Too Clever: Cutting Environmental Programs To Pay For An ETS

KEVIN RUDD’S RUSE has been exposed; to fund a switch from a carbon tax to an ETS — the supposed flagship of Labor’s environmental platform — his government will junk annual spending of $1.4 billion on other environmental programs. And lob a grenade at car makers. It stinks of policy on the run.

A lot of mileage has been made today (and not least by Kevin Rudd and his new Treasurer, Chris Bowen) out of modest promised savings for households arising from his decision to “terminate” the carbon tax.

This decision — made to distance Labor from Julia Gillard’s Prime Ministership, and to try to wrongfoot the Liberals — was never going to be as harmless as it was made to sound, and in finally being forced to spell out concrete details the Kevin Rudd who was Prime Minister until 2010 has made a dramatic reappearance.

Measures to cut $1.8 billion out of fringe benefits tax concessions for those who drive company vehicles — on the spurious pretext personal use of such vehicles is higher than historical estimates have projected — will throw an incendiary device into the remaining automotive manufacturing industry in Australia: a sector already facing abandonment.

With a third of all new vehicles in Australia purchased by fleet management companies, but 80% of all Australian-built cars finding their way into commercial fleets, it’s obvious that this measure to effectively increase the expenses of fleet managers will have knock-on effects to the manufacturers, and could be the final straw for the struggling Holden.

But the most audacious aspect of Rudd’s pledge to fund his ETS stunt from budget savings is where the rest of the money is coming from: axing a raft of environmental programs.

These savings include

  • Cutting the Energy Security Fund — aimed at assisting electricity generators in adapting to carbon pricing — by $770 million over four years;
  • Cutting “clean technology” programs by $586 million over four years;
  • Cutting aid to the coal sector — to assist with its adjustment to a “clean energy future” — by $186 million;
  • Cutting the Biodiversity Fund by $213 million;
  • Cutting carbon farming measures by $144 million.

Apparently, a nominal amount will be saved by cutting the size of the upper echelons of the Commonwealth Public Service and is earmarked to be added to savings made for the ETS, but at the end of the day — given Labor’s addiction to stacking bureaucracies with stooges, then crying foul when Liberal governments sack them — “nominal” is the key word.

It should be emphasised that all of this “saved” money isn’t being ploughed back into environmental spending, as Rudd and Bowen might hope to give the impression of; it’s being cut — the programs eliminated — to pay for Rudd’s populist gesture in “terminating” the carbon tax, to ensure the mismanaged budget Labor has presided over doesn’t blow out even further into deficit.

In other words, $1.4 billion per year, over four years, slashed from the environment budget.

There goes Labor’s credibility on environment policy at a stroke.

Tellingly, the¬†Clean Energy Finance Corporation — a $10 billion “investment” fund that is in reality little more than a pork barrel — is untouched.

But for the most part, the worst aspect of these machinations lies in their deception.

Rudd has at least been honest enough to say — loudly — that he is pulling forward by one year a change that would have occurred under Gillard’s so-called Clean Energy regime anyway.

But far from shovelling cash at voters, he’s simply throwing a crumb: by linking a floating carbon price in Australia to that traded on European carbon markets, this fraud will only save households money for as long as the European price remains at $6 per tonne, as opposed to the $25 per tonne that the change temporarily abandons.

There are forces in Europe — governments, lobbyists, interest groups et al — not only committed to driving that price up, but determined to do so, and to levels far higher than the $25 per tonne that has already begun to impact consumers in Australia.

When that happens, the handful of dollars Rudd is trying to bribe people with here, in a cynical and grubby charade, will quickly be replaced with hip pocket pain far worse than anyone has had cause to grumble about to date.

And all that money sliced out of spending on the environment? Well, that will still be gone, which should give pause for thought to anyone silly enough to consider voting for Labor on the basis of its environmental policies.

Tony Abbott is right: Rudd isn’t “the terminator” in his claim to have banished the carbon tax, he is the exaggerator; and far from being a “terminator,” he is simply a fabricator.

And speaking of fabrication, this policy was cooked up overnight, with no consultation, no consideration of its impact and, in fact, no tangible evidence of consideration of anything other than its capacity to generate votes in the very short term.

It brings back all the worst aspects of Rudd’s first stint as Prime Minister: the shambolic approach to government, the last-minute policy and the half-baked decision, all conspiring to produce shocking policy outcomes that address an immediate political imperative, yes, but leave a trail of chaos in their wake and a host of other problems for someone else to fix.

This time — in the pursuit of votes — Rudd has jeopardised an entire manufacturing industry, trashed his party’s credibility in a key area of policy, and offered voters a short-term honey pot to sip from with one hell of a sting waiting when they reach the bottom.

I actually think it’s rather sad. This is the man whom polls show the public has clamoured to see restored to the Prime Ministership, and in his first major announcement all he has to offer is a sellout.

Clearly, nothing has changed in three years.

And once again, Kevin has been just a bit too clever by half.