In the past fortnight, the politics of climate change has changed dramatically. What only six months ago was the conventional wisdom -- that Australia should lead the world on combating global warming and make deep cuts to carbon emissions via a cap-and-trade model -- has been turned on its head.
Today, Kevin Rudd is isolated on his Carbon Pollution Reduction Scheme and climate change has turned into his perfect storm. Meanwhile, business leaders such as Heather Ridout and Don Argus support either a time-out of two years or a carbon tax to replace emissions trading. And more and more Liberal and Nationals MPs and senators want the Opposition to sharpen the difference with Labor, even before the Government releases the draft legislation next week. Someone should apologise to Brendan Nelson.
Recall that last winter the then-Opposition leader (whom I advised) raised all sorts of doubts about the Government's emissions trading scheme. The argument went like this: taxing industry and redistributing the proceeds at potentially huge cost to the economy -- at a time when no international consensus existed and when Australia accounted for only 1.4 per cent of global emissions -- was not in the national interest.
The response was downright hostile. Much of the media, scientific and business establishment deemed it blasphemy that anyone dare question Canberra's grand ambitions. Ross Garnaut, the Government's climate-change adviser, supported carbon cuts in the target range of 25 to 40 per cent by 2020. He also suggested very little in the way of compensating those energy-intensive industries that would either fold under the cost burden or pass those costs on to consumers up and down the energy chain.
Public opinion was overwhelmingly supportive; Newspoll and AC Nielsen showed that nearly 80 per cent of Australians wanted the nation to make deep carbon cuts regardless of what the rest of the world did. For his pains, Nelson was denounced as a denier by his Labor opponents and disowned by his shadow cabinet, leaving the central difference between the Government and Opposition one of timing; the former supported a start date of 2010; the latter 2011.
My, how times have changed. The issue that cost Nelson his leadership could yet be a political godsend for Malcolm Turnbull. The financial crisis has given industry more political ammunition to criticise the scheme. The many commentators who berated Nelson for his wait-for-the-world policy are now writing obituaries for the Government's emissions trading model. A Lowy Institute poll revealed that most Australians are far more concerned about their jobs and hip pockets than any campaign to save theplanet.
Labor, meanwhile, is spooked. The Prime Minister himself has walked away from Garnaut's proposals and significantly downgraded the Government's target range to as low as 5 per cent by 2020. So much for Rudd's claim that "climate change is the great economic, environmental and moral challenge of our time".
In this environment, the Liberal and Nationals parties should oppose the Government's legislation outright and spell out a different way of meeting the climate challenge in the most forceful and coherent language they can find. Here are some suggestions:
First, insist that the ETS will kill investment, lower growth, drive jobs to nations where costs are cheaper and raise prices that would ripple throughout the energy chain and touch every corner of the slowing economy. There is also every risk that our energy intensive industries would move offshore to those big polluting nations, such as China and India, that are unlikely to conform to any post-Kyoto deal, thus worsening the climate change problem. And if we adopt an ETS, and our trading partners do not, our exports, as former treasury economist Geoff Carmody argues, would cop a carbon cost not borne by our competitors; ditto our import-competing industries.
Second, highlight the unfairness of imposing emissions ceilings on industry at the height of the global financial crisis. When the Government creates an artificial scarcity of carbon, credits will be distributed. How these are allocated will create vast opportunities for Labor-friendly lobbyists, political rent-seeking and more subsidies for favoured firms.
Third, suggest more practical ways of limiting carbon emissions, including simpler and more transparent forms of taxation on industry. The carbon tax proposal has recently received a wide airing, with support coming from ideologically diverse thinkers such as Richard Denniss, Sinclair Davidson, John Humphreys as well as US President Barack Obama's energy secretary Steven Chu. Other options include technological breakthroughs and clean energy use, such as nuclear power. After all, Australia is home to one of the biggest supplies of uranium.
Fourth, forget about questioning the science underlining global warming and leave that debate to the climate scientists, policy wonks and media columnists on the sidelines. To reopen this debate in parliament now would merely allow the Government to portray the Opposition as climate change deniers: a foolish and offensive charge, but nonetheless a politically damaging one to a party still struggling to recover from John Howard's refusal to ratify the Kyoto protocol.
Finally, expect howls of outrage that the Opposition's opposition to emissions trading betrays a key Coalition electoral pledge. (The ETS, remember, was a Howard government initiative.) Never mind that Liberals have jettisoned many Howard-era planks, such as Work Choices and opposition to an apology.
The fact is, new oppositions often change former government policies and commitments.
For the past year, Labor, business and environment groups, as well as the media, promoted the emissions trading debate as a political watershed. It was going to be the historic turning point in Australian climate change policy. Yet the legislation could very well collapse in coming months. Liberals are in a prime position to steer the rapidly changing debate to their advantage. But they can't do so if they are carbon copies of Labor.
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