Foiled by a carbon clumsy Canberra

What Australia has been doing in carbon reduction is classic Yes Minister but even the people who wrote the TV series, Antony Jay and Jonathon Lynn, would not have thought up a plot this absurd. In this week's KGB interview, you will see that I have a debate with John Daley, CEO of the Grattan Institute. In fact I am a great admirer of his work because he has meticulously proved what everyone suspected – that the public service in Canberra simply could not organise carbon reduction schemes and wasted large sums. Other carbon reduction monies were not spent. It's just a different version of the insulation, defence and other Canberra debacles.

Daley then says in effect that the only way to reduce carbon is via an emissions trading scheme because that way the market makes the decisions not the public servants and Ministers and therefore it will work.

Again that's probably true.

In the KGB interview, Daley goes one step further and says that Australian electricity is one of the most carbon intensive in the world and longer term we face big curbs from other nations if we don't reduce it. Moreover if we close our aluminium export plants other global sources of aluminium will take their power from less carbon intensive generators and so the world will be better off.

My suggestion was that we simply spend our money replacing brown coal generators with gas generators, or better still get private enterprise to do it. That way we may keep our aluminium exports. Daley said that was simply too hard a task for Canberra. Yet because it's too hard for our Yes Minister crew eventually we may have to close our aluminium export plants and many other export industries.

Readers will know I advocate taxing imports with the carbon impost and exempting exports. Daley says that our big exporters will be compensated and in any event our coal exports will still be viable. I can't argue that except that the carbon tax and the higher Australian dollar would have a substantial effect on profits and investment.

But what if we were smart? And used some of the money raised to incentivise private enterprise to build gas fired power stations to replace brown coal. The answer will be that it's too hard.

Because we can't implement sensible decisions we are forced into second and third best alternatives.

Footnote: Those interested in trust taxation and want to know how some people use trusts go The Conversation.