Tree of Knowledge

There’s a fairly vigorous comments thread discussing the Green Paper on the CPRS (not be confused with the ETS) currently running over at Larvatus Prodeo.

Kim notes my missive from earlier today and comments:

Another update [by Kim]: Tim Watts writes:

The reaction in the left-wing blogosphere to the Rudd Government ETS Green Paper’s cent-for-cent reduction in the fuel excise to compensate for tax increases in the ETS seems to have been universally hostile.

Indeed, and rightly so. Though that’s not the only way in which this Green Paper has wimped out.

Tim argues that those who dissent from government policy paint it as political opportunism. Well, it is. One wouldn’t expect anything more - or less - from the political process. But there’s good politics and bad politics. As Mark said in his post, there was no need to join the Libs in the petrol politics game - which all the pragmatic indicators suggest is pretty bloody irrelevant. We’re arguing here at LP that good policy could be good politics. Didn’t a certain Kevin Rudd also make that claim when he promised “evidence-based policy” and long term solutions rather than poll driven populism?

Mark has subsequently followed up with a broader post (to his credit he is coming out and saying Double Dissolution here – fair enough he’s got a solution to the Senate Question, but that’s a pretty big call!).

In response (all intended in good humour for the record):

I didn’t mention the Libs petrol politics in my post; I mentioned Senator Fielding’s petrol politics. While I think that there is real potential for a political backlash in RARA over any government driven increase in petrol prices, the far bigger political problem is getting the thing through the Senate. Given his historical position and limited constituency, including petrol in the ETS CPRS without cuts to the tax excise would rule out the possibility of obtaining Fielding’s (or the Libs’ for that matter) support for the legislation. No Fielding, no ETS; it’s as simple as that. Recognising this isn’t ‘political opportunism’ or ‘poll driven populism’ it’s recognising political reality and trying to achieve a result in the face of it.

I don’t have a problem with people who ‘dissent’ from the government. All I’m saying is that if you want to see something done about Climate Change, as I do, and the government does, and as the online left does, you’ve got to work within the political context. Those who want petrol in the ETS without compensation need to explain how they’d get that through the Senate.

So far as evidence based policy goes, again, can we get some perspective here. As the Green Paper notes:

“the increase in petrol prices from 90 cents/litre in 2003 to current prices at around $1.70/litre is roughly equivalent to a carbon price of $320, which is well in excess of the expected carbon price under the scheme”.

Similarly, as Brett writes at Everything is Changing

“The reason for establishing an ETS is to provide a price signal for consumers to reduce their carbon emissions. It is hard to imagine a bigger price signal than a seven-fold increase in the price of a barrel of oil since the 1990’s. Adding the price of carbon to the current record pump prices would have an almost laughably small effect of about 4.5c per litre (assuming the government’s reference case of $20/tonne). If the message that we have to reduce our fuel consumption is not getting through already, a few percent extra will make little difference.”

So what are we really talking about here? The evidence is that in light of the already high, and continually rising prices, the amount of compensation being provided for the inclusion of petrol is going to have a marginal impact on emissions (if you don’t believe me, you can ask Josh Gans). However, the absence of compensation could torpedo the whole policy. To my mind, that’s a reasonable trade off. It’s not ‘pissweak’, it’s not a ‘cop out’ and it’s not ‘opportunism’. I agree that ‘good’ policy is good politics. However, pursuing ‘best’ policy can be bad politics AND bad policy if it means you end up achieving nothing.

Finally, as has been noted by a myriad of commentators, the government’s response to Climate Change is going to be political difficult for a number of reasons that extend beyond petrol alone. Given the scale of this political challenge, shouldn’t the left be trying to provide some support for the government’s efforts? I’m certainly not saying the government shouldn’t be criticised, but the level of vitriol that has been directed against the government on this decision is unhelpful to the broader cause. You can take that or leave it, but if the Rudd government loses power at the next election the terms of the debate over the ETS will be far less favourable.

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