Brian Toohey says it's really got that bad.
Extracts from his provocative AFR column:
"Kevin Rudd is not behaving like a prime minister about to deliver a series of tough budgets. If he were, he would not give motorists a previously unnoticed $17 billion handout revealed in a Treasury report released on Monday."
"The Treasury report on the Mid-Year Economic and Fiscal Outlook (MYEFO) estimates that the government will outlay more than $116 billion by 2019-20 to compensate big polluters and households for the impact of the CPRS. Almost all of this money will be wasted.
"Instead of helping tackle global warming, the great bulk of the $116 billion will undermine the CPRS's goal of creating a price incentive to switch from products that emit greenhouse gases.
One of the worst examples involves an initial outlay of $3 billion to fully exempt petrol and diesel from the minor impact of the CPRS (6¢ a litre) until the decision is reviewed in 2014. Most observers, including some ministers, didn't realise that the cost of this exemption extends into future years, even if the government refuses to offset any additional impact on motorists from higher prices for pollution permits after 2014.
The Treasury estimates that the cost of the spineless initial decision will be $20 billion by 2019-20; $17 billion more than was commonly assumed. The cost will be much higher if the government wimps it and fully offsets all rises in permit prices after 2014.
"Although some people still regard the CPRS as a market-based scheme, the reality is that old-fashioned government regulation will do most of the work via a cap on emissions. A levy would also rely on caps to meet any target for greenhouse gas cuts. However, a low price would remove the justification for counterproductive compensation (other than the normal indexation of pensions).
With revenue from a $10 levy starting at about $5 billion a year, this would be sufficient to fund the $3 billion a year that the Garnaut report recommended be spent on developing low-emission technologies. The rest could go to purchasing abatement credits, promoting energy efficiency, and adjustment assistance for displaced workers.
UPDATE: Quiggin reckons Rudd's preparing for a double dissolution
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