Chomping at the bit for the carbon tax

The media, when not gazing with rapt attention at their own belly buttons, are starting to focus on Tony Abbott ahead of the July 1 starting date for carbon pricing rather than the purveyor of the policy, Julia Gillard.

This says everything about the general expectation of what the next federal election will deliver.

The first assumption seems to be that we will go to the polls in late 2013.

Constitutionally, the election must be held by November next year, but one could put forward a raft of reasons why it might be late this year, ahead of the next budget or immediately after it.

Regardless of the timing, the issue is what a Coalition government would do after victory, not what the carbon tax will actually achieve, which this decade is two-fifths of three-quarters of you-know-what.

Any change in household consumer behaviour, which will account for not much more than a quarter of electricity production, is already being dictated by large increases in retail bills.

While few seem to be paying attention to the Gillard government's compensation offers, the carbon tax is seen as an extra irritant. But prices will continue to rise until mid-2014 – it's the regulator's determinations, stupid.

If there is a shift in behaviour happening, (and a whole bunch of people desperately want this to be the case), then the fate of policy is not the issue.

So far as a change in carbon emitting generation is concerned, the carbon tax at the level pitched is neither here nor there.

If it was $50, it might indeed start pushing older, more inefficient coal generation out of the east coast market. But it isn't, and won't be for many years to come.

Where the carbon tax and the renewable energy target will bite is in the manufacturing sector because any factory or plant on the verge of international competitiveness is at risk.

Meanwhile, the commentariat relentlessly forgets about small business when focusing on the issue.

Small firms are living on the edge in this economic environment and any extra cost, such as an uncompensated carbon addition to already too-high power bills, is capable of pushing them over.

The Gillard government mantra, apparently accepted by a lot of the commentariat, is that "the mob”, as Paul Keating used to call those of us who vote, will soon settle down after C-day.

The problem is that this manifestly ignores the impact on large businesses, and headline-grabbing redundancies as well as small businesses, where the victims will simmer until the poll comes around.

This feeds in to a significant issue for the next election, namely that the Coalition will say if you really want rid of this tax, you can't fiddle around with your Senate ballot.
This time, you have to signal your intent with both votes.

The commentariat seems to have forgotten 2004 and how a visceral rejection of a Latham-led ALP gave Howard a Senate majority.

This majority allowed him to seduce his government on to the siren shore of Work Choices, but was also a signpost to the fact that the electorate is capable of, in effect, walking and chewing gum at the same time, ballot-wise.

This is the weakness in the argument that Daniel Palmer (Four reasons Abbott won't repeal the carbon tax, June 19) and others are putting forward.

While we are told that we can expect to be dragged back to the polls for another go at skewering the tax well ahead of due time, we "the mob” are quite capable of acting in our own interests.

With the Coalition in the box seat in both parliamentary houses, all the rest of the sophisticated arguments fall away and the carbon tax will be deader than the flightless bird – along with the Clean Energy Finance Corporation and whatever else in the "clean energy future” the Abbott forces don't want.

This is a point of maximum danger for the single, bipartisan policy that has prospered over the past 12-15 years: the renewable energy target.

Embraced by John Howard after he had lunched at the White House with Bill Clinton and Al Gore and heard their wish to mandate renewables, but appreciated their Congressional weakness, the RET was an international first for Australia.

It would have been politically smarter of Howard to have embraced enlarging it in 2004 to 2007, when it became apparent that the key technology (wind) was capable of being expanded beyond his original target, but we could write a book (and some have) about the failures of that term.

Rudd, in turn, could and should have acted immediately on seizing office to legislate for the new, expanded RET because the Coalition would not have opposed him.

Instead, he stuffed around for nearly two years and then introduced a system where the populist solar support now embedded in it – to woo the Greens -- would undermine the main game.

The result is that the RET is lagging well behind attaining its 2020 goals and may well fall short.

Gillard, Combet and Swan may try one last run with the Greens later this year to enlarge the RET further before the voting mob get to them.

The large-scale renewables sector will seek this because is dismayed by the decay in power demand growth this decade.

If we are going to have 250,000 gigawatts of consumption in 2020 instead of the 300,000 GWh expected 2-3 years ago, then the 20 per cent target should be only around 30,000 GWh (less solar) rather than 45,000 GWh (less 4,000 GWh of solar).

The public tend to forget the existing hydro-electric factor which drops the target down to these levels.

Energy-intensive manufacturers would welcome a lower target, but what they really want is the RET to join the carbon tax and the CEFC in dodo-land.

The pressure is likely to grow on Abbott to accept the argument that the RET is bad news for big, trade-exposed business, but the Coalition is going out of its way – confer Greg Hunt in the CEFC parliamentary debate last month – to say it will maintain the 20 per cent target.

What exactly does this mean?

A sop to the manufacturing Cerberus would be to acknowledge that lower demand means a lower target.

However, an alternative, which would really put the government on the wrong foot, would be to take up Grant King's suggestion and opt for 25 per cent by 2025.

Renewable energy is the popular aspect of carbon policies with "the mob”, and Abbott would be a mug to alienate marginal voters by wrecking the RET.

Instead, why not opt to enlarge it in due time?

Meanwhile, carrying on in the media about double dissolutions and a "legal bloodbath” misses the big point about the federal poll, whenever it is.

The message to the voters will be "You can fix this mess with your votes, both of them, right now.”

I'm willing to bet that it is a message that will be heard.