The reaction in the left-wing blogosphere to the Rudd Government ETS Green Paper’s cent-for-cent reduction in the fuel excise to compensate for tax increases in the ETS seems to have been universally hostile –Larvartus Prodeo variously describes it as “highly problematic” and “ALL Wrong” and An Onymous Lefty describes it as “Absolutely pissweak”, which was very close to Not A Hedgehog’s label of “Piss. Weak”. The Greens have described it as both ‘Cruel’ and ‘Populist’.
A bit of passion over policy is great – but in this case it’s misguided. The Australian Left have an unfortunate habit of imputing political opportunism as the rationale for every government decision with which they disagree. All those who are condemning the cynicism and incompetence of the Rudd Government need to ask themselves one question “What would I have done in the situation?”
And when you answer that question keep in mind that the Greens, Fielding and Xenephon all have an effective veto over anything that comes through the Senate.
Also keep in mind that, as An Onymous Lefty has railed at in the past, Steve Fielding has been a long term supporter of a cut in the level of government taxes on fuel. It was only in February that Fielding was saying:
Senator Fielding says cutting the fuel excise would be a simple and immediate way of easing the pressure on household budgets.
“People are struggling to make ends meet,” he said.
“Petrol has fuelled inflation for the last couple of years. Now this is a significant problem, and it’s about time the Rudd Government really got a handle on this issue by cutting petrol tax.”
He’s (generally) a smart operator in the Senate and you could easily imagine him playing the filibuster role and refusing to pass the ETS wholesale if it resulted in families having to pay a cent extra for anything. As Sam Maiden points out:
The Senate is certain to amend the Government’s draft legislation – which we won’t see until December. The three-year sunset clause on excise relief is probably the first in the amendment firing line.
Don’t forget, the Coalition needs just a single extra vote from the independents, Family First’s Steve Fielding or No Pokies senator Nick Xenophon to block this legislation.
In contrast, Bob Brown wants an ETS that will put a price on carbon that is MUCH higher than anything the ALP has ever contemplated, while at the same time opposing any financial compensation for low-income earners.
I haven’t read too many people suggesting that the government go to the electorate in a double dissolution on and ETS, so if you have a better option for an ETS you also have to explain how you’re going to get it through the Senate when Brown and Fielding’s positions are both miles apart and deeply entrenched.
Including petrol in the ETS without an excise offset would have condemned the policy to death in the Senate. Sometimes policy leadership is about more than a blunt refusal to compromise. Sometimes policy leadership is about getting a result when it makes EVERYONE unhappy, but no-one furious.
That being said, exempting petrol in the short term isn’t the policy catastrophe it’s being made out to be. As Wayne Swan noted today:
“What we’ve decided to do, in the first instance, is to provide relief from the emissions trading scheme when it comes to petrol excise,” Mr Swan told ABC Radio.
“That relief is being provided because petrol has already gone up around 30 cents a litre this year alone.”
It’s not like there isn’t already a MASSIVE price signal to motorists to use less fuel. As Josh Gans has recognised:
A year ago, I would have been outraged about this. But with world markets doing a much better job of getting petrol prices up than any emissions trading regime, we can be relaxed. What is more, this plan must be forecasting that the pain from emissions trading will be no more than the current level of the exise tax. That implies that we already have a carbon tax on petrol in our current policy. To get political traction on this issue, this is something I can live with. Moreover, there will still be impacts at the refining end and also on the costs of car capital.
If someone gave Bob Brown a magic wand three years ago and let him increase the price of petrol by 30c a litre do you think he wouldn’t have jumped at the chance? At any rate, the policy is being reviewed in three years time, so if fuel prices do go through the floor (!), the mechanism can be adjusted to reflect this.
While we’re at it, it’s still coming in in 2010, we’re not waiting for China, India USA et al before we act, we’re legislating for larger cuts contingent on an international agreement. It’s not the ACF/Greenpeace dream position, but there’s still plenty to be happy about in this Green Paper.
