquote in angled brackets to quote.

  70. Steve Hamilton
    April 23rd, 2008 at 17:19 | #70

    This is what makes Kevin Rudd’s “We’ll bring down the price of fuel” (albeit unspoken) suggestion in last year’s election campaign so absurd. It’s frustrating that the Rudd Government says that it’s serious about global warming on one hand and on the other is suggesting that it wants to reduce the price of petrol for motorists. At the end of the day, if you want to reduce emissions, then you want people to drive less, not more. If you want people to drive less, then why on earth would you raise the incentive for them to drive more? Unfortunately, as always politics is a game of pragmatism.

    The same line goes for the ETS. I saw Ross Garnaut interviewed when his interim report was released, and the interviewer seemed bemused and upon realisation almost outraged over the fact that the proposed ETS would raise the cost of electricity. I mean COME ON PEOPLE, we’re both trying to discourage people from using electricity, and discourage the burning of cheap coal; under what circumstances would electricity prices not go up in such a scenario?

    And I fully acknowledge your frustration regarding the inability or unwillingness for individuals to put their money where their mouth is on climate change; everyone says that they support cuts to CO2, but if you actually quanitified the cost to them in $$$, then I’m sure the attitude of many would change quick smart. Which I suppose underlines the whole impetus for action on climate change; it’s human nature to overuse resources when they are free.

    Cheers

  71. April 23rd, 2008 at 17:39 | #71

    Given that raising the price of petrol and electricity is going to be politically impossible, why not introduce feebates? Sure, they may not act directly to reduce carbon emissions, but chances are the more efficient car/appliance is going to use less petrol/electricity.

    I’ve pretty much given up on politicians doing what’s really needed so I look for alternatives that the politicians might go for.

  72. wizofaus
    April 23rd, 2008 at 18:13 | #72

    You would think explaining to people the concept of reduced income taxes = more money to either
    a) pay for same amount of electricity, if you really can’t find ways to reduce your usage
    or
    b) spend on other things, while you reduce your electricity usage to match the increase in price.

    wasn’t all that hard. Indeed, regardless of whether it’s a carbon tax or an ETS scheme, surely it needs to be coupled with income taxes (as I said before, especially to the lower brackets), to be workable.

  73. April 23rd, 2008 at 19:02 | #73

    wizofaus @ 72: Yes you wouldn’t think that’s too difficult, but remember the problems Howard had selling the GST, and that was essentially the same deal. i.e. trading a consumption tax for reduced income taxes.

    I think the concept of replacing the GST with a carbon tax that raises similar revenue would be politically saleable.

    What we lack is politicians with courage who care more about implementing good policy than getting re-elected. That’s why I think Turnbull could be a pivotal player in coming years. If he becomes leader and pushes his income -> carbon tax reform agenda the major parties will be trying to out-green each other at the 2010 election. Rudd might be forced to actually do something.

    Three things Turnbull really believes in:
    1. Tax reform
    2. Climate change
    3. The Republic.

  74. gordon
    April 23rd, 2008 at 19:04 | #74

    Steve Hamilton and Carbonsink (#54 and #55), I’m sure you both realise that I’m not advocating complete abolition of CO2 emissions. The CFC experience was quoted to illustrate the absence of logic in concentrating exclusively on emissions trading schemes as the major strategy in reducing GHGs. Carbon trading was always a political/diplomatic strategy by the US in relation to Kyoto.

    And as far as the price of electricity for the private consumer is concerned (#70 and #72), there is a huge issue of fairness. It’s beginning to look as though only the unsubsidised private final consumer is going to have to pay any extra. Where is the extra cost to the industrial and transport users? When are we going to look at energy subsidies for aluminium, for example? Why did the Shergold Report and the State Governments’ discussion paper both leave large loopholes for “energy intensive trade-exposed sectors” in their emissions trading proposals?

  75. wizofaus
    April 23rd, 2008 at 19:26 | #75

    (BTW I wonder if ETS scheme going to become another example of RAS syndrome, like PIN number.)

  76. April 23rd, 2008 at 20:10 | #76

    gordon #72: Yes, I’ve banged on here (and at other blogs) about the cheap, dirty electricity supplied to smelters etc. The consensus response was that they’d only move overseas and use cheap, dirty Chinese electricity.

    I’m all for hitting industry first with increased energy costs. I don’t know why the politicians are talking about hurting private citizens (read: voters) with higher electricity prices when they could close a few smelters and meet all their emissions targets with one stroke.

  77. April 26th, 2008 at 21:19 | #77

    Quick science lesson:

    coal combustion (for electric power) burns coal (mostly C, with some water, hydrogen, and sulfur) in air, to produce a mix of CO2, N2, SO2, H2O and various other pollutants from partial combustion.

    In smelting, coking coal is first purified to make coke- carbon with very little else in it. This is then reacted with an oxide (iron oxide, zinc oxide, lead oxide, etc) in the following reaction (using iron as an example)

    Fe2O3 + 3C -> 3CO (carbon monoxide) + 2Fe.

    Traditionally, that carbon monoxide is generally burned in air to produce CO2 and energy. But because smelting is an air-free process, the carbon monoxide you produce could be neutralized in other ways and/or sequestered much more easily than the exhaust from coal combustion.

    This simply requires the price of carbon to be high enough to pay for the sequestration.

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