Labor’s nostalgia based on bad maths and worse politics

Labor likes to complain about the Coalition rewriting history when it comes to its successful handling of the financial crisis. Yet the party is engaging in some revisionism of its own about the same era.

It’s 10 years since the Rudd government’s Carbon Pollution Reduction Scheme (CPRS) was defeated in the Senate, opposed by the Coalition and the cross-bench. Labor is commemorating the anniversary by claiming that if only the Greens had backed the CPRS, Australia would have avoided a decade of climate wars and begun reducing its carbon emissions. This is a fully-fledged campaign, with senior Labor figures using it to attack the Greens and a frontbencher delivering a speech doing the same.

Except, the CPRS in its original form was a poor carbon pricing scheme in support of a woefully unambitious target, 5% below 2000 levels by 2020. If that was what had been put to the Senate in 2009, it might have at least been relatively innocuous.

But industry lobbyists and union heavyweights came in for their chop, prompting Kevin Rudd to water an already poor scheme down further.

Rudd used the financial crisis as an excuse to increase and extend the “compensation” baked into the scheme for the nation’s biggest polluting industries via free carbon pollution permits. So large was the compensation and other handouts attached to Rudd’s scheme that it was going to require a government subsidy until at least 2016, and wouldn’t have broken even until 2022.

There was a mechanism to eventually reduce the level of free permits to heavy polluters, but the decision was left in the hands of politicians — the same politicians who had caved to lobbying and increased compensation.

If this had all been in service of reducing emissions, that might have been OK. But as Richard Denniss pointed out at the time, the CPRS wasn’t going to do anything. The government’s own modelling showed that coal-fired power generation would be unaffected. In response to a laughable campaign by then-opposition leader Brendan Nelson, Labor panicked and made sure that the price of petrol wouldn’t be affected by the CPRS. And the scheme didn’t cover one of the worst sectors for emissions, agriculture.

But it got worse: in order to get Liberal support, Rudd watered it down even further. Big polluters, including the coal industry, were given billions in extra handouts and agriculture was given a permanent exemption from climate action to win Malcolm Turnbull’s support.

The CPRS would have locked in rising emissions until well into the 2020s at the earliest. And it was possible that polluting industries could have successfully sued future governments for any changes to the scheme to actually make it work.

Julia Gillard’s carbon pricing scheme turned out to be better in every way than Rudd’s CPRS. It also featured high levels of compensation for polluters, but the Productivity Commission would have determined when they ended, not politicians. An independent Climate Change Authority would set targets.

A Clean Energy Finance Corporation was established to invest in renewable energy. Compensation for households was much more effectively targeted. And the data shows that, until 2014 when the scheme was repealed, Gillard’s scheme was highly effective at reducing emissions, at minimal cost to the economy.

There’s also the politics. Labor complains about the Greens not backing the CPRS, but Rudd and co refused point blank to ever sit down with Bob Brown and the Greens to discuss the scheme. And if Labor was so aggrieved about the failure of the Senate to pass the CPRS, Rudd could have called an early election in 2010.

Indeed, that was the plan — to call an election in February 2010, which on the polling available at that point would have delivered a handsome victory over Tony Abbott. But Rudd chickened out and put the election off.

He was less reticent about undermining Julia Gillard after she replaced him. If there’s a reason why Australia doesn’t have a working carbon pricing scheme, it’s because Rudd’s relentless destabilisation of Julia Gillard meant a shambolic Labor had zero chance of ever winning the 2013 election. Rudd ensured that Tony Abbott would be elected and repeal an effective, low-cost carbon pricing scheme.

The press gallery is happy to support Labor’s claim about the Greens wrecking the CPRS because it fits one of its favoured narratives, that extremists on both sides have wrecked the chance of effective climate action, and that if only the “sensible centre” would be allowed to govern, things would be OK.

But when it comes to climate action, this is both wrong and irrelevant. Climate change is caused by basic physics. You either reduce carbon emissions or you cook the planet. The CPRS wouldn’t have reduced emissions — just given huge taxpayer-funded handouts to polluters. The press gallery’s centrist “fault on all sides, extremism is wrecking civility” hand-wringing will never change the basic maths, just guarantee we’re stuck in a permanent loop of climate failure.

Is Labor’s nostalgia for the CPRS misplaced? Send your thoughts to boss@crikey.com.au. Please include your full name for publication.