Abbott and Gillard down and dirty

leak26march

BENEATH the brutal political "death struggle" between Julia Gillard and Tony Abbott lies the core truth -- there can be no investment certainty in Australia's energy sector until the current battle is resolved by an election with a victor one way or another.

Gillard and Abbott are tearing each other apart with a desperation that shows the ugly unresolved reality of minority government. They are now fighting the next election, given the 2010 election left climate change unresolved. Business complaints that the current process is too politicised are true but irrelevant. Only another election can resolve the impasse and deliver a stable policy.

Climate change in Australia has become an ideological dispute that fuses economic reform, climate policy and the culture war. The longer it is unresolved the greater the threat to Australia's investment outlook.

Beneath the hysteria and hypocrisy of this week, Abbott's essential accusation remains: that Gillard's carbon policy is illegitimate because it was based on an election deception. His pitch is powerful and easily grasped: that if Gillard had announced a carbon tax before the election she would not be Prime Minister today.

Abbott says the people have every right to be angry and his own anger is palpable. So Abbott has a single repeated demand: that Gillard call a fresh election to obtain a mandate. He makes this demand confident that Gillard would lose any such election.

Gillard's essential position is unforgiving. She operates as a legitimately elected minority Prime Minister. She intends to ensure the parliament is workable and that it runs full term. Gillard plans to legislate a carbon price scheme with the support of the Greens and present this to the nation as a defining economic reform critical to Australia's future.

After this Gillard will seek re-election and the public's repudiation of Abbott. She calculates Abbott has fatally exaggerated the price impact of the new tax and that he cannot escape being tagged as a denialist. Her belief, as she told parliament this week, is that "increasingly Australians are disgusted by his negativity and revolted by his arrogance".

Election defeat would guarantee Abbott's removal as Liberal leader and ensure liquidation of his "direct action" policy. Conservative politics would descend into dispute and disharmony, leaving Labor in control of the nation's direction.

These competing scenarios belong to a polarised nation. It is incredible to think that at the 2007 poll John Howard and Kevin Rudd had virtually the same policy, both backing a carbon price and an emissions trading scheme.

This is Gillard's opening against Abbott. "He is not a Liberal in the tradition of Liberals past," she said, attacking Abbott. Her argument, would you believe, is that Abbott wasn't Howard. Yes, Howard has become the new Labor hero, the man who finally acted on climate change, who wanted to price carbon. Climate Change Minister Greg Combet quoted Howard saying: "No great challenge has ever yielded to fear or guilt. Nor will this one."

In case you are confused, this Howard, the heroic champion of climate change action, is the same Howard denigrated by Labor throughout 2007 for refusing to confront the problem.

The point, of course, is that Abbott transformed the politics of climate change in late 2009 by deposing Malcolm Turnbull and uniting the conservative forces in a populist rejection of carbon pricing. When Gillard unveiled her new plan recently, Abbott called for a people's revolt against her. The key to his politics is to mobilise the anger of outsiders who feel cheated by the decisions of insiders seen to control people's lives by imposing a carbon tax to check global warming.

But a people's revolt is a chaotic, confused assembly of grievances. Nor is it controlled by the Liberal Party. This week's "no carbon tax" rally outside Parliament House captured brilliantly the tensions in the new outsiders-insiders divide in politics that reflects the fault line dividing Abbott and Gillard.

Gillard branded Abbott as an extremist for associating with extremists. Yes, the crowd contained Pauline Hanson, denunciations of Gillard as a bitch and plenty of climate change deniers. In a classic tactic, Gillard attacked Abbott for associating himself with "One Nation, with the League of Rights, with anti-Semitic groups and with grossly sexist signs". She hit every sensitivity among those voters suspicious of Abbott.

Was it a mistake for Abbott to address the rally? Of course not. These were his backers. This was the people's revolt he had called forth.

In fact, Abbott's speech sought to educate the crowd to his strategy. "I don't think this is about climate change," he said in a remark sure to displease. "Climate change happens, mankind does make a contribution. It's important to have an intelligent response, not a stupid one, and an intelligent response to climate change means more trees, better soils and smarter technology. It doesn't mean a great big new tax that just for starters will drive your power bills up by $300 a year."

Here is Abbott's strategy. He will fight the new tax but he won't deny climate change. He has the chance to win on the tax and knows he will lose by running on climate change scepticism.

Abbott's problem, of course, from the parliamentary party to the people's revolt, is that his coalition of supporters contains sceptics and deniers as well as people just resentful at a new tax when cost-of-living pressures are hurting.

To an extent, he needs to cultivate all parts of this coalition, and his own positions though the years reflects such parts. But the quasi-religious nature of this battle is more a risk than a gain for Abbott. Combet nailed this flaw and nailed the rally as a deniers' picnic.

Mocking Abbott for saying it was a "snapshot of middle Australia", Combet said, "You must be kidding." He listed the placards on display: "Carbon really ain't pollution", "No carbon tax, reject junk science", "Carbon dioxide is not pollution, I love CO2", "Say no to carbon tax 4 UN/IMF global governance =agenda 21 genocide". If Labor can paint Abbott as a denier then it wins this battle.

The risk for Labor, however, is insider arrogance and moral superiority. Defending the crowd, Abbott asked: "Why shouldn't they be angry?" The Coalition's message was simple: is it extremist to rally against an unpromised carbon tax? As usual, the media mirrored perfectly the insiders-outsiders cultural divide.

The ABC's radio coverage the next day was focused overwhelmingly on criticism of Abbott from the position of patronising moralism. In a rare institutional reflection, the ABC's Chris Uhlmann said later in his blog the ABC itself was an issue for the protesters and speculated that attendees watching its work that night might have had "all their fears confirmed".

The ABC, in fact, has departed from its charter obligations to the Australian people, with its popular radio programs now operating on a sustained basis as the cultural resistance to right-wing talkback led by the Macquarie network. Such media positioning is integral to the deepening of Australia's insider-outsider political divide. The sooner this media reality is recognised and debated honestly the better.

Meanwhile, Abbott kept driving his highly personalised campaign to destroy Gillard, saying: "We have seen real Julia; we have seen fake Julia. We have seen wooden Julia; we have seen teary Julia.We have seen all the way with LBJ Julia; we have seen Bible expert Julia. We have seen George Washington 'I will never tell a lie' Julia. The fact is: the one thing we have not seen is truthful Julia." Contemptuous of Labor's campaign on the banners, Abbott said Howard had suffered far worse, being branded "Satan" and "Hitler" and "baby killer", but put up with it and never demanded an apology.

For Labor, the road ahead is filled with policy obstacles. Comments this week from expert adviser to the multi-party committee, Rod Sims, and Productivity Commission chairman Gary Banks prove the point.

Both accept the broad market-based approach adopted by Labor and rejected by the Coalition. But Sims said Australia's 5 per cent reduction target by 2020 was a big 25 per cent reduction from business as usual and that solar panels, energy efficiency and wind farms couldn't get there.

A carbon tax did not create certainty. It neither established a forward price trajectory nor allowed full purchase of overseas offsets. Going to the critical issue, Sims said the reason Australia now faced a hybrid model was because Labor and the Greens could not agree on the targets. The hybrid was a means to delay that decision.

Banks said Labor's pivotal request to the Productivity Commission to estimate the effective carbon price in other nations was "challenging". Because no other country applied economy-wide CO2 emission taxes but opted instead for "a myriad of less transparent more narrowly focused interventions", then "comparable measurement becomes highly problematic".

What's he saying? That Labor's political imperative to justify Australia's action by reference to an effective carbon price in China and America is riddled with methodological holes.