The Breakthrough Institute

By Leigh Ewbank, Breakthrough Fellow

Less than three weeks from the Australian Senate's highly anticipated second vote on the Carbon Pollution Reduction Scheme (CPRS) bill, the Australian Government's Mid-Year Economic and Fiscal Outlook (MYEFO) has revealed new problems with the Rudd Government's deeply flawed cap-and-trade plan. Crikey's national politics correspondent Bernard Keane has found that the CPRS will require a massive $5 billion of taxpayer subsidies in its first five years, and that taxpayers won't break even until 2022. With the Labor Government releasing this crucial data so late in the game, it's no wonder that Australia's policy analysts are finding some interesting surprises.

In addition to the billions of dollars in public money the scheme requires to function, Keane shows that the government will give away more free permits to polluting industries than originally thought, concluding that:

"In 2012-13, free permits to [Emissions Intensive Trade Exposed Industries] EITEs account for 28% of revenue. By 2020, they account for nearly 35% of scheme revenue..."

Such giveaways will keep downward pressure on the domestic price of carbon and increase the viability of polluting industries for a decade.

With apparent policy failures like this, it's no wonder that Bernard Keane's criticism of the CPRS is so harsh:

"Yesterday's MYEFO figures reveal in clear terms just what a policy disaster the current version of the CPRS is.

How the government started with the basic principles of an emissions trading scheme and ended up with this car wreck should become one of the key lessons in policy failure for future generations of politicians and public servants."

"The few remaining supporters of this scheme outside the government must surely now accept that the CPRS in its current form must not go ahead. It will not drive a transition to a low carbon economy and it will impose a significant burden on taxpayers. Only the removal of the fuel excise offset or a significant reduction in assistance to big polluters can justify the introduction of this monumental stuff-up."

Bernard Keane's critique of Labor's CPRS comes on the heels of those of many other experts. Late last month, executive director of The Australia Institute Dr Richard Denniss branded the CPRS a "complex and expensive national scheme" that won't change a thing. Denniss criticised the scheme for failing to adequately address emissions generated through energy generation, transport, and agricultural sectors. Add to this list the schemes inability to account for the emissions reduction efforts of individual households and facilitate investment in enabling infrastructure (transmission lines) and it's hard to see why the CPRS is still regarded by some climate advocates as worthy of passage.

So how does Prime Minister Rudd respond to critics of the CPRS like Bernard Keane and Dr Denniss? He simply ignores them. In a high profile speech to the Lowy Institute, the PM creates a straw man to divert attention away from legitimate criticism of the CPRS and towards irrelevant climate skepticism. This strategy allows Rudd to avoid answering substantive criticisms of the CPRS emissions trading policy.

Australia's progressive campaigners mustn't allow the PM to ignore legitimate critiques because it doesn't suit his government's political interests. To have a positive effect on reducing Australia's GHG emissions and transition to clean energy economy, the CPRS must be drastically strengthened or superceded. The likelihood of this happening will increase if academics, journalists, politicians and citizens with legitimate critiques have their positions acknowledged at the highest level of government.

Check out Solve Climate for background on the CPRS and Australia Archives for Breakthrough's take on Australia's climate change policy.