Why is credibility important? Why is it important to know that the government will have the backbone to take tough decisions on climate change in the face of determined opposition and to carry through with its stated policy intentions?

1. Credibility is important because the intention of raising charges on GGEs is not only to penalise the GGE emitters of energy users to induice less consumption. These charges are also intended to have supply-side effects that encourage energy suppliers, industries and consumers to undertake substantial investments that longer-term will switch the economy away from being reliant on carbon fuels.  In many cases these investments are sunk costs – they cannot be retrieved once made. Hence investors will be fearful of half-hearted attempts to deal with climate change that will later be revised once these sunk investments are made.  Investors will reason that GGE emmision charges will remain politically unpopular and that governments will hasve incentives to encourage sunk conservation investments and then relax the charges.

Kevin Rudd’s actions in caving in to the polluters has plausibly increased such fears and reduced the prospect that such investments will be made.

2. Credibility is important in seeking global greenhouse controls in Copenhagen this year. The more countries that have clearly committed to take strong action to switch away from carbon-based energy supplies the greater the prospect of a global agreement to control emissions.  Australia carries a voice in such negotiations that goes well beyond its contribution to emissions. If a major international energy exporter makes clear its own determination to take determined action that sends a significant signal to other countries.

One path to develop a credible climate change response is to remove emissions control from the political arena entirely.  An independent agency could be set up to achieve the emissions cutbacks that have been agreed to by politicians at minimum cost.  Generally that will involve sticking to an emissions trading scheme in the face of ongoing pressures on government to relax or dismantle it.

It is important too for pressure groups such as the Greens and the Australian Conservation Foundation to act as a cohesive force in opposing policy backtracks.  You want what Laura Tingle calls a ‘noisy base’.

The Greens have done what they could this week but the apologetics from Don Henry and Ian Lowe from the ACF make me wonder whether these people have, perhaps inadvertently, shifted into the Labor cheer squad.  I wonder how they would have reacted had it been a Government led by Malcolm Turnbull who announced the policy backflip.

It is a major backflip for a man who said, last December, in the face of the full obvious force of the financial crisis, that there was no case for delay.  But it is by no means an astonishing backflip.  I think Rudd’s mouth runs ahead of his brain most of the time but, on climate change, he simply cannot be trusted at all.

Rudd has caved into business who were faced with the prospects of tiny cost increases and their immediate response was not gratitude but – ‘not enough we want even more concessions’.  They will use the extra time not to adjust to the new scheme but to prepare a campaign to thwart any scheme (AFR, Tuesday, p.2). Rudd has also tried to play some really low level politics with Malcolm Turnbull. The stupid issue here is that Turnbull can now push for further delays in adopting any scheme to ‘fine tune’ the details.  

Kevin Rudd went into the election mee-tooing John Howard on all issues other than climate change and the prized Labor scheme to increase unemployment by abolishing WorkChoices.  He has reneged on the first distinctive policy but not on his second which should help to drive unemployment towards 9%.  His profligate fiscal policies will be largely ineffective in offsetting impacts of an external terms of trade shock that we can do little about but will leave us with mountains of debt, huge tax bills and a devalued currency.

Rudd is using the financial crisis to enact policies that will reduce the gains we have achieved in labour markets and which which will help imperil our environmental future.  Given the ambiguity of the Liberals on this issue – they should be pushing hard to achieve sensible climatic change policies – I will think seriously about voting for the idiot Greens  (woeful economics, sound environmental policies) in the next election.  It is one way I can indicate my total disgust with both major political parties in Australia because of their lack of principle on the climate change issue.

The Greens at least lack the hypocrisy of the Labor cheer squad who insist that the feeble conditional 25% increased cut more than compensates for the policy negatives.  They are hypocrites who see climate change not as an urgent policy priority but as politics.  Very unimpressed.