Give Us Something To Talk About


If you were hoping for some policy debate in federal politics last week, you were wasting your time. Since the Multi-Party Committee on Climate Change (MPCCC) announced (pdf) its Carbon Price Framework (CPF), the debate in Parliament has gone around in circles, finding its literal nadir in the rotations performed by Senator Mary Jo Fisher. 

Where once upon a time oppositions deconstructed government proposals in detail, building up sustained and intense critical pressure that occasionally culminated in a motion to censure the prime minister (the passing of which would traditionally cause a government to resign), the current mob have virtually ignored the CPF to focus on whether Julia Gillard broke her pre-election promise to put a price on carbon in some form other than a tax. Indeed, they rolled out the censure motions with such regularity last week that the ABC started running a sweepstakes to guess when the suspension of standing orders would next be called for.

One problem for the Opposition is that there isn’t very much in the CPF to criticise. The document is five pages long, and lays out a rough timeframe of when the fixed-price period, flexible-price period, and discussions about the latter could occur; what sectors could be covered; and that we couldn’t use international permits during the fixed-price period. That’s pretty much it — aside from some pleasant language about "economic transformation", "business certainty", and "fairness". As Ben Eltham pointed out last week, this is a much cannier strategy than what the ALP did with the CPRS (or even the RSPT, which, even though it had the nominal benefit of being a well-constructed piece of policy, still crashed).

With little to criticise and not much to offer as an alternative, the Opposition resorted to hypothetical scenarios about possible food, petrol, and electricity price rises. They were forced to make assumptions about details that haven’t yet been decided, such as what the price of carbon permits will be, the extent to which the sectors will be covered, and what sort of compensation will be offered. Without these crucial details, however, you could assume pretty much anything about the carbon tax — which the Opposition (and Government in response) duly did, as did much of the media and a plethora of special interest groups (with BlueScope Steel delivering a particularly flagrant example).

The thing is, we’ve been here before: we had the same special interest commentary and pseudo-analysis during the debate about the CPRS, but also plenty of more formal modelling and analysis. Some of these modelling and analysis has been updated since then — Ross Garnaut, for example, is currently half-way through releasing the updates to his review — and newer studies have been added to the body of knowledge we have. The MPCCC carbon price framework has not changed the validity of any of these studies and so, if you paid attention the first time around, there is very little in the current iteration of the debate worth paying attention to from a policy perspective — as opposed to a political perspective.

More interesting are the frameworks established by these studies, and how the CPF fits into them. These frameworks are the contributions of experts in science, economics, sociology, law, philosophy; each discipline has its own structure, theories, body of knowledge, and a field over which it claims expertise. Sometimes these fields overlap, but more often they are complementary. When communicated well, they enrich public knowledge and enable us to better assess the arguments being put to us.

The strength of my field, economics, in the climate change debate is in evaluating the suitability of different policy instruments to achieve a stated set of (economic) objectives — for example, under which scenarios taxes are better than quantity controls; how firms and consumers will be affected by particular cost increases; weighing up the economic costs and benefits — through the use of models of human behaviour on a large scale, including the examination of secondary, possibly unintended, effects. Stating that economics is best for economic objectives may seem a little tautological, but, well, everyone is guilty of thinking their field can do it all at one point or another.

That we don’t have a consistent stated set of objectives or a climate policy philosophy from any party bar the Greens makes the task of the economist more difficult, of course. But, at the moment, anthropogenic climate change is widely accepted by all sides as a problem and the debate concerns the mechanism of the solution, with the CPF bearing more than a passing resemblance to proposals put forward by the Garnaut Review in 2008.

Any final carbon pricing framework could do much worse than base itself on the Review; it addresses prices, compensation, institutional arrangements, transitions, emissions-intensive trade-exposed industries, enforcement mechanisms, innovation policy, sectoral peculiarities, broad uncertainties, and eventual global agreements, all in the Australian context. A sensible economic analysis of any future climate policy could compare it to the Review’s recommendations (or those of the updated version of the Review, due to be released in May), identify the differences, and question whether they are decisions made within the economic framework or a political framework. Chances are, many of the compensation arrangements we’ll see will not be grounded in economic reasoning — if they are sold as such.

I have colleagues who believe that politicians’ decision-making processes are governed almost exclusively by the desire to win the next election — and sometimes it is difficult to believe otherwise. With the ALP struggling to clearly outline its core ideals and the Opposition functioning as a party of, well, opposition, their medium- and long-term goals for this country are opaque.

But if we step away from the content-free zone of Question Time and offer our politicians frameworks and ideas — be they a more powerful social-justice imperative or the need for a mix (pdf) of instruments in climate policy — perhaps they’ll take some of them up. Then we’d at least have something worth talking about.


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