Wednesday, August 25, 2010

Revolution of thinking voter turns politics green

Sorry but I'm not convinced a hung parliament is a terrible thing. It may end up being a good thing. I see it as the revolt of thinking voters against an election campaign that was aimed almost exclusively at unthinking voters.

Labor's been given an almighty kick in the pants but there was no enthusiastic embrace of the Liberals, whose campaign was almost completely negative. The parties should take it as a warning that if they want to win sufficient votes to form government in their own right next time, they should offer more sensible policies and arguments.

The big winner is the emerging third party, the Greens. Labor's share of the primary vote fell by almost 5 percentage points but the Coalition's share rose by only about 1.4 percentage points, with the Greens' share up by 3.6 points.

Those figures make it seem as though all the Greens' additional votes came from Labor. In truth, they show only the Coalition's net gain in votes, concealing those votes it too lost to the Greens. Had the optional preferential voting system been available, I'm sure many of those who voted for the Greens wouldn't have allowed their preferences to flow back to either party.

The swing to the Greens was even greater in the Senate, where their primary vote of almost 13 per cent is expected to give them an extra senator in each state, with some of those positions taken from the Libs. This will lift the Greens' total senators to nine, giving them the balance of power in the Senate from July next year and probably for at least the next six years.

So unattractive was the choice the main parties offered that I'm sure people voted Greens for various reasons. But no doubt concern about lack of "real action" on climate change was the most prominent. Consider the way people concerned about global warming - still a majority of voters - were dudded by the two main parties. Both went to the last election promising to introduce (similar) emissions trading schemes; both went to this election promising not to introduce such schemes.

As Dr Richard Denniss of the Australia Institute observes in a paper to be released today, this election has shown just how much of a challenge new issues such as climate change are for old political structures. Despite much of the election allegedly being fought on economic management, neither Labor nor the Libs had to explain how they could claim to be "good economic managers" yet they were determined to ignore all economic evidence about the best way to tackle climate change.

The Libs describe their approach as "direct action" - which translates as support for the regulation and government intervention once primarily associated with Labor. Labor's major contribution to the climate change policy debate during the campaign was its proposal for a "citizens' assembly", which sounds reminiscent of the Greens' historical preference for "consensus-based" decision-making. "The Greens, on the other hand, have been pushing for the economic rationalist approach of relying on a carbon tax and price signals," Denniss says.

Despite the Liberals' pious condemnation of waste in the campaign, most of their direct action policies would be riddled with waste, with the likely cost per tonne of emissions reduced by their subsidy schemes far exceeding any price per tonne contemplated under emissions trading or a carbon tax. The same is true of Labor's proposed cash-for-clunkers scheme.

The parties' failure to gain a majority in their own right means neither can claim a Mandate for the policies they took to the election. The side that finally reaches a deal with the independents will probably have had to change its policies to achieve that deal.

But this sudden need for policy flexibility in response to unexpected circumstances could be good news for those silly sausages who worry about saving the planet. By my reckoning, three of the four members expected to hold the balance of power in the lower house - the three country independents and the Greens MP for Melbourne - accept the need for a price on carbon. And then, of course, there's the Greens' balance of power in the Senate.

There's no substitute for a government with a logically consistent set of policies (and no reason only one major party should have a monopoly on the desire to save the economy from the ravages of climate change). But for the benefit of those independents - or anyone else - seeking a coherent approach to the problem, the Australia Institute's paper, Once More With Feeling, sets out six principles for good policy design.

First, remove subsidies that encourage the use of greenhouse gas-emitting fuels. These include the concessional taxation of company cars and (controversially for the country independents) the fuel tax credit scheme.

Second, introduce a price on greenhouse gas emissions. Given the rejection and abandonment of Labor's carbon pollution reduction scheme, a simple carbon tax - as already proposed by the Greens - may be the best starting place.

Third, remove existing subsidies to renewable energy that don't deliver low cost of abatement or help develop a domestic industry. For instance, the present subsidy for photovoltaic solar panels on rooftops has been found to cost $447 per tonne of emissions avoided. As for developing a local industry, the panels are imported.

Fourth, invest in public transport and other infrastructure to ensure consumers can more easily respond to the higher price of fossil fuels.

Fifth, regulate to enhance energy efficiency where existing market failures reduce the ability of higher energy prices to achieve reduced energy consumption.

And finally, provide business investors with certainty about the direction, if not the destination, of legislative change.

Two-party government has reached a sad state when neither side is offering such a sensible - dare I say, rational - approach to our greatest and most pressing economic threat.