The 'tax' word doesn't have to hold us back from commencing a serious discussion about carbon pricing

With Opposition Leader Tony Abbott and his merry band of hysterics literally frothing at the mouth over the carbon pricing proposal (announced by the Gillard Government on 24 February 2011) and seeking to distort any legitimate debate, perhaps it is time average Australians wrested back control from those conservative prima donnas now prancing across the nations television screens shouting various versions of “L.I.E. Tax!”

One of the first ways to do this is to look again at the information which is at hand.

Cast your mind back to those media reports prior to the August 2010 federal election which clearly show that the Gillard Government had let the electorate know its thinking on establishing a carbon price in 2012 and, recall the fact that in December 2010 the Minister for Climate Change and Energy Efficiency Greg Combet was reported as having; sent a strong signal the federal government is considering implementing a fixed carbon price, followed by a fully fledged emissions trading scheme, to solve the political impasse. Mr Combet said while the government had not formed its final position on carbon pricing, a fixed-price start could defer the divisive debate on emissions reduction targets, but ensure short-term investment certainty for business.

Then go to the MULTI-PARTY CLIMATE CHANGE COMMITTEE created in the wake of the last federal election.

Membership of this committee comprises:Prime Minister Gillard (Chair), Deputy Prime Minister and Treasurer Wayne Swan, Minister for Climate Change & Energy Efficiency Greg Combet, Senator Christine Milne (Deputy Chair), Senator Bob Brown, Tony Windsor MP, Rob Oakeshott MP. Assisted by Adam Bandt MP and Mark Dreyfus MP, with Professor Ross Garnaut, Professor Will Steffen, Rod Sims and Ms Patricia Faulkner acting as advisors.

Opposition MPs are noticeable by their absence from this committee because the invitation to join was firmly rejected by Tony Abbott in 2010.

The Committee’s stated operating principles for creation of a carbon price mechanism are:

1. Environmental effectiveness: The mechanism should be capable of delivering reductions in carbon pollution that are informed by the climate science, to ensure that Australia contributes to the global mitigation task and to help transform our economy by driving investment and innovation in clean energy and low emissions technologies and processes.
2. Economic efficiency: A mechanism to price carbon should harness the most cost-effective pollution reduction options and facilitate informed and efficient investment decisions. It should also minimise costs of our pollution reduction to the economy as a whole and be consistent with Australia’s broader economic reform agenda.
3. Budget neutrality: The overall package of a carbon price mechanism and associated assistance measures should be budget-neutral. This does not preclude other measures to address climate change being funded from the Budget, consistent with the Government’s fiscal strategy.
4. Competitiveness of Australian industries: The overall package of carbon price design and associated assistance measures should take appropriate account of impacts on the competitiveness of all Australian industries, having regard to carbon prices in other countries, while maintaining incentives to reduce pollution.
5. Energy security: Introduction of the carbon price should be accompanied by measures that are necessary for maintaining energy security.
6. Investment certainty: A mechanism to price carbon should provide businesses with the confidence needed to undertake long-term investments in low emissions technology and infrastructure, which will reduce costs for households and businesses in the long-term. It should keep our industries at the forefront of the research, development and deployment of new clean technologies, attracting global investment flows and creating new jobs.
7. Fairness: The introduction of a carbon price will affect Australian households and communities. Assistance should be provided to those households and communities most needing help to adjust to a carbon price, while striving to maintain incentives to change behaviour and reduce pollution.
8. Flexibility: Internationally, climate change policy is continuing to evolve. A mechanism to price carbon should be sufficiently flexible to respond to changing international circumstances, including improvements in international accounting rules, developments in climate change science, and tangible international action to deliver an effective global solution.
9. Administrative simplicity: A mechanism to price carbon should be designed with a view to minimising both compliance costs and implementation risks.
10. Clear accountabilities: A mechanism with transparent scheme rules and clear accountabilities will help promote business and community confidence in carbon pricing.
11. Supports Australia’s international objectives and obligations: An effective global solution requires action from all major emitters to limit the global temperature rise to less than 2 degrees. A carbon price mechanism should support the goal of promoting international action to deliver an effective global solution, and be consistent with Australia’s foreign policy and trade objectives.

The Multi-party Climate Change Committee webpage contains a history of how this particular carbon pricing mechanism proposal actually came about:

• Meeting 4 - 18 February 2011: Communiqué—18 February 2011
• Meeting 3 - 21 December 2010: Communiqué—21 December 2010
• Meeting 2 – 10 November 2010: Communiqué—10 November 2010
• Meeting 1 – 7 October 2010: Communiqué—07 October 2010
• Establishment of the Multi-Party Climate Change Committee—27 September 2010: Prime Minister establishes climate change committee

Papers have been released by the Committee since November 2010 and on 24 February 2011 it invited members of the public and interested parties to provide input on this approach via an email to: MPCCC@climatechange.gov.au, or by letter to The Multi-Party Climate Change Committee Secretariat, GPO Box 854, Canberra ACT 2601, Australia

Despite the accusations about specific cost of living increases being thrown about by Opposition MPs; To date no final decisions have been taken about the design of a carbon price or its associated features including assistance packages for households and industry.

However the general proposal is clearly outlined by the Committee:

…….a proposed carbon price mechanism that has been discussed by members of the Multi-Party Climate Change Committee (MPCCC). The proposal has been agreed by the Government and Greens members of the Committee. Mr Windsor and Mr Oakeshott have agreed that the proposal be released to enable consideration by the community and to demonstrate the progress that has been made.

The MPCCC has discussed a number of different ways in which a carbon price could be introduced into the economy and the advantages and disadvantages of each. This paper outlines the result of that discussion.

The proposal focuses on the high level architecture, start date, potential mechanisms to allow flexibility to move to emissions trading, sectoral coverage and international linking arrangements.

Further detailed discussions will be required in relation a starting price for the carbon price mechanism, and in relation to the associated assistance arrangements for households, communities and industry, and support for low emissions technology and innovation.

The outlined architecture also allows for consideration of other design options such as phased coverage of sectors over time and coverage of the electricity sector via an intensity-based allocation scheme.

Broad architecture of the carbon price mechanism

A carbon price mechanism could commence with a fixed price (through the issuance of fixed price units within an emissions trading scheme) before converting to a cap-and-trade emissions trading scheme, with the following broad architecture.

Start date

The mechanism could commence as early as 1 July 2012, subject to the ability to negotiate agreement with a majority in both houses of Parliament and pass legislation this year.

Length of fixed price period

The fixed price phase could be of between three and five years, with the price increasing annually at a pre-determined rate. The initial fixed price could begin to drive economic transformation and investment in low emission technologies, and ensure greenhouse gas emission reductions.

Transition arrangements

At the end of the fixed price period, the clear intent would be that the scheme convert to a flexible price cap-and-trade emissions trading scheme. In relation to the transition to a flexible price, it would be important to design the arrangements so as to promote business certainty and a smooth transition from the fixed to flexible price……………….

The full version of this document can be downloaded as:

• Multi-Party Climate Change Committee - Carbon Price Mechanism (RTF 83Kb)
• Multi-Party Climate Change Committee - Carbon Price Mechanism (PDF 135Kb)

In the last few days an unlikely duo, Joe Hockey and Gretel Killeen, have independently complained that this ‘tax’ has been sprung unannounced on an unwitting population reeling from domestic natural disasters and international political unrest and that this was unfair – presumably because they both consider that a national government should not continue with policy implementation whenever communities are rebuilding or news is bad somewhere in the world.

Indeed on the ABC’s Q&A on 28 February Killeen waxed poetic on the subject in a manner which demonstrated that she had probably not investigated the issue beyond a quick look at the mainstream media or cheat sheets used Coalition politicians:

There was no catalyst to cause this announcement to be made. It's not as though we suddenly got now [sic] figures on global warming, let's come in with our tax. It came out of the blue and when I say out of the blue after, what, five days of us being shattered in sharing the New Zealand earthquake trauma, Egypt, Libya, another boy dying in Afghanistan. We were preoccupied with other issues. This one came in for no apparent reason. Not only did it come in, it came in unprepared. We didn't even get any facts.

While Liberal Party MP Hockey stated on 1 March in a doorstop interview:

Now, to add on top of that rising interest rates, to add on top of that a flood levy, to add on top of that now a carbon tax, it’s going to rip the heart and soul out of small business and families and here’s the proof. And they’re dealing with all the other impacts, as Rita was saying, the impact of the cyclone and the floods, it’s around you.

So what does all this tell us?

Well it indicates that:

1. Australia went to the ballot box in August 2010 knowing that a re-elected Federal Labor Government would introduce a carbon price and after that general election the country also knew that, despite having to form a minority government, Labor’s plans for a carbon price were proceeding.

2. Ordinary Australians can contact the Multi-Party Climate Change Committee and give their personal opinions of carbon pricing before all details of the plan are finalised.

3. Tony Abbott and assorted Coalition MPs are issuing media releases and conducting interviews which deliberately ignore the fact that the electorate could hardly have been ignorant of the coming national price on carbon and are telling hardcore political lies with impunity because they apparently believe journalists and voters are monumentally stupid.

4. Some allegedly intelligent adults are obviously basing their own positions solely on Coalition political spin and looking no further into the matter of carbon pricing.

5. To date there is very little reasoned and reasonable national discussion on the announced carbon price mechanism framework.

6. Remedy for any deficiency in either the national discussion or the mechanism currently under contruction lies in our hands.

So if you believe climate change must be addressed with strong mitigation measures it's time to shake off that natural lethagy and start reading and writing - you only get what you fight for in any democracy.