Malcolm Turnbull is attempting to discredit Labor’s new emissions plan. Here are six reasons the government’s campaign is wrong
April 27, 2016 — 1. The prime minister says that by promising to cut emissions by 45% by 2030, rather than 26% to 28% (as the government has pledged) Labor is “doubling the burden” on Australians. But modelling commissioned by the Coalition from leading economist and former Reserve Bank board member Warwick McKibbin showed that a 45% cut would shave between 0.5% and 0.7% from gross domestic product (GDP) by 2030, whereas a 26% cut would shave between 0.2 and 0.3%. In other words the difference in the economic cost of the Coalition’s target and Labor’s target is about 0.3% of GDP in 2030. That’s 0.3% of an estimated GDP of over $3.5 trillion. It’s not hard to work out that is not doubling an economic burden.
- Greg Hunt and Barnaby Joyce have recycled the discredited claim that different modelling has shown that Labor’s 45% target will increase electricity prices by 78%.
That is wrong. The numbers come from Treasury’s 2013 modelling from the Climate Change Authority. The CCA itself has said it is “incorrect” and “wrong” to interpret its report this way. Its former chairman, Bernie Fraser, said the claim was “weird” and “misleading”. The 78% increase refers to wholesale prices in a scenario where Australia did nothing at all, compared with a scenario where we reached a higher target using only a high carbon price. We have already decided doing nothing is not an option, and no political party is proposing to reach a target using only a carbon price. So the figure is entirely irrelevant to the debate. The McKibbin modelling is far more useful in estimating the costs of what might actually happen.
- Scott Morrison claims Labor “learned nothing from the last election when voters said ‘no’ to a carbon tax” and is “bringing back … a big thumping electricity tax” that will “punish Australian families”.
Except it isn’t. It is proposing a separate intensity-based emissions trading scheme for the electricity sector, different from the ETS for heavy industry. This idea is very, very similar to one Malcolm Turnbull himself proposed as opposition leader in 2009, and very, very similar to the scheme “Direct Action” could be converted into after the election – something most in the business community assume will have to happen since Australia’s emissions are rising and Direct Action has little hope of reaching the government’s long term target. It’s the scheme the energy market regulator – the Australian Energy Market Commission – recommended that the government adopt in a submission last year and said could operate “without a significant effect on absolute price levels faced by consumers” and which state and federal energy ministers asked that body to develop further late last year.
So if prices increase slightly – and they may – it’s a price rise the Coalition itself is very likely to find itself considering when it starts figuring out how to reshape Direct Action into something workable after the election.
- Malcolm Turnbull says Labor’s proposed target is out of step with the rest of the world, because it is higher than the target he pledged at the Paris conference.
But that’s not really right either. The Paris conference was a “bottom up” process, which means countries got to promise whatever they were prepared to do, and peer pressure was the only thing pushing them to higher levels of ambition. Many have judged the Coalition’s target to be too low to represent our fair share of the global effort. Analysis by Climate Action Tracker rates it as “inadequate” The CCA recommended a reduction of 40% to 60% on 2000 levels by 2030. The Climate Institute said the government’s target was “pathetically inadequate”. And the prime minister acknowledges that Australia will almost certainly have to increase its target over time, which raises the question as to whether we wouldn’t be better designing policy to achieve the emission reductions we know we are going to have to achieve.
- The government claims the broader industrial ETS will be “yet another economic handbrake that Labor is putting on our economy”.
But – evidently not keen to walk straight into another major scare campaign – Labor has gone to great lengths to make sure this claim cannot be substantiated.
In its first stage, from 2018 to 2020, heavy industry will only have to buy permits over a yet-to-be-determined “cap”. If it’s a trade exposed industry and exceeds its “cap” those permits can all be bought on the international market. The cheapest of those permits, “certified emission reductions”, are selling for less than $1. So while we can’t calculate exactly what a particular firm might have to pay, it isn’t going to be much.
After 2020 it will introduce a longer term industrial ETS, and also decide what other sectors might be covered, for example agriculture or road transport. Here the details become even more vague, with most to be determined in consultation with industry after a Labor government won office.
And just in case anyone still had concerns, there’ll be a “strategic industries taskforce”, to help design the scheme, and a $300m fund to help hard-hit communities with the transition.
Labor might be criticised for leaving important details until later, for erring on the side of caution, for claiming it will get to net zero emissions by 2050 without explaining exactly how it would do it. But it’s made absolutely sure it can’t be attacked for applying an economic handbrake on anything.
- Which brings us to the final reason this new carbon tax scare campaign rings so totally hollow. Labor, and those in the Coalition who understand that climate change is a thing, are actually converging in their ideas about what policies Australia should adopt. They are moving towards sectoral, and maybe intensity-based, trading schemes and towards using a suite of policies (energy efficiency, vehicle standards, regulations) to get to our targets. And every interest group with a stake in this argument – business, environment groups, investors – are desperately willing the major parties to find some kind of consensus. The Business Council of Australia said Labor’s policy could be a “platform for bipartisanship”. They are right.
And the barren, stupid climate wars and dumb fact-free scare campaigns are a guaranteed recipe for a terrible economic and environmental failure.