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Published 08 October 2013 11:53, Updated 09 October 2013 07:49
The carbon tax was one of the big issues of the past six years but business doesn’t care whether it stays or goes - it just wants an end to uncertainty and destructive politics.
The political reality is that Prime Minister Tony Abbott can’t repeal the carbon tax until July next year, but he does have the opportunity to forge a bipartisan approach on an emissions trading scheme (ETS).
That would be good for business and good for Australia. Here are three reasons why an ETS would work for everyone.
Businesses are struggling with the uncertainty over the fate of the carbon tax. Will it stay? Will it go? Will there be an ETS instead?
The uncertainty, far more than the carbon tax itself, is damaging for business. It is particularly destabilising for entrepreneurs trying to build businesses in clean technology and renewable energy, as BRW discovered when writing this recent feature on the sector.
This comment from David Solsky, chief executive of software company Envizi, typified the sentiment. “How can you expect businesses to make tens of millions of dollars in investment decisions with that kind of uncertainty?” he says. “It doesn’t matter if it’s an ETS or direct action, just tell us what it is and let everyone get behind it. I’d like to see it stop being a political issue and let it be a sensible economic issue with bipartisan support.”
One way or another, Abbott should end the uncertainty as soon as possible. The political reality is that he can’t repeal the carbon tax in the current parliament. Both candidates for the Labor leadership, Bill Shorten and Anthony Albanese, have ruled out supporting a repeal, and so have the Greens who currently control the balance of power in the Senate.
Abbott has three options. He can try to force a repeal of the carbon tax, all the while beating his chest about his “political mandate”. When it fails, he can either call a double-dissolution election or, more likely, wait for the new Senate to be installed in July 2014. Neither of these options is conducive to the type of certainty that Australian citizens crave and businesses need.
The third option is to negotiate with the current parliament, respecting the fact that opposition MPs and senators also have their own electoral mandates. This has to be the way forward as it would allow the matter to be settled once and for all before the end of this year.
Former prime minister Kevin Rudd could not pass legislation changing the carbon tax into an emissions trading scheme in the dying days of his government - Albanese told ABC’s QandA last week that they did not have the numbers in the House of Representatives. But if Abbott were to propose an ETS and Labor were to support it, which they should, then he wouldn’t need the Greens or the independents or Clive Palmer or anyone else.
Abbott would certainly look silly if he reversed his long-held opposition to the carbon tax. Moving to an ETS instead would let him maintain some credibility.
The only problem is that Abbott repeatedly said in the lead up to the election that an ETS was “a carbon tax by another name”. This was rather a political own goal, closing off options. It’s also not true.
The carbon tax is a fixed cost added to emissions, while the ETS is a mechanism that caps emissions. The government issues permits (which it can either sell or give away) but it doesn’t derive ongoing revenue and the market decides the value of the permits. The Conversation has a good explainer on the difference between the two. Politfact has also interviewed economists, tax experts and accountants, ultimately concluding that the ETS was not a tax.
The first Rudd government was elected on the promise of an ETS. It used to be Coalition policy as well. There is no reason bipartisanship can’t be recovered on this issue.
There would be some political cost for Abbott to move to an ETS but there is also much to gain if he wants to forge a reputation as a statesman. Rather than fighting culture wars, he could be a leader for all Australians. For inspiration he need look no further than his fellow Liberal, NSW Premier Barry O’Farrell, who has built a broad centre-right support base with consensus decisions such as being first to sign up to the Gillard government’s Gonski reforms.
Australians did have issues with the way the carbon tax was imposed, but they haven’t stopped caring about climate change. They worry about the future for their children and grandchildren, they worry about destructive weather events and the potential loss of the Great Barrier Reef. Just look at the fact that the Climate Council, an independent body replacing the axed Climate Commission, raised $430,000 from public donations within a day and over $1 million so far.
Abbott is on record as saying he believes the science on climate change. On the eve of the 2013 election, he told the ABC Insiders program: “I think that climate change is real, humanity makes a contribution. It’s important to take strong and effective action against it.”
Yet over time his statements have flip-flopped and some of his first actions since taking office were to dismantle the climate change infrastructure of the previous government. If Abbott wants to shake the persistent accusation that he is a “climate denier”, then he needs to take stronger action to reduce Australia’s emissions.
Coalition policy is to reduce carbon emissions by 5 per cent by 2020 - the same as the Labor target but via a “direct action” plan instead. Little is known about what direct action would involved, but it is expected that more information would be released this month. The problem is that many of the senators-elect have signalled that, while they would repeal the carbon tax, they would not support government spending on a direct action plan. Australia could be left without a plan to reduce emissions at all - and that would be at odds with the Coalition’s long stated position.