Wednesday, September 11, 2013

Scrapping the green empires

Now the hurly-burly's done and the people have resoundingly elected the Coalition in what Tony Abbott declared to be a plebiscite about the carbon tax, where to from here?

As well as terminating the carbon tax, the annual costs of which rise to $13 billion by 2020, and the $2 billion a year subsidy to uncompetitive green energy schemes, the Coalition has already announced $1 billion a year in savings from other measures.  These include the Cleaner Environment Emissions Reduction Fund, Carbon Capture and Storage, a pared-back Murray Darling water buy-back and ensuring renewables pay their own connections to the electricity grid as is the case with other electricity supplies.  Including its own Direct Action measures, the Coalition is budgeted to remain spending at least $1-2 billion a year on green subsidies.

Labor and the Greens left institutional bulwarks intended to make it difficult for a Coalition government to implement the policies for which it now claims a mandate.  Among these is closing the Clean Energy Finance Corporation's $2 billion a year in subsidies to uncommercial green ventures.  The CEFC's chief executive, Oliver Yates, has indicated that a mere change of government would not stop him throwing public money at the value-deficient projects the CEFC finances.  His chairwoman, multiple recipient of ALP patronage Jillian Broadbent, has however indicated she would consult with the incoming minister before the CEFC disburses further funds.


Doubtless other bodies set up to pursue the carbon emission restraint agenda will also seek to stay on the gravy train.  Among these is the six-member (none of them climate scientists) Climate Commission under Tim Flannery.  The commission, its eight-member advisory panel and support within the public service, has made increasingly hysterical claims about dire consequences that follow if we do not take immediate steps to curb carbon emissions, and, in effect, start to de-industrialise Australia.

Then there is the ''independent'' Climate Change Authority chaired by Bernie Fraser, whose members, including left-wing luminaries such as Clive Hamilton and John Quiggin, were hand-picked for holding views reliably in accord with those of the previous government.  In establishing the CCA, the Labor-Greens alliance left a poison pill specifying that unless advice to make a change is provided by the authority, the current inflation-indexed $24.1 per tonne carbon tax stays in place.  And the CCA has set out a timetable that it hopes will guarantee it a future well into the life of the next Parliament but one.


The government is also hostage to the partisan CCA in addressing the remaining elephant in the carbon-policy room.  This concerns the Renewable Energy Target's (RET) requirement that electricity retailers incorporate green energy, which is 3-20 times the cost of conventional energy sources, into their supply mix.  Having originated under John Howard as a trivial sop to wind lobbyists and green idealists, this form of electricity is now on course to impose $5 billion a year in damage to the consumers and the economy by 2020.  Ostensibly planned in its current form to comprise 20 per cent of 2020 electricity supplies, the actual 45,000 gigawatt hour target is more likely to be 25 per cent.  The RET raises the wholesale cost of electricity by some 40 per cent and undermines the natural comparative advantage of Australian consumers and firms in low-cost energy.  At the very least, the government needs to terminate any additional expenditures but the Spanish government provides some precedent for actually clawing back funding previously committed — often for 15 years — to these high-cost projects.


Managing the various commissions and departmental agencies addressing carbon emissions programs are several thousand people, whose work is surplus to the new government's requirements.  These include about 1000 public servants from the former climate change department now embedded within the industry department.  That department also houses other green program managers and the 2700 strong CSIRO, dependent on climate change for a large proportion of its work.  Other agencies like Resources Energy and Tourism, Agriculture, Sustainability, Treasury and Foreign Affairs also have tumescent climate-change fiefdoms within them.

The Coalition will seek ways to neutralise the poison pills bequeathed by the Labor-Greens alliance if the Senate refuses to pass amending legislation.  One approach would be for the government to cut off funding of the CCA and CEFC, including funding for salaries.  The Greens have received advice that this may leave the government subject to legal recourse.  It would, however, be difficult for investors to argue that subsidised dependent expenditures in this area were made unaware that a new government would seek to unravel their funding.

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