To price but not to tax

In one episode of Yes Minister Hacker says something like “It seems the civil service just prevents governments from implementing the sovereign promises the government has made to the people” to which Bernard says “Well somebody has to”.

I’m a bit of a promises guy – I think if a politician promises something they should deliver it. And it’s bad if they welsh on the promise.  So I begin unsympathetic to Julia’s broken promise. After all she said that she wasn’t introducing a carbon tax.  Now she is.

Anyway I read a bit of the transcript with Neil Mitchell and have to admit that I’m kind of convinced by her case. Firstly circumstances are different in a hung parliament, but I don’t think that’s very firm ground on which to base a rearrangement. Circumstances always change.

And when Julia said “Get out every statement from the election campaign … all of the ones where I talked about the need to price carbon” I wasn’t particularly convinced either.  But then she said this.

The Australian people voted for me knowing I believed climate change is real and that I was determined to act on it, and that the Labor way of acting on it was to price carbon. People were going to say ‘Well isn’t that going to work effectively like a tax’, and we were going to have one of those silly debates about whether or not I would say the word tax. So I just clarified yesterday that the first few years with the fixed price do work effectively like a tax. This is the right thing to do to price carbon.

Well I’m not sure it’s all that clearly expressed, but at that stage I kind of ‘got it’.  Julia went to the election saying she was going to put a price on carbon. Not denying that prices would rise, thinking she’d do it using permits she ruled out a tax. If John Howard was in her shoes right now he’d be arguing that it’s not really a tax, it’s a fixed price permit system. Which it is.

Anyway, it all seems pretty OK to me.  Then again I’m not particularly enamoured of the Abbot led Coalition, so that’s no doubt influencing my judgement.

What do others think?

Postscript: Having written the above piece I listened to Julia on Alan Jones’ program (mp3). I was pretty amazed at her hamfistedness in explaining what seems (at least to me – and others disagree as we have seen) a reasonable position. Fred Argy explains why below.  All her predecessors from Hawkie on would have explained their position, and have done a good job of persuading the audience – though of course even the best persuader can only turn around a few people. Howard makes an interesting contrast – as he was a shifty fellow and ultimately got a reputation for it, but of all our past PMs he was the most unfailingly polite – which I suspect is a very worthwhile political trait. I was amazed at the combination of aggression and blind recitation of all the same talking points she’d been using from the press conference to the House to all the interviews. She might have listened to Jones and her other accusers and then, having done so crafted her explanation, her persuasion, her case in as commonsensical way as possible to what they had said.  Had I been writing the post now, I might have titled it “To price but not to tax: to defend but not to explain: to assert but not to persuade”. I can’t imagine anyone in Jones’ audience thinking the better of the PM for the interview other than those who were already admirers.

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e-girl
e-girl
13 years ago

So, the government is going to impose a charge upon something and that charge is not in any way related to cost recovery. Let me think, what could that be?

It’s a tax. It’s a proposal for the government to take money out of our bank accounts in accordance with some magic formula.

Let’s all just cope with the fact that it is a tax and proceed apace.

E.

Catching up
Catching up
13 years ago

Agree 100%.. She did say that there would be a charhe on carbon.

Ken Parish
Admin
13 years ago

It’s not only a tax in practical effect but in law. The classic High Court definition of “tax” for constitutional purposes is found in Matthews v The Chicory Marketing Board (Victoria) (1938) 60 CLR 263 at 276, where Latham CJ described “tax” as “a compulsory exaction of money by a public authority for public purposes, enforceable by law, and not a payment for services rendered”. A licence fee or fine or penalty are also not taxes, but the carbon price certainly isn’t either of those things.

Gillard said before the election:

“I don’t rule out the possibility of legislating a Carbon Pollution Reduction Scheme, a market-based mechanism,” she said of the next parliament. “I rule out a carbon tax.”

Clearly it’s a broken promise not just semantics. It isn’t comparable with Howard’s “never ever” promise on GST in 1996, because he took his backflip to the following election and gained a mandate for it, which Gillard isn’t promising to do (she almost certainly wouldn’t get one). It’s more like Keating’s promise in the leadup to the 1993 election to deliver big income tax cuts without a GST; the so-called “L-A-W law” tax cuts. Keating proceeded to break that promise almost straight after the election by repealing the law in question. Gillard has a slightly more plausible pretext than Keating because circumstances really are radically different with a minority government. Gillard has not only the opportunity but probably also an unavoidable political necessity to push for a carbon price because it’s the price of continuing Greens support. Of course she can’t afford to admit that, hence the attempt to bluff her way around admitting that this is a broken election promise on any credible view.

cbp
cbp
13 years ago

The question should really be how many people voted for Labor on the condition that they wouldn’t introduce a carbon tax (but presumably knowing full well that they would introduce some sort of price on carbon), and how many people care.

I would suspect the majority of people couldn’t care less whether its a carbon tax, an emissions trading scheme or anything else because they all amount to pretty much the same thing.

The Liberal party and there supporters in Sydney radio land must know this, but they also know if they shout loudly enough they will impress a portion of the population.

Ken Parish
Admin
13 years ago

I guess I should make it clear. I’m a bit uneasy about breaking a clear election promise, but on balance I think Gillard is right to grasp the nettle and crash through. She would have been wiser to think of some weasel words so she could later deny with at least a smidgin of plausibility that she had made the promise at all. That’s what John Howard would have done, and he would have got away with it. Hopefully Gillard will too, because getting a carbon price is more important than maintaining a political purity that no leader ever manages for very long.

Ken Parish
Admin
13 years ago

Nicholas

I suspect you were writing your response at the same time as I was writing comment #6.

ennui
ennui
13 years ago

I take the view that a ‘promise is a promise’

Politicians usually fudge these issues – broad generalisations allowing plenty of wriggle room is standard practice. Gillard is still learning – hopefully with better staff!
The carbon tax is undeniably a broken pre-election promise.
However, a coalition, cobbled together from the ALP,the Independends, and the Greens, obviously made no promises – have no election mandate.

As Tony Abbott said himself –
“ABC News Updated Sat Sep 18, 2010 9:42pm AEST
The Federal Opposition leader says Ms Gillard’s admission that several election promises will be broken due to the hung parliament is an example of why she cannot be trusted.
He says the Labor Party has no mandate to govern.”

This coalition government resulting from a hung parliament is clearly an “unmandated” government, free to pursue policies they believe circumstances require.

The matter of whether Gillard broke her promise is not an issue – the context underlying that pre-election promise no longer exists.

The real issue is whether we should have a price on carbon at this time. And, if that policy can be justified, which I believe it can, why are we not now seriously examining the case for nuclear power as a component of our overall energy mix?

Paul Montgomery
Paul Montgomery
13 years ago

I do not like it. It is bad in every way possible.

It is a clear broken promise, and will define her government. It is bad politics because she will take responsibility for voter anger with higher bills, like Brumby in Victoria but this time she will have earned it.

A year ago we almost got an ETS. Have we really suffered so much in the intervening year that it is absolutely necessary to go for three years with a raw tax and wait for the MBM (shudder) to catch up? Can we not do without the tax and bring it all in in 2015 as the full package? It is like ETS Beta, and we are the testers going live with a buggy product. I do not understand the risk Gillard is taking.

This talk of “technical foul” is too cute. The end does not justify the means if Gillard undermines confidence in her particular shaky government and the concept of minority Federal governments in general.

Jim Belshaw
13 years ago

I want to put forward a very simple minded response on this one without qualification or supporting argument. The role of a Government is to govern. In a parliamentary democracy, Government depends upon parliament. Parties compete in the electorate, the elctorate determines who is elected, but it is the lower house of parliament made up of elected representatives who actually decides who rules.

The very idea of manadate is suspect. It locks us into a supermarket approach whereby Governments can and should only deliver on the specific shopping list put forward. This is in fundamental conflict with both the idea that Governments should govern and our political system. It actually degrades the politcal and public policy process.

I could mount a strong case based on facts that the proposed carbon tax is a natural response to the way events have moved, that it is not inconsistent with the Government’s stated objectives. However, that would be to play the mandate game.

The Government has put a policy position on the table. To my mind, the issue now is the validity of that position. Questions of broken promises is a red herring, and a smelly one at that.

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e-girl
e-girl
13 years ago

We live in an exciting age, in which billions of people are being lifted out of poverty. Let’s suppose that there are costs to this. We now have some choices before us:

a) Tell those billions to kick back and enjoy poverty. o_O

b) Embrace the fact that, as societies become wealthier, they are better able to resist those costs, including natural disasters. Meanwhile, work toward improved technologies with fewer side effects.

c) Revert to mercantilism, and attempt to posit that the current level of wealth should be averaged out. Hint: mercantilism = epic fail.

d) A variant of c: reduce our wealth by reducing our energy use and hope this persuades the poorer nations not to use much energy.

There are probably others, but option b seems to be the best one to me. Or does someone want to explain to those living in poverty that they should stay poor?

At the moment, coal, oil and gas (COG) are the best options. Nuclear fission is the next best. Wind and solar fail in the absence of highly efficient mass energy storage and the need to retain COG powered backups. Fusion would be lovely, people are working on it, but even if there is a breakthrough tomorrow, it will be a generation or two before it is in widespread use. Biofuels steal food from the poor to stick the fuel tanks of the relatively wealthy – moral fail. Genetically engineering bacteria and algae to produce oil and gas is showing promise, and would be a closed cycle production system (algae->engine->atmosphere->algae), but it would take a generation or so to replace our current energy sources.

Some people will mention peak oil and contend that we are doomed. However, the genetic engineering of bacteria and algae is the most likely candidate for a replacement of our current sources. At the moment, there are huge reserves of gas and oil in unconvential fields, such as gas bearing shales, tar sands and even the conversion of coal (Norway has an astonishing amount – under the North Sea). We have options to see us through until alternatives emerge, so panic is not called for.

The fetishisation of climate (ask a geologist about climate change) is distracting attention from many pressing environmental/sustainability problems including the loss of productive land to salinity, the depletion of fish stocks (and the related issue of the rise of jellyfish and squid to fill voids in the ecosystem), water supplies and so forth. We live in an energy-rich universe, but we’ll die without potable water, the only question is whether we die of thirst of from war.

Fred Argy
Fred Argy
13 years ago

Like you, Nicholas, I am not enamoured of an Abbott led Coalition, but I thought Gillard did a bad job of explaining itself to the people in Parliament. She could have said

“Parliament has changed: the Governmnent could have sat on its hands and refuse to deal with the Opposition (no tax) or the Greens (in favour of a carbon tax). That would be the end of the debate. But the structure of Parliament has changed. So we leant a bit towards Greens (who will control the Senate) and the business world and went for somethng “like a tax”, which is what we always believed in”.

This at least offers us a real policy solution to catch up with the rest of the world. And, as Jim Belshaw says, it the role of Government to govern.

Instead, in Parliament, Gillard made no attempt to explain itself. She missed an opportunity.

I think Gillard still has the right policy – but once again failed to sell it properly.

Mr Denmore
Mr Denmore
13 years ago

I don’t think people care. Accusations of broken promises and lies by politicians of politicians don’t wash with the electorate because everyone knows you have to lie and dissemble to succeed in politics. No-one would ever be elected if they told the truth.

But people are aware that the climate is changing, they understand that the overwhelming majority of respectable scientific opinion says unless we act now, the changes will be irreversible (if they aren’t already) and they know there are huge vested interests in slowing action on this issue or stopping it altogether.

So I applaud Gillard’s minority government in at least making a start. Remember, it was less than 18 months ago that parliament was on the brink of passing Kevin Rudd’s ETS (which was similar to what Howard had proposed), only for the forces of reaction under Abbott to block change.

People with kids want politicians to start on this issue. They know it involves costs and they are tried of the mindless obstructionism of Abbott. He’ll be gone within six months.

Tel
Tel
13 years ago

Each year goes past and the dire predictions from the IPCC back in 2001 fail to eventuate. The North Pole still has ice all year round, the Northwest passage still isn’t being used by commercial shipping, the drought that would never end did actually end. Less and less regular people are holding up the light of true belief (but they do like to hold candles up during Earth Hour so they can multiply their carbon footprint by a factor of 5 or more).

This is probably the last chance the Greens will get for their tax, you can bet they are pushing Julia as hard as they dare.

Dave
Dave
13 years ago

Jacques @ 12,

I agree that that is the nub of the matter: whether or not the promise was made in bad faith. In an indirect sense it was, because it relied on some voters confusing “carbon tax” with “carbon price” and hence believing that Gillard was ruling out a carbon price (which clearly she wasn’t). Reading commentators and comments (on other blogs), many people still believe she was ruling out a carbon price.

But in a direct sense it wasn’t bad faith. Through the CPRS policy development process, Labor had considered and rejected a carbon tax and I don’t think anyone in Labor – or more widely – expected it to be resurrected. So it must have seemed a pretty safe promise to make.

Mel
Mel
13 years ago

E-girl:

“The fetishisation of climate (ask a geologist about climate change) is distracting attention from many pressing environmental/sustainability problems …”

I think e-girl has a point. The 30 year drought in the south west of WA, 13 year drought in SE Australia followed by record breaking floods, increased top end wet season rainfall and floods and cyclones in Qld are all exceptions that prove the rule that climate has absolutely no relevance to environmental/sustainability problems.

You know it makes sense.

Patrick
Patrick
13 years ago

Record-breaking what? where? Ah, you mean they broke all the records since the last records … that they didn’t break…

Nick, I don’t understand what you mean by saying Howard came to have a reputation for shiftiness – as opposed to firemen perhaps? What exactly kind of a reputation do you think Gillard has? Shorten? Howes? Rudd?

Frankly I suspect she didn’t bother explaining it because she knows it is a broken promise and simply figured that the best path would be brazen it out. I kinda hope they do dump her because that would be easily the best option for the Liberals and for my money Abbot would be quite alright as PM.

Dave
Dave
13 years ago

To Tel:
The things you quote the IPCC as saying is in the usual deniers way are used out of context. Items you mention are modelled to not yet happen. They will occur as we reach the tipping point which collectively we are trying to stop or at least defer though CO2 mitigation.
Should the opposition fail to enter the negotiations and endorse the out-come then Australia will get a better more ethical result though a Greens negotiated process.
Should the process fail before the next election and Liberals are returned, their abatement scheme seemingly will come directly from individuals pockets since they prefer to reduce business tax’s and inputs at the expense of people.

Tel
Tel
13 years ago

Well I don’t want to do too much into the AGW debate here since it is better covered elsewhere, but my point is that the whole ram-it-through-without-public-consultation approach we are seeing is characteristic of a group of people who feel their power is dwindling (and by implication don’t seriously expect to see a lot of AGW predictions come true).

Anyone who wants to check the SPM of AR4 (Summary for Policy Makers of Assessment Report 4) can see on page 14 figure SPM.5 a bunch of scenarios and projected temperature rises. We are probably closest to A2 scenario from an economic point of view. See any “tipping points” in those graphs? Perhaps some mild positive feedback but no particular sudden changes. In fact, the SPM doesn’t even mention “tipping points”. AR4 ch10 does mention “climate surprises” and “tipping points” but only in a very nebulous sense to say that maybe it might happen, but we don’t know when or where and probably it has happened in the past. Slowing of the Atlantic “conveyor” (or AMOC or just MOC) is considered “very likely” sometime this century (AR4 ch10 p752) without any particular due date, but recent NASA reports show that isn’t happening either.

As for cyclones in Qld being an exception that proves the rule, there’s a long discussion at http://www.wunderground.com/education/webster.asp where you can see figure 2 how the Suummer SST in the West Pacific flattens out after 1995 and in Figure 4A the number of major cyclones (cat 4 or bigger) per year also peaks around 1995 and afterwards flattens out. If you prefer Ryan Maue’s Accumulated Cyclone Energy graphs, you see three approximately equal size peaks around 1993, 1998 and 2005 and generally falling ACE values after that. The BOM also provides graphs showing that the frequency of the largest type of storms in Australia is reducing (but frequency of storms in general is about constant).

Looking at Arctic ice, the IPCC predicted, “Sea ice is projected to shrink in both the Arctic and Antarctic under all SRES scenarios. In some projections; arctic late-summer sea ice disappears almost entirely by the latter part of the 21st century” (AR4 SPM p15 also in AR4 ch10). Well you can look at IJIS/JAXA satellite scans of the arctic (admittedly only a decade of data) and 2007 was the lowest year for summer sea ice, but overall no dramatic trend. There’s a slight trend towards less summer ice in the Arctic but the “disappears almost entirely” is nowhere near happening unless we get significant acceleration.

I recently checked the BOM rainfall measure for Sydney Observatory (one of the oldest in Australia) and the total annual rainfall for Sydney from 1858 to 2010 almost exactly equals the total annual rainfall for Sydney from 1981 to 2010.

I could go on, but probably people have stopped reading anyhow, you believe what you want to believe while calling other people “deniers”. Thing is, people who cry wolf sooner or later get ignored, so enjoy the fun while it lasts. At least with a Carbon tax we can remove it again.

Ken Miles
Ken Miles
13 years ago

Longer term data series of Arctic ice trends, suggest that if anything, the 2001 IPCC report underestimates loss of Arctic ice.

Dave
Dave
13 years ago

The debate is not about wether or not to do something, but instead what thing will we do.
The ark left the shores of Indecision, Procrastination and Indignant Delirious Interference ( IPIDI ) at Kyoto. It is about to disembark on the shores of Action. There may be a squall or two in rout, but we will get there. Better to catch one of the last launches to join the ark than to wave frantically from the land of IPIDI.

Tel
Tel
13 years ago

Ken, so why has the Antarctic ice been increasing? Did the IPCC predict that? For that matter, why give the IPCC credit for “predicting” in 2001 the longer term trend that was already visible since 1960? Anyone can put a ruler on a graph and extrapolate a bit, doesn’t prove they have any grasp of the principles.

The ice data you link to is stitched together from various data sources, I’d prefer to go with the satellite data, which probably needs another decade or so to see whether the acceleration in CO2 production that the world economy has delivered actually maps to any noticeable acceleration in ice melt. Indeed the fact that the pre-satellite data in the Antarctic shows a completely different trend to the satellite data in the same region makes me very suspicious.

Now if these people were really confident in their theory, they would be happy to wait a bit, because the longer they wait, the more it is gonna prove them right, huh?

Tel
Tel
13 years ago

Getting off topic, but the Irish election recently saw the Green Party take a bit of a bashing. I can understand the Irish are angry about malinvestment in silly real estate development and bank bailouts, and nobody enjoys the IMF taking control of your economy… but is that what they are blaming the Greens for?

The Irish Greens were at best only a minority partner in coalition government (much like thee Australian situation) so it seems that when the government makes a mistake, guilt by association hits all. That seems a little unfair. Then again, maybe CO2 unbelievers are popping up amongst the Irish as well?

Tel
Tel
13 years ago

So are you saying that Green issues are the issues you have, when you don’t have any real issues to worry about?

Ken Miles
Ken Miles
13 years ago

Ken, so why has the Antarctic ice been increasing? Did the IPCC predict that?

The 2001 IPCC report makes it clear that significant losses of Antarctic ice will occur at very slow rates. Because of a) lack of good quality data from Antarctic b) relative poor understanding of the drivers of Antarctic climate and c) the extremely slow time scales under which the Antarctic responses to external forcing; make it an extremely poor place to look for global warming trends. Also, your assertion about Antarctic ice increasing is wrong.

For that matter, why give the IPCC credit for “predicting” in 2001 the longer term trend that was already visible since 1960? Anyone can put a ruler on a graph and extrapolate a bit, doesn’t prove they have any grasp of the principles.

If the IPCC simply drew a line on a graph, you might have a point. But that didn’t happen. The real person who deserves credit is Svante Arrhenius who (in 1896)suggested the link between carbon dioxide and ice levels purely on the basis of physical principles.

The ice data you link to is stitched together from various data sources, I’d prefer to go with the satellite data, which probably needs another decade or so to see whether the acceleration in CO2 production that the world economy has delivered actually maps to any noticeable acceleration in ice melt. Indeed the fact that the pre-satellite data in the Antarctic shows a completely different trend to the satellite data in the same region makes me very suspicious.

A general point; if you want to get a trend from noisy data, you need to have a long time series. Otherwise, you’re just fooling yourself. This is why scientists place a lot of value on new data-sets. Your statement about completely different trends is simply a result of mixing up noise from trends.

Now if these people were really confident in their theory, they would be happy to wait a bit, because the longer they wait, the more it is gonna prove them right, huh?

Luckily, there is an alternative to waiting a decade. Your earlier statement about the satellite records being only ~one decade old is incorrect – you are only looking at a small subset of the satellite data. They actually started in 1979. And guess what, this longer data set strong support the observation that Arctic ice are dropping faster than IPCC predictions (see Fig 2b here).

Geoff Honnor
Geoff Honnor
13 years ago

s “Instead, in Parliament, Gillard made no attempt to explain itself. She missed an opportunity”

I think she lacks the political capital to argue the case for change on a shift in circumstances to which she’s responding. A constant Gillard critique is that she follows rather than leads, responds to events rather than shapes them and is flexible around tactical opportunism to the point of being politically double-jointed.

I’m picking that she’s decided to simply crash through on this by making it hers in terms of judgement call and ownership and refusing to publicly countenance an alternative cirumstantial motivation scenario. It’s risky but she’s obviously confident of winning the day.

It’s been snowing – though don’t take that as a comment on AGW:) – in Ottawa (where I’m attnding a meeting)and the big news here is the someone called Christy has just been elected to head the Liberal Party in British Columbia. I thought you’d want to know.

Jacques Chester
Jacques Chester
13 years ago

I don’t think people care. Accusations of broken promises and lies by politicians of politicians don’t wash with the electorate because everyone knows you have to lie and dissemble to succeed in politics. No-one would ever be elected if they told the truth.

Sure, we complain about liars but continue to elect them. It’s a known property of the system. That doesn’t mean we have to condone it. In particular the only check on the magnitude of lying by politicians is a) our own estimates of their probability and b) the punishment meted out at the ballot box to those considered to have lied to egregiously.

Otherwise every election would be about debates such as the choice between unlimited chocolate stipends and free HSV utes for every man, woman and child.

Jacques Chester
Jacques Chester
13 years ago

s/to/too/

derrida derider
derrida derider
13 years ago

An interesting point Nicholas made – one reason Howard lasted so long is that he was unfailingly courteous, even as he was royally screwing people. It’s true, and its amazing more pollies don’t pick up on that – a calm politesse costs nothing and gets you a long way.

I think its a mistake to eschew equivocation, too. Howard was politically quite correct to muddy the waters on definitions such as what a “tax” is, and Gillard would have been well advised to do the same. It’s part of framing the terms of a debate – something that was a Howard strength, and that the Labor goverment has been consistently poor at.

Patrick
Patrick
13 years ago

I don’t think it is in the labour genes, frankly. The last one to give it a shot (in 30 years) afaik was Beazley, but he was actually nice, which made him useless.

Patrick
Patrick
13 years ago

Bailleu, time’s judgement permitting. I think it is in the Victorian air.

conrad
conrad
13 years ago

“Yes, I’ve heard he’s a very nice man”

One of my rather left leaning colleagues knows him somehow or other and also thinks he a nice man, despite the political differences she must have with him.

rog
rog
13 years ago

It seems to me that the debate could be that Gillard has been consistent on climate change and this could show up the Coalitions ever shifting policies on the same. Last nights Q&A had Turnbull openly denying and/or defying Abbott’s position and the renewed attention could make it difficult for the conservatives to sustain any form of credible argument.

observa
observa
13 years ago

He was doing OK until Captain Willard came on the blower and he thought she said Gillard!

http://www.news.com.au/travel/news/man-refuses-to-fly-with-female-pilot/story-e6frfq80-1226013368608

Either that or multiculturalism aint all it’s cracked up to be ;)

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