Goring the tax
Before Clive Palmer bamboozled all with his Al Gore press conference, the mood in the government as it charged towards its carbon-tax-axing climax was best summed up by another Queensland MP.
Nationals leader and Deputy Prime Minister Warren Truss shares an electoral boundary with Palmer on the Sunshine Coast. But he is considerably less outrageous than the member for Fairfax. He is also more consistent.
“This is a crusade to get rid of this carbon tax that we have been on for several years,” he told the meeting of Liberal and Nationals MPs on Tuesday morning. “We need to finish that crusade in coming weeks.”
As parliament braces for the arrival of the new senate, convening for the first time from July 7, the central policy the Coalition took to the last federal election is tantalisingly close.
Budget measures are toppling like so many dominoes, but the carbon tax is creeping closer to its date with the long-promised axe. The crusade is on track.
The only thing still in the way as Truss addressed the party room was uncertainty about the new senate, including the views of senators aligned with Palmer.
Ah, Palmer. His announcement late on Wednesday, with former United States vice-president Al Gore, was, to put it mildly, confusing, as is so often the case with the antics of the Palmer United Party leader.
Palmer will vote down the existing carbon price, regardless of the fate of his proposal for a new emissions trading scheme (ETS) that would only come into force when Australia’s trading partners adopted similar policies.
If Palmer gets his way, some climate change architecture will be salvaged. His three senators will oppose the abolition of the independent Climate Change Authority (CCA) and the Clean Energy Finance Corporation (CEFC), which is making money for taxpayers while supporting emissions-reducing projects.
He also argues the renewable energy target (RET) should not be changed, at least until after the next election.
One person involved in arranging the Palmer-Gore appearance concedes the proposed ETS is pie in the sky but says it is still important that there is a notional commitment to it. The proposal is highly unlikely to get through parliament and, even if it did, it is fairly meaningless.
“It’s only symbolic in the sense it is unlikely to get up, but symbols are important in this context,” the source says, rejecting criticism that Gore was compromised by being seen to endorse Palmer’s stance. “Yes, it was worth it. We’ve saved the RET, the CEFC, the CCA, and we’ve wedged Tony Abbott on his own terms.”
The upshot of the affair can be understood with a metaphor that may resonate among those familiar with Palmer’s peculiar passions. If Australia’s climate change policy were a big ship – let’s call it the Titanic – and Palmer was taking a turn on the bridge – then he is steering it straight towards the hull-splitting iceberg, but he’s making an effort to save the deckchairs.
As expected, the PUP will oppose the Coalition’s grants-based Direct Action policy, which will be mourned by few. Its demise could save the government more than $1 billion during the next four years.
For someone who professes to have recognised the need for action on climate change, it is strange that “citizen of the world” Palmer sees little sense in Australia holding to its target of cutting emissions by 5 per cent of 2000 levels by 2020.
“I don’t think we want to look at any arbitrary solution before having the discussion,” he said, when asked about the target. “I don’t think we’ve got a drastic problem we need to worry about. I’m sure we can manage it, but it needs to be a global problem. It’s not a problem for Australia, it’s a problem for the whole world.”
Behind the Gore appearance
The joint appearance with Gore almost didn’t happen. The climate crusader had misgivings about appearing on a stage with the man who would deliver Tony Abbott the support he needed to end carbon pricing.
But in the end, Gore and his hosts, the Australian Conservation Foundation, judged that the prospect of Palmer and his senators salvaging some climate change policies and keeping alive the possibility, however remote, of a future carbon price, was worth it.
By Palmer’s side, Gore declared it an “extraordinary moment in which Australia, the US and the rest of the world is finally beginning to confront the climate crisis in a meaningful way”. That’s stirring, except Australia was about to dump its meaningful response, with the assistance of the man standing next to him.
The backstory to this bizarre duo sheds light on the strange alliances that can evolve behind the scenes in Canberra, and on Palmer’s willingness to work with anyone who further boosts his already immense profile.
When the ACF wanted to arrange a phone call between Gore and Palmer, they approached John Clements, former staffer to retired independent MP Tony Windsor. Clements developed a relationship with Palmer after the billionaire drove to Glen Innes on the NSW Northern Tablelands during the last parliament to try to woo Windsor to become involved in the party he was planning to set up.
In recent weeks, Clements became the conduit for talks between former ACF head Don Henry and Palmer and Gore. Palmer’s fascination with US Democratic politics – he idolises John F. Kennedy – played a role. A former senior Greens adviser, Ben Oquist, who now works for the Australia Institute, was also instrumental in persuading Palmer to meet Gore.
Clements and Oquist had both been involved in finalising the carbon pricing scheme that was introduced two years ago by Labor, the Greens and regional independents. Now they were working with the man who would ensure its demise, albeit while saving a few measures. With Palmer’s decision, the fate of the carbon tax was sealed, just days shy of its second birthday.
The carbon price's record
It may still be too early to eulogise the carbon price, given there will always be unpredictable elements to this new patchwork senate. But it is timely to take a look at what this policy has achieved during its brief life. It is lauded by supporters for reducing emissions, but derided by critics for increasing the cost of living. Electricity prices have risen, emissions have dropped. That was, after all, the point of the scheme. And households have been compensated for the price rises.
Those who hope prices will now plummet will be disappointed. The carbon price pushed up power bills by about 10 per cent, but it was just one of a number of factors contributing to higher prices.
Frank Jotzo, the director of the Centre for Climate Economics and Policy at the ANU, says that on two of three measures, the carbon tax was delivering the change it was designed to. He says the carbon price has contributed to a reduction in electricity usage and a shift to using low-emission power plants, while many dirty plants have been left idle. He has a theory that all the political rhetoric about a “great big new tax” played a bigger role in encouraging people to embrace efficiencies than the actual price increases associated with carbon pricing.
But the carbon price has not delivered on the third measure of its performance, failing to encourage new investment in cleaner energy production, although the RET has played a role. “There is no incentive to invest if the expectation is chances are there won’t be a carbon price in future,” says Jotzo.
Jotzo was at a conference of emissions trading experts in Spain when news broke of the Palmer-Gore announcement. “Reaction from colleagues here [in Spain] to the Australian news is incredulity at how political the carbon pricing issue is, and how volatile the policy settings,” he says.
He adds there are already emissions trading schemes in Europe and parts of the US and China, so if Palmer wants to make an ETS conditional on international effort, there is a good argument that it should be immediately reintroduced.
On a political level, the whole manoeuvre can be seen as a win for Palmer. He has managed to have a bet each way, delivering on his promise to abolish the carbon price and even convincing the government to legislate for price reductions to be passed on to consumers, while still basking in Gore’s green credentials.
In doing so, he is appealing to two disparate cohorts who have embraced him: pensioners concerned about the cost of living, and younger voters who are impressed with celebrity politics.
The Coalition has also claimed it as a win, with Environment Minister Greg Hunt saying it was “vindication” of the government’s policy.
What we have seen this week caps a saga that started in 2007, under John Howard, and has since contributed to the demise of three prime ministers and two opposition leaders. Now it has elevated Palmer, a former climate change sceptic, onto the same stage as a former US vice-president and climate zealot.
The crusade Truss referred to is almost over.
This article was first published in the print edition of The Saturday Paper on Jun 28, 2014 as "Goring the tax". Subscribe here.