Stuck in a carbon loop

The ALP's decision to place a tax on carbon makes its attack on the Greens a futile one, particularly when you consider attitudes have shifted so much it's now being forced to re-justify the need to reduce carbon.

The biggest problem that the ALP has in attacking the Greens over their allegedly "loopy” policies is that the most "loopy” of all Green policies – placing a high tax on carbon at the wrong time – has been adopted by the ALP.

And so Australia, and particularly business and public service Australia, needs to understand that something very profound is going happening as a result of that "loopy” decision.

In itself a carbon tax in was not "loopy” but to pitch it at $23 a tonne at a time of sharply rising power prices, a high Australian dollar, a soft non-mining economy, no tax on carbon imports and when we are already lifting the percentage of costly renewable energy in the system was a recipe for voters to wipe out most government seats.

That's what will happen, according to the opinion polls.

The profound changes start when the new government takes office. First Tony Abbott has confirmed what I wrote last week (Abbott's critical carbon tax catch-cry, July 6), that there will be no emissions trading schemes under a coalition government because in truth emissions trading schemes are simply a carbon tax calculated differently to the current one. That means those that those who are investing in emissions trading or any uneconomic form of carbon reduction to take advantage of the carbon tax need to gain their returns in the remaining term of the current government and perhaps three to six months after that, assuming the opinion polls are right.

Second, because Julia Gillard used the carbon tax as a means of distributing cash to lower income families, which is hard to reverse, large amounts of money will need to be raised by big cuts to government spending which will transform the public service. Most of the people in bodies and in government departments that have anything to do with carbon will find themselves on the streets. Those in vulnerable positions should consider trying for a transfer before its too late.

However over a wide area very large amounts of government spending will be reduced. The ALP would argue that as the magnitude of these cuts become understood there will be voter reaction. But the hostility to the carbon tax, and the Gillard pre-election lie that went with it, is now so deep in the community that I doubt whether that will happen. A change of leader could help.

What we have to hope is that we get some much needed improvement in public service productivity. I know it is a state area but in Productivity Spectator this week Jackson Hewett explains how modern hospitals are able to cut costs by 25 per cent and improve service (PRODUCTIVITY SPECTATOR: Your money and your life, July 9).

Of course that will take time, investment and most important, staff training.

Thirdly, we still want to reduce carbon. The only way to do that is to follow the Americans and start planning to use our gas reserves here in Australia rather than exporting them. That will involve a whole new approach to gas pricing and a major exploration program.

But even to do that will require a rejustification of the need to reduce carbon. When you introduce a "loopy” policy the justification of that policy (the need to reduce carbon emissions) also becomes classed as "loopy” by wide areas of the community.

Finally, many believe the carbon tax will survive for a year to 18 months, or even longer, under a Coalition government because the minister for carbon Greg Combet and the Greens’ Bob Brown designed the tax to be ”Abbott proof”. But on a government change most of the carbonites in Canberra will be sacked quickly so the mechanism to collect the tax will be dismantled. If there is a big defeat he ALP will not want a double dissolution election. It would cost them even more seats (people don’t like it when politicians don’t get the "loopy” policy message), and would give the Greens more long term senate seats because the entry quota would be lower.