<a href="https://www.greenlifestylemag.com.au/blogs/leon#">The Business of Green</a>

The Business of Green

Money matters in the green world, by Leon Gettler.

The politics of carbon

railway change

The politics around the proposed carbon tax has changed it's course this week.

Credit: sxc.hu

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The politics of the carbon debate grows more interesting by the day with the Federal Government going on the front foot and hosing down speculation that a carbon price will slug Australians. This could mark a turning point in the debate.

Scrambling to get traction in the debate and win voter support, Climate Change minister Greg Combet has pledged that "millions of households" will be better off when compensation for price rises is distributed. He flagged a lower than expected figure of $20 a tonne. The Feds will also exclude petrol. That would halve the cost of the tax to $405, before compensation or about $7.80 a week, enough for two cups of coffee. Combet says that Australia’s biggest polluters will cop the biggest hit. He says they are responsible for half of Australia's greenhouse gas emissions and will pay the vast majority of the carbon tax revenue.

Combet’s figures need some fleshing out. They’re short on detail and the numbers won’t be finalised until at least the middle of this year.

Industry has attacked Combet’s numbers. Bluescope Steel chief Paul O'Mallley says Department of Environment data suggests the Government will collect more than three times the figure Mr Combet put up, and that his numbers are based on selective use of official data. And Australia’s biggest union has warned the government that it will lose union support if “one job” is lost because of the proposed tax.

So there is still some way to go. Still, this week marked a turning point in the political debate.

The fascinating part here is whether the Government’s position will put it on a collision course with the Greens. In an interview with the Sunday Age, Combet indicated that he thought the Rudd government’s compensation levels for carbon intensive industries are just about right. Greens deputy leader Christine Milne has described it as ''a victory of lobbying power over good policy'' and says this sort of compensation looks after vested interests, not the entire community.

She has a point. Business is getting better deal than any householder. As Bernard Keane points out in Crikey, the compensation for business is not the same as the compensation for households. “They wouldn’t get a tax cut or a grant, they’d get free permits,’’ Keane says. “That is, they would see virtually no price signal, whereas consumers would see the full signal. It’s like giving householders a “no carbon tax” card they could wave every time they had to make a purchase. If the carbon price revenue was being directed into a corporate tax cut, it might make more sense to argue businesses would respond to carbon price signals, but not when the price signal is almost entirely neutered.” Which means business has little incentive to reduce emissions.

The government’s strategy seeks to to stop the Opposition making further headway on this issue. So predictably, Opposition leader Tony Abbott has come out and told voters not to trust the government.

But for all the Opposition’s rants, the chances of them stopping it are close to nil. As Rob Burgess writes in Business Spectator, the Libs would have to win control of the Senate. Now that’s impossible because the proportional representation system favors the minor parties.

The Opposition would have to kill the legislation before it gets through in November. And the only way that’s going to happen is if there is a by-election caused by defection, illness or death. Or maybe the independents Rob Oakeshott, Tony Windsor and Andrew Wilkie could switch sides. That’s about as likely as Donald Trump becoming US president.

“That fact remains, therefore, that if Tony Abbott's team does not find a way to bring down the government before the carbon tax is legislated – most likely in November of this year – the Coalition will be powerless to repeal it until two Senate elections have taken place,’’ Burgess writes. “That most likely means a carbon tax for four years, and by that time who knows where global carbon politics will have taken us. Coalition MPs vowing to repeal the carbon tax must, therefore, be careful to avoid saying exactly when they'd be able to fulfil that promise.”

Politics aside, the more important question is whether this country’s biggest polluters will be reducing emissions after the scheme comes in. Don’t hold your breath. With all that compensation, there’s no incentive for them to cut back.