Peregrine

A difficult set of numbers

2008-12-15T15:40:00.005+11:00

The Rudd Government has released its CPRS White Paper which will form the basis of its emissions trading policy until 2020. The headline figure is the setting of an emissions reduction target of 5% (on 2000 levels) rising to an 'absolute maximum' of 15% if an international agreement is put in place.

Given the previous policy platform outlined on matters such as renewable energy, it is not surprising that the target ceiling has been set at 15%. The Garnaut Report stressed the significance of per capita emissions in setting targets and with Australia's population projected to grow considerably due to higher immigration and birth rates than European nations; it is not surprising that the Australian approach has been to adopt a markedly lower target range than Europe.

The revised CPRS design is reminiscent of the 'action target' approach that had previously been advocated by Argentina. The action target theory sets a target range which is varied based on economic activity, thus ensuring any cost burdens do not place an excessive lag on industry in vulnerable times. As the global economy has tracked downwards dramatically since the initial mooting of the CPRS, the ambition of the scheme has been scaled back to reflect the difficult economic position.

The difficulty in setting a target is demonstrated by the need to balance an existential threat of future damage from climate change against the immediate threat of the global economic downturn, particularly as the most trade-exposed industries that are in the vanguard of carbon emissions are the ones whose immediate prospects have been severely affected by reduced demand in places such as China. The need to maintain consensus is vital in this situation and keep the majority on board. This has led to the increased insulation of both businesses and households from price rises.

The unfortunate byproduct of this is a reduced emphasis on energy efficiency programs. Ideally, using energy efficiency as a means to both lower individual costs and streamline the economic structure to encourage more efficient use of energy would have both short-term cost saving and economic stimulus benefits and long-term restructuring advantages. It is important to note that during the Asian economic crisis, energy efficiency procedures actually broke down as lower demand reduced costs. The result was a Chinese industrial sector beset with out-of-control emissions growth. The introduction of the CPRS will not take place until 2010, so it is imperative that energy efficiency is promoted strongly for the next tweleve to eighteen months to prevent a massive shock when the carbon price signal takes effect.

A belated rejoinder

2008-09-09T18:44:00.007+10:00

A few weeks back, Sam Roggeveen of the Lowy Institute came across this post offering an intuitive response to a Cato Institute article on the uneconomical nature of climate change mitigation.

Roggeveen made two criticisms of the post. Firstly, it did not offer grounds for preferring one discount rate over another, so it's not clear why the 'do very little' school is wrong. Secondly, it suggested the post implied all attempts to analyse climate change in these terms are bogus without offering an alternative.

Why the 'do very little school' is wrong - preferring discount rates

The reason why Stern's discount rate is to be preferred over Norhaus is that the discount rate represents not merely the future trend of economic growth (itself a considerable presumption in the face of major climate change impacts), but two ethical decisions.

The first ethical decision is the value that a given generation places on a particular good. This theory is called prioritism. Prioritism in this context means that future generations can make a lower claim on goods.

The second ethical decision is the choice to disregard events in the future simply because they are so far in the future that it really does not matter. This is called temporal impartiality. Economists have a fairly short-term view of the world which treats what happens in 2050 as almost negligble importance. Treating the future welfare as of little importance leads to a rapid rate of discounting for future costs. Norhaus ultimately ends up with the conventional discount rate of 6% per annum which applied to the finance market from 1900-2000.

Temporal impartiality and prioritism are thus interrelated ethical judgments rather than mere economic factors which go to the value one places on the position of future generations. The usual underlying assumption is that future generations are going to be richer and able to look after themselves so we in the present do not need to worry about their fate. The problem arises when one considers that future generations may not have the same easy access or unconstrained ability to deal with resources that we currently do, not to mention being further hampered by climatic conditions.

Stern's reduced discount rate means that the welfare of future generations is valued far more highly than conventional financial models and thus takes into account the principle of intergenerational equity which usually plays a very limited role in financial decision-making. It is to be preferred to Norhaus as it encompasses both the economic and moral implications of climate change.

Are all economic models wrong - the alternative?

Remarks made in my post regarding problems with economic modelling related to the assumptions included in them by 'do very little'-favouring economists. The rule to remember with all modelling is that models are the children of their creators. The outcome of a given model depends entirely on the assumptions used in its design. If one believes for instance, that climate change is really not likely to be a problem, humans have little agency to affect climate and/or that any constraint on progress is a bad outcome, it is very easy to take the best case scenario of the IPCC Report, apply a high discount rate and conclude that climate damage costs do not justify reforming the entire economic structure. Underestimating the potential real cost of climate change on this basis constitutes a statistical lie.

In dealing with economic costs from climate change, we are dealing with two levels of modelling, economic modelling and climate effect modelling. The magnitude of risk from climate change comes from the likely outcome of differing concentrations of carbon emissions in the atmosphere. Host of variables such as sea level rise, feedback mechanisms such as increased sunlight absorption, decreased carbon sink capability of vegetation, release of permafrost, ocean current variations can affect the ultimate outcome.

So the best approach to economic modelling on climate change would adopt a low discount rate and a medium to high range assessment of climate impacts. This would ensure that there was enough fat in calculations to take into account feedback mechanisms and policy could be developed on a prudent basis rather than the 'wishing and hoping' exercise that doing very little would entail.

It is patently obvious that we need to develop technology that involves less reliance on finite resources and more reliance on renewable energy. It is surprising that economists who believe in growth without end have not pushed this argument further and instead lead us down the path of using a finite supply of resources from an increasing number of inefficient sources such as shale oil and tar sands.

Hudson Recruitment goes Middlemarch

2008-08-15T18:44:00.004+10:00

From the files of one very frustrated literature graduate...

Don't let the economists get too close

2008-08-13T14:59:00.004+10:00

Over at The Interpreter, there's an interesting dance going on vis-a-vis the merits of raising the price on carbon by schemes such as emissions trading and carbon taxes. In the red corner we have the 'rapidly evolving' views of the Lowy Institute's Sam Roggeveen and in the blue corner, East Asia Forum's Peter Drysdale.

Roggeveen appears to have taken on board the work of Warwick McKibbin, who noted that many early adopters of Kyoto targets have failed (in some cases absymally) to meet them. The argument is further supported by the comments of Ted Norhaus, who argues that the UK and Germany only reduced their emissions because of pre-Kyoto reforms. In this light, Roggeveen offers up the Cato Institute's Jim Manzi's paper for comment highlighting the following conclusions:

In summary, then, the best available models indicate that 1) global warming is a problem that is expected to have only a limited impact on the world economy and 2) it is economically rational only to reduce slightly this marginal impact through global carbon taxes. Further, practical knowledge of the world indicates that 1) such a global carbon-tax regime would be very unlikely ever to be implemented, and 2) even if it were implemented, the theoretical benefits it might create would almost certainly be more than offset by the economic drag such a regime would produce.

What Roggeveen has come across is the great paradox of the collision of economic instruments to manage environmental problems. While the tools of economics such as trading schemes are designed to increase efficiency in achieving environmental outcomes at least cost, the assumptions that economists apply to the world come into conflict when dealing with issues such as the precautionary principle and intergenerational equity.

Much of the economic commentary on climate change discounts the effect of the problem for two simple reasons. Firstly, economists discount the future interests of individuals compared to the present generation based on the fact that there is a 100%probability that the living exist, whereas there is a less than 100% chance of subsequent generations. Second, economics assumes a continuing narrative of economic expansion and hence discounts current estimates of the value of today's paper money. The Stern Review was praised in some quarters for using a very low discount factor to cost future damage from climate change. However the Productivity Commission took issue with its figure of 1% discount per annum over a hundred years for precisely this reason. The cited economist, Ted Norhaus, prefers to discount future impacts by 6% per annum. The net result is that while Stern costs climate damage in 2100 at 37% current value, Norhaus costs it at 0.0295%.

Conversely, when estimating the cost of climate policy, the tendency of anti-action economists is to count the carbon cost imposed by trading, exaggerate it out to a projected level of equality with renewables based on years of underfunding, factor in extra costs such as lost land usage for renewable plant and completely discount a commensurate surge in the renewable industry. One does not even need to include the ramifications of lost productivity through the risk of interruption to the mythical baseload power supply to see the carbon reduction ledger firmly in debit.

The piece de resistance of this argument is the 'best available models' line. Economics demands certainty, but we have very little when it comes to climate behaviour. We can only postulate about the speed and magnitude of changes caused by retention of increased heat in the atmosphere. When these figures are fed into economic theories of discount and growth, we get a series of statistical lies which speak to the Bjorn Lomborg school of climate change being an overhyped waste of resources.

What Norhaus, McKibbin et al fail to note in their critique of Kyoto targets is that Kyoto should be judged versus business as usual, not whether targets were met courtesy of Thatcher's coal mine closures or the fall of communism. It is painfully obvious that investment follows return, and that means that creating markets through the introduction of trading systems and renewable energy targets allied with clean energy funding is the way to go. Governments need to understand their role is to promote good policy and secure their nation's welfare into the future and not rely on the prejudices of the past.

The merits of climate change action will depend on the scope of that action and its capacity to reduce emissions while promoting sustainable development. Thus developing programmes that can gradually build from a national to regional to global level, buttressed by agreements ensuring common but differentiated responsibility is far more desirable than a 'do nothing', rely on technology alone approach.

Encouraging SMEs to act on climate change

2008-08-11T19:38:00.000+10:00

Peregrine apologises in advance for any viewers who may be offended by advertising...

I am in the process of starting up my boutique consultancy for small and medium businesses. It's called ClimateEasy and offers a range of cost effective services for business to prepare them better for the challenges of climate change.

Check it out here.

Perhaps these two gentlemen have explained climate change to Brendan Nelson

2008-07-30T17:43:00.004+10:00

As part of its ongoing 'climate change is a myth perpetrated by green leftists' series, The Australian recently published the work of Messrs Evans and Jensen. Dr David Evans, a self-styled 'rocket scientist', is a former employee of the Australian Greenhouse Office. In hindsight, that appointment was probably as constructive as say, appointing Senor Fawkes pageboy for the House of Commons, for the good doctor appears to have had his head turned rather too swiftly for someone intimately involved in the climate modelling process. Dennis Jensen is one of the handful of Western Australian MPs who subscribe to the 'Howard as demigod' thesis, and are on the record as skeptical of the IPCC-inspired policies adopted by almost every social democratic party in the world.

Evans' piece, which has been dissected by Tim Lambert, boils down to three essential points. First, Evans does not give credence to the very modelling he was engaged to produce and hence will not accept any conclusions that either correlate observations with modelled outcomes, or predict the effect of various phenonmena on climate. This means Lambert's references to such visions of orbital forcing or carbon dioxide effects on temperature will fall on deaf ears.

On top of this rejection of modelling, Evans also rejects data showing temperature rises and adopts a very short-term view of climatic variability, suggesting the Earth is now cooling again. What makes me suspicious of such claims is the fact that climate skeptics do not suggest the Earth is reverting back to normal service but is in fact cooling (from the hottest part of the last several hundred years!).

Evans' third tenet is that the Vostok ice cores no longer support the C02-warming causal link as the warming follows the C02 by 800 years. This is widely accepted. He uses this fact as a stick to beat Al Gore as a misleading alarmist politician. Evans' problem lies in the second bit of data: for 800 years the temperature rises but C02 does not, then the two rise together for around 4200 years as the Earth emerges from an ice age. This supports the argument that increased sunlight raises temperature, gradually warms the earth and releases C02 and methane via melting permafrost. Has anyone spoken to Putin and Medvedev about the double-decker carbon sink they have in Siberia?

Basic common sense should cause someone with a scientific background to act cautiously and take appropriate precautions. Evans makes no mention of what will happen to the oceans absorbing ever larger concentrations of C02, nor the chemically proven fact that carbon dioxide is less soluble in warmer water. He ends his piece with the charge of 'criminal negligence and ideological stupidity' against the ALP. I would counter that by saying that if the ALP knew of both great environmental risk and the impending threat posed to our major coal and steel industries and did nothing to reposition the economy the charge would be made out.

Mr Jensen appears to be following Kipling's injunction to keep his head when all around him are losing theirs. His piece is basically a cry for nuclear power, regardless of climate change. It is also a cry for debate, although given those who seek that debate are largely disinterested in observations, conclusions, logical inferences and fair play, one does wonder what sort of debate the member for Tangney is advocating. Jensen believes that energy measures are tokenistic and that solar and wind are 'as yet unproved'. He implies climate advocates are today's flat-earthers, suggesting he subscribes to the Galileo Complex. Given most of Jensen's fellow-travellers would gladly locked Signor Galilei up for the term of his natural, it seems an odd piece of identification.

On the cost of emissions trading, Jensen states:

If all carbon in the stationary power sector were to have a $50-a-tonne price of carbon dioxide imposed (as is the case for the European price for CO2), it would mean a cost burden of $660 a year for every Australian, or more than $2500 per household, according to data I have received. These would not all be direct costs from the emissions-trading scheme, but also from higher prices of products that would flow through as a result of increased production costs. Those higher costs would make some businesses unviable, and they would have to close or move offshore.

Firstly, the Rudd Government's Green Paper indicates that $20 per tonne is the starting carbon price. Australia is years behind the EU and the $50 per tonne mark is unlikely to be reached for some years. Jensen makes no allowance for increased use of gas or an escalation in renewables (Rudd's 20% 2020 target seems to have escaped his notice). If we use the average power bill of $1020 per annum, we get a $163 rise at $20 a tonne for carbon. This means a $50 per tonne price adds $407.50 to your average bill. Assuming no renewable uptake, this means $252.50 is the price rise from stationary energy usage alone by business. All of which is great, except Jensen fails to include the compensation payable for price increases: remember, it's supposed to be the polluter pays, not the consumer. Also Jensen needs to answer, if these businesses are unviable because of associated emissions costs, is that because they cannot pass them onto the consumer? In which case, his $252.50 per household secondary emissions costing is surely higher.

Being a nuclear advocate, Jensen does not include the transport sector in his calculations, and the imposts created by high oil prices on freight costs. The biggest threat to business at present comes from oil prices and interest rates, and it will only be businesses that do not reform their practices early that will be vulnerable to the degree Jensen postulates. Given nuclear will require tremendous government support, surely that would feed into major stationary energy price rises of the very ilk Jensen criticises.

It is these true believers in business as usual (with nuclear variations) that Nelson's policy seeks to placate. Rather than offering certainty, the central demand of business, these dictates would add great uncertainty: whether any action would be taken at all under a Coalition Government and indeed the very viability of an export sector propped up by extractive carbon-intensive industry.

For the rest of us, we should learn some basic chemistry about carbon dioxide, keep a weather eye out to see if the birds are singing earlier this year and do what we can to make a difference, whether that be recycle, turn off the lights or push our politicians for action. Those are our best guides in sorting the climate fact from fiction.

Another global warming challenge

2008-07-22T22:14:00.006+10:00

In the spirit of that fabled freedom of speech, Tim Dunlop has issued an invitation for any unpublished scientist whose (scientific) views are contrary to the global warming orthodoxy to send him a thousand word dissertation. Tree of Knowledge ups the ante to include explanations of why they differ from their fellow contrarians.

Global warming denial is both an inherently frustrating and fascinating phenomenon. Fascinating because of the psychological history, the experiences and influences that shape the views of the individuals that hold them. Frustrating for the standard political reasons. A level of intransigence by scientists and commentators either genuinely convinces politicians and the public the problem lacks urgency or provides a convenient excuse for inaction. It is not helpful in the modern massaged world of mass politics to be presented with the need to instigate a revolution across the economy and stimulate a domino-like consensus of opinion across both the developed and developing world.

It is understandable that conservatives in all walks of life, be they businessmen, unionists, politicians or commentators do not want to see the certainties of the modernity turned on their heads. Some see global warming belief as a triumph of faith over reason, others see it as an admission that the technologies of modernity cannot overcome the trials of nature. Both of these impulses have been criticial to the development of modern capitalism. Dependency on oil and baseload power are ciphers for an ideological conviction of humanity's inevitable progress. A narrative that despite the occasional conflagration has moved on apace since the medieval era.

The problem with this view is it ignores the inescapable facts that the oil reserves we rely on are finite and that it is simply unsustainable for the entire world's population to have the ecological footprint demanded by the modern western lifestyle. By definition, there are limits that constrain our access to resources. Hence in order to grow our way economically out of trouble, either we will have to find more arable and exploitable land or make our resource usage (across the whole gamut from food to metal production to energy itself) progressively more renewable. In short, while dealing with an exponential culture of achievement we will have to rediscover the cyclical resource use culture of our forebears.

As interesting in a 'angels dancing on a head of a pin' way as the global warming denial debate is, it does nothing to explain how proving the non-existence of anthropogenic global warming will solve humanity's forthcoming problems. It offers no solutions towards sustainable development and appears to buttress an ethic of land use and interaction which may be out of date and is certainly counterproductive.

Perhaps the greatest challenge for those poring over statistics, dissecting graphs and drawing conspiratorial conclusions is how are those intellectual endeavours going to secure the health, wealth and happiness of your grandchildren and their grandchildren. When the oil runs out and every nation from Guyana to Nepal demands a McDonalds on every street corner.

Dr Nelson slips his Freudian

2008-07-22T19:29:00.004+10:00

I wonder if when the erstwhile Dr Nelson was responding to the indefatiguable Australian campaign to draft our former Formula 1 treasurer to the opposition leadership, he intended to say this:

"If Peter decides he is going to continue his political career, and serve the people of Higgins, and indeed the Liberal cause, I can assure you he will be on the frontbench with a bullet"

Would that be Mr Rudd's missing silver bullet or one to the back of the head, in the traditional manner of deserters?

Rudd's political honeytrap

2008-07-16T22:56:00.004+10:00

The Rudd Government's Green Paper will no doubt earn the ire of some climate and environmental organisations for its gradualist approach to emission reduction.

Petrol is in the scheme but compensated by 'cent-for-cent' excise reductions until 2013. Agriculture is out until further notice (possibly starting in 2015) and coal power generators will receive government assistance. The Government appears to be easing voters into copping nanoeconomic pain, by hitting them first with upfront power bills (softened to an extent by increased government payments). This suggests that fast tracking renewable energy - as indicated by the proposed 20% national renewable energy target by 2020, is seen as a more palatable and effective option for achieving emission reductions. If stationary energy emissions make up 50% of all emissions, rising to close to 60% by 2020, a 20% rise in renewable market share would achieve between 10-12% emission reductions. That would suggest that Rudd's interim emissions target cannot be much higher than about 15% by 2020 from the current nominated suite of abatement options. Even to achieve these savings will require a considerable improvement in fuel efficiency and or energy efficiency at the current target levels. Such a target looks low by world standards and will barely be in the pack once developed nations crunch the carbon numbers.

This may well be the genius of Rudd's plan. The bar is so low that it reflects a pragmatic Liberal policy wish list. So low that in one sentence Nelson chastisted Rudd for lifting their excise-permit neutral idea and in the next called it a petrol tax. The end result of Labor's policy is that it puts the onus on the people to push it to take more action. It is almost the minimal possible response without jeopardising the integrity of action altogether. Rudd has effectively offered an election year handout with the electricity rebates and absolved the government of responsibility for excessive petrol hikes.

Nelson is left in nanoeconomic limbo. He has to either junk the scheme entirely or have a technical debate over the merits of 2012 action. Nelson has flirted with a faux policy debate about the hybrid model but if anything has smacked of 'The Hollowmen' in national politics, that search for an alternative was it. Possibly locking Turnbull, Hunt and Bishop into his Central Coast caravan for a weekend and designing a proper policy alternative would be more beneficial both to the debate and the long-term coherency of his party.

At the minute his argument boils down to 'there's a right way to do it (mine) and a wrong way (Rudd's)'. If the excise cut is my idea it's good policy and if it's his policy it is bad. The fact that all this operates in the future - i.e. after the battle has been won at the polls, makes Nelson's 'Rudd's 2013 review is Rudd-speak for ending the excise cut' ring hollow. If Rudd is to pay for injudicious action it will be in 2010. If he is to pay for inaction it will be 2013.

The scheme offers so much to the vulnerable polluters and the kind of targeted compensation scheme now becoming the Rudd trademark that it is highly unlikely the final draft will be any weaker. If anything, the challenge is being thrown down to voters to tell the government they want action and are prepared to pay for it.

Watching Penny Wong at the Press Club demonstrated a player in control of her material, confident in the merits of the argument and open to being pushed to further action. Watching Greg Hunt on Lateline demonstrated a puppet forced to parrot a line he did not believe in, wishing he had something coherent if not constructive to say. Only when Hunt got onto his pet subject of solar panel rebates did he seem to have conviction. Perhaps he should show some boldness and adopt the German bipartisan solar feed-in tariff where homeowners get four times the price for their surplus solar energy fed into the grid.

The danger with Rudd's policy is that in forcing the Liberals over the climate cliff, it will force a very swift acceleration of targets in the medium term. But by then Greg Hunt might be PM.

A Liberal dose of climate chaos

2008-07-13T11:22:00.005+10:00

Opposition is tough enough when your party is roughly on the same wavelength. When your party is undergoing a crisis of relevance and historical purpose, it becomes akin to herding cats. Brendan Nelson was elected to the leadership based on being a compromise candidate. Instead, he has become the compromised candidate who seems to be the last person to know when his policy has changed.

This has been the case on WorkChoices, the apology debate and now climate change. Nelson is frequently trying to be both progressive and conservative in the same sentence and the first thing that goes is the syntax of his sentences, then subjected to Rumsfeld-style ridicule.

The diabolical mess that is the Liberal party's position on climate change comes from Nelson's futile attempts to reconcile two mutually exclusive positions. On one wing we have the bipartisan actors such as Greg Hunt and Malcolm Turnbull who genuinely want to get the carbon reform ball rolling. On the other lie the science deniers led by Tony Abbott, representing the growth-is-king mantra of the Howard era. One suspects that they hold exorcism ceremonies around a portrait of Bob Brown clad with faux-Viking horns such is their distrust of Green policy. Whereas a compromise on the apology was possible but looked churlish and nonsensical, there is no way to balance these two positions down the middle. Either Nelson must lean towards the do-nothing denialists or he must lean toward the progressive wing of the party.

Nelson seems to have realised this himself but has not conjured up the escape route. His first attempt was to stand by the Howard policy of an ETS commencing in 2012. However, while Rudd can deal with both nanoeconomic and enviro-economic issues in turn, Nelson has based his entire leadership (if that's what one can call it) on nanoeconomic pain alone. He emotes on behalf of carers, pensioners, shoppers and motorists and is thus rendered allergic to price increases.

So by default Nelson is left with a leadership philosophy which does not allow him to support any price rises. Hence the compromised nonsense of 'petrol included but no net increase in taxes'. Perhaps he got caught in the GST comparison. While both the GST and the ETS result in pricing realignments, the essential purpose of an ETS is to input the price of carbon emission rights into the economic system. That means that products requiring higher level of carbon emissions will increase in price relative to those that require lower levels. Its operation can only be revenue neutral in the short term by government recompense.

However the reality that caused Howard to adopt the 2012 ETS in the first place has not changed. So Nelson cannot ditch the policy entirely but reopens it to consultation, digging up the hybrid alternative that Howard's Shergold report left on the cutting room floor. It will not take very much effort for Penny Wong to start citing Shergold's reasons for rejecting Nelson's proposal and exposing it as a fig leaf for denial. Denying climate change is as politically toxic now as advocating for asylum seekers was during the Tampa saga.

Further, the incoherency of Nelson's position makes him look an incompetent and weak leader and will do nothing for his electoral stocks. By not developing a progressive, innovative, liberal-philosophy based position on climate change, Nelson is not just undermining bipartisan action but his own party.

Rudd's Climate Change Game Plan

2008-07-12T18:14:00.002+10:00

Much of the media talk, well at least prior to the spectacular Liberal policy implosion, on climate change has centred around the difficulties it presents to the Rudd Government. This is largely based around a conventional view of Australian politics which casts Labor as the union-worker party and the Liberals as 'good economic managers'.

However the odd thing about this analysis is that it ignores the fact that it was the previous Labor government that introduced free market reforms which made the market economy paradigm a bipartisan project and hence an inherent part of the political landscape. Consequently, the supposed opposition of former ACTU members such as Martin Ferguson is seen as fatal to Rudd's project. The narrative goes that coal mining unions will revolt and suburban battlers concerned with the new nanoeconomics of interest rates, fuel and grocery prices will descend on Canberra with pitchforks and lead Kevin to the one-term electoral guillotine.

The flaw in this theory is that it relies on the assumption that the public's long held interest in climate action will dissolve in the face of the economic consequences. It is clear that when Rudd was elected, the public flicked the switch from concern over Labor's macroeconomic credentials to a more nuanced worry about nanoeconomic issues and the integration of environmental and economic concerns. Not only that, but whereas immigration eroded Labor's position (roughly 70% of voters supported Howard's detention programme at its height), a similar level of support exists among Liberal voters for climate action. Given climate change and its economic underpinnings challenge the very basis of conventional politics, failure to act with bipartisanship may deal a cruel blow to the future of the Liberals.

In order to turn Liberals to the Labor cause, Rudd needs to complete the evolution process begun during the 1980s by breaking the final bonds with the vested coal industry interests. He also needs a second economic reform programme. Hence the Garnaut Report. It is no coincidence that Garnaut played a key role in the 1980s reforms. Rudd's plan appears to be to offer bold action on climate change, hence his defence of the 2010 starting date for the ETS. Thus he will get credit for 'strong action', but also leaves the way open to 'listen to the people' if problems arise that need a 2012 date. If the Liberals fail to at least meaningfully contest the climate action field, they are setting themselves up for irrelevance.

The draft legislation for the ETS is not due until late this year. This will give ample time for the customary Rudd technique of kite flying to see which measures the public will bear and which need more careful handling. Hence the equivocation on petrol, which may depend as much on the oil price in November as anything else. Rudd will probably remove the GST on excise as a minimum and possibly mandate no GST on carbon permits. As the essential purpose of an ETS is for prices of carbon fuels to increase, the Liberal policy of 'no net tax increase' contradicts this basic aim. A coherent policy either leaves petrol in and increases the price, or leaves it out and places the burden on other sectors. Energy price compensation will be means tested in line with the strategy pursued with the solar panel rebate, remembering of course that while energy usage does not change much versus income, the ability to purchase energy efficient appliances does.

On the global front, Rudd will push for Australia to play a major role as an emissions intense middle power, bridging China, India, the US and Europe into some kind of coalition. China has expressed interest in an emissions trading scheme and expect Rudd to cite the ETS and Chinese moves as complementary. This also dovetails with Labor policy to increase the role of Australia's financial services sector in China and India.

The Rudd Government has demonstrated a committment to climate action and expect to see a lot more claims to be exercising national and diplomatic leadership in this area, while we are told how we are acting behind the rest of the world. This paradox is vital to understanding the politics of climate change and their implications. The need to act is clear but the traditional sense of caution towards major reform is also alive and well.

A random plug

2008-07-10T18:08:00.003+10:00

The political inversion of the climate change debate

2008-07-04T15:13:00.003+10:00

A number of journalists ranging across the spectrum from Fairfax's Annabel Crabb to News Limited stalwarts Dennis Shanahan and Andrew Bolt have identified the apparent contradiction between Rudd's 'I feel your pain' pitch to 'battlers' (or as the Piping Shrike has put it 'The New Sensitivity') and the inherent need for energy prices to rise to combat climate change.

On paper, it looks like a recipe for a Latham-Downeresque implosion. However, it both gives the voters no credit by implying they cannot hold two ideas in their collective heads at the same time and misunderstands the reasons for Howard's demise. Firstly, it is a well-established fact that voters can differentiate between state and federal politics. For at least two terms of the Howard government, large swathes of the country voted for completely different parties at the state and federal level. In fact, where Labor has run into trouble in the past is by dismissing many voters as 'ignorant' or 'unsophisticated'. The key basis of politics is persuasion, and a failure to persuade, while open to inteference from outside forces, ultimately comes down to whether the audience sees an essential truth in your message and your capacity to deliver. Rudd seems to be aware of the dangers of underestimating the public mind.

Secondly, Howard's fall from grace came from Rudd altering the economic debate from the macroeconomic level to the nanoeconomic level. Hence he recognised the problems of petrol and grocery price vulnerability and promised government assistance around the margins. Petrol and food prices operate however as free markets without government command and control influence, so real power here is limited to a 'watching brief', keeping an eye on price fluctuations and opening up the field for more competition.

What Rudd aims to do with climate change is again redefine the economic debate, this time on the macroeconomic level. Setting a price for carbon will integrate environmental costs into the economic system. That is the first step. The second will be for environmental and economic management to be seen as covalent. The third step is to break the nexus between economic growth and environmental emissions growth thus ensuring a political, economic and environmentally sustainable future. Unlike previous reforms such as the GST, support for an emissions trading scheme is consistently over 50%, while opposition sits around 25% with around 20% of people waiting to hear more details. Thus aligning economic and environmental action is what the people want at this point in time.

Unlike petrol and food commodities, the Rudd Government will have the power to set the starting price for carbon, define the parameters of the market and redistribute revenue from carbon permits to compensate the people. This market will afford government a measure of control rather than the watching brief seen in the nanoeconomic field.

The other thing that climate change does is transform energy increases into issues of personal responsibility. It thus becomes almost a civic duty to accept and embrace higher energy prices and encourage a larger share of renewable energy usage. In this climate, the goodwill to government is not dependent on keeping prices down but ensuring there is appropriate action being taken which is manageable on both the national and personal level. So government will both have more power to act and a proportionally lower need to act to ease public concerns.

The critical factors with the climate change carbon transition process will be the quality of the Rudd Government's communication with the people and its capacity to persuade voters that action is in all our interests. On this, expect to see a lot of Garrett and Rudd, and very little of Wong, who will be behind the scenes dealing with business and other large stakeholders.

Something is missing from this picture

2008-07-01T18:24:00.004+10:00

The Australian Astronomical Society has just announced the release of a rather obtuse-sounding paper "Does a Spin–Orbit Coupling Between the Sun and the Jovian Planets Govern the Solar Cycle?". This would normally pass into the scholarly ether but for the efforts of numerous global warming deniers to promote it as evidence of 'global cooling'.

The paper contains various observations regarding the orbit of the Sun, Jupiter and Saturn which have been helpfully translated to mean the Earth will experience diminished sunlight in the next decade and a consequent lowering of mean global temperature by 1-2 degrees. This trend is predicted to last around twenty to thirty years.

Precisely why certain blogs have immediately accepted this one paper rather than the weight of scientific opinion that anthropogenic climate change is unclear. However, even if we do accept these findings that a new global dimming is upon us, this only delays the impact of temperature rises from increased carbon in the atmosphere.

The IPCC Fourth Assessment Report offers a range of scenarios for temperature change, giving a projected increase of between 0.8 and 1.2 degrees C by 2040. It is quite possible that the two phenomena, if scientifically sound, could offset one another. However, the dimming period is predicted to last only 20-30 years which means by 2050 there would be a reasonable chance that the full force of high atmospheric carbon levels would be felt.

In other words, far from evidence that global warming is bunk, the global dimming phase at best offers a temporary reprieve and an unexpected opportunity to make better, more strategically sound long-term decisions.

Rather than use this as evidence for opposing any climate action, it should give us hope that we can adapt out society for sustainable development over the long term. We need to gain a better appreciation of both the dynamics of carbon in the atmosphere and the trends towards higher or lower solar radiation. At the same time, we need to continue picking low-hanging efficiency fruit and researching long-term fossil fuel replacements.

These decisions will be best made with open minds rather than ideological obsession.

Rudd's first statement: in debt according to the voters of Gippsland

2008-06-30T10:00:00.003+10:00

By-elections are traditionally unfriendly terrain for governments. They are something like a political Twenty-Twenty match, exaggerating the effect of local issues and suppressing the overall standing of the party leaders. With the government out of election mode, there are few policy handouts to focus self-interest. This leaves the voters to 'judge the government' on its operating machinery, rarely an enterprise the government comes out on top in.

The Gippsland result was consequently never likely to produce a Labor win, however the magnitude of the defeat bears some examination. It is questionable whether Labor's candidate was particularly strong, being neither particularly popular nor having much of a message for people straining under high petrol and food prices. It is possible that he was the fourth or fifth best candidate running. Labor did terribly in La Trobe, Victoria's coal heartland, which was no doubt due to concerns over climate change mitigation taking jobs, living costs and the 'Bundy and Coke' backlash, plus the Liberal candidate was well-known in those parts. It suggests that Gippsland will become a progressively safer seat for the conservatives as time goes on. Indeed, it points to a loss here being catastrophic for both the Liberals and Nationals.

Sheer mathematics may have exaggerated the size of the defeat. There is some argument that the Liberals' decision to field a candidate contributed to some of the anti-National protest vote going to the Liberals and then back to the Nationals via preferences. Certainly Gippsland has a high proportion of former One Nation voters who would not be in broad sympathy with Rudd's agenda on climate change, Asian engagement or reconciliation.

However the effect of these local factors does not excuse Canberra altogether. Following Rudd's election last year, Peregrine made the following observation on the reasons for his high approval:

Rudd's approval rating seems to not be giving him the type of blank cheque voters offered a Coalition government running on 'keeping interest rates low' and border security. It is a loan that he has taken out on promises of taking concrete action on climate change, restoring the position of employees in the labour market, fixing the health system and improving the position of 'working families' on housing affordability, rents, grocery and petrol prices and child care.

The big question will Rudd have the political capital to pay up when the voters collect their debts.

The early evidence from Gippsland is that Rudd might not have spent much political capital but he has not repaid the trust shown in him yet either. The nanoeconomics of petrol and grocery prices are dwarfing all other issues, and Rudd has yet to have any concrete policy achievements on health or housing affordability. On the Gippsland climate change index he is even further behind. Here not only will action be critical, but retraining and business restructuring will be vital as the coal industry plays a major role in this part of Victoria.

In short, Gippsland represents a vote of confidence in the local National candidate and a vote of concern against a government that has not done anything to inspire confidence that jobs will be protected and services will improve. Instead all some voters have seen are long-term aspirations and short-term price rises, things they find even less appealing than Brendan Nelson.

Breaking the economic - emissions growth nexus

2008-06-25T18:51:00.003+10:00

The realpolitik challenge of climate change lies in its economics. Although governments and environmental movements alike have long advocated the use of market mechanisms such as emissions trading in concert with traditional regulation and conservation measures, the major stumbling block to building a universal consensus for action is the link between economic growth and emissions growth.

It is axiomatic that, while powered predominantly by fossil fuels, economic growth will result in an increase in carbon emissions. This makes economic transitions from developing to developed countries have an exponential effect on carbon levels and push the atmosphere into dangerous territory. It paradoxically makes the problem more urgent and less amiable to agreement and action. Hence overtly capitalist, free-market theorists and commentators dismiss the need for climate change and heavily critique emissions trading despite its core reliance on market principles.

It is clear that unless this nexus is broken, we will find out exactly how much effect carbon can have in the atmosphere. The key to breaking this nexus comes when our power supplies need to either be replaced or augmented with new installations. That means that renewable energy and low emissions technology such as gas have to be utilised in a way that makes them economic competitors with fossil fuels.

The key tools for this task are a thorough assessment of power station requirements, an emissions trading scheme recognising the true price of carbon, international targets for renewable energy production to stimulate development, international accounting charting a decline in emissions growth versus economic growth, adequate compensation mechanisms for people overly affected by increased prices, vigilant regulators preventing profiteering, removal of artificial barriers supporting coal and oil over gas and encouragement of technology adoption through government initiatives.

We need to attack assumptions such as the supposed inability of renewables (or anything other than nuclear or coal) to produce baseload power. We need to encourage innovative technology and find ways to exploit our geothermal, solar and wave resources rather than our oil. Gas and energy efficiency can set the ball rolling, but wave, solar and wind technology must be facilitated to become more efficient and cheaper.

In short, we need to recast, redefine and adapt our economic structures and the energy delivery systems that power them to subsume environmental and economic responsibility into the one concept. We need to set meaningful targets, design appropriate processes and coordinate action and encourage innovation.

Taking a carrot and stick to Mugabe

2008-06-25T18:17:00.002+10:00

It seems that with Mugabe's virtual declaration of war on the MDC, the global community has suddenly started mentioning the 'g' word and the 'R' word. Visions of genocide and the absymal failure of the UN in Rwanda have given a new urgency to measures to rein in the Zimbabwean dictator.

One 'r' word that is key for Mugabe is rejection. Rejected by the international community, he discredits European and American attempts to counsel his behaviour as colonial interference. Rejected by his people, he has manipulated the populace through fear. He has shaken the country like a tree until all the MDC supporters fall out. He cannot accept rejection, so the agents of that rejection must be purged.

Mugabe will continue to menace Zimbabwe unless either saner heads in the ZANU-PF roll him into retirement or his advanced age (or an assasin) catches up with him. A third option is military intervention under the emerging 'duty to protect' doctrine. However it is likely that China would veto an excessively aggressive pursuit of such intervention unless there was broad agreement with its African trading partners. China may not like a human rights mililtary incursion precedent to be set with the ongoing issues in Tibet and Nepal.

A negotiated settlement with Mugabe is not an option. However, a deal for an interim power sharing agreement might be possible under a moderated ZANU-PF. The trick to moderating the ZANU-PF is to allow Mugabe's liberation-era allies the option to give Mugabe a graceful exit and retirement. Zambia has pushed for action, yet South Africa's Mbeki demonstrates a reluctance to push too hard, given his apparent sympathy to some of Mugabe's land-distribution policies.

The international community's role is to freeze Mugabe's influence on the world stage and encourage external nations not to bankroll the regime with either cash or arms. It can also prompt Mbeki to act by offering South Africa either advantageous trade inducements or diplomatic positions on the world stage.

The 'liberation' club could appeal to Mugabe's vanity by reminding him of his advanced years and that his role as 'father of the nation' would best be preserved by not declaring a civil war on his own people. A nation such as Equatorial Guinea, which has done deals with Mugabe in the past, could provide his cronies suitable accommodation. The stick option lies in authorising military action, with a force led by a suitably neutral power such as India under UN auspices, with logistic support from Europe, US and Australia. This could encourage a new solidarity, not between leaders but between people as Africans.

Things fall apart, the centre cannot hold

2008-06-24T18:19:00.003+10:00

Our political culture is in great flux. The admirable work of the Piping Shrike has detailed this in a series of posts as a political realignment. The major parties are catching up to the fact that they have no social base and hence are hostage to the nightly news cycle. This gives an apparent fragility to Rudd's stratospheric polling. However it rather forgets what has happened federally is merely an extension of the decline of state Liberal parties to the point of irrelevance. So much so, that in South Australia the Liberal party is now experiencing defections to the federally moribund Family First. A small group of pundits have either diagnosed Rudd as acting as permanently on campaign or like a political bubble ring - held in a kind of stasis by the vortex of his activity. Presumably they believe that Julia Gillard is the dolphin responsible.

Rudd has decided that the media is for the dissemination of this messages, and his chief conduit to said media is rumoured to have a nasty habit of abusing them. Consequently they are taking it personally and according him very little favourable coverage. It also fits within their frame of reference that budgets mean something to politics and that the opposition is merely dormant, to be revived under the appropriate leader once Nelson nicks one to the slips. Hence Rudd is nothing remarkable and will come down to earth once his honeymoon ends. The thought does not enter their collective heads that this is the new reality. Instead, we hear the Whitlamesque fairytale that Gillard will storm the barricades and burn the Treasury benches to the ground like Boudicea. Some in the Canberra Press Gallery witnessed the Whitlam crash firsthand, no one has ever witnessed a federal government sustain ratings in the high 50s.

Into this breach step the Howard-era acolytes, now spurned by the new regime and left to ply their trade on the fringes of mediocrity. They demonstrate a bitter, visceral resentment of Rudd for removing their great leader Howard. The great citadel of Howard's media support is the Australian, which has now altered its brief from acting as government gazette to Her Majesty's loyal opposition. Loyal to Washington, specifically the neo-conservative, market vision, where private wars and global hegemony are de rigeur. Ad hominem argument suits this band as their voice, their tribe, their man is always right and their opponent is always wrong. Hence distracting bloggers by trolling and pouring vitriol is acceptable in the name of new-age Foucauldian information politics. So while taking down those that support the agendas they oppose, they also fly assorted kites to either make the Liberal position appear mainstream, or change the mainstream altogether and push the polity in the right direction. This ad hominem strategy extends to the truly bizarre and inconsistent criticisms of the Rudd government, one minute pro-business, then anti-business, pro-China, then anti-China.

As the polity has moved right through waves of economic prosperity, the traditional Liberal party's role has become almost irrelevant. With Labor concentrating on technocracy, encouraging education and removing the complexity of business regulation, politics shifts to the nanoneconomics of petrol and grocery prices. The Liberals are left with an emoting leader and little else. Climate change represents the position perfectly. The agreed solution is an emission trading scheme - a market mechanism - yet the free market, user-pay Liberals strain to support it and even now seek to make political capital.

If Labor wins the battle on emissions trading, the Liberals will be split between the caterwauling right and the moderate left. The caterwaulers will most likely head to Family First. How much of the party ultimately survives depends on whether Labor can successfully manage this fundamental change into a new political constituency. If economic management becomes covalent with environmental management, then Labor could well benefit from demographic change and make serious realigning inroads into those leafy seats that polls make so tantalising. If the green barrier dissolves in the political sphere, it will dissolve in the minds of voters. One suspects though that long-term ideological, logical and intellectual poverty will eventually cause the party to split unless strong leadership can hold the strands together.

If, however, the politicians fail to act appropriately, then the results could be apocalyptic for all of us.

Wow! Some action from the ICC

2008-06-21T10:34:00.006+10:00

Common sense has prevailed

Perhaps they can get their act together and do something about allowing Zimbabwe to play international cricket?

On fatuous comparisons and foolish rules

2008-06-19T16:48:00.003+10:00

Tiger Woods' latest major tournament victory has led some headline-challenged commentators to declare he is the best sportsman ever. To paraphrase Oscar Wilde, to say an athlete is the best ever in their sport is unfortunate, to say they are the best anywhere of all time seems like carelessness. It seems a relative easy call to make - yet narrow down the test and see how difficult it becomes. For Woods to be America's best athlete alone would rule out Carl Lewis, Mark Spitz, Michael Johnson, Michael Jordan, Pete Sampras and Jimmy Connors alone. Not to mention women of the calibre of Martina Navaratilova and Chris Evert.

To even compare across the same sport, one needs to take into account four criteria: quality of performance, consistency, opposition and technology. In golf, Woods has the benefit of incredibly enhanced distance and accuracy due to a revolution in club design. It is impossible to know what Jack Nicklaus, Ben Hogan or Norman Von Nida for instance might have achieved with the same equipment. There is an argument that Woods' level of achievement has come at a time of great depth on a highly professional tour, but balancing these factors requires a chat around the bar rather than mathematical precision.

It is hard enough trying to compare Sampras and Federer, and they almost overlap with only the interregnum of Hewitt between the two masters. They have near identical records in terms of tournaments won, but whereas Sampras had several titanic tussles with Agassi, some won, some lost, Federer's battles with Nadal appear almost dictated by the surface they compete on. Federer is a great frontrunner, but can he win from behind? All of these factors make comparing one champion, seemingly a prototype of another, highly problematic.

However one thing cannot be in dispute. One athlete stands above all in terms of his uniqueness, if not all-round achievement. That man is Sir Donald Bradman, whose incredible personal average not only made him the greatest batsman ever but carried his entire team, and at times the morale of his nation, along with him. While the quality of his opposition is debatable, his consistency is beyond comparison. Perhaps the closest in icon status is Babe Ruth, whose defection led to the 'curse of the Bambino', which was blamed for the Boston Red Sox failure to win the world series for eighty two years.

Other players have averaged a hundred for a couple of series, but no one has gone near that for longer, despite questionable bowling and batsman-friendly conditions. Yet Bradman could not simply be the best cricketer - cricket has bowlers in it too. So we are left with players who cannot be compared across the same sport, even at the same time, as they have different roles in the team. Everyone can have their own personal favourites, but comparisons of the greatest ever really belong as arguments to be had at the pub, and not in serious journalism.

An argument that should be had in public is the ridiculous outcome in last night's match between England and New Zealand. Sixteen thousand people waited through some of the most depressing weather Birmingham could dish up only to have the game end one over before it could be a full match due to rain. Of course, despite the match being reduced to a 29 over game and not starting til 3pm, the dinner break was left at 30 minutes. This kind of nonsense makes cricket, particularly one day cricket, an international laughing stock. It has not been adequately explained why 10 minutes is sufficient to adjourn a match after twenty overs in 40 degree heat, yet an extra 20 minutes is required when the match lasts twenty four overs in 15 degree drizzle. The ICC should axe this regulation pronto, and allow the interval to be a minimum of 10 minutes with the consent of both captains. Oddly this happens in a test match, but once players set themselves for a fifty over pyjama battle, it appears they will wilt without 30 minutes break.

The Shanahan Principle

2008-06-17T12:01:00.003+10:00

That the prominence of Tuesday's Newspoll on the Australian's website is in direct proportion to its favourability to the Coalition.

Can anyone actually find the 59-41 poll on the Australian's website?? Is this a case of not 'Where's Wally' but there are the wallies?

Pop goes the alcopop proxy

2008-06-16T00:35:00.003+10:00

It is undeniable that there has been an increase in alcohol-related harm in recent years, whether this be measured by hospital admissions, police reports or sheer anecdotal evidence. It seems that the latest generation of teenagers to run the gauntlet of adolescence have taken to drinking (more) early and (more) often. In response to this, the Rudd government took the most immediate policy action at its disposal, imposing by regulation the same tax scheme to pre-mixed drinks as conventional spirits. The uncharitable have criticised Rudd's move as 'spin and symbols', yet the problems raised by alcohol are so complex that the alcopop tax served as a proxy for real action while that massive effort was weighed, planned and negotiated.

The alcopop tax loophole was created when for reasons best known to itself, the former government chose not to adjust the excise rate charged on alcopops to match conventional spirits. This created a very slippery pathway for young teenagers to move from soft drinks into spirits while not experiencing the paint-stripper style symptoms associated with higher alcohol drinks. While teenagers have always taken up drinking through the high school party scene, the government's tax policy should have assisted in them choosing something other than sugar-coated rum as their poison. The spike in the ready-mixed drink share of the alcohol market, from 3% to nearly 12%, points to a very substantial increase in alcohol consumption through this fiscal misadventure.

However the alcopop debacle is only part of the problem. Greater disposal income, more stress being felt by adolescents in a world of unstable employment prospects and the collateral effect of older siblings' own drinking habits have caused the problem to snowball. The ridiculous hours clubs are open to, coupled with the relaxation of planning provisions and the introduction of mega venues where responsible service of alcohol is not in management's interests create a cocktail of potential violence, drunken behaviour and potential major health ramifications.

Clearly, to address all these problems will require a coordinated effort between local, state and federal government, alcohol manufacturers and club management. The accessibility of alcohol, the concentration of venues and the attractiveness of excessive drinking need to be considered carefully. The idea that it is acceptable to consume twenty drinks a weekend for ten to fifteen years is unsustainable. Yet that kind of intake is more norm than exception. The assumption appears to be that consistent drinking through the week is bad, a sign of alcoholism, but the weekend binge is culturally acceptable. This assumption needs to be examined and researchers must develop responsible guidelines that speak to the long-term effects of 'the binge', rather than just the per diem intake.

Health Minister Nicola Roxon seems intent at present to cover the time lag in taking tough action with party politics against the former government's inaction. The former government's actions in allowing the pre-mixed drink preferential tax treatment and failure to develop any response beyond the obligatory alcohol campaign are worthy of censure. However Roxon would be better served not battering her audience into submission but laying the groundwork for a major social overhaul - one that may eventually see the weekend binge as unwise a social choice as the pack a day cigarette habit.

Setting liberal democratic parameters for free speech

2008-06-11T11:43:00.003+10:00

It is interesting to note the minor blogging brushfire breaking out over the prosecution of the Canadian neo-conservative columnist, Mark Steyn, for alleged hate speech comments under British Columbia's anti-vilification laws. The problem anti-vilification laws are bound to run into is the issue of free speech - the purported essence of democratic society. The introduction of anti-vilification law - legislation specifically designed to change behaviour through language and attitude -raises questions as to how to set the boundaries of free speech.

Anti-vilification laws represent a laudable attempt to protect minorities from abuse and work towards a harmonious multicultural society. However, they have failed to address the philosophical challenge posed by an insurgency of conservative commentators. Progressive thought is constantly under attack from those who oppose it. Anti-vilification law, with its focus on behaviour change and centralised control, is tarnished with images of Maoist-Soviet re-education. The sanctions offered by the laws are weak, yet the challenge remains strong. The result is a hatred of the laws, rather than the behaviour, and the false assumption that other cultures are 'protected species'. Anti-vilification laws are seen as a dangerous fetter on free speech, rather than valid laws which should be upheld by the archetypical law abiding citizen.

The idea of anti-vilification is to set parameters for what is and what is not acceptable conduct in society in line with internationally recognised human rights principles. In other words, it goes to fundamental questions of humanity. Rather than being seen, however, as 'behaviour change', instead it should be recast as 'the law of the land'. This is particularly important in the post-terrorism era, where aggrieved persons are easy prey for fundamentalists of all persuasions, and a 'free speech incident' such as an ill-advised cartoon in one country can lead to bombings in another. Failing to bridge the divides between communities, and worse, reinforcing the prejudices as justified resistance to 'political correctness' makes all of us vulnerable to bad neoconservative foreign policy adventures in Iraq, Iran (or insert Muslim country of their choice) and increases the likelihood of terrorist attacks in all corners of the world.

There is a loud chorus of concern that moderate Muslims do not take action to rein in their extremist counterparts. Yet that chorus also sings loudest about the evils of political correctness and refuses to accept that the crude remarks of Jones and his acolytes also demand action. This lack of a causal link speaks to a deeper and perhaps wilful misunderstanding of both other cultures and the nature of terrorist outrages.

Australian speech is partially protected by the implied constitutional guarantee of freedom of political communication. That guarantee means that any law that is not appropriate and adapted to preventing obscenity, libel or incitement to violence and restricts the ability to criticise government policy or access to media during political campaigns is likely to be unconstitutional. It is arguable that in the present climate, a strong anti-vilification law which inteprets say, Jones' laissez-faire response to the Cronulla text messages as worthy of sanction may meet this test for incitement, but it is a grey area.

To play their role to best advantage in the Australian polity, anti-vilification laws need to be remodelled in consultation with those very players who are at the pivot point of the problem. Conservatives and cultural representatives should be brought together for a thorough-going summit on social inclusion, freedom of speech and incitement to acts of violence, vandalism and discrimination. This would be an act of true national leadership and may provide an environment of goodwill and understanding, where issues can be rationally debated. This summit should then lay out a nonpartisan programme for uniform anti-vilification legislation, allowing for strong sanctions such as suspension of broadcasters and ultimately broadcast licences for repeat offenders. This would give the conservatives (and their media masters) most likely to be affected by law changes a hearing in the process and mitigate their concern about the threat to free speech.

The continued attack by conservatives such as Steyn on anti-vilification and other similar laws is neither liberal or democratic. However, without consultation with such parties, the resentment and martyr mentality of the 'political correctness' mindset will continue to thrive and plague our supposedly liberal, democratic and mature society.

Fuel poverty and the emissions trading debate

2008-06-05T13:10:00.005+10:00

Much as I hate cheap jargon, expect to hear a lot more of the phrase 'fuel poverty'. Basically it means paying a high percentage of your income in fuel costs (whether that be electricity or even petrol). Given high interest rates, rising inflation particularly in essentials such as food and constrained wages, the usual fury over fuel prices has been exacerbated as people actually start to feel like they are impoverished, not just inconvenienced by petrol prices. The potential for political trouble with the impending emissions trading scheme is palpable. Peter Garrett getting into contortions about including petrol into the emissions trading scheme demonstrates this clearly.

A major problem with emissions trading is the impetus for power companies to pass on the permit costs to their customers, namely the 90+ percent of them who have not taken up Greenpower schemes. The obvious solution is to redistribute the permit costs back to consumers. It seems likely this will be done by a tax credit system, which will probably have to pay credits quarterly in line with utility bills. The system would then be revenue neutral, provide almost no cash-flow issues for ordinary people and achieve carbon reduction targets by the government's overall cap on tradeable permits. The ACCC would have a key role in preventing price gouging by power companies inflating their carbon abatement costs.

However energy usage does not necessarily equate with income either, so government, in conjunction with power companies, will have to even out the discrepancies by commissioning large scale insulation and energy efficient appliance roll-outs to retrofit existing homes in line with new standards. Water companies are currently using similar tactics to improve water usage habits. Another option may be to commission a buyback of inefficient appliances and vehicles, an idea that Tim Flannery has recently floated. For those still under grave threat, short term payments could be made to top up tax credits for excess bills. A further key part of the puzzle lies in switching new power plants to gas co-generation or renewable sources. Government could mandate all new vehicles be run on either LPG or hybrid technology systems.

Running some decent advertising equating energy usage (or abuse) to extra power costs would create more of a sense of personal responsibility rather than government-imposed tax grabs.

The main challenges needing action are to compensate people affected by higher prices, spread the risk from energy bills more evenly across the population and most importantly, educate the people to understand how they can help with climate change and how the government is not committing daylight robbery.

A possible related reform could be brought into business taxation. Business could sign up for an eco-charter where they pay a reduced tax rate in exchange for signing up to stricter environmental standards and responsibilities. This could be particularly useful for corporations in counteracting the 'only duty is to shareholders' mantra, which has left corporate social responsibility aspirational at best. This would eliminate the need for onerous carbon input systems or providing wholesale tax credits for business.

Emissions trading is not a panacea but a market correction mechanism that allows lower emission fuels such as gas, renewables such as solar, wind and tidal and higher emission fuels such as coal to compete on an environmentally level playing field. Designed appropriately, it could potentially restructure our economic foundations in a way that promotes sustainable growth well into the future.

I shredded my economic credibility and all I got was this lousy 5% preferred PM bounce

2008-06-03T11:00:00.003+10:00

Forgive the headline but that may just be what's going through Brendan Nelson's mind this morning. For he has set up his party to either indulge in fiscal vandalism or show a fatal lack of policy consistency. Of course, when dealing with Brendan's Libs, you feel like Rosencrantz and Guildernstern in Tom Stoppard's play, as they vainly shout 'consistency is all I ask'! While there are occasional bursts of passion, there is too much confused thought between them.

There may be a large section of the media who believe Rudd is some kind of self-proclaimed messiah and an equally large section that feels he is well-qualified for the spin vacancy created by MacGill's retirement. However, if one looks at the nonsensical suggestions coming out of the Liberal bunker, it becomes clear that the Nationals are not the only party struggling for relevance.

Nelson's budget response appears to consist of blocking the alcopops tax and FuelWatch and raising the possibility of blocking the Medicare surcharge changes. It seems having totally mismanaged its Senate majority in government, the Libs are set to do so in opposition by a display somewhere between petulance and wilful obstructionism.

It is almost as if they believe some of the dribble that Rudd's government will implode in Whitlamesque fashion. Whereas Whitlam's mantra was crash or crash through, Rudd's mantra may as well be commission an inquiry to see if there's an obstacle ahead and then go around the back way.

Precisely how the Libs plan to pay for this nonsense is another matter. Given they cannot decide either whether there is severe inflationary pressure or not, it suggests they should seek to reduce government spending, not government revenue. The alcopops tax and the excise combined will cost something between $3-4 billion, and the Medicare surcharge (by Brendan's admission) around $500 million. It does not compute.

Nor should Nelson get too carried away with that 5% preferred PM bounce - it's not that they like him any more - his dissatisfied numbers actually crept up (within MOE) to 40%, they're just not too happy with Rudd's performance last week, probably based on a false impression of what he actually promised. Given the correlation between those who think Labor promised lower prices and those unhappy with last week, Rudd might become the first politician in history to run ads reminding us of what he promised at the last election.

So the Libs got nowhere from blanket media coverage on a hot button issue that Labor got major mileage out of in opposition, and what gains their leader made are based on a misrepresentation of Labor's election promises. That does not augur well for the future of a credible or responsible opposition.