Commentary

 Comment

CPRS rage is growing

Steve Bright

Published 7:46 AM, 18 Nov 2009


Australia’s CPRS is barely breathing while a crowd of experts are milling around to snatch essential organs before death. Electricity wants a kidney; coal will settle for a lung; mining, maybe the eyes; farming wants a left foot; forestry, manufacturing, transport, everybody wants a piece of it.

These are just some of the EITEs – Emissions Intensive Trade Exposed – industries asking the rest of business to pay for their right to pollute.

It should not shock the Rudd government, but perhaps might, to know that many clients I speak to, big and small, are increasingly frustrated by the way CPRS is developing.

The refrain I am hearing flags two main problems: clarity and equity. Unfortunately, the CPRS provides neither.

Others are just plain confused, not just about the detail of the scheme and its uncertain exemptions, but also about the dis-empowering process that has seen lobbyists and politicians shut out most of the small and medium business sector, together with manufacturing, services, education, health, retail and import.

Is this the future of climate change policy in Australia, they wonder: business-as-usual, profligate subsidies and penalties for innovation?

Australian government has a time-honoured practice of ripping off one sector to pay for the inefficiencies of another. Primary industry subsidies in the 1960s and 1970s have given way to risible decisions such as providing the biggest infrastructure and operating cost subsidies in the developed world to the aluminium industry (a product that resembles congealed electricity).

Here’s an example from Victoria, which thanks to the national grid, is no longer quarantined south of the Murray. This month, we had the edifying spectacle of TRUenergy proposing to build a $2 billion gas plant next to their high-polluting brown coal power station. But hang on, here’s the kicker, they’ll only build the plant if the government stumps up $8 billion in bribe money.

Then there are the other debt-riddled electricity generating businesses in Victoria. With commendable lack of strategic insight they paid billions for over-valued, decrepit, dreadnought-era assets just over ten years ago as Robert Gottliebsen has pointed out numerous times.

All Australians are going to be paying these industries to do nothing about their carbon emissions.

Now, in most emissions reduction scenarios there are two politically acceptable options:

– develop products, industries and people capable of achieving a reduction through R&D, education, skills development and so on (this is close to the AIG’s approach – not a bad one); and/or;
– tax someone in order to pay for the technological, infrastructure and operational changes necessary.

Notionally, the Rudd CPRS falls in to the second category – using a market signal to force polluters to change their behaviour.

In fact, there is no incentive for big polluters to change as Giles Parkinson made clear as early as February. Not when they are exempted 94.5 per cent of their pollution tariff. No one, from Garnaut down, can explain the market mechanism that will see us achieve a reduction in emissions as a result of the CPRS.

That’s because there isn’t one. So, it is safe to assume the CPRS is not at all about reducing emissions, but is intended to prop up inefficient, polluting, uncompetitive enterprises.

Now, some people won't have a problem with this as a general proposition. But it really hurts when the rest of the economy – small and medium business, most manufacturing, services, education, health, retail and import, plus that long-suffering cash cow once known as the citizen – are going to pay the bill.

And, to top it off, there is no subsidy to encourage change. Australians are paying the subsidy to ensure that nothing happens. Did you get that bit?

Organisations across the board expect more. My clients in mining, energy and water are busy building their Plan B; a strategy for transitioning to a low-carbon economy sooner rather than later. They have looked at the carbon trading responses in Europe and even New Zealand and seen that we have selected the worst parts, the bits that have failed in, for example, Phase 1 of the EU response.

So, in two weeks the Australian government is going to turn up at Copenhagen. Kevin Rudd, Penny Wong and other bureaucrats will put the proposition that Australia is a responsible hero of climate change, encouraging compromise and forward movement through a balanced, fair approach to what the PM's described as the great moral problem of our time.

No matter the spin – and it will be spun – Australia will be consigned to also-ran status. That country in the bottom corner of the world holding everyone back by insisting that climate change is just a simple economic event and a 5 per cent reduction will be just fine.

Steve Bright is an organisational development consultant who specialises in strategic thinking, corporate communication and organisational learning.



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