More than four years in the making, the Abbott Government’s Direct Action policy is still nothing more than smoke and mirrors, and with a $2.6 billion price tag, it’s also a colossal waste of tax-payer money.
At a time when the Government is slugging Australians with tax increases and cuts to pensions, the Abbott Government has found a spare $2.6bn to pay big polluters.
The Direct Action policy was released in the wake of the Liberal Party’s decision at the end of 2009 to dump both Malcolm Turnbull and its 2007 election commitment to support an emissions trading scheme (ETS). Mr Turnbull described the Direct Action policy at the time as "an environmental fig leaf to cover a determination to do nothing" and, in the Parliament, "a recipe for fiscal recklessness on a grand scale".
Greg Hunt says that 'additional funding will be considered in future budgets' – these are hardly words of certainty, or of a government of 'no surprises'.
The most fundamental failing of Direct Action is its lack of a legal limit or 'cap' on carbon pollution – the central element of an ETS. It relegates Australia’s international commitment on carbon pollution reduction to a mere aspiration. The Liberal policy relies heavily on highly contested methodologies, such as soil carbon, which will likely make the aspiration a distant one. And, four years on, Greg Hunt still can’t assure us about other basic design elements.
A wide range of witnesses to the Senate Inquiry repeatedly cast doubts on Hunt’s assurances that taxpayers won’t end up paying for reductions that were going to happen anyway (the question of additionality). And the Government continues to avoid questions about how it will set baseline levels of pollution for business and then penalise them for any increases (another element of Direct Action which sounds to many a lot like a carbon tax).
Even if all these questions were able to be adequately answered, the policy remains hopelessly underfunded. Ross Garnaut calculated that Australia’s minimum commitment on carbon pollution reduction will require taxpayers to fork out $4-5 billion each year to Australia’s polluters, an estimate backed in by former Treasury Secretary Dr Ken Henry. Dr Henry told ABC 730 that "reducing Australia’s carbon emissions through any mechanisms other than an emissions trading scheme will necessarily be more damaging on the Australian economy".
Significant details were absent in the White Paper – unacceptable for a policy that Mr Abbott took to the 2010 election and which has already been the subject of a Green Paper:
- Penalties that would apply to over-polluters: Mr Hunt said he’ll wait and see if industry over-pollutes and then there "may be cause for discussion or activity". This is a cop out that confirms what the Coalition’s policy is all about – paying big polluters to keep polluting.
- Contracts allocated under the ERF will typically be for a five year period, according to the White Paper: It doesn’t explain how he would do that on a 4-year funding base.
- Crediting periods under the ERF are stated between 3-15 years: Yet the only financial commitment is for four years.
- Mr Hunt couldn’t explain how Australia could meet its target without applying a cap on pollution.
- Mr Hunt couldn’t explain why business would participate when there are insufficient incentives and no indication of what the benchmark auction price will be.
Greg Hunt says that 'additional funding will be considered in future budgets' – these are hardly words of certainty, or of a government of 'no surprises'. This is policy fraud – an expensive con that will do nothing to tackle climate change.
It is a one-off deal offering taxpayer dollars to big polluters with no incentive for long term change.
Mark Butler is the Shadow Minister for Environment, Climate Change and Water.
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