Home > Oz Politics > Will Fielding stay crazy long enough?

Will Fielding stay crazy long enough?

December 1st, 2009

At this point, the only chance for survival for the Liberal Party is that Steve Fielding will join them to refer the ETS to a committee (I assume Fielding’s vote is enough to pass a procedural motion, is that correct?). If this happens, the threat of an immediate DD is gone, and they have the chance to crawl back to sanity and try to pass a bill in the New Year, assuming Rudd lets them.[1] That would get the issue off the table and give them some chance of avoiding annihilation, particularly if the economy weakens over 2010. But Fielding prefers the idea of a Royal Commission. If he sticks with this, the Senate will either reject the bill or pass it as the result of a Liberal Party split.

As I’ve said previously, I hope they reject. Then we will either get the original ETS legislation or, better, a Labor-Greens deal.

fn1. Of course, it’s now open to Rudd to come back from Copenhagen (which looks certain to produce a political agreement, if not a legally binding deal) and announce that the deal he made with Turnbull is no longer on the table. Then the Abbott-Minchin Liberals would have the choice of voting for the original ETS, or fighting a double dissolution. Rudd has so many winning options now, it’s hard to describe them all.

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  1. Andrew
    December 1st, 2009 at 13:29 | #1

    Meanwhile… at last sanity has prevailed and we haven’t got ourselves locked in to a hopelessly compromised ETS purely for the sake of allowing Rudd & Wong to arrive in Copenhagen with an ETS in their back pocket. I still don’t understand the unseemly rush to pass the legislation just to satisfy Rudd’s ego. Surely it can wait until the new year when (hopefully) something more definitive has emerged from Copenhagen and we know where to pitch the appropriate Australian approach.

  2. Fran Barlow
    December 1st, 2009 at 13:46 | #2

    @Andrew

    Technically Andrew, if the CPRS doesn’t pass, Kevin can say anything he likes at Copenhagen, satisfying his ego even more, since the associated constraints will be absent, and he can argue for even more robust-sounding objectives. The way to narrow this scope was to pass the CPRS, assuming the principal reason for opposing it was jealousy of Kevin Rudd’s happiness or satisfactions.

  3. Fran Barlow
    December 1st, 2009 at 13:48 | #3

    Actually, PrQ, if the economy is perceived as weakening then arguments against the stimulus become harder to make. Rudd will say the opposition misread again and were merely being doctrinaire.

    So either way, heads I win … tails you lose

  4. Freelander
    December 1st, 2009 at 13:55 | #4

    If they send it to committee it might be interpreted as ‘failure to pass’ so a DD might still be on.

  5. Hermit
    December 1st, 2009 at 14:30 | #5

    There are uncontrolled variables that could swing public opinion either way. Abbott and Fielding might be emboldened if
    - 2010 looks like a recession. Therefore not the time for ‘new taxes’.
    - fuel prices surge. Therefore other factors will reduce carbon.
    - summer is cool from now on. Maybe the scientists were wrong.
    I agree the Opposition is letting Rudd off the hook too lightly. Their role should be to fine tune not to oppose on the grounds of dogma.

    If Labor-Greens ascend after an election or marriage of convenience that would seem to rule out the nuclear option for the duration. Let’s not start the debate over (see BraveNewClimate for that) but many people believe that it is the workable alternative to coal. If they are right years could be wasted not pursuing that option.

  6. Peter Evans
    December 1st, 2009 at 14:37 | #6

    Freelander@4, didn’t that great tax loophole opener Garfield Barwick decree in the High Court that “off to committee” did not constitute failure to pass (c. 1974)?

    The Greens will be dead keen on a DD. And I would have though one or two liberal moderates on a dodgy 3rd senate spot…

  7. Freelander
    December 1st, 2009 at 14:47 | #7

    @Peter Evans

    Possibly, but surely his judgement can be distinguished. In this case and in these circumstances…

  8. Fran Barlow
    December 1st, 2009 at 15:16 | #8

    We should be clear that an ETS is not a new tax.

    An ETS seeks to put a price on the emission of CO2 by selected industries — currently this cost is internalised by the community and externalised by the emitters. Strictly speaking there is already a price on CO2 emission — it’s just that this price is being borne by the public at large rather than those doing the emitting and their beneficiaries. The benefit of this extenality can be seen as a subsidy from the commons to private interests.

    A fair ETS would settle this cost wholly on the emitters and their beneficiaries relieving the commons of this burden. Accordingly, it is not fair to call it “a tax”. Done correctly, it is a form of cost recovery which effects an end to a structural anomaly in which benefits were privatised and losses socialised. A tax might of course be pressed into service of the same end — cost recovery, but this would not describe the ETS, which creates, after all, a form of property in the commons, unlike a tax.

  9. December 1st, 2009 at 15:30 | #9

    Fran,

    If it walks like a tax, talks like a tax and taxes like at tax as the Emisions Taxing Scheme does, then it’s a tax, no 2 ways about it.

  10. iain
    December 1st, 2009 at 15:31 | #10

    Libs need a majority.

    This means not just Fielding but also people like Troethe.

    Fielding’s suggestion that Plimer head up his Royal Commission demonstrates where his mind is on this matter.

  11. Joe
    December 1st, 2009 at 15:41 | #11

    What is the committee to do? The bill has already been considered, most of the amendments considered, so a referral can only be seen as a failure to pass.

  12. Fran Barlow
    December 1st, 2009 at 15:51 | #12

    @Tony G

    If it walks like a tax, talks like a tax and taxes like at tax as the Emisions Taxing Scheme does, then it’s a tax,

    But that’s just it — it doesn’t. Your lot just think that calling it a tax makes it easier to politically attack — but that’s just dissembling. Careful analysis distinguishes them.

  13. zoot
    December 1st, 2009 at 15:54 | #13

    Tony G @9: I believe the correct nomenclature is Emissions Trading Scheme.

  14. zoot
    December 1st, 2009 at 15:59 | #14

    And an Emissions Trading Scheme has already been used successfully in that hotbed of communism, the USA.

  15. December 1st, 2009 at 16:11 | #15

    Zoot and Fran,

    The emission taxing scheme now before the Senate states;

    “a person who is responsible for greenhouse gas emitted and who must surrender one eligible ‘emissions unit’ for each tonne of carbon dioxide equivalence of the gas.”"

    Unless they are a coal fire power station they will have to buy an ‘emissions unit’ . It is a tax on emissions.

    Have a look yourself

  16. Jim
    December 1st, 2009 at 16:39 | #16

    Tony G,

    But aren’t emissions taxes more efficient anyhow?

  17. Jim
    December 1st, 2009 at 16:42 | #17

    Besides, why is it that those in favour of the scheme are afraid to say: “Yes. Your power bills and petrol will cost more. That’s the point. If you’re not a halfwit, you’ll wear polar fleece inside and stop buying 4wds.”

  18. Fran Barlow
    December 1st, 2009 at 16:53 | #18

    @Jim

    That’s a silly image in a place like Australia. One of the silly things about household power usage is that people who think 20 degrees outside is picnic weather have their thermostats adjusted to 17 degrees inside. During the winter of course they have it up at 24 and 25. All very silly. 20 degrees is pleasant wherever you are.

    But in Australia it is rarely really cold — at least not like the kind of cold one gets during a North American or British winter.

    And as yet, there is no cost on CO2 from transport so you can pollute the planet with your ugly 4WD to your wallet’s content.

  19. zoot
    December 1st, 2009 at 17:07 | #19

    Tony G, we obviously disagree on the definition of “tax”.
    For example, I don’t consider setting a price for water is raising a tax, just as I don’t believe setting a price for carbon is raising a tax.

  20. December 1st, 2009 at 17:31 | #20

    Fran Barlow :
    @Jim
    But in Australia it is rarely really cold — at least not like the kind of cold one gets during a North American or British winter.

    Actually, it is colder here in winter – indoors. That’s largely a result of poor design of course, e.g. my bath room has a permanently open upper window with sloping glass slats to keep rain out and let in air (and pigeon feathers etc.) – just as the eaves keep summer light out and prevent solar gain on cold days outside winter. The technical fix provided was an overhead heater (I also leave an old sweater at the foot of the door to reduce draughts reaching the bedroom). Sure, it’s the result of stupidity in applying a norm to what should be a lower bound, but nevertheless Australian homes are typically colder in winter and need far more artificial heat than they should.

  21. Rogerrocks
    December 1st, 2009 at 17:31 | #21

    Just a quick question for the economically minded. If you set an emissions target and then give away a lot of permits to the power stations, won’t that result in a higher carbon price than if there were no give-aways (for the same target)? If this is the case, has anyone done an estimate on how the planned give-aways will increase the permit price?

  22. Mike
    December 1st, 2009 at 17:33 | #22

    Tony, she’s trying to raise your level of comprehension by explaining that the costs of carbon emission are already being borne unfairly by the whole community, and that an ETS simply re-allocates these costs to those who bring them into being, and their beneficiaries. Without such a reform, these costs will mount uncontrollably. It is actually an attempt to introduce a fair pricing system for real resources consumed by economic activity but currently uncosted. It isn’t a tax therefore, but a more accurate accounting system. But of course you won’t accept this because you want to consume all your externalities now and leave nothing for future generations.

  23. Michael
    December 1st, 2009 at 17:35 | #23

    Tony G just gets more ridiculous the longer this debate runs. Why don’t we substitute the ETS for the GST? Then it wouldn’t be an extra tax, but wait a minute…… the ETS isn’t a tax!!!! The permits are TRADED!

  24. Donald Oats
    December 1st, 2009 at 17:36 | #24

    Yay! The Liberals had a Lobotomy. Yay! Crank it up Rudd, crank it up!

    Ironic really, that senator Nick “The Knife” Minchin from SA, home of the largest percentage of alternative energy generation, should bring the Liberal party ETS policy crashing down.

    On a more serious note Bob Brown gave a simple, direct interview to the media throng – the ones who gave up chasing the Mad Monk and the rest – and he extended another opportunity to Labor to talk with the Greens. I hope they do and set up an ETS that is far less friendly to the biggest polluters, in that the subsidies are removed from the ETS, and far more serious about reducing Australia’s relative contribution to global emissions. That may give us more clout on relevant trade issues down the track. On the other hand, the biggest polluters could be given some encouragement to move out of big polluting and across to other electricity generation methods, or to being more efficient with power consumed in the case of smelting aluminium etc. They could investigate o/s methods for example…

    If that happens, home consumers may avoid much in the way of price hikes beyond normal privatisation-caused price hikes. Or the private health insurance gouging over the last decade? Phhwwtt! Who cares about another readjustment to the cost of living.

  25. December 1st, 2009 at 18:03 | #25

    This statement by Mike is utter bs;

    “and that an ETS simply re-allocates these costs to those who bring them into being”

    The fact is KRudd’s eTs tranfers the costs across social stratas with no regard as to the emission levels.

  26. Chris O’Neill
    December 1st, 2009 at 18:12 | #26

    And as yet, there is no cost on CO2 from transport so you can pollute the planet with your ugly 4WD to your wallet’s content.

    There is a substantial amount of tax but it’s not enough to cover the externalities. Pr Q has written on this.

  27. December 1st, 2009 at 18:17 | #27

    Tony G :
    Fran,
    If it walks like a tax, talks like a tax and taxes like at tax as the Emisions Taxing Scheme does, then it’s a tax, no 2 ways about it.

    Actually, it escapes being a tax on the same technical grounds as Barack Obama’s mandated health insurance: although it would compel people to pay out cash just like a tax (“it walks like a tax”), it doesn’t deliver the whole or most of that to government cash collections (though some may reach the government at the margins, that’s probably classified as “fines” because ordinarily people wouldn’t be paying the government). The same applies even more so when people make burdensome behaviour changes in response or in anticipation, as then they aren’t paying out actual cash at all – just incurring opportunity cost.

    None of which avoids the essential point that it would indeed burden people, just like Barack Obama’s mandated health insurance. But it’s not a technical quibble to point out that it would not be a formal tax, because that highlights part of what is wrong with the whole ETS approach – even stipulating for the sake of argument that emissions restrictions are desirable (which they may be, even if only on prudential grounds). The winners would be politically determined and could not be wholly anticipated and properly aimed at, whether by planners or by participants; resulting behaviour change might be wrong in timing, direction and amount because of the ambiguity and lack of clarity in how incentives would work through (where direct mandates and even taxes/subsidies send clearer and less ambiguous signals – time delays and intermediate layers matter, here); and, worst of all, the international aspect and tradeability of permits would open the door to a range of loopholes in many countries flowing from any individual, isolated loopholes in a few countries just as EEC rules did in agriculture. That last is particularly why it is unwise at best, idiotic at worst, to lock in an Australian system that would interconnect to other countries’ systems before their systems were known well enough to determine the right interfaces. In the worst case, Australians would have to honour other countries’ loopholes (at a price, particularly to the balance of trade), and the only behaviour change would not be overall emissions reductions but the importing of permits generated by others’ loopholes which would have to be given full faith and credence. In the best case, there would be a horrendous bureaucratic process generating Australian equivalent permits from mismatching foreign ones, and vice versa – even if many or most of them happened to match, because they would all have to be vetted just to catch any that didn’t. It would be an analogue of having different interconnecting railway gauges on a heavy traffic system, not that anybody would ever put in those in isolation in the full knowledge of later connections. Oh, wait, we know they might because they did – so we can’t take it for granted that a local ETS locked in now would be planned well enough to fit a wider system not yet known in sufficient detail (e.g., there would be a huge cost if the wider system didn’t come in for a while after all).

    So, in the Yes, Prime Minister phrase, “if you must do this damned fool thing [using an ETS as the means to deliver emissions control], at least don’t do it in this damned fool way [locking in a detailed system up front before anyone even knows its wider systems needs, as they haven't yet been worked on by the other implementing groups]“. Coasian solutions to externality problems are more efficient than Pigovian ones where the creating, monitoring and enforcing property rights of the former have little or no overhead as compared with the bureaucratic efforts of the latter in estimating suitable wealth transfers and then making them and/or imposing behaviour changes. That isn’t so when the new subject matter is too artificial and removed from individual involvement, as then individuals have to conduct a distinct exercise for it – even if the costs get folded in and hidden (though things like the GST get the worst of both worlds this way).

  28. boconnor
    December 1st, 2009 at 18:21 | #28

    Fran Barlow @ 8 :
    We should be clear that an ETS is not a new tax. (snip)

    Fran, excellent demolition of the “its a tax hike!” argument. Impressive.

  29. Chris O’Neill
    December 1st, 2009 at 18:28 | #29

    Donald Oats:

    he (Bob Brown)extended another opportunity to Labor to talk with the Greens.

    That’s OK but the Greens don’t hold the balance of power, yet.

    BTW, the Greens should try to get first preference votes of Labor voters in the Senate by saying that this will make sure that their preference won’t go astray in any crazy preference deal done by the Labor party as happened with Steve Fielding and which still happens with the DLP.

  30. Mike
    December 1st, 2009 at 18:42 | #30

    Tony G :
    This statement by Mike is utter bs;
    “and that an ETS simply re-allocates these costs to those who bring them into being”
    The fact is KRudd’s eTs tranfers the costs across social stratas with no regard as to the emission levels.

    No, you are wrong, there is an involved system of compensation by social strata and by emission quantum, in fact, since heavy polluters are heavily compensated.

    At least in the current version of the trading scheme.

  31. Fran Barlow
    December 1st, 2009 at 19:08 | #31

    @boconnor

    Glad you liked it! Another advantage a properly structured ETS has over a sumptuary tax system is that while emissions can be fully monetised, the ETS allows for spatial and temporal flexibility within the system, so that operations where the cost of avoiding emissions would be technically difficult and highly costly can choose to purchase emissions at a rate determined by the success of the other players in the system in avoiding emissions. They can invest in new technology and if they over-achieve they can sell off their surplus, so they take less longterm risk and may tend to act more aggressively to reduce emissions than in the case of a PAYG sumptuary system.

    Similarly, since the instruments are property, there is a structural constraint on the rules being fiddled with to suit sectional interests in the way that a tax system would be.

  32. Hermit
    December 1st, 2009 at 20:08 | #32

    @Rogerrocks
    I don’t think that the others have to cover for those industries with free permits. I’d guess Australian domestic annual emissions are now about 600 million tonnes of CO2 equivalent, about the same as exported coal. I haven’t seen supporting data but the ETS might only cover say 200 Mt in the initial years due to all the free permits, largely undeserved in my opinion. It could be even less, I’d like to see a sector by sector analysis.

    It will get really interesting when for example brown coal generation has to pony up in full when their free permits expire. That is 2015 I think. By then all Victorian households should have both insulation and smart meters to painlessly reduce their consumption. Paid for by permit sales not strictly a tax. I suggest if aluminium smelters in several States still feel genuine pain we should consider a small tariff on aluminium imports if other countries don’t have their own ETS by then.

  33. Chris O’Neill
    December 2nd, 2009 at 02:08 | #33

    I suggest if aluminium smelters in several States still feel genuine pain we should consider a small tariff on aluminium imports if other countries don’t have their own ETS by then.

    The problem is some Aluminium is produced from burning coal and some is produced without much carbon emissions, principally hydro. A carbon-rational world would give a big cost advantage to hydro-Aluminium over coal-Aluminium that doesn’t presently exist. A real test for emission reduction schemes is to see if they create this advantage. I would expect that this advantage, if properly set up, should wipe out coal-Aluminium and shift it to hydro-Aluminium. Australia dips out here because it doesn’t have much opportunity to shift from coal to hydro.

  34. ozzoid
    December 2nd, 2009 at 14:57 | #34

    Tony G :Fran,
    If it walks like a tax, talks like a tax and taxes like at tax as the Emisions Taxing Scheme does, then it’s a tax, no 2 ways about it.

    if it sounds like an idiot, writes like an idiot and misrepresents (‘Emisions Taxing Scheme’) like an idiot…

  35. Donald Oats
    December 2nd, 2009 at 15:20 | #35

    Looks like I get at least part of my wish: Julia Gillard, Penny Wong and Greg Combet announced that the first sitting day in Feb 2010 they will introduce a new ETS bill. Yay!
    Since it will be post-Copenhagen, there will most likely be increased pressure on Rudd et al to set a significantly higher target and to ensure that anyone named “Tony G” is as heavily taxed as possible. That may with a bit of negotiation get the Greens and an independent onside. They may also – I hope – avoid compensation towards big polluters, letting them participate in a primary market for permits, and then off to the races we go. Both Tonys probably won’t like a more focussed ETS such as CPRS II, which is a nice extra benefit :-P

    Hi Taxin’ guvvimnt, ah, so sweet, isn’t Tony G?

  36. Chris O’Neill
    December 2nd, 2009 at 15:22 | #36

    the Greens should try to get first preference votes of Labor voters in the Senate by saying that this will make sure that their preference won’t go astray in any crazy preference deal done by the Labor party as happened with Steve Fielding and which still happens with the DLP.

    Also, even if you vote below the line to make sure your preference flows direct to the Greens from the Labor party, I think you still lose some of the value of your vote, compared with a Greens first preference, if other Labor voters preference reactionary parties (Family First, DLP) ahead of the Greens.

  37. December 8th, 2009 at 08:53 | #37

    Auto meter is and will always be the industry leader.

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