Everyone expected Clive Palmer to pose problems for Tony Abbott and his legislative agenda. But the intensity of the headache is only now becoming clear. Palmer’s decision over the weekend to withdraw his support for the Coalition’s risible Direct Action climate policy makes clear what the mining mogul has been hinting at for some months now.
“We'll be voting against Direct Action, whatever form it's in,” he said yesterday. “If that's what the Government wants, they can call a double dissolution.”
“We can't see any reason to vote for direct action. We think it's hopeless,” Palmer continued. “It's goodbye Direct Action. It's gone.”
Palmer wants the government to spend the money it has budgeted to pay big polluters to reduce their emissions on pensioners instead.
“Supporting aged pensions is more important than supporting token campaigns like Direct Action,” Palmer tweeted.
Palmer’s opposition could be the opening gambit in a bargaining process to allow the Palmer United Party to set terms for the passage of Direct Action in the Senate. Or it could be a genuine indication of the party’s opposition to the measures. Either way, Tony Abbott and Greg Hunt have a problem.
Without Direct Action, if the government goes ahead and abolishes the carbon tax, the Coalition will have no climate policy in place whatsoever.
While this may not unduly trouble the climate sceptics on the Coalition backbench, it also removes the chief utility of Direct Action, which is political, rather than environmental. Direct Action has always been used by the Coalition as a handy tool to deflect unwelcome scrutiny of its profoundly anti-environment attitudes. Without it, the Government will find it increasingly difficult to defend itself against charges of destroying the planet.
The Coalition’s anti-green ideology plays well to a certain subset of the electorate, chiefly older men in the suburbs. But in the inner cities and amongst younger voters and women, the environment remains an important political issue. The Coalition’s slash and burn approach to environmental regulation and green policy initiatives risks serious problems down the track.
Green politics are one problem. Palmer himself is another. The outspoken Queenslander is a skilled political opponent. His rhetoric on Direct Action is a clever wedge tactic to use the Coalition’s own ambivalence on climate policy to attack it from the right. By assailing the policy’s credibility, he is simply echoing the Coalition’s own rhetoric on climate, which has repeatedly called the science of human-caused global warming into question, and which has long argued that Australia’s small contribution to reducing emissions will have no impact on global temperatures.
Unfortunately for Greg Hunt, Palmer is right when he describes Direct Action as a token policy. No credible economist or climate policy expert believes the policy can work. Every independent analysis has concluded that Direct Action will not achieve a 5 per cent emissions reduction without a massive increase in government spending, well beyond the $1.55 billion the government has so far budgeted over the forward estimates.
Even Greg Hunt’s own hand-picked economist, Danny Price, chosen by Hunt to advise the government on setting up Direct Action, has told journalists that the 5-year contracts for emissions reduction envisaged by Hunt’s recent Green Paper on climate policy are simply too short to be workable.
The Green Paper was slammed by most experts after its release in December. Curtin University’s Jemma Green pointed out that it opens a huge loophole, that means “money will be given to carbon-reduction projects that would have gone ahead anyway.”
Environmental lawyers at Norton Rose Fulbright argued that the “safeguard” mechanisms to prevent companies from exceeding their emissions baselines are “substantially undeveloped”. Climate finance analysts Bloomberg New Energy Finance were even blunter. They called the policy “practically unfinanceable.”
“It is very hard to see how projects will be viable under this mechanism, particularly ones that will be big enough to provide the amount of abatement the government requires,” Bloomberg New Energy Finance wrote. “All of the bankers we have surveyed have said projects under the scheme will be practically unfinanceable.”
It takes a special type of chutzpah to plough ahead with a manifestly flawed policy in the face of informed criticism. But Environment Minister Greg Hunt is a specialist in arguing dubious cases. He was on the ABC this morning warning of a constitutional crisis if the Palmer United Party went ahead and blocked Direct Action. Because it will be part of Joe Hockey’s budget in May, Hunt claimed that blocking it is tantamount to blocking supply, which hasn't happened since the Whitlam government.
“The funds will be part of the budget papers, and I doubt that the budget will be blocked unless we're going to be forced into a constitutional issue,” Hunt told ABC Radio today.
Hunt is most likely correct. It does seem unlikely that Clive Palmer would use his numbers to block supply. But Palmer United senators can still frustrate Direct Action by other means. For instance, they can block some of the legislation linked to the policy: the government needs to amend the Carbon Farming Initiative, for instance, in order to legislate for a key mechanism of the policy involving soil carbon.
The minor party senators can also refuse to vote for other Coalition policies, potentially taking hostages of high profile government policies such as Tony Abbott’s paid parental leave scheme. Finally, Palmer could refuse to repeal the carbon tax itself, which would leave Hunt’s entire strategy in ruins.
Complex, risky policies that many experts doubt can work don’t necessarily hurt a government at the ballot box. But they do have a nasty habit of coming back to haunt their political creators, especially in election years. As the Rudd and Gillard governments discovered with their own carbon policies, even the appearance of a solid mandate can rapidly dissolve when faced with the hostility of vested interests, and when highlighted by an effective opposition.
The Abbott government has staked plenty of political credibility on Direct Action. That’s quite puzzling, because nothing about this government suggests it is at all serious about dealing with dangerous climate change.
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