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Thursday, June 2, 2011

Right-Populist monopoly media attempts to ‘deprive carbon debate of oxygen'


above: Cate Blanchett in the recent advertisement backing action on climate change

In this article Tristan Ewins reflects upon the Australian carbon tax debate as transpired recently on the ABC television program 'QandA'.  (Questions and Answers)  He considers issues such as compensation, welfare reform, and 'trivialisation' in Australian politics. The treatment of Cate Blanchett for participating in a related commercial is a case in point.

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Tristan Ewins, 2nd June 2011

In a recent episode of  ‘QandA” (Questions and Answers) the debate over the Australian Labor government’s proposed carbon tax continued in the same manner as it has for quite some time now.  In particular, the representative on QANDA for the conservative parties,  Liberal Senator George Brandis, repeated the usual line citing cost-of-living pressures and job destruction as the essential reasons the tax ought be rejected. While Labor MP Kate Lundy repeated again and again that low and middle income groups would be fully compensated (the point of the tax being not to raise revenue - but to create ‘market signals’ and so change patterns of consumption and investment)   Brandis calculatedly avoided engaging in his response – as to give any recognition here would ‘give the debate oxygen’ and reveal the ‘convenient fictions’ propagated by the conservative parties in attempting to build up pressure for an early election.

Brandis ignored the issue of what would have happened to the Australian economy without Labor’s stimulus; and the extent to which the most recent budget deficit was exacerbated by natural disasters beyond the control of any political party.  He also continued with the same ‘line’ that ‘Labor is addicted to debt’, ‘cannot handle money’ etc: not because it is true, but rather because Liberal focus groups must be reporting that these kind of truisms ‘resonate’ with the public. But if this is so it is only because these kind of ideas have been reinforced again and again over decades by the right-populist monopoly media.  The same focus groups must be telling Abbott that opportunist ‘lowest common denominator’ politics – especially in the case of vilification of refugees - are eroding Labor’s support base; ‘backing Labor into a corner’.  The human suffering of refugees is little consequence for many on the Right: ‘Anything goes’ for Abbott, and for ‘fear campaign shock troops’ like Scott Morrison in pursuit of personal ambition.

Debate on the proposed carbon tax had intensified as a consequence of a recent advertisement in favour of action on climate change – sponsored by progressive lobby association ‘GetUp!’, the Australian Conservation Foundation and the Australian Council of Trade Unions (ACTU).  Australian actress Cate Blanchett in particular had ‘come under fire’ from conservative forces, including most of the right-populist monopoly media, for taking a stand on this issue.  Opposition leader Tony Abbott, George Brandis and others had accused her of being ‘out of touch’ with struggling Australian families trying to make ends meet as a consequence of her personal wealth.  And yet the conservatives and their media allies want to attack truly vulnerable pensioners, while pleading for upper-middle class welfare for those on $80,000/year and more…

 If anything the focus on Cate Blanchett as a personality detracted from the real debate over climate change.  This was no accident – but was a tactic of distraction intended to avoid engaging on the issues; to prevent the message of this campaign from ‘getting through.’  This ‘trivialisation’ of politics in Australia is a regular phenomena – and perhaps a deliberate one – having the effect of weakening our democracy.  Australian social commentator, Guy Rundle – also a participant in the ‘QandA’ episode - observed tellingly that the conservative response was ‘a beat-up’.

 Perhaps the greatest deception of all by the conservatives, here, is the underlying assumption that a carbon tax would see cost-of-living pressures passed on to the public: while an Emissions Trading Scheme or Abbott’s so-called ‘direct action’ would not. This is crucial as an ETS has in the past been supported by past Liberal Party leaders John Howard and Malcolm Turnbull. 

 In reality a market-driven ETS would see the price paid for carbon credits being passed on to the public in about the same dimensions as with a carbon tax. And Malcolm Turnbull has estimated the cost of Abbott’s ‘direct action’ approach could approach the vicinity of $18 billion a year were the government “buying offsets or otherwise directly paying for abatement”, and aiming for an 80 per cent reduction of emissions by 2050, as urged by scientists.  A much more modest target of a 5% overall cut in emissions by 2020 would cost $2.1 billion/year in today’s terms.

 These costs would of course be passed on to Australian families also – via the tax system. Only it would be ‘hidden’ in a wide range of other different taxes – rather than an overt and obvious carbon tax.

It should be noted, of course, that Ross Garnaut also argued in ‘The Age’ on 1st June that a carbon tax at $26/tonne would rase $11.5 billion in the first year. But the overwhelmingly vast majority of this money would be returned to low and middle income families. Again – the point is not to raise revenue, but to change consumer and investor behaviour.  While the ultimate rate is probably more likely to be $20/tonne, once compensation is provided low and middle income groups will actually be better off.  Although over the longer term any kind of structural adjustment to deal with climate change will come at a cost (even if only as a ‘once off’) as it will necessitate investment in new technologies and infrastructure.  (including under Abbott’s ‘direct action’)

The point is that any kind of action on climate change will cost elements of the public directly or indirectly. By raising the spectre of ‘cost of living pressures’ while supporting ‘direct action’ Abbott is obfuscating this essential truth, and deceiving voters.

That said, there are some kinds of ‘direct action’ that make sense; and others that don’t.  At QandA Guy Rundle pointed out that Abbott’s program was one of ‘socialising’ the costs and losses of business – to be paid for by the public – while ‘privatising the profits’.  An example is Abbott’s preference to pay businesses directly for changed practices on climate change. This kind of ‘corporate welfare’ has become standard fare in recent decades.  And it also begs the question: where has the rationale for privatisation gone – supported by both Labor and the Liberals - where there is effectively no ‘risk'? (ie: when things go wrong ‘government picks up the pieces’)  The same could be said of Public Private Partnerships – also supported by ‘both sides’ of politics.

 But the right kind of direct investment in renewable energy could make a very significant difference, combined with other incentives. In particular new public initiatives in the power industry could be combined with a German-style program mandating compulsory purchase of energy from renewable sources fed into the national energy grid. In 2009 Germany enjoyed a share of over 16% of the power supply provided from renewable sources. 

 But in Australia the figure is only slightly over 5 per cent. 

Writing for Green Left Weekly, David Nichols also explained in 2008 how the costs of power privatisation in Australia have been passed on to the public.  He explains that “private capital has to earn a higher rate of return than public investment” and this means large enterprises with significant purchasing power can bargain for a better deal then, say, pensioners and others on low incomes.   He explains also how according to privatisation consultant KPMG, “the rate of return on publicly owned electricity generation capacity [was] 7.1% in Queensland and 10.6% in NSW, while corporate investors wouldn´t touch electricity generation until the rate was 15%.”  Finally Nichols contended  “private debt is more costly than public debt.”  The consequence of this is that public ownership could deliver a 30 per cent cut in costs as flowing from lower finance costs alone.”

As Guy Rundle effectively contested at QandA – privatisation is the ‘elephant in the room’ that the conservatives will not acknowledge when it comes to cost of living pressures.  But for that matter – neither will Labor – which had long since assimilated the privatisation ideology and effectively abandoned the mixed economy.

Perhaps now there is a need for introspective reflection within Labor on a cross factional basis – to reconsider the mixed economy, and concede  past mistakes. And even within the Liberal Party there could well be recognition that the mixed economy was undisputed under Menzies.

The final issue we will consider here will be the nature of carbon tax compensation. 

In ‘The Age’ on 1st June 2011 Ross Garnaut was quoted as arguing for 55% of carbon tax revenue to be passed on to tax-payers, rising to 64 per cent by 2021-22, with industry receiving 35 per cent, moving down to 20 per cent by 2021. (presumbly as industry adapted and modernised)  But ‘The Age’ also reported him as arguing that there should be “less compensation for pensioners and welfare recipients…because of [the] 2009 rise in benefits.” Effectively this would mean ‘no overcompensation for pensioners’.

 There are  a few issues here.

 Firstly overcompensation is essential for Labor in ‘selling’ the carbon tax.  This is as much the case for pensioners as for anyone else.  Pensioners vote!

 It is also key for social justice imperatives. Pretty much all pensioners struggle, and many disability pensioners and carers in particular don’t have many options in improving their financial circumstances.

Writing in February 2011, Peter Martin noted that :

Working households faced extra costs of 4.5 per cent in the year to December, age pensioners 3.1 per cent and welfare recipients 4.5 per cent. The CPI grew 2.7 per cent.”

He also noted how the Bureau of Statistics had argued:
“Age pensioners spend a relatively high proportion of their income on utility bills and fruit and vegetables, both of which shot up in price in the year to December.But while aged pensioners had their payments adapting to  “either the CPI [or] the pensioner living-cost index or male total average earnings (whichever is most favourable),  Newstart Allowance is only adjusted to only “what is…the lowest of these.” 

This means that even in the face of onerous active labour market policies and ‘work for the dole’ programs, Newstart has been eroding greatly relative to other pensions for a long time. 

Carbon tax overcompensation is a great opportunity to finally provide for the basic cost-of-living pressures faced by all pensioners, and especially by Newstart recipients.  Most Newstart recipients ought receive overcompensation of $50/week. And those working two days a week under the government’s new ‘work for the dole’ provisions could receive overcompensation of at least $100/week.  (for progressives this would be ‘making the most of a bad situation’)

Other full-pensioners (disability, carers, aged pensioners), whose financial situation is not necessarily so dire as that of the unemployed, could receive overcompensation starting at $25/week. Single Parents also deserve a significant extension of benefits.

And all such increases should be fully indexed on top of existing formulae.

Although improvement for Disability and Carers pensions – and associated services- could also be achieved via a National Disability Insurance Scheme; which would have Labor seen as ‘moving onto the policy front foot’. Perhaps providing such reform for Disability Pensioners and Carers separately would enable proportionately greater carbon tax-related compensation for other low to middle income groups, making the carbon tax ‘easier to sell’. But on social justice grounds Gillard Labor would still have to provide for Disability pensioners and Carers separately via a National Disability Insurance Scheme (NDIS) well before the end of the current term. Labor needs a positive message to re-engage with voters, and a NDIS could be crucial here.

The Greens and Independents especially need to make the most of their leverage over Labor to promote this reasonable and achieveable social justice agenda.

Here’s hoping that conservative forces fail in their strategy of attempting to ‘deprive the climate and carbon tax debate of oxygen’; manipulating voters through distraction and focus on trivalities. The issues are just too important to be engaging in these kind of cynical games.

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