The Business Council won plenty of headlines for backing a carbon trading system, but I wonder how many folks read the fine print to find plenty of backsliding and self-interest at work to neuter the thing.

By stark contrast, the Productivity Commission’s submission to the PM’s Emissions Trading Task Group is a beacon of disinterested rational analysis that happens to recommend a revenue-neutral carbon tax at least as an interim measure.

That’s something the BCA certainly doesn’t want. Instead it fancies a cap-and-trade system with “free permits to compensate enterprises for the economic loss” from the change in the “rules of the game”.

In other words, the big CO2 polluters should be given free licences to keep polluting with the upside of being able to trade and profit from those government licences.

That’s the same bad CO2 recipe cooked up in Europe. And it’s not much different from the (almost) free water allocations handed out in NSW. In both cases, over-allocation is a key feature at environmental cost while the lucky licence winners make windfall profits.

And it gets worse. The BCA also wants the government to “offset the competitiveness impact of the scheme on ‘trade exposed’ industries for as long as necessary, providing transitional arrangements through the permit issue process”.

Never mind alleged inter-generational subsidies, we’re supposed to subsidise the carbon emissions of exporters and import-competitors – which means a very large whack of the Australian economy.

And there’s all the room in the world for playing political favours and favourites. The BCA wants an RBA-like independent authority, but the $10 billion inland water racket shows what chance that has of getting up.

The Productivity Commission makes allowance for the stupidity of any attempt to self-righteously go-it-alone on carbon pricing, recommending a steady phasing in step with the international game, but it doesn’t lose sight of the end goal.

It’s a very nice submission. I’ll bet the government ignores it.