Let the carbon wars begin

The directors of Australia's largest advertising and media buying agencies must have been licking their lips following the government's announcement of its carbon pricing strategy yesterday.

The document outlining the plan, agreed by the Multi-Party Climate Change Committee, reveals that Australia will have a fixed carbon price – a carbon tax – for "three to five years" (though there's the option to extend this) from July 1 next year, followed by a cap-and-trade scheme that lasts, well, forever.

But what will have ad agencies salivating is the delicious lack of clarity on most important aspects of the package – what the per-tonne impost will be, how much compensation trade exposed industries receive and exactly when and how 'cheap' carbon credits from overseas will be allowed to return Australia to its carbon-guzzling ways.

That opens the door for a frenzy of special-interest advertising, not seen since the mining industry put $22 million into discrediting the Rudd government's resource super profits tax.

Indeed, it would not be too surprising if the same 'creatives' who worked on Labor's $30 million anti-WorkChoices campaign in 2007 were drafted to discredit Labor's own CarbonChoices policy in 2012/13.

They might even recycle some of the 2007 footage shot of defenceless breadwinners losing their jobs, as the more marginal end of the manufacturing sector shuts down.

Then there could be shots of jobless long-distance truckies watching freight trains slipping silently by, or unemployed coal miners telling Julia Gillard they can't afford their power bills – you get the picture.

But let's not be flippant. Structural change within the economy always hurts, and it really is Aussie 'battlers' or 'working families' who absorb most of the pain.

A generation of families suffered the adjustments of the tariff reductions started by Labor in the early 1980s. They forced our most inefficient industries to shut down – especially in manufacturing – and pushed capital into more competitive areas of the economy, making the country richer in the long run.

Labor is asking Australians to believe that some reasonably efficient industries – coal-fired power being the prime example – must be shut down because of the scientifically determined negative externality of global warming.

To date, a slim majority of voters accept this logic – Essential Media's February 14 poll, for instance, showed 49 per cent of Australians think the recent spate of natural disasters make climate change action more urgent, while 47 per cent think they do not.

The same poll found that, at the time the Gillard government was formed, 11 per cent of voters listed addressing climate change in their top three issues influencing their vote – by mid February, that had climbed to 16 per cent.

On the face of it then, the pain of structural adjustment – the Coalition thinks it will start with an additional $300 per year added to household's power bills and 6.5c/L for petrol – is something Australian voters are increasingly willing to grin and bear. When that money disappears from their bank accounts this may change.

And that's when the ad execs in slick suits walk in. Their job will be to reinforce notions such as 'Australia can't afford to go it alone or lead the world' in climate change mitigation.

That's not true, of course. The current resources boom is the ideal time to coax capital into less polluting industries, especially clean energy. And as for leading the world, we only do that in one respect – per capita carbon emissions.

The Coalition will run its own campaign, though it will lack the visceral force of industry-funded advertising.

Tony Abbott's position on climate change is weak – the Coalition is far from unanimous that climate change is even a problem, and though it has a carbon reduction plan, it looks second-best.

While there is no doubting Shadow Climate Minister Greg Hunt's commitment to carbon abatement, the Coaltion's 'direct action' approach means, uncharacteristically, ignoring the invisible hand of markets.

Julia Gillard focused on this in her attack on the Coalition's climate policy during Question Time yesteday: "Every dollar that is raised by pricing carbon will go to assist Australian households and businesses make the adjustment and go to funding programs that tackle climate change … [the Coalition] stand for $10.5 billion of expenditure on climate change programs that will not work. That is $10.5 billion that the Leader of the Opposition, if he were Prime Minister, would be ripping out of the purses and wallets of hardworking Australian taxpayers."

And that is where the battle-line will be drawn between now and July 2012. The MPCCC's statement of intent is intentionally vague – it leaves the most difficult details up the air – what the carbon price will be, exactly when the carbon tax will switch over to a cap-and-trade system, and which polluters will be compensated and by how much.

Subject to the cajoling of fellow committee members Greens Senator Christine Milne, and indepdendents Rob Oakeshott and Tony Windsor, that allows Labor to move forward or back on carbon reduction according to what, according to their own internal polling, voters will stomach.

But though that gives Julia Gillard maximum room to manoeuvre between now and July 2012, it opens up plenty of weak spots to be exploited by trade exposed industries, and the Coalition. And it may make quite a lot of people in ad-land very rich.

Connect with Rob Burgess on Google+

More from Business Spectator

Comments

Please login or register to post comments

Comments Policy »
Rob, firstly, you said: "When that money disappears from their bank accounts this may change" (See Let the carbon wars begin, February 25).
Or... alternately, it will have the desired effect and people will consume less carbon. What a shocking outcome!
Second, are we really worried about some agencies making some money out of this? Really, when so much is at stake?
I don't think a carbon price will achieve anything (See Let the carbon wars begin, February 25).
Petrol up 6.5 cents a litre. So? You need it so you will still buy it. Electricity will also still be required so you will pay. Where's the carbon reduction? I think this is a pointless action fuelled by climate change alarmists peddling fear.
I just think we are going completely the wrong way with this. Build nuclear power stations and be done with – no 'great big new tax' necessary! (See Let the carbon wars begin, February 25.)
Abbott could boost his position by promoting climate change as a positive (See Let the carbon wars begin, February 25). It's likely to increase rainfall in the more arid areas of the country and therefore bring more economic benefits, especially for agriculture. It will also make the interior regions more attractive to live in. If he can manage to fudge the fact that those living along the coasts will have problems, he may have a saleable story.
I agree with fellow commenter Graham Plowman (See 'Nuclear is all we need', Conversation contribution, February 25). Spend the money on nuclear anyway. There are more pressing environmental concerns than an unproven (read unscientific) theory of global warming and cleaner air would be nice. Chinese pebble bed reactors are the way to go. This tax seems another grab worn by the middle class and poor.
Just imagine the sadness that could result from this whole futile exercise if the so called polluting industries, just decided to pay the tax and keep polluting and pass on the costs (See Let the carbon wars begin, February 25). Obviously the true pollution has to be reduced... but C02? Pull the other one.
Fuel and electricity prices have risen substantially in the last couple of years. Has this reduced the use of such energy sources? No. And people will continue to use these energy forms (See Let the carbon wars begin, February 25).
People have to realise that not only will fuel and electricity prices rise with this tax, but all things grown, freighted and produced using electricity and fuels will rise. Families will get offsets against this. What is the sense?