Carbon Copies Down Under

FROM TODAY'S WALL STREET JOURNAL ASIA: July 17, 2008

The global warming craze officially landed in Canberra yesterday, as the Labor government released a sketch of what it calls "one of the highest priorities of the Australian government": its carbon trading scheme. That should signal the beginning of an important debate about the costs of this grand plan. But can the opposition Liberal Party muster a coherent argument?
Yesterday's 516-page report calls for a huge bureaucratic expansion and undefined costs to industry. Canberra has pledged to reduce emissions to 60% of 2000 levels by 2050, and it wants to set emissions caps this year. The government hasn't yet said how much companies will have to pay for all this. But they did say electricity prices could rise 16%, and fuel, 9%, when emissions trading begins in 2010.
You'd expect the Liberals to be howling. Instead, they're as green as Al Gore. Part of this is a legacy issue. Former Liberal Prime Minister John Howard embraced the idea of an emissions trading scheme by 2012 when he saw then-opposition leader Kevin Rudd gaining support by fearmongering about global warming. Mr. Howard said he'd implement carbon trading only if costs to the Australian economy were capped. His commitment has, for now, left the Liberals mostly on the same page as Labor.
Current Liberal leader Brendan Nelson hasn't tried very hard to distance himself from Mr. Howard's platform. He hasn't questioned the science underlining global warming. (Yesterday's report takes as truth the United Nations' discredited Intergovernmental Panel on Climate Change estimates.) He's repeatedly said that he supports an emissions trading scheme without seriously exploring other, more transparent, forms of taxation on industry – or opposing the tax altogether. He hasn't questioned the wisdom of the schemes Australia already has in place to pick winners among clean energy industries, such as mandatory renewable energy targets.
Mr. Nelson's only attempt to rejig the Liberals' position was a feeble try last week to step back from that 2012 implementation date and to ask that Australia – which emits only 1.5% of global greenhouse gas emissions – not act until big emitters like China lead the way. But as soon as he floated these common-sense ideas, his deputy Julie Bishop, shadow treasurer Malcolm Turnbull and shadow environment minister Greg Hunt all publicly cried foul. Mr. Nelson fell back into line. So much for leadership.
Labor is taking full advantage of the Liberals' disarray. Yesterday's report blithely asserts that an emissions trading scheme will touch "around 1,000 Australian companies in total," or "less than 1%" of Australian businesses. In reality, forcing companies to buy pollution permits would raise the cost of energy production and hit every corner of the world's 15th-largest economy.
Labor's report admits as much, noting there will be "adjustment costs" and pledging to offset energy price hikes by temporarily cutting excise taxes on gasoline. But Climate Change Minister Penny Wong played down any change of making such cuts permanent, suggesting yesterday that the Labor government would instead buffer the immediate impact on low-income families through cash handouts.
As for the economic havoc Labor's global warming plan would wreak, you know it's bad when even the labor unions – the Labor Party's core constituency – cry foul. The 130,000-member Australia's Workers' Union, the country's largest blue-collar union, and a local think tank estimate that the cost to the aluminum industry alone in job losses could range "from A$285 million to A$1.124 billion."
Given rising fuel costs, now is the perfect time for the Liberals to point out the economic cost of Labor's global warming scheme. But they can't do so effectively if they are carbon-copies of Labor. The public may not understand carbon trading schemes, but they understand hits to their pocketbook. It's time for the Liberals to start pounding that message home, in unison.