Emissions indecision déjà vu

On emissions abatement, from 2012 to 2015, this policy is like a base-load generator spinning its turbines but not connected to the grid. It's doing almost nothing. Australia's already-poor productivity will be undermined.

Is this 'getting the balance right'? If so, Australia's already poor productivity will be undermined.

Can't we do better?

The 'official family' (including Garnaut) say 'no': they say 'it's too late' to modify a long-term policy intended permanently to restructure the Australian economy that won't start until next year. We must follow Europe, they say, unlike the USA, Canada, China, India and the rest of the developing world.

Why? There's nothing in the now-dead Rio or Kyoto agreements that says we must apply the failed European ETS. Europeans have form. They devised the Common Agricultural Policy, are excessively pro-regulation, and are now mired in the follies and global threats of the Euro and related debt problems.

For those who don't really accept the science underlying concerns about climate change, the honest option is simply to come out and admit that, and reject policies to mitigate it, including 'direct action'.

For others, there's a better way to apply a broad-based price on emissions, whether we use a carbon tax or an ETS:

• apply the 'carbon' tax/ETS to all emissions produced in, and imported by, Australia;

• provide zero 'compensation' to industry, trade-exposed or otherwise; but

• allow all businesses to treat 'carbon' tax or emissions permit costs as input tax credits;

• allow these to flow down the supply chain using our existing GST system.

This is closer to a 'no regrets' option. It minimises economic damage to Australia if other major emitters don't act. It's a model that other countries could adopt. It improves chances of securing a global deal. Without that deal, Australia should really do nothing but adapt to whatever climate changes happen.

What now?

An early election, plebiscite, or recalling Parliament have been ruled out.

There's another option.

Garnaut was asked to update his 2008 report. Can the Productivity Commission (PC) update its recent emissions pricing report to include (i) the Australian emissions pricing effects of this policy, and (ii) the current emissions pricing policies of Australia's trade competitors? A credible, independent, evaluation of this climate policy by the PC could be done quickly. It would add rare rays of light to what is likely to be a very heated and noisy debate.

In future, either this policy remains a costly and ineffective response to global warming, and/or the emissions price will increase. A lot.