Turnbull's liberals vs Barnaby's socialists

Yesterday the Daily Telegraph broke the story of a leaked Coalition policy document aimed at fostering economic development and increased population in Northern Australia.  While Abbott talked this document down, it would not have been so widely circulated if its ideas weren’t endorsed by some important members of the Coalition.

The document’s policy proposals involved the revival of range of ideas dear to the hearts of the agrarian socialists such as Barnaby Joyce and Bob Katter, who seem to think that 98% of the Australian population are here to underpin the livelihoods of the other 2% engaged in primary industry. 

In the great tradition of Joh Bjelke-Petersen-style nation building, it proposes, according to the Daily Telegraph: special tax breaks for people living in the tropics; new dams and irrigation schemes to create a northern food bowl; a 15 year infrastructure plan for highway and rail projects; and even developing an energy-intensive industry hub.

What particularly struck my interest was point 8 of its first term initiatives:

“Leverage the Coalition’s Direct Action policy to support the development of projects such as the PNG Purari Hydro Project, that could deliver baseload levels of clean energy across Northern Australia and into the National Electricity Market.”

Now don’t get me wrong Origin’s PNG Hydro project could be a great initiative. 

But wouldn’t we want to see how it stacks up in terms of dollars per tonne of abatement versus other alternatives?  And do we want to run a carbon abatement tendering program that is also saddled with the objective of developing Australia’s north?

When Climate Spectator raised this idea of using the Direct Action fund to promote development of Northern Australia, Shadow Climate Change Minister Greg Hunt was very quick to hose it down. He said,

“There has been no change to the Direct Action Policy. The Emissions Fund would not be used for such a hydro project in PNG. The document is not Coalition policy, but rather a draft discussion paper that is part of a very extensive consultation process.”

According to Hunt the Direct Action policy remains the same as it’s always been, which he says is to select projects based on lowest cost abatement, and only projects located in Australia.

Still one has to worry when only a few months out from an election, there is still confusion amongst the Coalition about fundamental elements of a policy which we’re told hasn’t noticeably changed since the prior Federal election in 2010.  

Apparently the leaked document was an early draft which now no longer carries this reference to the PNG hydro plant. But according to the Daily Telegraph the document was distributed with a letter signed off by Andrew Robb who is charged with developing Coalition election policy.  So lines are getting crossed somewhere along the line if someone thinks Direct Action can be “leveraged” to support development of the top end.

In the end one has to wonder whether this reflects deeper divisions within the Coalition.  On the one hand we have the science and markets camp of Turnbull and Hunt, on the other the nation building camp of Barnaby Joyce.

The Turnbull-Hunt camp believe that government has little place in directing the economy and are big believers in free markets. On matters of the natural world they are guided by the advice of scientists.  For this group government environmental regulation is reconciled with a belief in free markets through seeing environmental problems as an issue to do with inadequate property rights.  Government sets limits around use of a natural resource via property rights and then leaves the private sector to work out how best to manage with a constrained resource.

The Barnaby Joyce camp is more of a go forth and multiply mentality, with an undercurrent of religious faith first, science second.  Prosperity is built upon building stuff and exploiting natural resources.  Government has a key role in helping enable the exploitation of natural resources, and also protecting the farmer and small business man from rapacious big business.  If resource constraints are encountered, government should just build more infrastructure to free up more natural resources.  Markets and tradeable instruments are seen with a degree of suspicion as something which big business and banks will use to game and take advantage of the farmer and small businessman.

The Direct Action policy’s vagueness and contradictions are a product of an attempt to reconcile the two camps within the Coalition. 

Hunt says the emission reduction fund is a “market-based” instrument that will buy lowest cost abatement irrespective of its source, and equates it to the water buy back (another thing Barnaby Joyce hates with a passion).

Yet the official policy document also states:

“Assessment of projects will also take into account any additional significant public policy benefits.”

In addition for abatement projects to be eligible for funding they must deliver, “additional practical environmental benefits”; “not result in price increases to consumers”; and “protect Australian jobs”

Unless the policy is further clarified and contradictions addressed, it is possible that once elected the emissions reduction fund becomes an unworkable mongrel of objectives or worse - a National Party slush fund.