Julia Gillard could learn a thing or two from the Liberal Party’s pollsters and premier professional lobbyists, Crosby Textor. Back in 2006 they gave a presentation to a number of clean energy industry representatives entitled, Working with the Federal Government – Policies, Politics and Influence. It opened my eyes to the value of applying an analytical discipline to politics. One lesson that remained with me from that presentation was that political parties essentially have two choices on how to approach a policy issue:
-- They can seek to neutralise an issue by removing differences between themselves and the other side of politics in the hope that voters forget about it; or
-- Choose to differentiate themselves by taking a strong stand on an issue in significant contrast to their opponents, so it becomes a reason for people to want to vote for them.
Unfortunately for the government, its attempts at neutralising the carbon price have been an abysmal failure, but not for want of trying.
The scheme has been delayed twice. The government has offered an incredibly generous package of free permits to trade-exposed industry (see: Grattan reports in April 2010 and August 2011). Coal-fired generators’ compensation has been doubled, and there’s the prospect of further money through a contract for closure. Contrary to any other carbon trading schemes proposed or implemented in the US or Europe, the government has allowed unlimited importation of cheap overseas credits. And the carbon price is now expected to be less than half what was originally expected once trading begins.
But have the disaffected groups stopped whinging?
Industry lobby groups have paraded economic modelling over 2008 to 2011 claiming that the carbon price would be far higher than Treasury modelling suggested. Now that carbon prices are likely to be stuck at the $15 price floor, half what was forecast by Treasury, they complain it’s still too high because it’s above the European carbon price. Yet when the European carbon price was €30, these same groups claimed this was irrelevant because the EU wasn’t a significant trade competitor.
Exactly the same economic modeller, The Centre for International Economics, has been used by the Minerals Council to:
- argue the price would rise astronomically after the fixed price period (by 118 per cent apparently);
- and then just 12 months later argue that the price would not drop far enough.
Just on Monday the Minerals Council’s favourite newspaper, The Australian, managed to turn a story about incredibly low carbon prices into a reason for why Australia couldn’t afford to put a price on carbon.
Are you confused? I sure am.
The government just can’t win with these industry lobby groups, and it should stop bothering.
Yet when the government stops pandering to opponents and looks to businesses that want to play a constructive role, it finds they have lost patience and enthusiasm. Businesses interested in making money by reducing emissions find it hard to get excited by a paltry carbon price of $15 per tonne of CO2. Many have watched their business plans go up in smoke with delays in trading and the depressed carbon price.
Then there are the renewable energy businesses who are apparently supposed to flourish under a carbon price. Sure that might be true...in 20 years time. In the meantime these guys are scared stiff by public servants who believe that once the carbon price is instituted (no matter how low and inconsequential) support programs such as the Renewable Energy Target should be abolished. Just a brief skim of the Wilkins Review is enough to see why they’re scared.
On top of this, members of the general public don’t really understand how a carbon price will work. It becomes especially confusing once you throw in lots of free permits to polluters and overseas carbon credits that mean emissions at home will barely reduce.
People understand that solar and wind power are good for the environment, these things are tangible and unambiguously clean. But financial derivatives that change incentives to make the electricity market dispatch black coal power stations more frequently and brown coal power stations a bit less?
All of this calls to mind the advice of another wise political adviser, Niccolo Machiavelli, who said back in 1513:
“It ought to be remembered that there is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new. This coolness arises partly from fear of the opponents, who have the laws on their side, and partly from the incredulity of men, who do not readily believe in new things until they have had a long experience of them.”
From now on the government needs to focus more on addressing the incredulity of those in favour of change. It’s never going to win a battle with Tony Abbott about who is nicest to polluting industry.
The government has no other choice but to embrace a strategy of differentiation. This requires cultivating a brand as the champion of the clean energy transformation. For this branding to be convincing, it will require a whole lot more than a $15 carbon price.