Putting the People’s Summit under the microscope

The centrist and left-leaning commentariat have unanimously condemned Julia Gillard’s (non) stance on climate change policy, an exercise in groupthink that would be stunning if it wasn’t so predictable.  Ben Cubby, Peter Hartcher, Lenore Taylor and Shaun Carney all think Gillard’s “people’s summit” non-policy is a pathetic cop-out and that she (or alternatively Rudd before her) should have had the guts to push a carbon tax/ETS agenda much harder.

Carney at least concedes that the real villain of the piece was Rudd’s earlier failure to convince the public of the need for an ETS so that Labor is now a sitting duck for a renewed Tony Abbott “great big new tax” scare campaign if it dares to beef up its climate change stance in any meaningful way before the election.  However, Carney’s implicit assumption (and presumably that of his groupthink colleagues) is that it is actually possible in the short term for Rudd or Gillard to achieve a sufficient community consensus for a significant carbon price so that adopting such a policy would be anything other than a political suicide note.

The blogosphere’s political expert Possum recently analysed the public’s climate change responses in the Lowy Foundation’s annual poll, persuasively concluding:

A full 20% of the those that believed in the need for immediate action that carries with it significant costs weren’t actually prepared to shoulder any of those significant costs themselves via increased electricity prices. In fact, only 29% of the people that believed in action involving significant costs were willing to pay significant costs themselves in terms of paying $21 or more a month for their electricity.

This is like those  standard polling results that show a large majority wanting more government services, and the same sized majority wanting lower taxes. Climate change, like so many other areas of public policy in Australia, is an exercise in rank public hypocrisy – oh yes, we all want X,Y and Z, but someone else can pay for it.

Moreover, this rank public hypocrisy on climate change isn’t a recent phenomenon.  Troppo readers will recall that even at the height of seeming public concern about climate change in the lead-up to the 2007 election, the same people who professed a desire for greenhouse action were also demanding lower petrol prices, resulting in Kevin 07’s farcical “Fuelwatch” promise.

While there seemed momentarily to be some chance, while Turnbull was Coalition leader, of a political climate sufficiently conducive to delivery of a meaningful carbon price regime over time, the accession of Tony Abbott closed the door decisively on any such possibility in the short term.  Neither mainstream party will ever willingly allow itself to be led by a courageous martyr who guides them lemming-like off a policy precipice.

The only sensible approach in the short term is the one Gillard has adopted: acknowledging that climate change is a real and serious problem that will require a carbon price as part of any workable long-term strategy, and pledging to implement a process whereby public understanding and consensus are achieved over time.  In a western liberal democracy it could hardly be any other way.

Whether Gillard’s “People’s Summit” proposal is likely to prove an effective way to build either community understanding or consensus on the issues, however, is much more dubious.  It’s certainly true that exercises in deliberative democracy such as deliberative polling can result in the knowledge levels and therefore substantive opinions of forum participants being altered by the process, sometimes quite dramatically.   However, there is little or no evidence that such exercises feed into greater understanding or changes in opinion on the part of the broader public not actively engaged in the deliberative exercise. The 1999 Deliberative Poll on the Republic referendum, in which I participated as a delegate, was a classic example.  The opinions of delegates shifted decisively in favour of a republic, but that had no evident effect on the subsequent equally decisive defeat of the referendum.

The idea that most people will even have the faintest idea who the delegates to Gillard’s People’s Summit actually are, let alone regard their opinions on climate change as having any persuasive recommendatory force, is utterly implausible.

Robert Talisse summarised some powerful arguments against deliberative democracy:

Richard Posner (2002; 2003; 2004) and Ilya Somin (2004; 1998) have recently championed an objection to deliberative democracy according to which citizens are demonstrably lacking in the cognitive abilities requisite for rational deliberation. In a searching review of the research concerning public ignorance, Somin (1998, 417) finds that ignorance of even the most basic political facts is so pervasive that “voters not only cannot choose between specific competing policy programs, but also cannot accurately assign credit and blame for highly visible policy outcomes to the right office-holders.” Noting that deliberative democracy “imposes a substantial . . . knowledge burden” (1998, 440) upon citizens, Somin laments that “deliberative democrats have generally overlooked the widespread ignorance that prevents most voters from achieving even . . . modest levels of political knowledge” (1998, 440-441). Hence Somin concludes that deliberative democracy is naïve.

Posner (2003, 151-152) agrees with Somin on the fact of public ignorance, and contends that the extent of such ignorance renders deliberative democracy a “pipe dream hardly worth the attention of a serious person” (Posner 2003, 163).

Even accepting that this pervasive public ignorance is curable by mechanisms like deliberative polling at least for the participants, no-one has yet devised any plausible mechanism whereby the insights achieved by participants in deliberative exercises could feasibly be generalised to the broader community.

Moreover, with an issue like climate change, where any credible policy prescription involves measures that will hit the public’s hip pocket nerve in significant ways, psychic phenomena like confirmation bias are heavily engaged making it child’s play for dishonest skeptic tools of vested corporate interests to sow fear, confusion and loathing even if some sort of community debate is kick-started by a government-sponsored deliberative process.

If Julia Gillard was actually serious about shifting the community in favour of serious action on climate change, she would adopt a more elitist-pluralist or neo-corporatist model for consensus building, as the Hawke/Keating government did with their 1985 Tax Summit, which to a significant extent facilitated the major economic reforms of those years.  Gillard should convene a summit comprising peak business, trade union and other interest group leaders (e.g. green groups) and put some specific policy prescription options on the table.  One might even include tax incentives for renewable and zero emissions energy technologies, instead of a direct carbon price whether achieved by an ETS or a new tax.  A much lower company tax rate for zero emissions energy profits; 200% depreciation for renewable/zero emissions R & D; and provision for long-term profit retention within such companies to fund development and commercialisation of these technologies; are just a few possible ideas.  Driving change by offering carrots rather than sticks might well prove more politically saleable, or at least persuade business interests that a mix of carrots and sticks is the preferred solution.

About Ken Parish

Ken Parish is a legal academic at Charles Darwin University, with research areas in public law (constitutional and administrative law) and teaching & learning theory and practice. He has been a legal academic for almost 12 years. Before that he ran a legal practice in Darwin for 15 years and was a Member of the NT Legislative Assembly for almost 4 years in he early 1990s.
This entry was posted in Climate Change, Environment, Politics - national. Bookmark the permalink.

33 Responses to Putting the People’s Summit under the microscope

  1. Nicholas Gruen says:

    I was certainly cynical because of the contradictions you mention, but I can’t see how Fuelwatch was farcical. I thought it was good policy, which was then dropped like a hot scone.

    More importantly, while I’m generally not just sympathetic to the argument you put against expecting our political leaders to be political heroes, I agree with it strongly and was on Troppo putting it myself, I think the Government could have got across the line with the CPRS in this election. It is pretty mild, contains generous compensation, had bipartisan support and the continuing support of Malcolm Turnbull and the support of business.

    Having said all that, I’m thinking, well something similar could have been said about the Resource Rent Tax and what happenned? A few million dollars spent by a few billionaires on a few ads and Australian’s thought that nasty government was trying to punish that lovely industry that had saved us from the recession!

    So you have a point.

    I like the deliberative model chosen but I also like the Summit idea and agree that it’s much more likely to close in on a set of actions.

    One thing more. I think all the hard heads on Gillard’s staff would have told them that this citizens deliberation thing would be pasted as a farce by the pundits, so in that sense it wasn’t an easy cop out – I don’t think they’d have expected to do well out of the speech (which they didn’t).

  2. observa says:

    No Nic, you’re wrong on Fuelwatch because it was just one plank of a much larger dishonest dog whistle by the left/green quants which included Grocerywatch and industry in general. Basically battlers/working families, you’re all victims of Big Oil, Coles/Woollies duopoly and Big Bad Carbon threatening your kiddies. When you do that you naturally raise expectations that all ‘we’ need to do is to legislate and crack down on them all and stop their nasty ways and its problem Solvered. Your policy problem then is speaking to truth.

    All Perth’s Fuelwatch really did was iron out the price cycle of perfect competition in the metro areas. After all if Big Oil had a monopoly, why on earth would they ever reduce prices in the rest of the capital cities? A wicked sense of humour perhaps? Same with Coles and Woollies which Grocerywatch confirmed. Noone but one lone supermart in outback Qld could better their prices and that’s because it’s only a necessary condition for competitive pricing that there be free entry, a la the ending of the 2 airline agreement when we largely ended up with Qantas and Virgin anyway. We’re a small market of 23 mill here folks. Same with those dark Satanic smokestacks kiddies. Your mums and dads really ‘own’ them as consumers like the ones in the La Trobe Valley which produce around 25% of all your power at home and school and for everything else you enjoy kids. Introduce an ETS and the problem is immediately apparent. If you’re not to immediately bankrupt them all and hand them straight to the banks, thereby tearing up long term power pricing contracts, you have to give away free credits and look like hypocrites. Welcome to Bob Brown voting with the Coalition.

    All this because deep down left greens are not prepared to speak to truth. What is that truth? That we’re all in this together and hence we all need a level playing field on price and a properly constituted free market is the only way to achieve that, without some being more equal than others. ie rent seeking, special pleading and the graduazzi in particular driving a bus through any progressivity in the income tax system over the long haul whereby ‘Greening’ takes on a whole new meaning.

    Here’s what happens when you don’t speak to truth-
    http://cboblog.cbo.gov/?p=1161
    How on earth would you get to carbon pricing at those levels without serious tax tradeoffs elsewhere if it’s not to be a great big tax grab?
    Furthermore, if you’re to design a competitive market price for a bad, you’d better do your homework properly and make it foolproof and interference proof lest it all collapses in a screaming heap-
    http://online.wsj.com/article/SB10001424052748704258604575360821005676554.html

    Don’t tell me the punters won’t listen to truth and vote for sensible, honest reform. The GST reform of the ubiquitous WST was a shining example of speaking to truth and following through with the hard yards against all the naysayers and doomsayers and there’d be no State Labor Premier even whispering rollback anymore. It’s why I’m a market green, not a phoney left green quant telling porkies to kiddies. There is an honest third way and I outlined it in the Tax redux post for you Nic. Just take off the blinkers and see the honest wood for the trees. It’ll take some arguing and talking to truth but in the long run that’s the only way forward. As for the left green quant approach, all can say is how are they doing?

  3. Nicholas Gruen says:

    Like I said Observa – Fuel/Grocery watch were implemented for cynical political reasons. They offered very little in the way of price relief for consumers which was how they were sold.

    Properly implemented (and it would have been a doddle with fuel, and trickier with grocery) they were still good policy.

  4. Robert Merkel says:

    Bollocks, Ken. Labor has all the support it needs to get an ETS through.

    Much as I dislike just about everything about the Howard government, the fact is that in 1998 he faced a vicious and misleading campaign against the GST – a change which was far more pervasive than the ETS will be – won, and got it through the Senate, all in the teeth of opposition from Labor.

    I think there’s far more support for action on climate change than there ever was for the GST.

  5. Robert Merkel says:

    Nick, not to rehash ancient history, but the retail margins in both fuel and groceries are very small. The effects of both FuelWatch and GroceryChoice, even if implemented perfectly, would have been extremely marginal.

  6. Senexx says:

    On ancient history, from a consumerist point of view, Fuel Watch sounds like a good idea and GroceryChoice might not exist but seems to have done its job anyway with all the major supermarkets now having the one price for goods in their respective stores Australia wide instead of differing by regions. You can’t get much better than that. All you have to do now is pick your store.

    On the issue actually under discussion I agree that Rudd failed to sell it but he started to in February this year to sell it quite well but it did not continue and I agree with Robert in relation to the GST

  7. Nicholas Gruen says:

    Robert, that’s why I described F/G watch as cynically marketed. There are still substantial locational rents and oligopolistic industry structures in both industries, and the policies needn’t have cost much. Indeed in the age of the smartphone, I’m not sure they had to cost anything. So they were good policy, but would have made negligible impact on people’s cost of living. Most worthwhile policies have very small effects, the test, obviously enough is whether their benefits outweigh their costs, and they would have here.

  8. observa says:

    “There are still substantial locational rents and oligopolistic industry structures in both industries, and the policies needn’t have cost much.”
    Nic, you have to ask yourself the root cause at to why ‘largely locational’ rents exist in the first place, although strangely they don’t appear to exist at our airports. My take is that what LGQs are really complaining/suspicious about is the natural tendency for our currently constituted marketplace to reward vast economies of scale due to the concomitant use of fossil fuels coupled with computerised logistics, ultimately expanding the breadth and reach of ever larger market players. Hence the ultimate Westfields at the expense of the local strip shops has been an inexorable process. On top of that the relatively cheap cost of fossil fuels and private cars has seen the rise of the regional malls with their high cost of entry bitumen parks and a further enabling concentration as the big players can easily play hardball with the big landlords. The Dillards then try to fight this incredible market power with a few million dollars for decentralisation. Basically pissing on a raging bushfire and an exercise in taxpayer futility.

    What’s the answer? Stop trying to treat the symptoms and understand and then treat the underlying disease. That’s what I argue with my simple CM. Look about you at the disease and some of the attempts to understand it. Straight carbon taxing at a level that will make a real difference means sacrificing a raft of other taxes and ditching conspicuous compassionatte pork. Gawdelpus it’s now cash for clunkers! (Psst! anyone got a V8 up on blocks I can re-register as I’ve got my eye on a new 6.0 litre Jeep Grand Cherokee). It taxes the life blood of capital and increases the tyranny of distance. Then resource taxing. If it’s good enough for the BHPs, Rios, Woodsides, etc then why isn’t it good enough for all of us and at the same time upping the cost of new resource use, thereby making recycling/reuse of existing much more economic. Again to get the max effect it will need ditching other taxes. It’s like this. Take 10 of us and 8 of us need an absolute level playing field on price, whereas 1 of us will need a legup (Centrelink) and one of us will have to contribute more (ANWT). But for chrissakes let the carefully constituted prices (and hence no bloody subsidies)be the same for us all, get out of our lives and let us all get on with it. It aint rocket science it’s the third way.

  9. observa says:

    The burning question for LGQs before we declare a truce and convince the conservative side of politics it really is all about properly pricing Spaceship Earth for us all and the kids (and not just its bloody atmosphere) is- Are you all fair dinkum about environmental outcomes? -or more interested in media releases, wearing moral badges and controlling all our bloody lives?

  10. Nicholas Gruen says:

    Locational rents don’t exist at our airports.

    Well it won’t get any laughs on the standup circuit so I’m not sure who your audience is. Have you noticed that since privatisation and deregulation of fees virtually every airport in the country has roughly quadrupled its landing fees and car parking fees and popped a $2 fee on taxis for having the temerity to drop passengers off and pick them up.

    That’s not rent – I guess it’s just a tip.

  11. Ken Parish says:

    Robert

    I was wondering whether someone would make the comparison with Howard and GST, claiming that Howard’s success somehow proved that Rudd’s/Gillard’s only problem was a lack of intestinal fortitude. It’s a common view on the left, but misleading.

    There are large differences between the situation Rudd/Gillard have faced over ETS and climate change and the one Howard successfully surmounted over GST:

    1. Howard was a much more experienced and wily politician even in 1998 than either Rudd or Gillard. He had already been around in politics for over 20 years.

    2. Beazley was a much weaker, less ruthless Opposition Leader than Abbott.

    3. The Labor brand was much more discredited in 1998 than the Coalition is in 2010. People had developed a visceral hatred for Keating and it hadn’t dissipated with his departure. Labor was always going to take time to recover. Howard by contrast wasn’t hated (except by the most rabid Labor supporters), people just decided he was past his use-by date and it was time for a change, along of course with Work Choices.

    4. Howard had the advantage of a rational Australian Democrats holding the balance of power, and willing to negotiate a reasonable compromise package on the GST if Howard won the election (albeit that the compromise eventually obliterated the Dems!!). Rudd/Gillard don’t have that advantage. The Greens, who will certainly hold the Senate balance of power after the election will under no circumstances vote for an ETS package remotely like the one Rudd was proposing. They will insist on a much “purer” and more draconian version which would terminally alienate the business sector and much of the rest of th Australian population, not to mention potentially damaging the economy to little purpose as long as the rest of the world metaphorically sit on their hands.

    Labor might have avoided the necessity for a deal with the Greens had Rudd seized the opportunity for a double dissolution while it was available (e.g. in January/February before Rhis popularity nose-dived as catastrophically as it eventually did). But would they have won an election even then, with the focus totally on an ETS that could easily be characterised as pointless or at least premature in the wake of Copenhagen and a reborn Abbott in full feral mode about the “great big new tax”? And if Labor had scraped over the line then, would it have been with sufficient numbers to get the original ETS through a joint sitting? I reckon it may have been line ball. Moreover, even if they had got the ETS through, Labor would then have been faced with an even more numerous Green balance of power bloc in the Senate, determined to assert their power and mostly unwilling to compromise. The effect of such a double dissolution result may well have made the Senate a massive obstacle to sensible centrist government for the next 6 years; a huge price to be paid for an ETS framework that we’ll certainly get in place iin any event by the time most of the rest of the world gets around to taking effective action too.

  12. Nicholas Gruen says:

    Ken,

    My view is different.

    I regarded Howard’s ‘adventure’ as he called it with the GST as inexplicably politically incompetent. It was brought about when he panicked about half way through his term when everyone – including business – was wondering aloud what the hell he thought he was doing. He would never have promised the GST if he hadn’t been slowly sinking in the wake of his own directionlessness.

    I thought when it was announced that it was political stupidity of a very high order and I’ve not seen a politician do something so obviously stupid until Rudd decided to have a major tax review report to him at the beginning of an election year. The difference was that the Henry Review was just inexplicably stupid but not politically suicidal. It just made Rudd look like a dill as he cherry picked <2% of the review's recommendations and it made a small but substantial contribution to his demise.

    Howard's GST was suicidal. Despite the glorious (and what looked at the time to be fiscally irresponsible) generosity of the compensation package, he lost the vote at the next election 51-49. Imagine how silly he would have looked having thrown away the first change his party had had at government for over 15 years. In fact as we know, he limped over the line on the marginals he held onto. And what Nicholas Nassim Taleb calls the 'narrative fallacy' has done the rest. People tell the story as if it was a carefully calculated and wisely conducted strategic move from the master politician.

    So full credit to Howard for his courage – the same courage shown by General Custer – but I don't expect or even really respect any politician for following that example. I might respect them if it were some really important principle, and if their loss didn't compromise that principle. But for a GST?

  13. Ken Parish says:

    Nicholas

    You might well be right. Howard’s GST election may have been just a stupid gamble that he luckily got away with, rather than a courageous political masterstroke. But that doesn’t disturb my basic premise that Rudd/Gillard running n ETS election would have been an even more stupid gamble that they would have been very unlikely to survive. It is Robert Merkel’s opposing assertion that I am challenging.

  14. Ken Parish says:

    BTW I’m interested in what others think of my “carrot-based” climate change policy at the end of the primary post????

  15. Nicholas Gruen says:

    Yes, Ken I appreciate your point @ 13, just putting in my oar. And you may well be right about the ETS. The resource rent tax was a lot easier sell than that and look how that went down.

  16. Nicholas Gruen says:

    On carrots, carrots are good but you also need the stick so that everyone is strategising ways to reduce carbon emissions. If you have a drought you might give rewards to the best water saving ideas, but you’ve got to ration water, not just because it’s efficient and produces some of the lowest cost ways of saving water (by preventing frivolous use of water), but also politically – if people see people behaving with contempt for the broad objective, that will undermine community support for the objective.

    But politically carrots can be very strong in dividing the opposition. Again it’s probably my naivety showing again – we have a lot of experience of business simply cherry picking – it’s certainly hard to get them on board with some divisive agenda even if you’re the Coalition, so it’s much much harder for Labor. But if the resource rent tax had come in with some really big business tax cuts – it might have made things a little more interesting.

  17. Robert Merkel says:

    The Greens, who will certainly hold the Senate balance of power after the election will under no circumstances vote for an ETS package remotely like the one Rudd was proposing. They will insist on a much “purer” and more draconian version which would terminally alienate the business sector and much of the rest of th Australian population, not to mention potentially damaging the economy to little purpose as long as the rest of the world metaphorically sit on their hands.

    Ken, have you taken the time to look into what the Greens are actually offering as a basis for an agreement with the government?

    There’s nothing whatsoever radical about it.

  18. Ken Parish says:

    Robert

    Are you serious? The item to which you link says nothing about the carbon price the Greens would demand as the quid pro quo for their agreement. Would it be $10 per tonne or $10,000? Don’t you think that makes a difference? And what do they mean by “an end to polluting coal-fired power”? How quickly and how would it be replaced, and what would be the price effects of doing so? Perhaps the answers to these things can be found somewhere, and perhaps they’re not as utopian or extreme as my experience of the Greens leads me to expect. But I’ll believe it when I see it, and past experience leads me not to be prepared to waste my time searching for moderate, sensible Greens policies. They are seldom in evidence.

  19. Ken, the attached letter nominates an initial price of $23 per tonne increasing at 4% above CPI annually.

    Radical? Hardly.

  20. Ken Parish says:

    Robert,

    Given that the Rudd CPRS involved handing out permits to existing emitters in year 1 covering their existing emissions at a fixed permit price of $10 per tonne, an initial price under the Greens’ carbon tax proposal of more than twice that amount is hardly likely to be one that business or the general community will embrace with paroxysms of joy. The initial price effect will be more than twice as much as the CPRS would have been. You could script Abbott’s lines for him now: Labor jumps into bed with Greens, sells Australia’s future for a preference deal in return for a great big new tax more than twice as large as the one Kevin Rudd was planning!!

    Of course such a characterisation would be unfair, because $23 per tonne is around the international norm in European countries where a carbon tax has been introduced, and Rudd’s CPRS involved a price of $40 per tonne (plus 5% annual increase thereafter) for permits to cover emissions growth after year 1. But fairness and political spin are very different creatures. It takes a spectacular level of naivete to imagine any major party could go to an election in 2010 and win by embracing the Green’s policy position. As I said, it would be a political suicide note.

  21. Nicholas Gruen says:

    I agree with Ken,

    And reading the letter I wonder whether one of its main motives was to address the anger that quite a few people feel against the greens at helping to scuttle the CPRS.

    I remember at the time being pretty annoyed at the sheer volumes that ended up being handed to business. But I recall at the time being pretty annoyed that the Greens were representing -5% as such a disgrace when it represented something like 23% against expected alternative emissions.

    Ultimately the Greens are not the government and should be doing what they can to get something workable through. No such luck. Going into an election where the ALP have shied off the CPRS (with all the work that would have been done on it – on compensation etc) and expecting that they will, just out from an election sign up to this deal seems pretty rich.

    And that’s before you get to the ban on new coal fired plants and complete banning of native forest logging and woodland clearance. Not really realistic methinks.

  22. Ken Parish says:

    The other big question that Bob Brown’s letter begs is the level of compensation to export and import-affected industries. Brown simply observes that this would need to be “worked through”.

    Rudd’s CPRS provided very generous compensation to export and import-affected industries, to the extent that almost 100% of revenue from emissions permits over the first few years was to be returned to industry and individual consumers. The Greens were scathingly critical of that aspect, so it’s reasonable to surmise that they would not be prepared to be anywhere near as generous.

    In the absence of such compensation, the effect of the Greens’ carbon tax on the thermal coal industry, for example would be a price increase of around 20% on current world prices*, coming on top of the additional 23% of profit to be exacted under Labor’s new Resource Rent Tax. * That estimate was based on the erroneous assumption that a tonne of coal produces a tonne of atmospheric CO2, which obviously isn’t true. Nevertheless, the price effect would be significant. However, according to an article I just Googled, a tonne of coal actually produces much MORE than a tonne of CO2: “Complete combustion of 1 short ton (2,000 pounds) of this coal will generate about 5,720 pounds (2.86 short tons) of carbon dioxide.” If that’s correct, a carbon tax of $23 per tonne of CO2 emissions on thermal coal (current world price around $US105 per tonne) would generate a price increase of significantly more than 50%.

    These sorts of imposts are bound to have significant effects on Australia’s international competitiveness, given that to the best of my knowledge none of our major competitor coal exporting nations currently imposes any form of carbon price on coal for export (although a couple of Canadian provinces do). Given that coal is a mineral not currently in short supply, the only likely effect of the Greens’ carbon tax in the absence of generous compensation to affected industries would be to reduce Australia’s export income from coal and increase that of our competitors, while not reducing the volume of C02 emissions from coal by even a single tonne. Not very good policy as far as I can see, but I’m sure it would bring a warm inner glow of moral righteousness to Green voters.

  23. Pingback: Towards a Citizens’ Assembly: In defence of Gillard’s climate change plan « Woolly Days

  24. observa says:

    Clarification: When I said “Locational rents don’t exist at our airports.” I meant in direct relation to the airlines. It would appear they’re not able to extract any locational rent like a Coles or a Woollies with shopping centre anchor tenancies, leaving the Aldis and Metcashs to struggle elsewhere with the planning hurdles,etc. It’s the shopping density of the two majors that gives them the edge there as Woollies is finding now in trying to catch up with Coles’ existing Bunnings rollout,in big box hardware, yet the consumer is enjoying the Bunnings cheaper prices with their 10% cheaper guarantee. Certainly with airports there is locational rent to be extracted re car parking, taxis and terminal rents and the Govt is happy to tender them out for full user pays for air travellers and it’s hard to argue they shouldn’t. ie that taxpayers should subsidise air travel. I’d just reiterate that the shopping density advantage in the marketplace has much to do with the concentration privately cheap fossil fuel use allows both for consumers in their cars to get to a centralised distribution location, as well as facilitating the suppliers getting product there with global shipping, truck transport, refrigeration and computerised logistics. Greens are always railing against this with their concern about ‘food miles’ and their penchant for farmers markets, but without seriously socially costing fossil fuels, they’re pissing into a hurricane.

    My solution is clearly to up the price signal for fossil fuel use and resource use generally. To get that signal loud and clear I ditch other forms of taxation and suggest that’s the only way to get us all on board with price substitution effects overcoming reverse income effect. Furthermore with land use as a resource, there is a further price to be paid for all that bitumen and concrete cover inherent in the process, not to mention trying to pick losers with plastic shopping bags over all the other packaging we cart home now. First they came for the shopping bags and then the Gladwrap and then the Garbags and then…? That direct intervention will just piss people off in the long run and be counterproductive re the main game. Up the cost of it all with gross income in their hands and let them all decide individually.

  25. observa says:

    As to carrots Ken I’d argue the only carrot should be level playing field price for us all, Centrelink and ANWT adjustment notwithstanding for the outliers at either end of the income spectrum. The visible invisible hand on the tiller. Adam Smith appreciated the sublime continuum of price vis a vis the lumpy intrusiveness of quantitative control. However it’s taxation that sets the overall constitution of price signalling and the ensuing marketplace outcomes. To the extent that we socially engage in quantitative controls and subsidies will deplete the capacity for inexorable price signalling. Administrative waste is a big factor to consider here also, no more obvious than the legal accounting brainpower allocated to the income unit and its taxation nowadays. Your carrots sound fine in theory Ken but who’s to say we should use carrots instead of chaff, figuratively speaking? In that sense “A much lower company tax rate for zero emissions energy profits; 200% depreciation for renewable/zero emissions R & D; and provision for long-term profit retention within such companies to fund development and commercialisation of these technologies; are just a few possible ideas.” produces more of the same incentives for administrativel blurring the lines. Think here about what would happen if Govt announced that the Sandstone sector can get a 200% extra grant for any and all research related to climate change? Welcome to the accounting games of separating business and personal expenditure nowadays, whereas my solution will have none of this sleight of hand. Private, business, religious, charitable resource use and it’s all the same. The truly neutral, secular hand of state. That is a very valuable imperative I’d suggest most strongly.

  26. observa says:

    I guess I’m really asking the hard question of LGQs here- Are you really fair dinkum about your neutral, secular State or really just a bunch of interfering Paulines with- “I don’t like that, I like this and so will you!”

  27. observa says:

    Speak of the devil-
    http://www.news.com.au/money/money-matters/tax-office-push-for-charity-monitoring/story-e6frfmd9-1225896551630

    Then Nic says- “If you have a drought you might give rewards to the best water saving ideas, but you’ve got to ration water, not just because it’s efficient and produces some of the lowest cost ways of saving water”

    Perched at the end of the MDB drain this market green has to take humbrage at part of that. A classic case of tragedy of the common with a clear role for overarching Govt supervision and then leave the myriad details to the market. The science says around 40% overallocated on average flows, with only 10% of that urban and industrial use. As for agricultural use, many SA pipeline irrigators can earn a quid at a price in excess of $2.60/kl while many of their river irrigator cousins struggle to stay afloat paying no more than 40c/kl. A simple solution to determine the average annual flow, auction it to the highest bidders and return the revenue to existing licence holders on a pro rata basis like share dividends. Then they’re free to sell out, borrow on the asset for water conservation measures or use the income to bid for the available water, depending on their particular circumstances. Failing that rationing or non-price allocation now sees Adelaideans building desal plants that run on Kyoto promises and we’re apparently supposed to take the day off when it rains to run around our backyards with pots and pans. Food, clothing, shelter, petrol, etc all left to the market but somehow water should be allocated by omniscient clipboard holders or the wisdom of Hillsong’s idol perhaps. More water in the world than oil yet we can leave petrol to the free market but not water. Gimme strength!

    Now as I’ve pointed out resource taxing water in this way can produce pressure to dam ever more natural rivers and to that negative externality the natural environment needs countervailing market power.(just like carbon taxing with knocking over rain forest for palm oil and the like) Land use resource taxing to the rescue here if we taxed flooded dam areas at the same rate as man-made bitumen and concrete cover. Keep em to a minimum or small and deep for lots of users or else folks.

    I’ll reiterate my challenge to LGQs here. Show me a pressing problem and I’ll show you how my market green constitutional marketplace addresses it better than any other, or all your ‘science’ of muddling through, infernal meddling and interference in our lives.

  28. Gecko says:

    Observa: An elucidating and very well presented argument which I enjoyed immensely for it voracity and compelling composition. I agree and disagree all in the one sentence, the one hemisphere and the one political reality. In other words I like it for its erudite logic but know that such logic is doomed in democracies that cater to free speech, converse opinion, elections, opinion polls and the commercial imperative of media sales. Those of us with limited cognitive function cannot still, for example, understand how banking, when left to its own device, recently imploded and thereby suggested that the market is not actually a self- fulfilling regulatory body worth betting the proverbial bath. I hasten to add that the idea of a one size fits all proposition presents a tantalizing debate throughout the multitude of self-interest groups and socioeconomic divides. But suggest ‘letting the individuals decide’ is a classic strategy that salivates the powerful and disarms the collective with no recourse once the horse has bolted. All in all, the ebb and flow of logic or lack of it, the angst of dealing with our cognitive ability or lack of it, is for some, the real Utopia for it represents our true world… where all things will never be quite right, never be quite logical and always in need of a little tinkering here and there… or else my friend, whats a heaven for?

  29. Ken, would you like to point to the line in the Greens proposal where they were proposing to levy the tax on the emissions generated by exported thermal coal?

    Nick, in the long term Australia will be expected to do much more than what the CPRS promised. Whether we like it or not, the combination of the science and the global politics make it inevitable.

    The CPRS as proposed locked us in to inadequate targets.

  30. Nicholas Gruen says:

    Robert, did it do that beyond 2020?

  31. observa says:

    There are a number of things that have to be ‘worked through’ now the polls(and the smart money) show we can be fairly confident a Gillard Labor Govt will be returned with not much loss of majority and a watermelon majority Senate. If not called a Big Australia anymore presumably Labor will continue immigration and boat people business as usual. Thankfully they’ll have the 100% renewables by 2050 Bob to help them ensure there are no more of Julia’s dirty coal fired power stations. These ones-
    http://www.businessspectator.com.au/bs.nsf/Article/Decarbonising-is-a-mammoth-task-pd20100624-6Q78L?OpenDocument&src=kgb
    No nukes, $23/tonne and no more dirty coal fired power stations and they need the MRRT to balance the budget and pay for the odd extra cash for clunkers policy promise. That’s an awful lot of wind and sun in my book.

  32. Robert Merkel says:

    No Nick, it won’t.

  33. observa says:

    “Observa: An elucidating and very well presented argument which I enjoyed immensely for it voracity and compelling composition. I agree and disagree all in the one sentence, the one hemisphere and the one political reality.”
    Well I know where you’re coming from that OTOH it’s a compelling logical third way through the mire and OTO it’s somewhat anathema to the science of muddling through we’ve inherited, or perhaps as an intelligent extraterrestial dropping in might say- Looks pretty good earthling but I wouldn’t want to start from there!

    That raises the question as to exactly where we are right now. I’ll leave aside here the consideration of the creation of claims on real production out of thin air from central bank elites and their omniscient oversight of the ‘free market’ funny money process as it’s a topic in its in its own right. Sufficeth to say that when I talk of price/s I mean those emanating from real free market exchange and note the Austrians were largely right, just bamboozled by demographics in the medium term as were Keynesian central bankers. They’re attempting to rectify that hubris and oversight now you’ll notice but let’s concentrate on real pricing for the time being.

    Copenhagen put paid to the notion of the vision splendid and the grand environmental plan, a lesson not lost now on our home-grown friend of the chair no doubt. If the answer to the problems confronting Spaceship Earth don’t lie in Washington, Beijing, London, Tokyo, Brussells, etc, then we’ll have to look closer to home and if possible give them all an offer they can’t refuse and hold that thought. Essentially if not us who then?

    That’s where I’m coming from with a simple blueprint for change in the right direction. There’s nothing hard about it or particularly radical in its componentry, but taken as a whole sets an initial example all must follow and build upon. Now when I say build upon there may be many who would like to see CO2E taxing the main centrepiece of such a package of reform longer term. However there’s a natural interim ceiling there that Ken raises, namely if we were to raise carbon taxes well beyond our neighbours, we’d flatten our own exports and MRRT revenue rather quickly. Nevertheless, ditching all other forms of taxing (income, company, stamp duty, etc) would allow us to carbon tax to the maximum without crippling exports for the time being. That will produce the maximum price effect domestically and produce the greatest behavioural change. The alternative of cap and trade would quickly run into the same ceiling problem anyway. Cap quantity too hard and you have to let go of price and should that price rise too much making exports too dear, the inevitable happens. To then exempt exports is to throw in the towel re the bigger picture. Right there you have the obvious rejection of C&T for the time being, unless you think changing light globes and shower heads, doing a quick calc of some average CO2 saved and handing those credits to Morgan Sachs beats straight carbon taxing at the mine or well-head. If you do this conversation is over.

    Back to the big picture again. We can’t get international agreement on the way forward for the environment and in any case the jurisdictional and consequent administrative hurdles are immense which leaves us to set the example all should follow. The Soviet experiment tells us loud and clear market price slays omniscient elites and their quantitative controls, yet we all need to comprehend fully the notion that the design of taxation(and its converse subsidy) sets the overall constitution of that marketplace. Garbage in and it’s garbage out like the housing affordability problem. You have progressive income tax, deduction for borrowing, capital gains tax exemption for principal residence, capital gains tax holiday on the rest and what pops out the end? Mcmansions and housing affordability and I’m supposed to believe that’s due to market failure. Que? A carefully constituted marketplace working perfectly in my book. Now look at the constitution of the marketplace I proposed and take your blinkers or tinfoil hats off to see what will inevitably result. Don’t bother me with complaints the wealthy are getting wealthier speculating in in Walmesley or Pitjatjantjara Earth Sanctuary shares either and minimising their ANWT, and claiming franking credits and all such deviant behaviour. Tell someone who cares or take it up with Gaia.

    Presumably our change of tack re environmental outcomes requires an unleashing of sweat, ingenuity and entrepreneurship in that direction and what better way than to remove all current barriers to the free deployment of capital and labour. Goodby capital gains locking up scarce capital with existing owners and similarly stamp duties, income and company taxes as a major impediment to ‘moving forward’. Pay as you consume, rather than pay as you earn which favours real savings and investment. Then the clincher. If the rest of the world don’t follow our example they’ll be left behind and not only that, they’ll have to sit idly by as the world’s corporations set up headquarters here. After all why wouldn’t they if they only have to pay their resource footprint here for doing so? That’s an offer they can’t refuse lest they remain a bunch of Kodaks in our digital green world.

Leave a Reply

Your email address will not be published. Required fields are marked *

Notify me of followup comments via e-mail. You can also subscribe without commenting.