The Coalition are pushing the ‘big tax’ line – of course most of the relative price changes on consumers were fully compensated by income tax cuts before the Coalition forced its amendments through. It was these amendments which forced bigger emissions handouts at the expense of consumers. The Coalition is engaging in deceit on this issue and, by forcing alternatives to charging for emissions, increasing the cost to the community of meeting emission targets.

What should the Coalition do? I was dismayed to find that only two Liberal Senators crossed the floor to vote with the Government although sincere thanks to them. I have no idea how the Coalition can move on from here. Abbott now says that climate change is real (!) and must be addressed but, if he opposes the current CPRS on the grounds it is a ‘tax’, there is no way he will sensibly endorse a pure carbon tax. He has gossiped a bit over recent days about nuclear power but this seems to be daydreaming – no power station has been built in the US for decades. Anyway, is Abbott suggesting a supply-driven response to climate change along central planning lines? That doesn’t sound workable and will inevitably be expensive if carbon isn’t in some way priced. The policy vacuum at the centre of the Liberal Party debacle has not been resolved and I assume further major changes will occur. Literally nothing has been resolved by the replacement of Turnbull by Abbott – at least in terms of climate change policy.

Update: Comments by Joshua Gans on the Liberal’s anti-market policies and from this in The Australian.  The Liberal logic seems so bizarre that you wonder whether Paul Kelly is right and Abbott is just making-policy-up as he goes along.  Even the Business Council of Australia thinks the Abbott scheme is foolish. Bizarre indeed, but maybe Abbott didn’t expect to become leader and was sprouting opposition to the CPRS without thinking about alternatives – or because he didn’t believe in climate change – and therefore did not see the need for alternatives. He has presumably now come back to earth.

There was almost certainly no email – that’s why Kevin Rudd is being so strong in his denials of it – the Labor Party has long-standing experience in handing out favours to mates and would not leave an evidence trail.  The civil servant probably got a FAX or a phone call. The poor guy will face long-term retribution from the Labor Party hacks installed into the civil service for trying to do his job honestly – my sympathies to him.

But overall the issue is small bikkies. The tens of millions of dollars of squandered Federal funds being directed at sloppily-designed school projects, the poorly-thought-through road projects, the gravy-train like adjustment packages being paid to greenhouse gas polluters are more cogent reasons for sacking this incompetent duo.

Update: The email – it did exist – is now claimed to be false and a sting seems to have been implemented but it is unclear by who.  Much more to come.  The nonexistence of the email, again, being used by Labor to deflect attention from Swan’s clear guilt.