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an Australian template for emissions trading? « Previous | |Next »
April 9, 2007

We know that Australia will be hit by more frequent and intense heatwaves, bushfires, floods, drought and landslides as global warming causes the temperature to rise this century. Global warming is coming at us no matter what we do or how much individual government ministers deny, or downplay, the effects.

So what is being done? Paul Kelly in The Australian has an interesting op-ed on the economic response to climate change. He says:

Have no doubt what is happening: Australia's pro-market economic establishment in the Treasury and the BCA is trying to seize control of climate-change policy. The aim is to reverse the water policy saga where Treasury was sidelined.

Australia needs to adapt as the report by the Intergovernmental Panel on Climate Change warns that Australia faces a rise in the sea level from global warming "is virtually certain to cause greater coastal inundation, erosion, [and] loss of wetlands". Water security problems are very likely to increase by 2030; coastal development is likely "to exacerbate risk to lives and property from sea level rise and storms"; and major infrastructure will be at risk from both increased temperatures and storm activity. Hot spots include major cities such as Brisbane and Sydney and the spreading urban coastopolis of the sea-changers.

Is Treasury trying to make a comeback? It is Prime Minister and Cabinet (PM& C) that runs the policy agenda these days, as we shift to a more presidential style of government. Policy is made by the Prime Minister and his office, and for political, not economic, reasons. Kelly says that:

The politics of global warming in Australia has been conducted in a policy-free zone. That is about to change. In two months the debate will be policy driven and will focus on an emissions trading model for Australia.
And who, pray, is devising this blueprint for John Howard? The Treasury and the Business Council of Australia (BCA), that's who. Given the leaking this week of Treasury chief Ken Henry's March 14 internal speech critical of government, the irony is exquisite.

I would suggest that Treasury is trying to get its foot in the door. Does that mean a "cap and trade" policy (as in the fishing industry), is supported by Treasury? Does that mean Treasury is advocating government intervention to tackle "externalities" --the costs an activity ( such as emitting greenhouse gases) imposes on others? Is the pro-market economic establishment in Canberra acknowledging market failure?

Kelly argues that the vehicle is Howard's taskforce on emissions trading, which was set up last year by Howard to report before June. It is PM & C that runs the task force, not Treasury. Kelly's argument is that the best insight into the taskforce's likely position came this week with the BCA submission prepared by Rod Sims:

It proposes, in effect, an Australian template, sharply different from the European Union trading model. It assumes a single trading scheme ("there should be only one scheme in Australia that puts a price on carbon") relying on commonwealth constitutional powers. It presumes the abandonment by Labor state governments of their own schemes along with the mandatory renewable energy targets cherished by Labor and the Greens.

I cannot find the submission by Sims online so it must have been leaked to Kelly. So why Sims?

| Posted by Gary Sauer-Thompson at 4:33 PM |