Aussie politics - game on

It has been widely reported that the draft report, authored by 2,500 scientists and due for release in Paris on February 2, will warn of more heatwaves, floods, droughts and rising seas linked to greenhouse gases released mainly by burning fossil fuels.

The draft for the UN Intergovernmental Panel on Climate Change (IPCC) is expected to predict a temperature rise of two to 4.5 degrees celsius above pre-industrial levels by 2100 with a "best estimate" of a rise of three degrees celsius.

That is a much bigger rise than previously forecast.

This turns the heat up on the government - what will it do to reduce Australia's relatively high contribution to global warming; the Australian people will not be hoodwinked and the costs of likely actions - embracing nuclear power, limiting road and air travel and air conditioning (for example) and water use by raising the cost of fuel, electricity and water - will not be tolerated unless they are sold very well indeed.

Howard's best chance would to cut a deal with Rudd on a bipartisan approach, but this is so far outside standard political norms as to seem virtually impossible.

Kevin Rudd has sensibly embraced a traditional Labor policy of spending more on education and research. This is clever because people worry about their children's education more than most daily issues but also because education raises both economic efficiency ("productivity") as it increases fairness ("equity").

This is in contrast to many policies that involve a conflict or "trade off" between efficiency and equity - think income tax cuts, as one example, that would improve incentives and therefore economic efficiency but at the cost (arguably) of reducing fairness.

Kevin Rudd has also cleverly begun positioning himself as the moderate man as opposed to Howard the extremist. Howard has been discombobulated by this and has come out swinging, his climate change initiative being the first of many Laborish initiatives he will embrace in 2007. Indeed, I confidently predict that Kevin Rudd will be able to claim a lot of influence on government policy even without winning government - the cold comfort of a successful opposition.

I should finish with my prediction. I expect John Howard to retain government. There will be a real struggle and Kevin Rudd will bring Labor to a far stronger position, poised to win next time round. My main reason is the importance of economic prosperity - why change a government that has presided over a decade of unprecedented prosperity?

This is the question that will resonate in many minds as they enter the ballot box in 2007.