The Dog’s Bollocks

Malcolm Turnbull gave a creditable performance on Lateline last night as he stabilised the Opposition’s hitherto shambolic stance on climate change and an emissions trading scheme. Turnbull has returned the Opposition to its policy stance enunciated during the death throes of the Howard government – with the caveat that they’d like to delay it another year.

Turnbull wholeheartedly endorses the need for an ETS, so the remaining quibbles concern when it should be introduced and the rate at which it kicks in once it’s started. 2012 is probably soon enough, according to Turnbull, who repeatedly reminded us that an ETS is ‘very complicated’. In other words, he is trying to buy time and concessions on behalf of the big emitters in the Australian economy. As I’ve said before, an ETS can’t be that difficult. As suggested on last night’s premiere of The Hollowmen, you can go the full policy monty in 18 months, so 2010 is definitely do-able.

The Opposition is ever keen to focus on the costs imposed by an ETS, as if there will only be negative impacts for the economy – ‘we don’t want to get too far ahead of the pack’. While details remain to seen, it is likely that the initial imposts for the individual will be in the order of a few hundred dollars a year – less than the impact of a tax cut foregone – which the electorate is largely prepared to wear, as long something is done. The biggest losers will be the extractive and fossil fuel industry Corporations, and even they will either be given generous concessions or pass the costs on to consumers wherever possible. It is this interest group that Malcolm is representing with the ‘hasten slowly’ warnings.

Yet this week’s G8 meeting gives symbolic encouragement to the notion of Global action on emission reduction. One likely outcome of the 2008 US Presidential election will be a commitment to a US ETS which will be legislated sooner rather than later, whomever wins. Last year the Global ETS market was worth about $64bn, according to the World Bank, more than doubling from $31bn in 2006. That value would soar to more than $3,000bn a year by 2020 if the US introduced carbon trading.

The world is moving closer to a global ETS. With the US on board, it will become increasingly difficult for India and China (who are both signatories to the Kyoto Agreement) not to do likewise, especially in the face of their customer economies imposing carbon tariffs on Chinese products.

So where does all this leave Australia? If there was the likelihood of a rapidly expanding global market for say, coal or iron ore, our businesses would be gearing up for it post haste, years in advance, in order to cash in on the boom. Yet the Opposition want us to drag our feet until we see what everyone else does first. At the least, there will be massive profit opportunities in the Carbon market for our market traders, but more significantly there will be a booming global market for carbon-neutral technologies (even ‘clean’ coal). Given our history of innovative invention – carbon-neutral technology is an ideal economic opportunity for Australian businesses to prosper, which might also go some way to ameliorating our worsening trade deficit.

That is the misfortune of all this dithering, dallying and delaying on behalf of the fossil industries. Australia is missing out on transformative opportunities presented by the inevitability of a global ETS. The sooner we get on with it, the better off we’ll be as a nation. We don’t hear the Liberals, the self-appointed proponents of business and the economy, talking about the opportunity costs involved in further delay.

But then again, we never were really that good at the entrepreneurial side of business – unless it involved digging stuff up, growing stuff or chopping stuff down and selling it the highest bidder with as little effort as possible. Value adding? Down-stream processing? What’s that??

Filed under: Big Picture, Economics, Environment, Politics, Emissions Trading Scheme, Malcolm Turnbull