The Carbon Tax We Really Don't Want


The New Zealand Prime Minister John Key was yesterday in Canberra where he was honoured with an address to both houses of Parliament.

There were the usual formalities of gun salutes and motherhood statements about the great friendship between Australia and New Zealand. Key thanked Australia for the support and charity that has flowed across the Tasman in the wake of Christchurch’s devastating earthquakes. Plenty of banter was exchanged over the chances of New Zealand and Australia at the upcoming rugby World Cup.

But when it came to the joint Prime Ministerial press conference, the questions to Key were all about carbon.

New Zealand has a price on carbon. Australia doesn’t. So perhaps Prime Minister Key has some advice for his cousins, struggling to come to grips with the thorny issue of pricing carbon?

"What I can tell you about the emissions trading scheme in New Zealand is it’s worked," he told the press gallery yesterday. He went on to further explain that "in the time that we’ve had it in place, all of the applications for new electricity generation has been in the renewable space."

"Secondly," he continued, "we are seeing a change in behaviour when it comes to forestry. So, we’ve now had a period of aforestation, of planting more trees, as opposed to what had been a substantial period of deforestation. So those price signals are working in the marketplace."

So New Zealand’s ETS must be pretty good, right?

No, actually. New Zealand’s ETS may be politically successful and economically advantageous, but it can hardly be described as the best-practice example of an emissions trading scheme.

Why? Because there’s no cap on emissions. As this factsheet from the New Zealand’s Ministry for the Environment states, "there is no cap on the emissions that occur within New Zealand."

New Zealand may have a price on carbon, but Kiwi polluters can emit all they like, and New Zealand’s emissions can keep rising forever. Moreover, the price is very low: just $15 on the current market. That’s far below what’s required to drive meaningful decarbonisation.

As a result, New Zealand’s scheme is not really a "cap-and-trade" scheme on the European model. It’s really just a fancy way of raising revenue. That’s right: it’s a carbon tax. New Zealand’s scheme will almost certainly fail to reduce the country’s emissions. Indeed, it’s hard to see how it could succeed. There is no mechanism to limit carbon emissions in the first place.

No wonder the scheme has been called by one economist "the world’s worst emissions trading scheme." 

But you could search high and low in the political coverage here in Australia to discover that crucial point. Instead, most of the political media seems to have bought the line that because New Zealand has a price on carbon at all, it is somehow a model of how to achieve a political solution to greenhouse gas emissions reduction.

The Herald Sun’s Michael Harvey even reported it by claiming the success of New Zealand’s low price and non-existent cap somehow translated into "pressure" on the Greens "to accept a lower carbon price". Pressure from whom? Harvey doesn’t say.

The West Australian reported the press conference with the headline "NZ leader urges low start to carbon cost". Really? Nowhere in the transcript does Prime Minister Key "urge" Australia to do any such thing.

In fact, Key answered the West Australian’s political reporter Andrew Probyn by saying "Let me start by saying it’s not for me to determine what’s the right approach for Australia, that’s a matter for Australian politicians," before going on to explain that New Zealand’s price on carbon was costing consumers there about $150 a year, and the price would move up to $25 a tonne in 2013.

But that’s federal politics in 2011, where media outlets spin the news every bit as aggressively as the politicians they report on.

If we need another example, look no further than Opposition Leader Tony Abbott’s "plebiscite" on a carbon tax. The idea was ridiculed by the Government, the Greens and even Steve Fielding as a stunt, which is exactly right. And yet the political media duly reported it as though it were a genuine proposal, rather than what it obviously was — a clever tactic to grab the media’s attention.

In fact, while Abbott wants to hold a national vote on carbon taxes, he has also said he won’t abide by the result if the answer is "yes." At least Michelle Grattan, who has seen a thing or two in her time, called it for what it was: "Abbott’s position, however, is contradictory and illogical", she wrote, surely the leading candidate for understatement of the year.

As usual with Tony Abbott’s media opportunities, the tactic worked and the absurd substance of his proposal was ignored. Much of the reporting today has been about the plebiscite, rather than other, far more serious and alarming aspects of the carbon debate — like the facts behind New Zealand’s ETS, or the recent death threats to climate scientists and campaigners that has led the Australian National University to upgrade its security.

It’s difficult to underestimate just how poorly Australian citiziens have been served by the media reporting of climate change policy. The scientific reality has routinely been obfuscated and elided. The lies of big polluters are consistently accepted as "modelling". And the colour and controversy are universally considered to be newsworthy, while the minor issues of policy mechanisms and structures are ignored. The time has long gone when we could expect the Australian political media to report on the substance of policies, rather that tactics of politics. Not only do they not want to, they don’t know how.


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Ben Eltham is New Matilda's National Affairs Correspondent.