Andrew Leigh (Fraser, Australian Labor Party) Share this | Hansard source

In 1989, when US President George HW Bush proposed the use of market based mechanisms to deal with acid rain, electricity generators warned him that their costs would skyrocket. Today, the program is universally regarded as a success, achieving its emissions targets at around one-third of the projected costs. Why are market based mechanisms so much cheaper at cutting pollution? In the case of acid rain, it turned out that firms used a variety of approaches to reduce emissions. Some retrofitted emissions control equipment. A number switched to cleaner fuel. Others retired their dirtiest generators. Because each firm took the lowest cost approach to abatement, the social cost was minimised.

For environmental economists, this result merely reaffirmed theoretical work of Arthur Pigou in the 1930s and Ronald Coase in the 1960s. By the time the member for Flinders won a prize for his 1990 university thesis A tax to make the polluter pay, the economic theory was widely recognised. The member for Flinders pointed out:

An attraction of a pollution tax regime is that it produces a strong incentive for firms to engage in research and development.

And that, for consumers:

… goods which do not generate—

pollution—

in their production will become relatively cheaper and therefore more attractive.

Discussing the politics surrounding pollution taxes, the member for Flinders argued that ‘a pollution tax is both desirable, and, in some form, inevitable’ but acknowledged that ‘even if some of the Liberals’ constituents do respond negatively, a pollution tax does need to be introduced to properly serve the public interest’.

Today, those opposite are the party of ‘no’. But not so long ago, only 16 short months ago, they were reformers. They were a party of markets. Senator Judith Troeth on 30 November 2009 said:

By having a price on carbon, people can decide whether they really want to use these carbon-intensive products. It is an effort to move people away from carbon towards other alternatives, and the most effective and efficient way to do this is through a price signal. The other consequence of the price signal is that it makes alternative sources of energy viable, and I am strongly of the belief that the nature of public opinion is changing as more people accept that carbon based energy is less desirable.

The member for Paterson, Mr Baldwin, told the House on 3 June 2009:

I would like to make it clear: the coalition will support an emissions trading scheme …

The member for Fadden said:

The opposition support an emissions trading scheme as one of the tools in a climate change toolbox. Other issues that should be considered include carbon sequestration—

and a ‘voluntary carbon market’. As the member for Wentworth said, though, ‘things changed’—things changed substantially. The member for Wentworth wrote on his blog:

Tony himself has, in just four or five months, publicly advocated the blocking of the ETS, the passing of the ETS, the amending of the ETS and, if the amendments were satisfactory, passing it, and now the blocking of it.

His only redeeming virtue in this remarkable lack of conviction is that every time he announced a new position to me he would preface it with “Mate, mate, I know I am a bit of a weather vane on this, but …”

The member for Wentworth told ABC radio:

My views on climate change—the need for a carbon price, the fact that market-based mechanisms are the most efficient ways of cutting emissions—my views are the same today as they were when I was part of John Howard’s cabinet, and those views were held by the Howard government.

By the time the member for Flinders wrote his thesis it presented the view that most small ‘l’ liberals around the globe have held for decades. Those opposite like to tell us that no-one else in the world is acting, but of course the US conservatives are proud champions of their nation’s emissions trading scheme.

Thirty-two countries and 10 US states have emissions trading schemes. Market based mechanisms are everywhere. Why is that?—because, just as the scientists tell us that climate change is happening and that humans are causing it, so the economists tell us that market based mechanisms are the most efficient approach.

As recently as 2007 the Liberal Party’s election platform promised:

To reduce domestic emissions at least economic cost, we will establish a world-class domestic emissions trading scheme in Australia (planned to commence in 2011).

The Gillard government proposes to start with a carbon price in which the market determines the quantity of pollution before transitioning to a fully flexible emissions trading scheme in which the market determines the carbon price. Both are market mechanisms. Both have the advantage that they allow millions of households and businesses to find the most cost-effective way to reduce dangerous carbon pollution. For the first time it will become profitable for entrepreneurs to find ways of reducing carbon emissions.

Because the arguments for harnessing markets to cut carbon pollution are essentially the arguments for free markets themselves, the opposition to emissions trading has traditionally come mostly from the left of the political spectrum. It was the left of the political spectrum that objected when, in 1989, President George HW Bush said that market based mechanism should be used to deal with acid rain. Yet today we have the odd spectacle of a supposedly market friendly party advocating a climate change policy that looks awfully like command and control.

If you think we can cut smoking rates more effectively by subsidising celery sticks than taxing cigarettes you will love Tony Abbott’s direct action plan. Of course you cannot, which is why the only way the coalition can meet its emission targets is by spending $20 billion buying permits from other countries.

While the coalition is running a million miles from market based reform, this government is getting on with the job of serious long-run economic reform—investing in the future. Today, the Treasurer and Minister for Resources and Energy announced that the government is accepting all 98 recommendations of the Policy Transition Group for the minerals resource rent tax. That will mean a boost to national savings, a cut to company tax rates and an investment in infrastructure. That infrastructure will go particularly to the mineral rich states of Western Australia and Queensland. Australians will get a fair share of the resources they own and will manage the mining boom in a way that supports the huge pipeline of investment.

But those opposite have become the party of ‘no’. They will reject the $7.4 billion the miners are willing to pay. They will reject the cut in the company tax rate which flows through to mums and dads who shop in Woolies and Coles. They will reject the tax cuts to small business; they will reject the boost to superannuation—a much-needed increase in retirement savings that will improve dignity in retirement for millions of Australians. And they will reject the investment in infrastructure.

They are indeed the party of ‘no’. They are even saying no to reforms which will ensure that Australians will not face exit fees of up to $7,000 on a mortgage. Last night we introduced regulations into this chamber that will ensure that that will happen from 1 July, but those opposite are standing up against that.

We know why this is the case. The Leader of the Opposition has always been a man of ‘no’. He brought his negative approach to public life in 1989, when his campaign against the republican referendum was: ‘Don’t know? Vote no.’ He came to the leadership with only one promise: that the Leader of the Opposition would say no to any sensible policy to tackle dangerous climate change. He continued being the man of ‘no’ on the issues of means testing the private healthcare rebate and the Building the Education Revolution program—a once-in-a-generation investment in our nation’s education infrastructure.

There are thoughtful people in the Liberal Party caucus. There are those who occasionally speak out in favour of ideas rather than carping criticism. There are people who could make a constructive contribution to the multiparty committee on climate change, if only their leader allowed them to do so. But, alas, the reformers are shouted down by the blockers.

This is a dangerous game that those opposite have got themselves into. It might feel good to be the party of ‘no’ but this kind of short-term populism is a risky strategy: you will quickly find there are people out there who are more simplistic and more negative than you. The organisers of yesterday’s rally said on their website:

CO2 is not pollution and does not need to be reduced in the first place.

What we are seeing here has its parallels in the US—the rise of carping negativity and Tea Party style politics. The re-entry of One Nation wrapped in a blue ribbon is what we are seeing here today. (Time expired)

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