Garnaut repudiates Government
Ross Garnaut, the economist on whom Labor had pinned its climate change hopes and dreams has come out against the $3.9 billion that the government has proposed in compensation to so-called trade exposed industry and the electricity generation sector.
Garnaut was one of Hawkes advisers in the 1980s and pushed strongly for the removal of protectionist measures. Garnaut sees Rudd’s $3.9b handout to industry as protectionist and says that there is no public policy justification to hand over this money.
In a time of global economic turmoil and global climate crisis, can we really afford to be giving money to polluting industries? Yes, the minerals boom has been buoying the Australian economy for years but what happened to Rudd’s “Life beyond the boom“? Propping up coal fired power stations against projected depreciation of their assets makes absolutely no sense when you’re talking about serious action on climate change. Why are we giving this money to the big polluters who are responsible for much of our greenhouse gas emissions?
The sad reality of the government’s ETS/CPRS is that the permit system has been gamed in favour of big business rather than in favour of the environment. A 5% target (with, fingers crossed, a 15% target if the world can agree on a global scheme) isn’t going to do much to reduce carbon emissions. Any reductions in emissions that households are responsible for will be neutralised by industry emissions. In the process, wealth will be transferred to those companies who have been riding high.
Think for a moment. If you want to reduce emissions, you encourage the uptake of renewable energy. To do that, government money should be spent on research and the rollout of new energy generation which is proven to be clean and works right now (none of this clean coal claptrap). The clean energy might be a bit more expensive to start with and that’s okay because that will encourage people to use less electricity (supply and demand). If the price of electricity is still too high, you use the money to subsidise the generation of clean power until it’s a bit more price competitive with dirty energy.
One way to get clean energy price competitive with coal electricity is to introduce a carbon tax; another way is to implement emissions trading. If you implement an emissions trading scheme, you don’t give away free permits because that’s just giving companies license to pollute without any real incentive to reduce their emissions. All permits must be auctioned. The resulting government revenue can go to funding research, subsidising electricity generation or giving relief to low income families who are unable to absorb the increased cost of the minimum amount of power that they use. That money could also go into the Greens’ Sun Fund proposal to roll out solar hot water to every house in the nation.
There’s a lot more you can do with a few billion dollars and an ETS than to prop up the industries who are the ones who’ll need to clean themselves up. Are we to believe that the mining industry and electricity generators are so poor after the last few years of digging minerals and coal up and either shipping it overseas or burning it to produce electricity that they can’t absorb a bit of the losses associated with economic restructuring?
As the Chaser boys said in this morning’s SMH, the Government’s ETS allows them to trade Australia’s environment for the continuing support of big business. This implementation of the ETS is designed to keep big business on side rather than fixing the problem. Rudd knows it, Garnaut knows it and I’d hope that Australia knows it.
