Top Carbon Cutters - #1 the bureaucratic troika

They’re the troika of mandarins who have shepherded Australia into unchartered economic territory: imposing a price on a common pollutant. Their fingers are all over climate policy, from the carbon price to mass rural tree-planting. They are Martin Parkinson, Blair Comley and Ross Garnaut – and together these card-carrying economists jointly take top spot as the most powerful drivers of Australia’s low-carbon economy.

This Power Index list has profiled business figures, lawyers, regulators and inventors (politicians were excluded). Why give the top spot to bureaucrats?

The low-carbon economy is emerging; its rules are still being written. If you want to know who by, read on. A market in its regulatory phase is a time for bureaucrats to shine, and these three policy wonks have done a fair bit of the thinking, much of the drafting, designing and modelling, and most of the grunt work in getting Labor’s controversial climate policy off the ground.

The Power Index couldn’t pick between them. Climate elder Garnaut wielded heavy influence early, but his star has waned. Parkinson and Comley are ex-heads of the Climate Change Department and remain in senior climate-related posts. Parkinson made climate policy happen but his attention is now divided; Comley has current influence and may be tomorrow’s chief.

Just one problem. Have they stuffed it up?

They are similar – trained economists who accept the climate science and pushed for a theoretically pure solution straight out of Arthur Pigou: internalise the externality wherever it is found, via a comprehensive carbon price. It’s a welfare economist’s wet dream.

Critics say the result was a prohibitively ambitious and complex scheme, a political ogre which was not pragmatic enough, and which the government – perhaps fatally – could not sell. The carbon price is unpopular and may be dismantled by a Coalition government come September. Perhaps the lesson for the next generation of Comleys is that politics really is the art of the possible.

Dr Garnaut was an economic adviser to Bob Hawke and ambassador to China, an academic and boardroom figure (complete with controversial mining ties) who came to climate late. He was federal Labor’s climate adviser from 2007-2011, delving into the science and proposing wide-ranging policies.

Garnaut (and Parkinson) sat on Julia Gillard’s 2010 post-election climate committee which wrangled a carbon price deal with the independents.  

Garnaut thinks big, he gave Labor’s climate push substance, credibility and economic heft – and when rent-seeking industry figures and climate deniers set up a hullaballoo, he took them on. He may look like a boffin, but Garnaut takes on his powerful critics like a street brawler with an excellent vocabulary.

“Alan Jones is a manifestation of a serious degeneration of Australian media and political culture in the last few years,” he told Lateline last year. The Coalition dislikes him.

Garnaut recently helped with the UN’s review of the CDM scheme (international carbon trading) and is an academic at the University of Melbourne. Watch for his future ruminations on China and climate change.

“He’s challenged assumptions,” said Erwin Jackson from the Climate Institute. Another industry insider described Garnaut’s influence as phenomenal, and added “everyone says he has a huge ego” (see his 28-page CV here). Garnaut is seen as professorial, in the old mould – “so British and reserved”, as carbon farmer Andrew Grant said.

Dr Parkinson joined Treasury in 1981 and headed up Kevin Rudd’s new Department of Climate Change from 2007; he joked he was the DCC in the early days. He was at the helm for the crucial years of developing the CPRS then the ETS. He became Treasury head in 2011, so is still involved in climate (the CEFC and economic modelling are under Treasury).

Andrew Grant says the Treasury head is the most powerful climate bureaucrat, “full stop”. Would the Coalition demote Parkinson? Some Liberals think he’s too political in his defence of carbon pricing, but governance expert Stephen Bartos says new governments often keep Treasury secretaries. Parkinson has form in lobbying to keep his job under the Coalition.

A carbon finance insider says Parkinson has “been consistent, and he’s got continuous outcomes. He’s smart, he’s persistent, and he’s well read.” Another says Parkinson comes across as reserved but willing to listen.

Comley is Parkinson’s protégé. He joined Treasury in 1994, was head of the DCC from 2011-13, and, in a surprise move which set tongues wagging, was this month abruptly shifted sideways to head up the Resources Energy and Tourism (RET) department (Subho Banerjee is acting head of DCCEE).

RET is seen as a pro-fossil fuel “brown” department, though Comley retains power over some climate schemes. Can he green up RET?

Comley has more international experience and is seen as being more hardline than Parkinson. A technocrat, he’s known for being gregarious, bright and quite a talker – “I didn’t get a word in for an hour” one insider recalled about a meeting. Comley has won a scholarship to Harvard to study executive training.

The future of this troika is uncertain. Shifting Comley to RET may be a precursor to “machinery of government changes”; Labor axing the DCCEE, losing some bureaucrats and farming others out to RET and the environment department.

Bartos said the appointment “says they’re leaving their options open to get rid of [DCCEE].” The Coalition has already promised to do this. DCCEE staff are nervous.

As for the Coalition, Prime Minister Tony Abbott may retain Comley, may perhaps demote Parkinson, and would ignore Garnaut.

So that’s a Cook’s tour of our mandarins (all declined to be interviewed for this story). Has their tight grip on climate policy been positive?

Erwin Jackson says yes; they see things from the “Treasury prism,” but applying the discipline and rigour of economists’ established norms is a plus. Jackson reckons countries where Treasury is involved in climate policy get better results. But he thinks the dominance of Treasury can lead to “a certain level of short-sightedness”.

Industry analyst Rob Fowler says “the Garnaut / Parkinson / Comley combination has been useful because they’ve driven a lot of outcomes, but it’s been challenging.”

Some of their solutions have looked good theoretically – maximising the coverage of the climate price – but have not been practical, Fowler argues. Yes, the textbook might approve of including farming in the carbon price, but given entrenched hostility from farmers and difficulties in measuring emissions, would it have been smarter to exempt it? In the CPRS, did Garnaut and Parkinson deliver a scheme so complicated no one could understand it?

That wraps up The Power Index series on the most powerful drivers of the low-carbon economy. The lead has been taken by bureaucrats and regulators, aided by a flotilla of lawyers, bankers, accountants and consultants. There are plenty of big-talking business figures with sustainability policies, but drill down into what they’re doing to cut emissions and you’ll see this market is largely being run by the government, top down. Watch this space though – come September 14, we might need a new list.