Coalition high and dry

• Michelle Grattan
• The Age, May 8, 2009
• http://www.theage.com.au/opinion/coalition-high-and-dry-20090507-awk4.html?page=-1

The Opposition is under pressure to come up with a stance on emissions trading.

THE Opposition has had a lot of fun with Kevin Rudd's penchant for inquiries and reviews. So it was not without irony that, faced with the Prime Minister's revamped emissions trading scheme — which concedes a lot of points to the Coalition — Malcolm Turnbull wanted it bundled off to the Productivity Commission.

But aren't we inquired out? After all, we have had the Shergold inquiry under John Howard, the basis for the proposed Coalition government scheme when Turnbull was environment minister, and under Labor we have had Garnaut, plus Senate inquiries.

The Opposition has had its own consultant's review of the Rudd (unrevised) plan. It's true that that report pointed to unanswered questions and the need for more analysis, prompting the initial Coalition calls for a Productivity Commission inquiry, but you would think these issues could be addressed by the relevant experts. There is a whole Climate Change department, and the area has become a private-sector growth industry.

If the Howard government could make decisions on the basis of the Shergold inquiry, surely, given the further investigations, we should have reached the end of the inquiry route. Anyway, business might have reason to be wary of a Productivity Commission inquiry — it would probably be appalled at planned feather-bedding of polluters.

The cynic might suspect Turnbull could want yet another inquiry to delay having to produce an alternative policy.

But having condemned the Government's revised scheme, the Opposition says it will come out with its own ideas soon, including about targets.

Emissions trading spokesman Andrew Robb has promised the Coalition will have something on the table when the Senate debates the ETS legislation — to be introduced next week — in June.

Of all the immediate challenges Malcolm Turnbull faces — including producing a convincing budget reply next Thursday — handling the ETS is perhaps the most formidable.

Consider his position. He is perched atop an Opposition fundamentally divided on climate, with the Nationals and some Liberals sceptical and not wanting to give ground, but others, including himself, previously committed to an ETS. There will be a difficult debate within his party, with Turnbull at risk of being arm wrestled by the hardliners.

He is under pressure from business, a constituency that is vital to the Coalition. Business is not united on the legislation's timing (the Australian Chamber of Commerce and Industry says there is no rush and yesterday announced it had commissioned another study), but the Government has brought two key groups, the Business Council of Australia and the Australian Industry Group, into its lobbying effort to try to pass legislation this year.

A few people around the business community remember Turnbull, as environment minister, chewing their ear about the importance of an ETS. Now it's business doing the chewing. Much of business wants certainty, most easily provided by having legislation in place. If the Opposition is really determined not to deal before the December Copenhagen climate conference, business will at least want to see the Coalition has a credible alternative view.

The Opposition may try a fudge. It may produce some skeletal policy (playing up its carbon capture storage), but say what is needed is more work. It claims there is plenty of time — the Government has delayed the proposed start a year, to July 2011 — and we need to see the Copenhagen outcome.

But if we are serious about Australia getting action started, this reasoning has flaws. It is pretty clear Copenhagen, supposed to be the end of the road from Bali, will be another staging post.

Frank Jotzo, deputy director of the Australian National University's Climate Change Institute and an economic adviser to the Garnaut review, dismisses the argument that waiting for Copenhagen provides a good reason for delaying legislation.

He says we know the broad lines that will come from it. Developed countries will commit to emission reduction targets; developing countries will indicate actions they are prepared to take. "The uncertainty about how much both developed and developing countries will sign on to do doesn't impinge on the architecture of our scheme." The minor adjustments needed could be made before the 2011 start. The advantages of legislation this year are that it would provide business with certainty and strengthen Australia's hand at the international negotiations, Jotzo says.

Liberal backbencher Mal Washer is the chairman of the Coalition's climate change backbench committee and committed to action on the issue. He doesn't think Labor's legislation should be passed this year because "the Labor model would not be cost effective". But Washer says the acid is on the Opposition to come up with an alternative — a range of policies of which an ETS is a key part. Otherwise the Coalition will be wedged on the issue, he warns.

Washer (optimistically) would like to see some consensus between Government and Opposition on general directions for Copenhagen and ideally, eventually bipartisanship on an ETS.

For those who think we need an ETS, there is a big risk in not getting it through Parliament this year. If Copenhagen is indeed inconclusive, there will be more pressure to delay here. Let's just wait till things become clearer, the critics would say.

And 2010 is a federal election year. What are the chances of reaching Senate agreement on such a partisan issue when the parties are in full combat mode? Probably small.

So not only would the start-up date for the ETS be put off until the next parliamentary term, but the fundamental question of whether we would get a scheme could be unresolved, leaving the much-prized "certainty" up in the air with the smoky emissions.

Michelle Grattan is political editor.