Flood Levy: Government Robs Green “Peter” to Pay Wet “Paul”

The federal government should fund flood recovery by cutting subsidies and tax breaks that promote fossil fuel use and greenhouse pollution, not by slashing funding to climate action programmes, the Australian Conservation Foundation says, while  Giles Parkinson in Climate Spectator writes:  “Surely, not in their wildest dreams would they have imagined that the Gillard government would decide, without a hint of irony, that it should be the clean tech and clean energy industries who should pay for the Queensland clean up, along with a bunch of unfortunates who cannot afford to pay their own rent?”

Giles Parkinson in Climate Spectator 28 January 2011

Senator Bob Brown received a right old bollocking when he suggested earlier this month that the fossil fuel industry should pick up the tab for flood relief, arguing that since fossil fuels were the major contributor to global warming, and that the intensity and frequency of natural disasters were likely to increase because of it, then the industry should be held to account.

It wasn’t just a matter of bad timing or unsightly finger pointing, although it was most certainly both of those. When disaster and tragedy strike, politicians and civil leaders are expected to show statesmanship and empathy with those who are suffering, which is why Queensland Premier Anna Bligh has earned such admiration.

Brown made many wince, including in his own party, but he was not the only one to cross the line. Catholic leader Cardinal George Pell, who influences an even greater congregation, wrote a week earlier of his delight at the extraordinary freeze that had hit Europe in late December – an event that just so happened to have killed dozens and ruined the travel plans of millions – because he thought it disproved the theory of man-made global warming.

“Nothing so delicious has happened,” he wrote, since President Obama’s aircraft was snowed in at the global warming summit in Copenhagen in 2009. The coolest Cardinal’s hopes were dashed a week later when data came in confirming that 2010 was, indeed, the hottest year on record – even despite the European deep freeze. 

The mining industry, predictably, made a big hullabaloo about Brown’s comments, claiming a levy would destroy their industry and invoking, yet again, the it’s-not-us-it’s-them defence – that Australian coal really doesn’t contribute that much to global warming. It certainly shouldn’t be them who paid, they said, ignoring for the moment that the exact function of a carbon price is to recognise the environmental impacts, or externalities, of burning fossil fuels.

So who, then, should pay? Surely not in their wildest dreams would they have imagined that the Gillard government would decide, without a hint of irony, that it should be the clean tech and clean energy industries who should pay for the Queensland clean up, along with a bunch of unfortunates who cannot afford to pay their own rent?

Gillard’s obsession with producing a surplus in 2012/13 is one thing, but the symbolism of slashing $675 million from climate change policies to pay for a natural disaster in the hope that it is a “one-off” is quite another. Climate change programs are suddenly luxury goods. What happens if there is another disaster?

The $430 million ‘cash for clunkers’ scheme is axed, along with Green Start, but so is the remaining $234 million in the Green Car Innovation Fund. Funding programs for utility-scale solar and carbon capture and storage are cut and deferred, and solar cities and solar hot water schemes are brought to an early end. That’s half a billion dollars out of solar.

The closing of some of these programs will not be lamented. Clunkers was a dumb idea and was destined to be cut anyway, and Green Start had already been canned. Many wondered why the coal industry couldn’t throw a bit more of its own money to develop technology that could supposedly save its future, and there were doubts about whether the money in either flagships program would ever be spent.

But was there really nothing imperfect about the subsidies that fossil fuels enjoy – the FBT scheme that sends drivers out on endless road trips so they can qualify for a tax break; the diesel fuel rebate; the petroleum exploration rebate – that they couldn’t be touched for these purposes?

So what is that government up to? Does it know? Is this just Penny’s pay back? Penny Wong, the former federal climate change minister, now in finance and vested with the responsibility of identifying sacrificial lambs, was never a fan of these schemes. Most were constructs from the offices of energy minister Martin Ferguson and industry minister Kim Carr, and she didn’t like them.

Could the ALP simply be giving itself some negotiating room? A program restated is easier agreed than a program added. Or is it simply trying to differentiate itself from the Greens; sowing the seeds for a carbon policy that might rely more on support from the Coalition than it does from the cross-benches?

One thing appears clear – Labor is being progressively seduced by industry groups and lobbyists who argue that complementary measures are not needed with a carbon price. This seemed to be the thrust of Gillard’s argument at the National Press Club on Thursday: The green schemes were cut because they did not deliver a low enough cost of abatement. In the case of clunkers, certainly not, but the other schemes were designed to support the early stages of development of technologies that can and – like solar – will defray costs elsewhere and, in the words of US President Barack Obama just a day earlier, underwrite the industries of the future.

This does not look good for the development of the cleantech industry in Australia. The motor industry is in uproar, and the solar industry is mortified that it has been subject to $500 million of funding cuts and deferrals. Flagships was not particularly loved because it required a panel to pick four winning technologies from a cast of 52, when markets tend to do a better job at that. Now two of those winners will not even be chosen till after 2015.

But the clean energy industry did not want to can government support, it simply wanted it replaced with ideas that have proved effective overseas, such as feed-in tariffs and loan guarantees. That now seems unlikely, and investors will look elsewhere, and Australian developers will continue to look for backers and markets overseas.

As Obama said on Wednesday, nascent industries need support. Gillard seems to be intent on following a different drumbeat. If Australia does ditch the idea of complementary measures, it will most certainly be ‘going it alone’. No other country has forged a similar path, but then they don’t have quite as much coal and minerals to export.

The economic rationalist argument might be valid, but as Professor Ross Garnaut notes, it would require a carbon price with real bite – somewhere between $50 and $100 a tonne to generate the technologies that are needed in the future. It’s doubtful that industry groups charged with protecting the status quo have that in mind. And you’d imagine that this government would not have the stomach to go there.

Source: www.climatespectator.com.au

Australian Conservation Foundation release

28 January 2011

Cut fossil fuel subsidies to pay for flood recovery

The federal government should fund flood recovery by cutting subsidies and tax breaks that promote fossil fuel use and greenhouse pollution, not by slashing funding to climate action programs, the Australian Conservation Foundation said today.

Prime Minister Julia Gillard yesterday announced cuts to the Green Car Innovation Fund, the Cleaner Car Rebate scheme, the Solar Flagships program, the Solar Hot Water Rebate scheme and the Green Start program to help pay for flood reconstruction.

“It’s right for the government to help people rebuild after these devastating floods, but it should use fossil fuel subsidies to fund the work,” said ACF’s executive director Don Henry.

“There are a number of tax breaks and concessions that drain the Federal Budget, while promoting fossil fuel use and greenhouse pollution.

“The largest of these fossil fuel subsidies is the Fuel Tax Credits program, which costs taxpayers more than $5 billion a year, the vast majority of which goes to mining companies as credits for use of diesel fuel.

“Another is the Fringe Benefits Tax concession for personal use of company cars, which is set up so that if you drive a company car, the benefits increase the more you drive it and the more you pollute the atmosphere.

“US President Barack Obama, in his State of the Union address this week, made a commitment to fund the development of clean technology by ending $4 billion a year of tax subsidies to oil, gas and other fossil fuel producers.

“Australia should take a leaf out of Obama’s book.

“While no single extreme weather event can be directly attributed to climate change, this summer’s floods are entirely consistent with what climate scientists have been warning about for decades.

“By cutting greenhouse pollution we can reduce the severity of extreme weather events and help protect our people and our economy.”

Source: www.acfonline.org.au