Wednesday, December 2, 2009

No ETS, but we’re closer to an election

Today marked the start of the Tony Abbott period of the Liberal Party. Its first act was to block the Government’s Emission Trading Scheme.  Bravely, two Liberal Senators,  Judith Troeth and Sue Boyce, kept to the deal made last week by the Liberal Party and crossed the floor – others, like South Australian Senator Simon Birmingham, were reduced to tweeting that both of their speeches were “outstanding”, and yet gutless wimp that he is, he didn’t cross the floor despite agreeing with them and having been advocating their position only 24 hours earlier.

So the Bill was defeated (and also let it be known that had the Greens voted with the Government, the Bill would have passed…), thereby triggering a double dissolution.

After the vote, Tony Abbott came out and made this incredible statement of policy:

In July Mr Abbott told the Coalition to pass the laws, saying that the Rudd Government had a mandate to act on climate change.  But he now says that is not the case.  "We were then, I think, still in a post-election period. We're now in a pre-election period," he told Radio National. "Their mandate I guess eventually expires and is replaced by our desire to provide the people with a contest, and that's what they're going to get under my leadership."

Get that? According to this genius, the Government has a set time to get its policy through, and then it’s all up for grabs. This guy is so dumb I scarce believe he can walk upright. Last time I looked a Government in this country was elected for three years, anything promised at the previous election to do in the next three years they have three years to do, not eighteen months – especially if you have the most backwards Senate in history blocking and delaying every piece of legislation along the way.  Abbott it seems has different versions on what “mandate” and “democracy” means to that usually peddled in dictionaries. 

Abbott, just to make sure everyone knew he is the dumbest leader since Alexander Downer, then announced that not only would the Liberal Party be going to the next election with a policy of “no ETS”, they won’t propose a carbon tax, or even a price on carbon. He also said that he was only committing to a 5% reduction in carbon emissions (which his office had to later “clarify” as meaning, yes he still supported targets of up to 25% cuts if the rest of the world got on board). So how are we getting this 5% cut in emissions without a price on carbon? I’m guessing Abbott believes a bit of prayer and goodwill – oh and turn off your lights when you leave a room; you know that sort of thing, let’s all pitch in together.


In fact it’s worse than that; it shows he is a complete dill on economic matters. Yesterday he came out saying the latest interest rate rise was due to the Government’s stimulus package. Which, to be perfectly blunt, is complete bullshit. How do I know? I read what the Reserve Bank Board said:

In Australia, the downturn was relatively mild, and measures of confidence and business conditions suggest that the economy is in a gradual recovery. The effects of the early stages of the fiscal stimulus on consumer demand are fading, but public infrastructure spending is starting to provide more impetus to demand. Prospects for ongoing expansion of private demand, including business investment, have been strengthening. There have been some early signs of an improvement in labour market conditions. The rate of unemployment is now likely to peak at a considerably lower level than earlier expected.

So, the stimulus on “consumer demand” (the thing that drives inflation) “is fading”, but public infrastructure (that which builds capacity and is relatively non-inflationary) is starting to provide more impetus to demand. What else is driving demand? Strengthening private demand – ie NOT Government spending. Ask yourself the next time you drive on a highway and see a new lane being constructed whether you think that construction is causing the prices of consumer goods to rise? How about when you see private businesses investing in a new factory – do you worry about inflation?

The RBA continues:

Inflation has declined from its peak last year, helped by the fall in commodity prices at the end of 2008 and a noticeable slowing in private-sector labour costs during 2009. In underlying terms, inflation should continue to moderate in the near term, though it will probably not fall as far as thought likely six months ago. Headline CPI inflation on a year-ended basis has been unusually low because of temporary factors, and will probably rise somewhat over the coming year. Both CPI and underlying inflation are expected to be consistent with the target in 2010.

So is inflation in danger of going mad? NO! In fact it is expected to be consistent with the target level. Let’s keep going:

The Board’s assessment of the outlook remains much as in the November Statement on Monetary Policy. Growth in 2010 is likely to be close to trend and inflation close to target.

With the risk of serious economic contraction in Australia having passed, the Board has moved at recent meetings to lessen gradually the degree of monetary stimulus that was put in place when the outlook appeared to be much weaker.  These material adjustments to the stance of monetary policy will, in the Board’s view, work to increase the sustainability of growth in economic activity and keep inflation consistent with the target over the years ahead.

In other words, things are looking up, so it’s time to keep moving back to normal non-expansionary levels of interest rates.

r480031_2439232 Now look, you can argue that the RBA shouldn’t have raised the rates yet, that the economy is too fragile, but you cannot, unless you want to get economic egg all over your face, argue that the Government stimulus has caused interest rates to go up.

But back to the ETS. The voting down of the Bill provides a trigger for a double dissolution, but later in the day Julia Gillard came out and said the Government would reintroduce the legislation – including the previously agreed to amendments – on 1 February next year (the first sitting day). This act demonstrates just how politically savvy is this Government. To understand why, take a look at the Nielson Poll released on Monday (thanks to Possum from Crikey for the nice tables):


So what we have here is the breakdown of a poll on the ETS. Only 9 percent of voters don’t want an ETS to be introduced at all. Bizarrely, 8 percent of those who don’t want an ETS, want it introduced as soon as possible (good luck working that out!). But look at the middle row – 49 percent of voters only want an ETS after the Copenhagen climate change conference. This was actually the Liberal Party policy up until yesterday.

Now let’s have a look at the views by breakdown of voting intentions (remember this was a poll that had the ALP leading 56-44):



What we see here is that 62 percent of Liberal-National voters want to wait until after Copenhagen, and only 14% don’t want any ETS at all. Yep, Tony Abbott’s policy of “No ETS” is one supported by only 14% of his own party’s voters!

Now let’s also have a look at what Tony Abbott said last night on the 7:30 Report:

TONY ABBOTT: OK, but there was a fundamental difference, Kerry. The Howard Government's scheme was not meant to happen in advance of the rest of the world. The - and Malcolm Turnbull's position, until quite recently, had been that we weren't gonna sign up to an ETS pre-Copenhagen…. But, but, it was never a unilateral new tax under John Howard. Under Kevin Rudd it is a unilateral new tax, so that he has got a trophy to take to Copenhagen. Now I'm all in favour, Kerry, of Prime Minister's of Australia looking good on the world stage, but I don't want to give Kevin a bauble just to boost his campaign to be the next UN Secretary General.

A couple thing, first the line about UN Secretary General proves Abbott reads Andrew Bolt rather religiously, but secondly, he makes a big point about not signing up to the ETS until after Copenhagen – and this point has been made repeatedly by Liberal Senators this week – how Rudd was rushing this ETS Bill through just so his ego would have the legislation in Copenhagen.

Well guess when February 1, 2010 is? Yep it is AFTER Copenhagen.

So what the ALP has done here is put the Liberal Party in the position of not only arguing against a policy they have been advocating all year, but also arguing against it being done at the time they have been arguing it should be done all year. By reintroducing the Bill next year they are in effect doing what Malcolm Turnbull wanted them to do! Yep Turnbull has got what he was after – what the Liberal Party was after – and he got dumped for it! That is some amazing footwork by Labor. 

If the ALP had said, right we’re calling a double dissolution, they are a chance to lose some of those people who want the ETS, but who only want it to be signed after Copenhagen. Now those voters are feeling more comfortable. They also kill off any argument that they are running scared to an early election – they will have given the Liberal three chance to vote on and debate the issue. So when Rudd comes out and says it is obvious the Liberal-National dominated Senate is not interested in working constructively, and that they have obviously moved to an extreme position on climate change, at odds with their own policy of 2008-09, they’ll be on very strong ground.

And strong ground is what you want to be on when you launch an election campaign.


Matt said...

Yep, this is the smartest move Labor could have made. Going into election mode would have simply galvanised the Coalition into some semblance of order. Holding off on that keeps the internal disputes smoldering and forces them to go through this whole process yet again in three months time. Is it possible that the intractable problem of agreeing on a Climate Change policy will then cost the Liberals a third leader?

I'm stealing this line from some pundit I heard sometime in the last week, but it brings to mind the Napoleon quote 'never interrupt your enemy while he is making a mistake'. Looks like Rudd is keeping to that one for now.

Grog said...

Great line Matt, I think I'll steal it as well!