Hazelwood decision is a victory for common sense

THE Commonwealth Government is flooding the media with climate change and carbon tax reports from taxpayer-financed scientists and other propagandists.

This ensures the continued prominence of its agenda for business decisions.

In Victoria, the Government has sensibly overturned departmental advice to start closing the coal-fired Hazelwood power station in order to reduce carbon dioxide emissions.

Hazelwood supplies 15 per cent of the state's electricity and Mr Brumby's plans to start closing it would have sent electricity prices soaring and threatened reliability.

Energy Minister Michael O'Brien saw the dangers of junking the plant's cheap electricity and replacing it with costly and unreliable wind farms or even by gas.

Unfortunately, feeling the need to brandish some green credentials, he also announced a wasteful.

$41 million increase in subsidies for the ''Energy Technology Innovation Strategy'' (ETIS).  ETIS is code for low-value technologies that cannot attract commercial funding.

The Hazelwood decision is only a respite for Victorian industry and consumers.  The Gillard Government's desperation to introduce a carbon tax creates palpable risks for the state.

A carbon tax would severely reduce the value of the brown coal power stations that supply 90 per cent of our electricity.

In reducing the value of these generators this prevents any significant new investment which, short of an economic downturn, will be needed in the next few years.

Even more seriously, it undermines the credit ratings of the state's four key electricity generators, opening up a real prospect of one or more going into receivership.

Things need not have turned out like this for Labor.  At Copenhagen in December 2009 the world's leaders failed to reach agreement on carbon dioxide emission cuts.

Kevin Rudd had been hyperactive in the lead-up and could have claimed to have failed with honour and announced he was now taking a back seat and awaiting a world agreement.

Julia Gillard could have taken the same approach after the failure of subsequent climate talkfests.

That might, indeed, have been her intent when she promised before the last election that a Labor government would not introduce a carbon tax.

But it was not to be.

Instead, the Government hand-picked advisers to proclaim that carbon dioxide emissions are leading to a warmer world and that a tax would not harm us.

MANY of the most eminent scientists consider carbon emission induced warming would be negligible and the better economics studies suggest any costs would be miniscule.

But most importantly, Australia is a global minnow.  If we act alone this has no effect except in impoverishing us.

And, outside the European Union, no nation is taking action that will reduce carbon fuels' usage to levels that will lower global emissions.

Australia's emissions per head of population are similar to those of other wealthy countries once our net exports are included.

But our raw material wealth and the low-cost coal-based energy leaves us especially vulnerable to a carbon tax, which would undermine business costs and slug household budgets.

If a near unanimity of nations were to introduce carbon taxes, so must Australia.  But global action is unlikely.