Tuesday, May 27, 2008

Rudd and Nelson want lower petrol prices. Garnaut doesn't.

Who is going to win? I've got a very bad feeling about this.

The government will release the draft of its emissions trading guidelines in a month or so. Garnaut wants transport fuels included. Cautious Rudd may now not.

Here's my colleague Shane Wright in the West Australian:


"There is a very big elephant at the bowser being ignored by Brendan Nelson and Kevin Rudd.

The elephant has a name — climate change — and all the chest-beating about lowering taxes on petrol just ignores the pachyderm that is coming down on the Australian economy at a rate of knots.

Both alternatives, Dr Nelson’s to cut excise by 5¢ a litre and Mr Rudd’s, which is to look at removing the GST impact from the excise, merely fiddle at the edges.

We’re talking 5¢ or 3.8¢ out of a price that in Perth at the weekend averaged 151.9¢ a litre...

That’s with a global price of about $US130 a barrel. Now, if analysts are correct, that price will push upward towards $US200 a barrel this year and maybe $US300 a barrel early next decade.

Yep, that 5¢ or 3.8¢ will be noticeable when you turn up to the servo and have to shell out $3 a litre or more.

While there is political mileage to be made out of reducing pressure on those notorious working families, both politicians are ignoring the longterm implications of their policies.

Ultimately, the contribution of petrol to climate change needs to be taxed.
Malcolm Turnbull and Dr Nelson tried to signal last week that maybe petrol should be excluded from any emissions trading scheme.

That ignores the problem that by trying to protect motorists, the cost of reducing greenhouse gas emissions will be increased for those other sectors left to carry the load.

You might be saving Mr and Mrs Average in their Pajero a few cents a litre, but they won’t be able to heat the house or switch on the air-conditioning because electricity costs will have ballooned, thanks to this policy loophole.

The emissions trading scheme is supposed to be up and running towards the end of 2010, but that’s off in the never-never for two major parties trying to pretend they can save motorists a couple of bucks a week by fiddling with petrol taxes.

Mr Rudd created a problem for himself in last year’s election campaign by suggesting he could do something about petrol prices. He can’t.

Dr Nelson is following down the same path but he is just as impotent on petrol as the PM.

The price we’re seeing today is a reflection of demand and supply. A price of $1.51 a litre is a pretty big signal to motorists to reduce their car usage or use public transport.

It’s a signal to car manufacturers that maybe the world doesn’t need another 4WD with 20 cup holders but an ultra-efficient vehicle.

Hell, maybe even one that doesn’t require petrol to drive the internal combustion engine.

And it should be a signal to political leaders that the road to a low carbon economic future will be rocky enough without promising something that simply will not deliver.

Look out for those elephants on the way."

4 comments:

Anonymous said...

That's what you get when the policy is put together by an ex- bureaucrat who now wants to please, and an ex-party hack who wouldn't know his way around a balance sheet. And, of course, all those talkback jocks are driving things along. It's bloody disgraceful.

Anonymous said...

Rudd and Nelson's policies are useless, except for the oil companies, who'll get to make a bit more profit out of their petrol as they'll likely raise their prices by the amount that the tax is reduced.

If Rudd exempts fuels from an emissions trading scheme then he'll be exposed as a big hoax on Climate Change.

Al

Dave55 said...

Garnaut will want to put a carbon cost on fuel because, well, ethically, emission from fuel should be treated equally to other energy emissions that are easy to tax. However if the only purpose behind the impost is to reduce consumption, rather than an ethical impost based on a desire to cost externalities, the increasing price of oil may do this itself; that is, the dramatic increase in fuel costs will promote investment in cleaner technologies. We are already seeing this with cars like the prius and more efficient diesels, but with a further increase in fuel above say $2/L, this sort of investment starts to make serious finacial sense.
At any rate, if carbon is costed at around $80/ tonne (upper estimate), this equates to around 350L of fuel (asssuming my maths and chemistry is up to scratch). This equates to around 20-23c/L. While this would be a big hit at the time, it will probably only be around 10% of the fuel cost at the time. There is also the possibility of reducing the excise and exempting the GST from this to reduce the overall burden on the consumer. This is based on an $80/t CO2 price so the acual amount may be considerable less.

Anonymous said...

The Rudd government has recently been critised for allowing too much responsibilty to rest on Garnaut regarding these issues.

The Australian and Herald Sun both ran an article on his recent planning application to the City Of Yarra and the response of one of the ten disgruntled neighbours who have alleged that Garnaut used his position of authority to obtain a building permit that he would not normally be issued by yarra City Council in an area of such Heritage significance.

http://www.theaustralian.news.com.au/story/0,25197,23673745-11949,00.htm…
http://www.news.com.au/heraldsun/story/0,21985,23686912-2862,00.html

I for one find it interesting how Yarra City’s senior statutory planner, John Theodosakis is ready to sanction Garnaut’s massive project in an area of heritage significance, when in 2006 he issued a refusal for minor privacy screen in a semi industrial street located in Fitzroy North. In the 2006 proposal there wasn’t even any consideration given to the fact that the street is full of small contemporary apartments, factories whilst being devoid of any heritage significance.

Mr Theodosakis then cited this amongst many guidelines:
Clause 22.02-3.3 of the Yarra Planning Scheme which relates to additions and new works - all heritage places:

"…Will not visually dominate an existing heritage place or street in terms of size, height and bulk when viewed from surrounding streets"

So why doesn’t the City Of Yarra apply clause apply to Ross Garnaut?

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