Palmer’s big hoax creates a climate of uncertainty

Tony Abbott has been handed a victory on the Carbon Tax.

BENEATH the calculated and distracting farce that he created this week, Clive Palmer did what was expected of him — announced he would vote to abolish Australia’s high-profile emissions trading scheme, the biggest legislative reform of the Labor era.

Palmer had a weak hand that he needed to conceal. As a businessman being punished by a hefty carbon tax bill and as a politician elected on a platform to abolish the carbon tax, Palmer had limited options. He is giving Tony Abbott the victory, above all, that Abbott had to have.

Unless he changes his mind and abandons the position he took this week, Palmer will sweep Labor’s ETS from the statute books in one of the great historical reversals of the past half century, the most recent parallel being Labor’s abolition of John Howard’s Work Choices scheme.

Once abolished, resurrection of an emissions trading scheme for Australia will be a long, hard, bitter road.

Palmer’s decision significantly strengthens the Prime Minister’s hand against Labor at the next election.

It is one thing for Labor to argue for the status quo. It is a much harder call for Labor to campaign at the 2016 election for a mandate to resurrect a carbon pricing scheme, a position that contradicts its cost-of-living campaign and misjudges the extent to which its ineptitude in office has turned opinion against carbon pricing schemes.

This is exactly the sort of campaign that Abbott wants. Abolition of the ETS will confront Labor with a strategic choice: does it continue to preference an ETS policy as a defining issue with the potential to damage Labor at a third successive election following the experiences of 2010 and 2013?

Palmer’s proposal to move an amendment to create a new ETS with a carbon price of zero coming into effect at some unknown time when Australia’s main trading partners establish such a scheme is a grand hoax.

The purpose was to fool people into thinking he is an enthusiast for action. A surprising number of people were keen to be fooled.

Provided this remains an unconditional amendment — as Palmer says — then it has no leverage. Abbott will not support it. He has no reason to support it. Indeed, it would be sign of serious weakness.

The hoax ETS amendment, therefore, faces certain defeat. But Palmer will be happy that his purpose is achieved. Much of the Thursday morning coverage took him seriously and even elevated him to quasi-heroic status.

This is about self-interest, not the national interest. Palmer is freed from a carbon tax bill likely to be about $6 million annually. He tells the anti-carbon tax brigade that he is keeping his word. He teams up with Al Gore to generate the optics of a climate change activist. He tells the ABC’s Tony Jones that he has changed his mind on climate change because he is concerned “about the wellbeing of the Australian people”.

When the celebrity and atmospherics are swept away, what is Palmer’s core position? It is opposition to the climate change policies of both major parties. He is killing the Labor-Greens ETS, perhaps the most comprehensive ETS in the world, contemptuously saying “we’ll just chuck it out”. He wants to strangle Abbott’s “direct action” policy before it gets any life, again treating Abbott’s policy with contempt. Yet his own ETS proposal is a fraud.

On the test of irresponsibility, this rates pretty high. Palmer’s net position makes it harder for Australia to achieve its 2020 emissions reduction targets. He is deliberately leaving the nation without any principal mechanism to tackle climate change while saying he acts in the best interests of the nation.

Does this sound like a responsible use of the Senate’s balance of power?

Yet Palmer, to a remarkable extent, gets away with it. Indeed, he is being hailed as some form of genius outfoxing Abbott, Labor and the Greens together. For how long will Palmer’s senators allow themselves to be manipulated into these hypocritical stands? Reports that they actually stood up to Palmer are heartening if true.

Former ALP powerbroker Graham Richardson said in this paper yesterday that Palmer might be the best media manipulator he had seen in 40 years. Sadly, that tells us more about the condition of the media than it does about Palmer.

Beyond this, Palmer has given the climate change lobby some genuine second-tier gains. The Abbott government is likely to surrender the fight to abolish two key institutions created by Julia Gillard’s Labor-Greens pact — the Clean Energy Finance Corporation, with its $10 billion authority to underwrite renewable energy projects, and the Climate Change Authority charged with advising on future emissions targets.

Abbott’s pledge to abolish these institutions is almost certainly lost now Palmer supports them. Abbott will happily trade away these losses to get the ETS legislation repealed. But they are still political losses. They leave Labor and the Greens with part of their climate change framework in place, evidence of Abbott’s failure to implement his full mandate.

This is a victory for the renewable energy lobby and testifies to Palmer’s effort to broaden his appeal to climate change activists.

The Gillard law creating the CEFC is remarkable, warranting an entire study in governance: it seems the Abbott government has limited power to prevent the CEFC continuing to fund energy projects all the way to $10bn. Despite this, the government is not entirely without influence. It believes it can shape the investment direction of the corporation. The current plan is: no more funds for wind power, more focus on energy efficiency. The government hopes it can strike an agreement with the CEFC along these lines. The bigger result, however, is that the Palmer-Gore love-in has probably saved the renewable energy target from reform this term. This was slated for substantial and justified change by the Abbott government.

The RET has been the main driver of funding into renewables, hiking power prices, underpinning huge industry subsidies and perpetuating high-cost emission reductions. The plan of the Abbott government was not to abolish the RET but scale back its scope to a genuine 20 per cent target from current projections showing that renewables are likely to overshoot and constitute about 26 per cent of the energy source mix by 2020.

Palmer’s support for the RET reveals his electoral tactic of trying to win votes from both the Right and Left on climate change policy. It suggests the audacious effort this week by the green lobby to use the deathly charm of Gore to shift Palmer’s position has reaped some dividends.

The Palmer reversals have confounded everybody, even perhaps himself. The history of the past six years is that trying to win both the Right and Left on climate change doesn’t work. Palmer will never beat Labor or the Greens as a renewable energy champion — but he can now be depicted as an agent of higher power prices, unjustified taxpayer subsidies and opponent of efforts to ease cost pressures on households. The Abbott government has achieved its aim of separating the carbon tax abolition from debate about its direct action scheme.

Once the ETS is abolished Abbott will be in a stronger position to argue the merit of direct action. Funding of the $2.5bn Emissions Reduction Fund, the heart of his policy, has been approved as part of the budget.

If the direct action proposal is defeated in the Senate — as seems likely — Abbott and Environment Minister Greg Hunt, will adopt plan B, one of several alternative funding mechanisms under review. They have no option but to get something in place. The entire intent of their opponents is not mainly to stop direct action but to prove to the nation that Abbott has no working policy.

The deeper historical lesson from this week is the failure of progressive politics over the past six years to secure and solidify an ETS. Labor and the Greens had a golden opportunity to achieve this — and they blew it. The almost certain repeal of the Gillard government’s ETS will become an abject humiliation for both Labor and the Greens.

When Gillard finally managed to legislate an ETS, her hope was that a future Labor-Greens Senate majority would preserve it from Abbott’s attack. That hope was undone at the 2013 election. Much of the future debate will focus on international action. Palmer’s effort to draw a formal link between an Australian ETS and comparable action by our trading partners is the exact position adopted by Nick Minchin when he led the assault on the Rudd scheme in 2009.

The reality is that the US Senate will not authorise any “cap and trade” scheme for a decade. That may be a conservative estimate. The climate change lobby talks up the extent of global action. But what counts are national ETS schemes. Judged by this criterion, Abbott remains in a powerful position to argue that the global momentum does not yet exist and will not exist for some years to justify the resurrection of any Australian ETS.