Friday, November 27, 2009

Malcolm in the Middle

In the debate over the proposed emissions trading scheme (ETS), beleaguered Federal Opposition leader Malcolm Turnbull seems to be between a rock and a hard place. Two camps seem to be putting the squeeze on him. Each one holding to a specific set of beliefs.

One the one hand, market reformists point to the phenomena known as global warming and climate change as indicative of the need to reform capitalism as we know it. On the other hand, market fundamentalists see the ETS as an intrusion by government into the affairs of the private sector which come with unnecessary distortions and costs to the Australian public. They allege no benefits will accrue unless a global deal is reached in Copenhagen by world leaders.

Proponents on the one hand see the need to internalise the undesirable side effects of productive activity as a way to improve the price signals to production and consumption that currently regard what nature endows as free. The political reality as pointed out by Mr Turnbull is that any attempt to spurn this publicly supported proposal will be met with scorn at the polls.

Opponents from within Malcolm's party see it as a "tax" or as onerous regulation. (It actually has elements of both in the form of a cap which sets limits on emissions--the regulatory part--and a trading scheme for emissions permits which will set a price for carbon--the tax part). They also want additional concessions for emitters although doing so would create additional distortions to the ETS. This amounts to a "free lunch" for emitters according to the Greens who oppose the legislation outright. Without their support, the Federal Opposition finds itself in a bind.

Rejecting the legislation could trigger an early election on the issue of climate change. By arguing in favour of passing the ETS legislation now, Mr Turnbull wants to position the Coalition that he heads safely into the next election as far as this issue is concerned. This has earned him the ire of his partymates who see delaying it as the only viable option.

On the other hand, he is receiving no help from the government which wants to play the symbollic game at the Copenhagen summit or perhaps make do with the self-destruction of the Opposition. Apparently, the middle ground seems to be melting beneath his feet. This "inconvenient truth" seems to be dawning on Malcolm and his supporters.

1 comment:

  1. Disagree. Turnbull was in favor of ETS not because of by-election worries, but because he's a banker indebted to Goldman Sachs (he was ex-chair and ex-anaging director and ex-partner of Goldman Sachs Australia), who owns 10% of Chicago Climate Exchange, which will have sole monopoly of greenhouse trading facilities/stock exchange in the world. -SoP