Voters can be more forgiving than politicians often assume. Labor failed to learn this lesson with the GST. Now the Coalition parties risk making the same mistake over climate change.
Labor lost the 1998 election after campaigning hard against the Howard Government’s plan to introduce the GST. Although the GST became a reality in 2000, Labor refused to give up. It went to the 2001 election promising to roll back the GST and lost again.
While other factors helped the Coalition, especially concerns about refugees and terrorists, Labor made no headway with its promise to roll back the GST. Once the GST was in place, most people no longer cared — particularly as they had received offsetting tax cuts or increases in welfare payments. Over two million small business operators were hit with the extra work of collecting the GST. But few switched to Labor which still required them to collect the tax, although on fewer items in some cases.
Before the 1998 election, John Howard managed to derail Labor’s scare campaign against the GST by urging voters to accept that it was “in the national interest”. Now Kevin Rudd is doing the same with his Carbon Pollution Reduction Scheme, which he portrays as having the noble goal of tackling the build-up of greenhouse gases contributing to global warming.
The Government’s green paper on the scheme, due to start in 2010, says only about 1000 companies will have to buy carbon pollution permits whose cost will add less than less one percentage point to prices in the early years. This will be offset by direct compensation and/or a new round of tax cuts in 2010. Although there was compensation for the GST, it put up prices by at least four times as much as is expected with the initial the cuts to carbon pollution.
Rudd has an easier argument to make than Howard before the 1998 election. Although Howard had a respectable tax reform case, most voters were hardly clamouring for the GST. But the opinion polls show they want action on climate change.
But the Liberal leader, Brendan Nelson, has spent the last three weeks chopping and changing on the issue. The general impression is that he wants Australia to do as little as possible to cut emissions. This would entail a retreat from the position of the Howard Government which was committed to introducing a similar scheme to the Rudd Government’s, except that it would begin in 201l or 2012. Howard promised to start the scheme, even if big emitters such as China and the US had not agreed to cuts. As recently as a week ago, Nelson wanted to wait.
At the urging of senior shadow ministers, including Nelson’s deputy, Julie Bishop, a joint meeting of Liberal and National parliamentarians last Wednesday broadly agreed to stick with Howard’s position. But Nelson later declined to commit to a starting date no later than 2012. With the public wanting action, Rudd is keen to claim that Nelson’s prevarication suggests he would prefer Australia to do nothing until every other country in the world acts.
The Coalition would be better placed electorally if it attacked Rudd for not encouraging some of the best ways to reduce emissions. Rudd appears fixated on using government regulation to introduce a carbon cap and trading scheme, while neglecting options that make cutting emissions a lot easier. He is promising so much compensation for households and companies that there will be very little money over to fund initiatives to cut the demand for energy and develop low emissions technology.
Without more efficient energy usage, the price of a pollution permit will be higher than otherwise necessary to cut greenhouse pollution. This perverse political result will trigger an upward spiral in spending on compensation which doesn’t eliminate a single tonne of carbon.
Nevertheless, the green paper notes that improving efficiency in energy consumption is a cheap way to cut emissions. As less energy is used, fewer emissions are required to produce it. A common estimate is that improving the efficiency of energy usage could cut national emissions by 30-40 percent. A recent report from the Energy Suppliers Association of Australia, whose members want to sell more electricity, acknowledged that consumers can save money with energy efficiency measures.
Some options such as turning off the power at the wall cost nothing. Governments could help with a faster rollout of smart electricity meters and improved energy standards for appliances. Rudd plans to doubly compensate welfare beneficiaries for the relatively minor impact of his pollution reduction scheme. It would be much better if he spent half the money on vouchers for low-income households to buy insulation which is particularly effective at reducing emissions by cutting energy demand while lowering heating and cooling bills.
The Opposition's shadow environment minister, Greg Hunt, understands the advantages of encouraging energy efficiency. So does the shadow Treasurer, Malcolm Turnbull. Nelson should let them attack the Government from this angle if he wants a favourable voter response.
Postscript: The Australian Federal Police Commissioner Mick Keelty’s refusal to release any part of his submission to the Mohamed Haneef inquiry — despite a request to do so from the Attorney General Robert McClelland — is utterly unacceptable. The Australian Security Intelligence Organisation has released an unclassified version of its submission which bluntly states that it had no reason to conclude that Haneef, whom the AFP arrested before the empty charges were dropped, had any association with terrorism.
Regardless of whether material from Britain should remain classified, there is no reason whatsoever why Keelty can’t give an explanation — if he has one — for the crucial mistakes the AFP made at the Australian end in its treatment of an innocent man. In our democratic system, ministers have an ultimate right to declassify material. McClelland should declassify, and release, the great bulk of the AFP’s holdings on the case.
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