Despite the Government announcing it has backed away from early action to reduce carbon emissions, the Prime Minister's website continues to say, "The cost of inaction on climate change will be much greater than the cost of taking action now."
Like others working for Kevin Rudd, his website managers can't keep up with his policy changes. Costs of "inaction on climate change" have just assumed a new meaning. At the very least the PM, in postponing the carbon trading tax, is acknowledging that immediate measures to reduce emissions would be costlier than doing nothing.
But his proposed watering down of the already diluted proposals has all the hallmarks of Napoleon's retreat from Moscow.
Ross Garnaut, Rudd's hand-picked consultant on global warming policy, had already said that the white paper was irresponsible in proposing a free supply of emissions to electricity producers and energy intensive firms. Now Rudd plans to increase that supply further.
Garnaut, Rudd and Penny Wong all talked about failure of a meaningful international agreement on emission reduction at Copenhagen later this year as being unlikely. Now that such failure is a certainty, the costs of Australian action to the economy are becoming clearer even to mystics who see only evil in production. Hence the PM's humiliating backdown. But, never one to acknowledge his own misjudgments, Rudd is spinning this as a means to buying the Opposition's support and as some sort of hiatus to remain in place only while the global economic crisis runs its course.
Doubtless Rudd's postponement of the planned new carbon tax is a prelude to an attempt to replace it with a tax on households to help defray some of the costs of his reckless cash giveaways.
What is increasingly clear is that there will not be a carbon emissions trading scheme.
Australia has an energy-intensive industry structure, a coal-based electricity generation industry and coal and gas as our export mainstays.
Capitalising on our natural advantages in fossil fuel energy has required forging supportive institutional structures, a process that has taken many decades. Our carefully developed political and administrative framework has allowed the creation of an energy supply industry that is the backbone of our present living standards. To become one of the world's lowest cost energy suppliers has entailed marrying our resource endowment with entrepreneurial and workforce skills. All this would have been jettisoned by a tax squarely aimed at destroying that productive efficiency fostered by low-cost energy.
Strongly performing industries will be at a premium in a world economy that's likely to be facing sluggish conditions for many more years. Even the most complacent optimists can no longer take as given the income derived from our present industry structure. Compounding the effects of the global economic meltdown's external assault on living standards with some purpose-made domestic measures is now revealed as a sledgehammer blow to the welfare of all Australians.
Formally announcing a total abandonment of the carbon trading scheme must be the next step. Such action is necessary, and the sooner the better as the prospect of the proposed tax hangs like a sword of Damocles over any prospective investment decisions involving energy. Australia can never afford to carry such baggage and the global financial crisis merely brings this home.
Inadvertently, the PM's website remains spot-on in saying, "There is no greater challenge now facing our world and our nation than dangerous climate change." The challenge is to his Government's credibility at having commissioned endless reports, undermined the integrity of Treasury forecasting and created a monster department of hundreds of globe-trotting drones to promote phantom opportunities that a carbon tax would offer Australia. The "dangerous climate change" is the shift in the climate of business opinion and community opinion more generally, as the reality of a crippling new energy tax looms.
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