Conservative Hypocrisy: Opposition to a Clean Energy Future

Bt, in his latest unabashed critique of the Gillard Government’s ‘carbon tax’, exemplifies conservative cynicism and an ignorance of practical realities. In his attempt to critically assess the Clean Energy Plan (CEP), he states:

“We should assess policies by the results they achieve not by the rhetoric that surrounds them or the hopes and aspirations behind these policies.”

This is a ridiculous claim to make. How else are we supposed to assess a policy which has yet to be implemented than by the goals, the “hopes and aspirations” which policymakers have in drafting such policies? The fact is that, yes, Australia does comprise only 1.5% of global carbon emissions, but the goals of the CEP go further than simply reducing Australia’s carbon emissions by 5% of 2000 levels. This plan is meant to prepare Australia for a global carbon permit market, the first regional market having already been set up in the EU. It is worth noting that the EU, as an economic union, has a larger GDP than the USA, in both nominal and PPP-adjusted terms, and thus, we definitely will not be acting alone in putting a price on carbon. By introducing the CEP at this (relatively) early stage, the Australian economy will hopefully gain earlier access to these international carbon permit markets, helping to further reduce global emissions, while allowing Australian businesses to adapt to a global economy in transition towards a clean energy future.

It is also worth noting that Bt has blatantly misrepresented facts:

“Australia produces around 2% of Co2 emissions (actually 1.5 but 2 is a nice round number)
The Carbon tax aims to reduce at least 5% of 2000 levels by 2050

The IPCC models 5 degrees Celsius over the next hundred years.

So lets start with something easy. Australia's reduction would be 2%*5%= 0.1% of global emissions. Obviously im not a scientist and i cant proceed to speculate on how this reduction will affect warming levels but i dont think you need a degree to understand 0.1% isn't going to achieve anything.”

He clearly states that the CEP aims to “reduce at least 5% of 2000 levels by 2050”, which, to most people doesn’t sound like very much. And it’s true that a figure like that is minute, but to state that Australia’s reduction would be 5% of 2% of global emissions in 2050 is farcical and an obvious misconstruation of the facts. First of all, the government plans on achieving this target of 5% by 2020 not 2050. Secondly, the long-term goal of the Australian Government is to reduce Australia’s carbon emissions by 80% of 2000 levels by the year 2050. So that’s 2%*80% not 2%*5%. That is a considerable difference. In other words, by 2050 a reduction of 1.6% of global carbon emissions will have been achieved by the Australian economy. That is a hefty contribution to global emission reductions, and considering we make up only 0.03% of the world’s population, we’re punching well above our weight. Clearly, Bt, you are no scientist, but then again, neither am I. I just took the time to actually read the Government’s Clean Energy Plan. I suggest you do so as well.

Now that we’ve cleared up a few facts, I’d also like to draw your attention towards the hypocrisy of so-called fiscal conservatives who oppose the carbon tax. Now, I’m often criticised for being overly idealistic. I contend that it is rather conservatives like Bt who are being idealistic in their opposition to a policy which is essentially market-based. They do not realise the consequences of their pointing and shouting at the perceived flaws in the scientific credibility of the CEP. Now, apart from the fact that these fears are largely overstated (and not to mention insulting to the CSIRO, the Bureau of Meteorology and a number of esteemed international Academies of Science), they are also ushering in a new era of socialism. Yes, I said “socialism”. That is exactly how I would term the Coalition’s Direct Action Plan (DAP). They don’t realise that by closing the door on the CEP, they are only opening another one for the DAP. Essentially, the debate about the carbon tax is one of alternatives. In our two-party democracy, there will inevitably be only two options available to Australian citizens. By remaining uncompromisingly in opposition to the CEP, even in light of the bipartisan agreement on the existence of climate change, hard-line fiscal conservatives are only serving to damage their own economy and violate their own ideals.

Bt also draws our attention to the rhetoric of the carbon tax debate. It has been poor at best and utterly appalling at worst. We have somehow descended from bipartisan agreement on the necessity of an emissions trading scheme (ETS), to bickering about the CEP, more commonly known as the ‘carbon tax’, or the ‘big tax on everything’, or even more simply, the ‘bad tax’. Labor and the Coalition are engaged in a populist race to the bottom, pandering to the lowest common denominator. It’s quite sickening. Nonetheless, the CEP is still good policy. In The Economist’s July 14^th article, Poles Apart, this classical liberal (a less obnoxious form of fiscal conservate) newspaper is able to see the merits in the CEP:

“And Ms Gillard deserves credit not just for putting a price on carbon—still the best way to discourage its use—but also for selling it as a way to shift taxation, not raise new revenues. Thus some of the cash which the plan generates will pay for tax cuts that will offset increases in electricity bills. It is better to tax pollution than work or saving.”

These merits ought to be recognised by Bt as well. The Gillard Government is attempting to introduce a price signal on carbon to the market economy, thereby facilitating innovation and greater efficiency on the part of Australian businesses. The carbon tax is a classic example of a Pigovian tax, insofar as it internalises the negative externality of carbon pollution. This is another point which Bt obstinately denies: that markets fail to account for social costs such as environmental degradation. Apparently, free-markets are so perfectly efficient that they will somehow magically reproduce non-renewable resources and stop sea levels from rising. Sadly, I can’t see that happening any time soon.

Bt also notes that:

“The Gillard govt is really stuck between a rock and a hard place here. On one hand they try to keep mining, manufacturing and households happy by providing tax cuts and subsidies to help protect them from the effects of a carbon tax. You often hear about the govt assuring the coal/mining industry etc that they wont lose jobs. But in itself is contradictory considering the whole purpose of a carbon tax is to move the economy away from such industries and they energy sources they use. They can't both assure workers of their jobs as well as guarantee meaningful reductions. You cant walk both sides of the street.”

The Gillard Government is not walking on both sides of the street. It’s called a gradual transition. As Julia Gillard accurately notes, ours is an “economy in transition”. You cannot expect to introduce an externality into a market without causing some kind of shock to the market. That’s why governments exist, to mitigate shocks to the market economy by acting as a check against the volatility of free-markets. Hence, the CEP imposes a price for carbon at $23 per tonne for three years, before giving way to an ETS on 1 July 2015. The ETS is the ultimate means of eliminating a negative externality. While under a Pigovian tax, a negative externality is internalised within existing markets, by introducing carbon emissions into the cash nexus, an emissions trading scheme creates an independent market for what was once an externality. In this way, the distortion of existing markets is reduced to a minimum. Thus, the superior allocating powers of the markets will allow the Australian economy to reduce carbon pollution most efficiently, as there will be no requirement for governments to estimate the social cost; the market will determine it for them. The government isn’t picking the winners, the market is.

In stark contrast to the market-credentials of the CEP, Tony Abbot’s DAP is a throwback to mercantilist policies of the 17^th Century. By essentially subsidising big polluters for emitting the most carbon emissions per capita in the world (at 27.3 tonnes per capita, well above the global average of 5.8t), the Coalition will merely be socialising the cost of supporting businesses through government intervention. This will encourage bureaucratisation, inefficient pollution reduction and higher government expenditure, in much the same way a “Brezhnev-era apparatchik” might introduce an anti-market reform. And while the CEP is far from perfect (it seems like everybody needs compensation for something nowadays), it’s a far more effective and efficient policy than the Coalition’s DAP. Although I’d prefer a Rudd-Turnbull-era ETS, since Australian politics debased itself into a populist scramble for compensation and tax-cuts, that’s now simply out of the question. And so I pose this challenge to fiscal conservatives: to evaluate the practical realities of Australian politics before they assess the merits of any government policies.  If you engage your mental faculties and look beyond the haze of reactionary cynicism, I’m sure you too will see the merits of the Australian Government’s Clean Energy Plan.