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."