Friday, July 15, 2011

Carbon pricing & Mr Abbott's end game

Despite my best endeavours, it is actually quite hard to avoid getting caught to some degree in the on-going debate in this country on carbon pricing. So looking back at the points I made in Things to watch as the Australian carbon tax debate unfolds, what new things have emerged? It's only a few days since that post, but as people pick over the entrails in the Roman temple that Australian politics has become, new things do emerge. At least, they are new to me!

To start with something that's not new, political controversies of this type generate their own momentum. They acquire a life of their own, a shadow play that drags people along independent of the world around them. Sooner or later we have to leave the theatre, but it's very real while it lasts.

Adversarial Politics

In the Sydney Morning Herald, Phillip Coorey quotes Tony Abbott as follows:

TONY ABBOTT says he will call a double dissolution election if he wins power and Labor and the Greens combine in the Senate to stop him from repealing the carbon tax.

The Opposition Leader, who is sitting on a massive election-winning lead in the polls, issued the edict in front of a community forum in Brisbane last night.

He said if the government was ''walloped'' at the next election over the carbon tax, it would be unthinkable that a humiliated Labor would not allow an Abbott government to rescind it.

Mr Abbott said he would have a mandate to rescind the tax which would be equal to that of Labor when it repealed Work Choices after its 2007 victory.

''It's just not political commonsense,'' he said.

On the face of it, that's quite a remarkable statement.

I haven't done the maths properly, but it runs something like this. Assuming that no existing MP dies or resigns, it's a bit over two years to the next election. Then the repeal legislation has to be put to Parliament, rejected and then put again followed by an election. The practical effect is some three years of uncertainty.

Leaving aside the policy effects of Mr Abbott's position, so long as business regards the end price point as uncertain they will be reluctant to invest, three years is a very long time in political terms. A lot can happen.

Meanwhile in the short term, Mr Turnbull apparently continues to twitter along about Mr Abbott. Not happy, Jan, to use a phrase added to Australian English by an earlier advertisement. I do wonder how long Mr Turnbull can survive.

As an aside, politicians who fall in love with social media place themselves in a very dangerous position. Really, technophiles are their own worst enemies. But that's a story for another post.

Global Changes

In an opinion piece in the Australian, Henry Ergas points to the apparent dependence of Australian Treasury modelling on global changes. The cartoon is from that piece. Large web and ipad version of

My old blogging friend Neil Whitfield's Google Reader carries a lot of pro climate change material. I tend not to read a lot of this stuff, it's all too adversarial for my liking, but looking at it there are two separate if linked issues.

One is the further evidence on the science itself. Over the next three years more evidence will accumulate. I, for one, hope that the sceptics are right, but we cannot assume that. The second is the nature of accumulating global effort on climate change, accumulating effort that creates its own momentum.

It seems to me that both Professor Ergas and especially Mr Abbott are in fact making some very courageous assumptions about both the science and the probable outcomes of the weight of accumulating current global efforts.

Mind you, the increasing risk of a perfect global economic storm could actually invalidate everything by stopping all action However, that strikes me as a lower probability outcome.

Differential Impacts & Price Effects

As you might expect, the continuing discussion is starting to draw out both the likely differential impacts of the proposals, as well as the likely price impacts. One of the Government's problems here is the existence of other price variables that affect the analysis such as the large existing rises in electricity prices.

Australians like their policy analysis simple, expressed in black and white terms. The world is not like that.

As a simple example, look at the this story Rooftop panels penalise poor by Dennis Shanahan in the Australian. Yes, I know that that paper has been running a very particular campaign, but Shanahan does make some valid points in terms of the differential impacts of apparently good ideas.

In fact, one of the biggest problems the Government faces in selling its ideas is that so much has been justified previously on climate change rhetoric that there is a now a deep distrust in the electorate.

Now here I want to introduce another story, again from the Australian, Michael Owen's piece Coal-fired power plants will be closed 'regardless of cost'. Leave aside the language used and look at the content. Look, first, at the time lines involved. Then look at the role of the Australian Energy Market Operator. Here I quote:

Under Labor's carbon tax, the Australian Energy Market Operator must sign off on any closure of power plants to ensure the security of electricity supplies.

But AEMO is limited to ensuring the timeframes for closure are "realistic" and "give enough time for replacement capacity to be built". AEMO executive general manager David Swift said the central brief was a "smooth transition to secure energy supplies" and not the cost to consumers.

"I shouldn't say this, but it's no secret the price of energy is going to go up out of all this," he told The Australian. "The new technology is more expensive and it's cheaper to run the coal-fired power stations.

"Do I have to take into consideration the impact of all this on prices for consumers?

"I'll get in trouble answering a question like that but, to be honest, the decision to approve closures are limited to whether the new technology works and is able to maintain the security of supply.

"There would be no consideration of what it would do to prices for consumers."

In NSW, country electricity prices have just risen by a bit over 17 per cent, city prices a little less so. Part of the rise is due to previous network under investment, the Government in Sydney used the electricity system as something of a cash cow, but a not inconsiderable part is also due to a miss designed solar electricity program.

Yes, I know that the previous government had a tendency to opt for "progressive" causes for easy immediate political gains, but the costs now make people very cautious about new things.

Murphy's Law

Murphy's law is already hitting the Government.

Australian department store David Jones has been forced to announce a significant profit downgrade because of collapsing retail sales. In radio interviews, I don't have a link, CEO Paul Zahra attributed the fall to a combination of the flood levy with the proposed carbon tax.       

David Jones is not alone.

All sorts of things have contributed to the fall in retail sales including fundamental structural change in retailing, something that I want to return to in a later post. However, it is adding to the growing sense of unease fed by current partisan politics.


In all this, I have no real idea as to how things will work out. Given that I work alone much of the time, and out of curiosity, I asked eldest what she thought.

As you might expect given her family background, she is generally in favour of a carbon tax. However, she also commented that the patrons at the pub where she works are generally anti to the point that it has become a no-go conversation area.

I think in terms of my own thinking I keep coming back to the time question. It will be months before the legislation is finalised, while the tax itself will not come into effect until July next year. That allows plenty of time for people to work issues through. It also allows lots of time for other things to happen. Here the difficulty for the Government is that it has other contentious legislation to come, including the mining tax.

Tactically, I think that Mr Abbott probably wants to keep this one on the boil until he has a new issue and especially the mining tax to add to his armoury. Yes, I know that the mining tax has been bubbling away, but he really needs the legislation to go into full attack mode.

In geographic terms, the mining and carbon taxes have somewhat similar distributional effects. As, in fact, do the poker machine proposals. I haven't attempted to map this, but it might be interesting to try at some point.

This muse is starting to take me in new directions. I need to pause here, for I am well over the time I allowed for this post.


Thomas pointed me to a useful post by ABC election analyst Antony Green, What Chance a Double Dissolution in the Next Three Years?, explaining the mechanics involved in a double dissolution election. It reinforces the point I was making about time.

In a post in the Australian's Mumble blog (Abbott’s long and short games) Peter Brent struggles to understand Opposition Leader Abbott's tactics. He says in part:

If the carbon package is brought in in twelve months time, and the next election is held in 2013, it is very difficult to imagine the Coalition taking a promise to totally undo it to that election.

It is even less likely that they would threaten a double dissolution if they formed government but didn’t get their way on the package.

Yes this is what the opposition leader is saying he will do.

Abbott’s game plan is probably short term. His leadership of the Liberal Party is dependent on the opinion polls. He needs to keep those walloping voting intention leads rolling in because they keep him secure in his job and prime minister Julia Gillard insecure.

While the government remains toxic there is a chance, however small, that its one seat House of Representatives majority will vanish. In some way or other. You never know your luck.

Like Peter, I struggled to make sense of Mr Abbott's position. However, as I wrote the above post, I found my ideas changing a little. It wasn't that Mr Abbott's statement on double dissolution itself became any more practical. Rather, in looking at the whole carbon tax question as part of a broader pattern, I formed a view on Mr Abbott's tactics that was a little different from my previous view.

Mr Abbott's game plan may, as Peter suggests, be short term poll driven. My feeling is that it's more complicated than that, something that I alluded to in my conclusion. Mr Abbott is playing a high stakes game centred on fissures in Australian views. He is actually attempting to create a new majority coalition of interests while continuing to do his best to destabilise the Government. He may well succeed.  


Neil said...

Thanks for the mention. I have become more "adversarial" in my Google Reader simply because there's no point in being namby-pamby when most of the self-designated sceptics are such poor scientists -- when they are not being straight-up dishonest! I also wish they were right, but King Canute didn't succeed either!

Alan Jones or the CSIRO? No contest -- one of Julia's better remarks.

Jim Belshaw said...

Hi Neil. I wasn't being critical. I understood where you were coming from. It can make it difficult, however, if you are interested in the science as opposed to defences of the science.

Neil said...

Not offended! But as one very interested in the science I get very offended by all the bad science out there that masquerades as "science" or "scepticism" but really is about as compelling as all those nutjobs who argued against HIV having anything to do with AIDS.

Really, the mentality that drives them is the same -- and Quadrant took those nutters seriously too.

There are many complexities in climate science of course, but for heaven's sake let's focus on the real scientists and not superannuated lords or fly=blown geologist on a political mission.

As for the appropriate policy responses -- now there I am with you, Jim. :)

Jim Belshaw said...

Thank's Neil!

Anonymous said...

Jim, balanced and thoughtful as usual; dunno how you keep it up.

Just to add my tuppence worth, I think there is a danger in trying to deduce from the noisy ones on both sides just what the majority of Australians think about all this. An observation not a criticism.

I accept Neil's fairly strident position as heartfelt, and with more than simple self interest. But I think that also applies equally to the 'other' side. But this still leaves probably 19 million Aussies who have to listen to all this rage and angst, and who probably have no great conviction either way.

You might think this off-topic, but I'll repeat some words from one of the GetUp supporters here:

“any social mobilisation is going to require rigorous leadership, no matter how democratic its goals. It may be that intelligent political engagement will always be a minority sport”.

Apart from being one of the most out-front insultingly elitist comments I've ever read, it has two other features: 1) it's most probably true; 2) it recognises the power of the noisy few in a cold blooded and cynical way.

Whatever happens at the next election I take great heart from the history of the Australian electorate in mostly getting their decisions right; in mostly being repelled by the antichrists of both left and right; and in mostly remaining a fairly gentle people - more than all this sound and fury might have an outsider believe to be representative of this country.


Jim Belshaw said...

Hi KVD. I try to be balanced because on a lot of these things I write to try to increase my own understanding, rather than to try to persuade others. Sure I have my own views, but they actually change sometimes as I write.

This happened this time because I was trying to see Mr Abbott's views in a political context, to better understand the tactics.

I do understand Neil's position; he has become frustrated!

I agree with you re the electorate, even though it sometimes takes a little time ends with positions different from mine!

Thomas said...

Hi Jim. Thought you would be interested in a piece by Antony Green from last month. The whole thing can be found here:

But the bit that your post reminded me of was this part:

A full term Gillard government would go to a normal House and Half Senate election between 3 August and 30 November 2013. New Senators elected at the election would begin their terms on 1 July 2014.

While it is not explicit in the Constitution, I believe it is implicit in the fixed terms of the Senate that a double dissolution trigger can only apply to legislation first blocked by a Senate in place after 1 July 2014. The Constitution states the Senators take their place on the 1 July after their election. Any double dissolution triggers attempted before new Senators take their seats would not allow the new Senators to vote on the legislation.

An attempt to create a double dissolution trigger before the new Senators took their seats would attempt to terminate the terms of 108 Senators rather than the 72 implied by the Constitution.


If the Gillard government last its three years until the second half of 2013, any new Coalition government would find itself struggling to do anything about a double dissolution election until 2015.

Neil said...

My strident views on climate change are merely reflections of The Royal Society and The American Association for the Advancenebt of Sciencss and every other scientific organisation with any prestige in the entire world -- and I mean every! Obviously I am the victim of a socialist plot involving all these people. Amazing eh!

I'm really boringly conventional, I think. For similar reasons I accept tectonic plate theory, evolution, gravity and heaven knows what else.

I am so conservative really.

Forgive me for being almost terminally impatient about the silliness that has made so many otherwise bright people people idiots on the subject of climate change when the science really is as clear as science ever can be.

But as I said above, what constitutes wise policy in dealing with the issue is quite another thing.

Neil said...

That should be Advancement of Science. Working on a netbook keyboard!

Anonymous said...

Neil I believe the term you are searching for is "rational ignorance".

I will happily admit to accepting the theories of evolution, and gravity, and tectonic plate activity. But I don't profess to understand them, and couldn't begin to put up a considered scientific defense of any of them if pressed.

On the other hand, I'm very uncomfortable with adopting the "fool, thief, liar" response towards anyone who questions my rational ignorance.


Jim Belshaw said...

Thanks, Thomas. Very interesting. I have brought the link up in the main post.

Neil said...

Hi kvd:

...couldn't begin to put up a considered scientific defense of any of them if pressed...

Neither could I, but I hope I recognise a considered scientific position when I see it, and that's what I haven't found so much of on the climate sceptic side. Rationality really does seem to favour the "consensus" position. See the link at my name.

But I am rudely interrupting you, Jim. Sorry -- especially as I find your analysis of the policy debate so compelling.cousn

Jim Belshaw said...

Feel free to go in whatever direction you like, Neil. The same applies to KVD!

Although I have written some stuff on the science debate including problems with group think, I didn't buy into the discussion between the two of you because I think that we have gone beyond the point where that's productive. I am more interested now in the policy issues. I think that the science will work itself out as more evidence becomes available.

Anonymous said...

Ha! All those considered words, with which I very much agree, and I've stolen a copy of the Nicholson cartoon. It's quite brilliant, both as concise comment and stand alone pure art.

Envious I am, of such talent.


Jim Belshaw said...

And so am I, KVD! It's a wonderful cartoon!