Tag Archives: Carbon Price

Conversations Around The Traps

Who Suffers From Zero Interest Rate Policy?

Zero interest Rate Policy or ZIRP as it is known in some circles has been going on for two decades in Japan. It has also been going on for 7 years in the USA and Europe. The reasons have ostensibly been from keeping asset prices to stopping banks from toppling over due to lack of liquidity, through to keeping people employed. The extremely accommodating policy has been running parallel with the Quantitative Easing program in the US and Europe which have somehow helped to prop up asset prices in bubble condition around the globe, but also not spurred growth as promised.

The way the traditional/classical economy was supposed to work was that lower interests would fund capital investment for the next phase of economic growth. Instead the low interest rates have allowed speculators to place bets at lower cost, while the piled up debt has eaten into future growth in a big way. The point of all this is to say, the things the easy money has gone towards have not been exactly productive or helpful, while there are people who are genuinely suffering because interest rates have been kept so low for so long.

For instance retirees in America and Europe with some amount of money saved up during their working lives would be finding that they won’t be living off the interest of the money they saved, but be forced to eat into their savings just to survive. This sort of thing can be seen as a breaking of the social contract. There would be a whole generation of kids growing up without learning about the virtues of saving because  they’ve never seen interest payments on their bank accounts. I don’t think this is a good thing because we’re raising people who haven’t seen the benefits of saving and compound interest.

Worse still, with something like QE going on at the same time, Zero Interest rate translates into a situation where you cannot sit on cash because inflation is eating away at that value; and you can’t stay in bonds because whole countries have been threatening to default for the last 3 years. That leaves equities or foreign currency trades, and they’re no guarantee of a return.

In fact, it’s worth asking at this point in time why people who save should suffer at the hands of the Central Bank while it essentially rewards people who go into debt to buy into positions. Why is it that people should not sit on their earnings as savings? If deflation is such a threat, then why is it so bad if the man on the street is able to get more for less?

Frankly I think the world is getting ripped off.

Politicians Lie, But Must They Be Brazen About It?

I was in a conversation earlier tonight with walk-off HBP, and the issue came up about how the Murdoch press essentially insist on telling non-truths and heavily-spun tag lines, all of which amount to nothing but lies. It’s like an Orwellian thing where untruths are shouted out loud until everybody accepts it as the dominant discourse and acquiesces.

But then Tony Abbott gets up and celebrates the repealing of the Carbon Price, characterising it s this bug bear in the economy that was raising people’s costs of living while not doing anything at all for the environment, and that his government is a “conservationist” government. All of these things are wrong. The Carbon Price was hardly a blip in the rising retail power prices, it was contributing to the reduction of our emissions, and there is no way you can call a government that insists on dismantling the Carbon Price system a conservationist government in any dialect or accent of English.

It’s an astounding thing that we have a Prime Minister that stands there and spouts untruths as if they were truth, pronouncing white is black and black is white. I can accept that politicians will work the facts of the matter in their favour through spin, and that they sometimes get it wrong, making them liars after the fact. I just can’t recall a single Prime Minister of this land lying knowingly with a straight face and expecting the people to buy it. This isn’t “no child will live in poverty” things where a politician simply gets the scope of the problem wrong. These things happen and I don’t judge too harshly. Going right back to Malcolm Fraser and looking through all the NSW premiers, I don’t think I’ve seen a single head of government lie with a straight face as Tony Abbott does.

This is a person who knows the science but chooses to ignore it; understands the facts and chooses to deny them; and then acts on the worst possible advice for ideological reasons and then says he is something that that he has never ever been; and that the ignoring and denying of science and facts and going against them for ideological reasons represents something that is positive for this country when it clearly is not. For Abbott to characterise his government as ‘conservationist’, he may as well as be saying his is a ballerina government, or an artistic government, or a caring compassionate government, or a forward-looking government. These things are equally Un-true of his government as the expedient, idle, lunatic, conceited claim that his is a conservationist government, especially having repealed the Carbon Price legislation, and telling us this at the press conference to announce the repeal.

I’ve just never seen anything like it. And my mind boggles, my brain explodes… It’s like a never ending torture of our minds.

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Torpedo Clive

Sinking Abbott’s Boats

If yesterday was eventful and humiliating for the Coalition government, then today must have been a gourmet meal built around a shit sandwich from Clive Palmer. Essentially, the Palmer United Party thwarted the government’s third attempt to repeal the Carbon Tax.

The Pulse during the day made for interesting reading as things went awry for the Abbott Government. Reading the entires it seems really clear that the Coalition promised to word it in a particular way, and then in classic sophist-fashion, welshed on the deal by changing the wording which got the ire of Clive Palmer.

Late in the day Pleiades gave me a heads up about how Clive Palmer was on 702 later in the afternoon, talking to Richard Glover. The interesting thing is that Palmer says he was double-crossed by the Coalition in the wording and so he simply wouldn’t support the Carbon Tax repeal bill that was so important to the Coalition. He then went onto say he won’t support the co-payment to doctors, and h would rather cut the 45billion off the NBN, 20billion off the Paid Parental Leave being proposed, and 37billion dollars ear-marked for Japanese submarines, than have the Co-Payment.

Here’s an interesting article on the day’s proceedings from Tony Wright. Tony Abbott has a huge problem on his hands and he can’t control it. He can now call a double dissolution but his polls are so dire he dare not. What threadbare preposterous notions the Coalition might have had as policy is being torn asunder. It’s well-deserved, but it’s going to cripple his government. He’s not going to be able to game Clive Palmer out of the game quickly.

Pleiades had an interesting observation. He thinks Clive Palmer probably sees the end of coal fire and fossil fuels around the globe and wants to get into renewables; but to do so, he wants there to be a market for him to function within and that means retaining the outlines for an ETS. From that angle you can begin to understand the how and why of his road to Damascus conversion on an ETS and not removing the emissions target. In any case, things are only going to get more interesting for the Abbott Government. The inability of the Coalition to negotiate anything is starting to look like a major stumbling block in them getting their policies through.

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Give The New Guys A Chance

Surprise! Not Your Villain du Jour

Ricky Muir – he of the Roo-Poo flinging Youtube videos and much media ridicule – entered Parliament House as a new Senator this week. By 10:30am this morning he had made news, first by not letting the Abbott Government have its way by steam-rolling the Carbon tax repeal. In a surprise move, Muir broke ranks with the Palmer United to defeat the government’s motion to force a vote on the the Carbon Price repeal. After lunch, he sided with Palmer United and voted to preserve ARENA, which, surprised most onlookers.

Maybe Mr. Muir was going to surprise everybody any way. The way he had been portrayed by the media made him look like a dimwit yokel, but I felt at the time it was a beat up. By hook or crook, we in the electorate seem to have managed to send a totally ordinary citizen into the Senate. If our chief complaint is professionalised politicians, then surely we have to leave some ground open for rank outsiders to come in and have a look for themselves. While Mr. Muir didn’t look promising going in, partly because of the immense vagueness of his party’s platform, this week so far shows that he may yet turn out to be a reasonable, centrist man to have in the senate to balance views. So far his two major contributions don’t seem to be those of an ideological extremist or a radicalised desperado.

The other surprising tidbit that emerged during the week was how Glenn Lazarus – aka The Brick with Eyes – was instrumental in bringing Clive Palmer to the middle of the debate so that the emissions target would be kept. This was remarkable in as much as it showed the Palmer United Party is not Clive Palmer’s puppet show, and that in turn he was somebody who was going to be persuaded by his new senators.

Again, it’s hard to imagine just what would bring a retired Rugby League great into politics in this way – especially after Mal Meninga made a famously bad attempt at it – but it is clearly evident we can’t be dismissing him on the basis of his previous career or his current party affiliation. The fact of the matter is we don’t know much about the policy position of the Palmer United Party simply because the party is so new and everything seems to be made up on the fly. They can conjure Al Gore from a hat, so who are we to judge what they can accomplish? The PUP Senators represent an open end, rather than a closed, conservative alternative.

The silver lining on the generally angry black storm cloud that is the Abbott Government is that the Senate is so fractured that it’s just going to have to fight out every policy morsel on its merits. This means that it can’t bundle together things hoping for a horse trade. This Senate is fractious enough already that if anything it’s going to be more parsing and demanding than previous Senates. This means that while the Carbon Pricing will likely be repealed, it is going to get replaced with an ETS of some description – even if it is priced to zero until certain conditions are met. It’s quite the circus, but the point is that the Abbott government will find out just how little an endorsement it got from the electorate for it to be able to claim any kind of mandate. Our hopes actually rest with Ricky Muir and Glenn Lazarus being centrist, reasonable people. It’s a far cry from the Democrats but they may well turn out to be more credible and laudable in the history books than Meg Lees and Natasha Stott-Despoja.

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Focus Group Fun

VIP = Vested Interest Policy

I went to that focus group meeting last night. It wasn’t what I thought it was going to be at all. It was actually a focus group on an ad campaign they’re planning to present some new policy to the public. What was interesting about it was how much they wanted to talk about the details of presentation when in fact everybody in the room was flinching at the policy itself. Yet, that in of itself and even the policy seemed to be small potatoes next to the larger problem.

The crux of the biscuit was trying to sell a policy where Centrelink clients will get automatic payments to offset the impact of the rising bills from the Carbon Tax. You could hear the gasps of disapproval from people in the room, for in most part, they disagreed with the Carbon Tax (which in of itself was, disgusting to see) and the thought that there would be money going to people on welfare to offset its impact was just too much to handle. I was amazed at how hostile the people were towards “people on Centrelink payments” even when it was pointed out that 6 million Australians were on such payments of one form or another.

6million!

If you’re on Centrelink payments of whatever kind, it indicates your life is underwater, financially. For there to be a figure like 6 million means that a quarter of Australians are financially underwater.

“One in four, if you like,” said the focus group moderator, as if it made it sound better. Of course, it doesn’t.

Either the threshold for getting Centrelink payments is really low, or there are a lot of people out there who are losing out from the various conditions of the economy. Yet we were there not to discuss the policy – because hey, we’re not politicians what the hell are we supposed to know? – but how to couch this topic so that the people who aren’t on Centrelink don’t get their hackles up, because nobody at the table was on Centrelink payments. (I guess the good news is that the ALP have stopped focus groups on actual policies.)

Still, judging by this lot the other 14-16million are going to be pretty pissed off that their Carbon Tax is going to go to welfare recipients. At the same time, I wondered why they didn’t just quietly bump up the welfare payments. It seems the Federal ALP government want to tell the 6 million Australians on Centrelink payments that yes, they’ve taxed the rich a little bit and here’s the booty, rather than do the rational thing and just increase payments.

“It stinks,” said a dude who said he was fitness fanatic and into finance. “It all stinks. they’re buying votes with our tax money!”

“Yes,” said the woman next to him. “These people don’t deserve that money. That’s our tax money going to people who can’t look after their lives and they’re probably going to spend it on pokies.”

“How could we stop them spending it on pokies instead of on the bills like they’re supposed to?” asked another. “Who knows what they’ll spend it on?” … as if it were any of her business how people spent their money.

I love these focus groups. I always learn how naked self-interest dresses itself up as moral high ground. It’s interesting the government’s money to spend is their tax money as much the money then paid into these accounts need to be dictated as to how to be used. It’s a funny kind of abstraction of what the government budget is. My own contribution was that every time they mentioned 6million, I thought of the Jews who perished in the Holocaust.

“Really?” said the moderator, surprised.

“Yes,” I said. “6million is the number claimed to have been lost in the Holocaust.”

“I didn’t know that,” she said. Others nodded in agreement that they didn’t know either. You ask a group of idiots what they think, you’re going to get some dumb answers. There we were, getting paid to offer up dumb opinions on whether ‘benefit’, ‘scheme’ ‘package’ or ‘allowance’ were the right words with the right connotations. It’s a bit like parsing the difference in nuance between ‘rape’ or ‘sexual assault’ or ‘unwanted sexual penetration’, before somebody shoves a hostile foreign object into one of your orifices.

Still, I kept wondering about that staggering number of people who have Centrelink claws in the side of their lives. What if this thing has the effect of increasing the number of people on Centrelink payments? Maybe that’s what the ALP want? – to have as many people enthralled to the government payments so that they are reminded that they are the needy and disenfranchised. Even if I’m not one of those nutty right wingers screaming there’s a class war going on, it makes you wonder about motive.

In this instance, the government wants to squander the money raised from the carbon pricing to offset energy bill rises, but in turn this encourages people not to change their energy consumption patterns, so it’s totally self-defeating as to why you would have a carbon price in the first place. (like, ‘d’uh‘) The correct and sensible thing to do with that money is to at last figure out cleaner energy options and investment strategies for more green energy systems or even carbon abatement. Not buying off the lowest quartile of the electorate.

 

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Carbon Price Banter

Finally Something In Place

We know the story: Kevin Rudd swept to power in 2007 with the promise of an ETS. He decided to negotiate one with the Coalition, finding common cause with his counterpart Malcolm Turnbull, which led to the demise of both men as leaders. Julia Gillard became Prime Minister having buried both the ETs and Kevin Rudd, went to the polls promising not to price carbon. Tony Abbott did worse, he supported the ETS, then in the expediency of his leadership challenge opposed it and buried Malcolm Turnbull. Both went to the polls and the electorate were so disenchanted, it resulted in the hung parliament. So off they went talking to the cross bench independents and the lonce Greens MP who negotiated the carbon price back on to the agenda, – which made Julia Gillard a ‘liar’  but that was the price of keeping office. Tony Abbott’s been running around siding with the loonies and climate change deniers drumming up a fear campaign, while the Greens and independents negotiated with the ALP to get this legislation.

And that’s how we got the second-best policy according to Petr Hartcher.

For Gillard, carbon pricing is the reform she didn’t want. She proposed the vacuous “citizen’s assembly” as a way of killing carbon pricing. She has negotiated this tax not because she believes in it but because it was the price of bringing the Greens and independents together in support of her minority government.
Brown decided to block Rudd’s emissions trading scheme in the Senate to hold out for a more ambitious one, then bewailed the government’s failure to reform carbon pricing. He is now supporting Gillard’s second-best scheme in an effort to salvage something from nothing.

And Abbott once urged the opposition to support the Rudd scheme in the interests of expediency, and then, as leader, opposed it in the same cause.

Even so, industry leaders thought he should have negotiated the terms of the carbon tax with Gillard. This would have reduced the power of the Greens and made it more business friendly. Instead, he pursued his populist oppositionism and left Gillard to deal with the Greens.

And there’s the crux of the biscuit for the industrial lobbies that opposed the carbon tax along with Tony Abbott this time through. In a game of double or nothing, they doubled down on the side of not having any kind of policy on carbon in this country but badly misread the prevailing winds. If Julia Gillard’s only reason for being PM was that she negotiated *something* with the independents and Greens, then they should have been awake to the probability that this time, the thing was going through. The greater irony is of course is that had the last one gone through, it might have been a bit better for the industry lobbies.They really misread the public mood, which has resulted in this legislation.

The funny thing is that this was on the cards ever since the hung Parliament election last year and when Julia Gillard announced she would price carbon as a result of her deals. It’s amazing such a poliy got through in a hung Parliament, but maybe sometimes that is what it takes to get change.

Phil Coorey writes the Greens had to compromise greatly too.

The Greens complained last time abut the lack of restrictions on polluters to stop them buying permits overseas, enabling them to keep polluting at home. This scheme has restrictions but they do little more than pay lip service to the concern.

The CPRS was to start with a fixed price of $10 for a year before turning into an emissions trading scheme with an estimated starting price of $26. This scheme will start as a fixed price of $23, indexed upwards for three years, and has a floor. The government claims it will be a net lower carbon price over the first three years.

Today, the already febrile nature of federal politics will increase to that of an election campaign, with Gillard and Abbott locked in a fight to the death. The Greens and the government can ill-afford to bicker.

Either way, the Greens’ policy purity of two years ago has gone. Like Labor, the minor party could not afford to fail to reach a deal this time. It’s called compromise.
Welcome to political reality.

It seems in the final wash up, the Greens didn’t come close to getting everything they wanted, and that perhaps this is a good thing for industrial Australia. After the last time through, it raised serious questions as to what on earth the Greens were doing in parliament if they couldn’t get some kind of carbon trading scheme up and running. So it seems this round of negotiations was indeed a last ditch effort to salvage something from a real political opportunity with their names carved in to it. It was do or die for the Greens as much as the ALP.

Why Are You In Politics, Tony?

Which brings me to Mr. Abbott, who made a laughable speech after the Prime Minister made her speech. He said taxation was bad. I laughed out loud because if taxation per se was bad, then the Liberal Governments he was part of did a lot of bad things – like introduce the GST. There is no way taxation in of itself is ‘bad’ – it depends on the tax policy and this why policies get debated (like, d’uh Tony). So it seems it’s quite appropriate to point out that had Mr.Abbott done some negotiating instead of fear-mongering in the public arena, they might have gotten something that better suited their perceived constituency of big business.

I guess he decided it was better to play the political game than to wrestle policy – which he already seems to choose every time – but just this once it seems he missed an opportunity to do something worthwhile and participate in a historic decision. Instead he’s going to go down as the clown who went jumping around playing politics in the polls while an important legislation worked through Parliament with nary an input from his party.

The polls might suggest he’s way ahead of Julia Gillard right now, but once this thing goes through, he’s going to look weak and powerless for not being able to stop it. All this talk of repealing it is not going to help his cause at the next election when the pricing will already be in place. So really, what the hell are you doing in politics, Mr. Abbott?

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What Prof. Ross Garnaut Has To Say About The Carbon Price

And The Charcoal On The Wall Says…

Pleiades sent me this link today. Professor Ross Garnaut had a few words to say about the way the big end of town is conducting itself in the carbon pricing debate.

Garnaut takes particular aim at BCA chairman Graham Bradley, Bluescope Steel chairman Graeme Kraehe and AWU boss Paul Howes, as well as BHP Billiton chairman Jac Nasser. He accuses them of elevating the cause of narrow business interests over the national interest.

He is also nauseated by the claims of the mining industry and its “hue and cry” against a market-based carbon price. He notes that the huge amount of money flowing into the country for the mining boom is displacing investment, and jobs, elsewhere in the country – a situation that is rarely appreciated in public debate. He accuses Bluescope and the AWU, who have been among the loudest opponents, of using the carbon price as a “scapegoat  …to duck the consequences of the resources boom.”

He reserves special condemnation for the BCA, the peak business lobby group, which has been riven by internal dissent over a carbon price, including from many members who do not accept the science of climate change. Just this week the BCA has recommended a starting carbon price of just $10 a tonne, and asked that most emissions-intensive industries be shielded completely from the carbon price – a proposal that has since been echoed by the Australian Industry Group.

Garnaut recalls the BCA’s rejection of a consumption tax at Bob Hawke’s National Taxation Summit in 1985 – the first “big outing” for the then newly formed council. “What emerged that day in Parliament House was a lesson in how vested interests can make the perfect the enemy of the good. In overreaching for an ideal outcome for themselves if not for the community, the business Council destroyed a central pillar of tax reform for two decades. They shot themselves squarely in the foot, with the country as collateral damage.”

Now, Garnaut says, the BCA has “returned to old type” in discussions about climate change policy. He recalls an anecdote about a visit to China by BCA chairman Graham Bradley in April this year, with a delegation led by the Prime Minister, Julia Gillard. “During high-level discussions with senior government and business leaders, Mr Bradley said that the Business Council would not support any carbon tax that would ‘discourage investment’ in Australia. And there should be no carbon tax on natural gas,” Garnaut writes.

But Garnaut says this approach has no logic. “There can be no carbon pricing without structural change. Structural change removes some jobs and discourages some investment. It is not logical to be in favour of a market-based mechanism for reducing emissions, as the (BCA) professes to be, and simultaneously be against a carbon price that discourages any investment. It would be as illogical as favouring productivity-raising reform but being against any policy change that discourages any investment.”

So take that, Business Council of Australia! There’s more in that link, so do have a read.

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Compensation For Carbon Price

This Is Going To Get Interesting

Less than 5months from now, the Greens will hold the balance of power in the Senate and not surprisingly they will be pushing politics to the left by a long way. This might be a good thing given how far to the right things swung under John Howard. Some Gen-Y kids are going to be in for a surprise. Besides which, the Greens aren’t green through and through, they’re more watermelon-like: green on the outside, red on the inside.

That being the case, the Greens are already shooting down calls for a compensation package for there being a carbon price.

As chief executives from some of the nation’s biggest companies attended climate change talks in Sydney yesterday, the Greens highlighted the fraught political landscape confronting the government’s push for a carbon price.

After the Herald revealed growing unease among business leaders over the government’s negotiations with the Greens, the party’s leader, Bob Brown, vowed to challenge the resources industry in its campaign for compensation.

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Senator Brown accused Rio Tinto of trying to ”gouge” public money after this week unveiling a record profit of $US14 billion.

Rio Tinto, which owns half the country’s aluminium smelters, is understood to be lobbying to ensure it is protected against higher electricity prices.

But Senator Brown said he would ”take on” Rio, which he said would have pocketed $565 million a year under the abandoned carbon pollution reduction scheme. The Greens blocked that scheme, claiming that the compensation it offered to trade-exposed sectors and the power industry was excessive.

The Treasurer, Wayne Swan, was co-chairman yesterday of the meeting of executives from companies including BHP Billiton, Rio Tinto, NAB, Woolworths, Qantas and Origin Energy.

It is understood most of the executives agreed a carbon price was inevitable, but stressed the need to avoid ”unintended consequences” for the economy. One said trade-exposed companies including BHP and Rio Tinto appeared ”nervous”, and were the most vocal in explaining their situation to the government.

I guess the mining business headed up by such hard-done-by types like Andrew ‘Twiggy’ Forrest and Gina Reinhardt are going to take to the hustings (or the back of flatbed trucks) and spend scores of millions to discredit a government trying to do something to address the fact that there needs to be a carbon price. I’m even guessing that the same bunch think that they can roll the Labor government if they can get to the two independents, Windsor and Oakeshott but there’s every chance they can’t. Let’s face it, Windsor and Oakeshott were up to taking the punishing, bullying pressure from Tony Abbott. If the corporate world start launching ads attacking these men, they’re more than likely going to push them away; not turn them so they join Tony Abbott.

The uncomfortable truth is that the Senate with the Greens holding power is going to be much, much more progressive than the old Senate so any number of these deals such as the revised Mining Rent Resource Tax and Carbon Pricing are going to be harder to negotiate. It’s clear Bob Brown is spoiling for a fight, and he’s got his numbers down.

All this is to say once again what a colossal fuck up the move against the ETS and Malcolm Turnbull was, and because of that move the corporate sector is going to pay a heavier toll than if the Coalition had let the Emissions Trading Scheme get up. The boot’s going to be on the other foot come 1st of July.

And Just Why Should They Get Any Compensation?

This is the crux of the Greens’ position. The reason a carbon price is being discussed is to create a deterrent for wanton emissions, as well as build a fund to combat the effects of climate change. The Corporate sector says they’re only part of the problem, and ask why must they pay first before the private citizens? The answer to that is that they can always pass on the cost to the consumer, and therefore the punter is going to get hit with the carbon price; but also the notion that the government should compensate these polluting businesses for the losses they make when they have to factor in a carbon price is just another way for these firms to try and socialise the losses, just as they seek to continue privatsing the profits by avoiding the mining super-tax.

There’s really not much more to it than that, so you can easily expect the Greens to ask, why should the tax payer fund any compensation for any of the polluting activity that these companies engage in and contribute to? They’ve been getting a free ride to date but the free ride is over. There is no reasonable argument to give compensation to freeloaders who suddenly must pay their way. Certainly it’s the exact same argument they mount when they attack the welfare system and dole bludgers (do such entities exist any more?).

They can surely cop their own medicine. There shouldn’t be any compensation at all.

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