High Court on gay marriage - two steps forward, one step back

Two steps forward, one step back. It's a cliche but in the case of this week's decision in the High Court striking down ACT same-sex marriage legislation it is most apposite.

The irony of the decision is that while it struck down ACT same-sex marriage legislation it also was a further step on the way to true marriage equality.

Undoubtedly, those couples that rushed to wed in the period between the hearing of the case and the decision are distraught at having the legal recognition of their relationship stripped from them.

However, the great weakness of the ACT legislation was that in order to get around the prohibition on same-sex marriage in the Commonwealth Marriage Act, lawyers needed to argue that an Act entitled Marriage Equality (Same Sex) Act did nothing of the sort. Rather, they argued it established a legal relationship that wasn't in fact marriage and was different.

In their unanimous decision, High Court judges identified this as a key weakness in the ACT case.

"The Territory submitted that the Marriage Act and the ACT Act "do not regulate the same status of 'marriage," judges said.

"As both the short title and the long title to the ACT Act show, the Act is intended to provide for marriage equality.... By providing for marriage equality, the ACT Act seeks to operate within the same domain of juristic classification as the Marriage Act."

But in finding that the Commonwealth has the constitutional power to make laws in relation to marriage, the Court also went out of its way to highlight that the power was not limited to wedlock between a man and a woman.

This is the real significance of the High Court's decision. The Commonwealth Solicitor-General in arguments before the Court went out of his way to avoid the issue of whether the constitutional power - s51 (xxi) - was limited by the understanding of its marriage at the time of federation.

That is, the understanding of the scope of the power at federation was informed by a number of 19th Century English cases that marriage was only between a man and a woman. The Commonwealth Solicitor-General argued there was no need to address this issue in order to find the ACT legislation invalid.

But the Court was not to be dissuaded by the Commonwealth from addressing the scope of the marital power. Instead, it went out of its way to stress the content of the power was one that had changed as Australian society changed. And it was prepared to give a broad ambit to the scope of the constitutional power -  as the modern High Court is prepared to do in relation to other heads of power - defining it without reference to religion, history or sexuality.

Somewhat provocatively, the Court even suggested the marriage power could encompass could include polygamous relationships, as it is in some other countries.

"Marriage" is to be understood in s 51(xxi) of the Constitution as referring to a consensual union formed between natural persons in accordance with legally prescribed requirements which is not only a union the law recognises as intended to endure and be terminable only in accordance with law but also a union to which the law accords a status affecting and defining mutual rights and obligations," the Court said.

The real power of the court's decision then is that it is no longer possible for groups like the Australian Christian Lobby to claim that marriage is only between a man and a woman or that it is fixed by reference to out-dated values.

As the Court makes clear, it is not possible to limit the legal concept of marriage "by confining attention to the marriage law of only those countries which provide for forms of marriage which accord with a preconceived notion of what marriage 'should be'".

In the rarefied world of this High Court, this goes as close to a slap-down of the religious right as you get.

In doing so the High Court hand-balled the issue of marriage equality back to Federal parliamentarians and reminded those seeking real marriage equality that it can only occur if the artificial constraint on the scope of s. 51(xxi) is removed in the place it was created in 2004. It is not achieved through state or territory level legislation creating a legal artifice to get around a federal discriminatory law.

Now the Government cannot hide behind the claim that it does not have the constitutional power to recognise same-sex marriage.

So while the Abbott Government may have won the day in the High Court, it is highly likely the battle will return to parliament, which will eventually come to the same decision as the High Court and many other countries have done. And it is highly likely that battle will not only divide the Coalition but also the Labor Party. But more about that in a future blog post.

The Canberra Feedback Loop

She would call four to five times a day. Maybe more. At times, pleading and begging. At other times, rude and bullying.

Then there were the emails - shorn of formal niceties and full of demands and threats.

Sure, it is never easy dealing with press gallery journalists when working in Government. But this particular journo took the cake for sheer rudeness and front.

Every day was a new demand to be spoon-fed an "exclusive" or "drop" or a rather transparent attempt to flush us out by claiming she had "government sources" on a story.

On one such occasion, in relation to a budget measure, she had her facts completely wrong but in the early days of the Rudd Government in 2008, it was worth more than our jobs were worth to deny it and in so doing give her the real story. However, as best he could the media advisor tried to steer her away from writing the story warning her she would look silly by writing it. But she was not to be swayed and swore she had a high-level source saying the Government had broken an election pledge to introduce the measure. 

Next morning,  she had her "exclusive", even though it was completely fictional. So when time came to make the announcement a week before the budget, it was decided there was no point giving the journo the story as she had already reported it was not going to happen. As a result, the brown stuff hit the fan - the journo in question rang first thing in the morning and then emailed making all sorts of dark threats. Soon after her paper started writing stories about Government "spin" and "media management".

I am not going to name the journalist. It serves no purpose. The reason I tell this story is to give some insight into the rather extreme tactics of some journos to get a story out of a new government. But also to give colour to a broader point about various government strategies to handle the media.

This incident was in the early days of the Rudd Government when few had any idea that things would end so badly. At that time, the strategy driven from Rudd's office was very much based on feeding the media beast and trying to control the agenda. In those days - unlike later in the life of the Government - control was tight. Stories didn't get out unless we wanted them to get out. In the first year of the Rudd Government there was only one real "leak" - details of Cabinet discussions on Fuelwatch - and that came from Godwin Grech, not from within Labor ranks.

However, while the media strategy seemed to have worked for Bob Carr and Tony Blair, journalists had become wise to it. Journos - particularly from News Ltd - who had become fat and lazy from the Howard Government culture of exclusive "drops" could be overheard down at Aussies Cafe whingeing about how hard it was to get stories out of ministers' offices. They quickly rebelled within months of Rudd coming to power. 

Quickly, the claim of the spin machine of Kevin Rudd's office became a widely accepted fact in the media and it worked against the Government. (From my point of view, if Rudd's media office had been proper spin doctors, they would have been a whole lot better than they actually were). 

Watching the Abbott Government recently has reminded me of those early days of the Rudd Government. Like the Coalition, Labor too was wary of the media and was convinced it could control it. But unlike the Coalition, Labor believed it could do this through regular announceables.

Abbott and his senior advisors clearly watched closely Rudd and Gillard's failed strategy to deal with the press gallery and the mayhem created by the ever-quickening catherine wheel of the 24-hour media cycle. To their credit, they have tried to lower the frenetic white noise of politics, realising that most people are thoroughly sick of politicians on their TV and radio every moment of the day.

However, it is clear there is more behind the Abbott Government strategy. From the recent weeks it is clear it is also driven by deeply ingrained disdain towards the Canberra press gallery.

The Coalition's disdain for the Canberra press gallery is by no means unique in Australian public life in recent times. However, it becomes dangerous when the barely concealed belief they can ignore the Canberra gallery and talk over their heads starts manifesting itself as belligerent arrogance and conceit at press conferences.

Prime Exhibit was Christopher Pyne on ABC Radio this week: ''It's not my fault if some people in the press gallery don't understand the complicated nature of the school funding model."

There can be no other explanation for the public performances of ministers like Christopher Pyne and Scott Morrison other than basic arrogance and conceit. Tony Abbott's ham-fisted initial response to revelations of spying on Indonesia's president seems similarly driven by  a belief that what matters is not the perspective of political journos but those of listeners to talkback radio. In so doing he completely missed the serious diplomatic implications of his actions. 

While many voters may dislike the Canberra press gallery, I reckon they hate even more the recent displays of belligerence by Pyne and Morrison. Not a great deal that fascinates the press gallery tends to filter through to average voters. But I bet they would have concluded two things this week - the Coalition has broken its promise on school funding and Pyne is an arrogant pillock. For a government elected on the promise of no surprises and a pledge to keep its election commitments, Pyne's efforts this week were just breathtaking, especially on an issue of such high importance to so many voters.

And what happens when you starve a pack of hungry wolves ? They gorged themselves on the piece of red meat, finding angry school teachers and state education ministers to fill the airwaves and column inches. While its influence is no longer what it used to be, the press gallery still has a large impact on the way many Australians understand and interpret federal politics. 

In some cases, like a bad circus mirror, the press gallery reflects back to politicians a distorted version of themselves that soon becomes reality. This feedback loop has a major influence on the way the political actors see themselves and act. In competing versions of reality, it is the press gallery's narrative normally - not always - becomes the accepted narrative. By the time it has been picked up by the ABC in the morning, repeated on talk back radio and again in the commercial nightly news, fiction often becomes reality.

The Abbott Government might think that in the end results will speak louder than words but they take the press gallery for granted at their peril. If a tree falls in the forest and no-one is there is to see it happen, did it really happen ? In contrast, those ministers who  assiduously court gallery journalists and do to the talk show show circuit of Sky News and Q&A will always be the ones feted as the strong performers, despite meagre policy records.

However, the more important lesson for the Coalition this week was that it takes Coalition state colleagues for granted at their peril. Pyne committed an A Grade newbie error this week in expecting Liberal education ministers in NSW and Victoria to meekly fall in behind him on education funding. This faux pas was made even worse by the fact he didn't even do state counterparts the courtesy of letting them know beforehand before dropping the story out in the media. Again, a sign of disregard of elementary political and diplomatic due process, something that seems to be an emerging hallmark of the Abbott Government

The Greens, Labor and a pack of matches

You really have to hand it to the Greens. They are just as capable of devious acts of political bastardry on Labor as ALP's best faceless men. If not more.

Now in writing this, I am fully aware of the Twitter shitstorm this may bring down on me and as a result nearly didn't post this item. But hell, someone has to say it. There needs to be a proper public discussion about how it all went so wrong over the last six years.

Let's just rewind the clock six years and trace back most major problems Labor now face.

Sure. Labor's sheer ham fistedness on most major policy issues has a lot do with their problems. But you'll probably also find the Greens sowed the seeds.

Watching the Greens deal with Labor over the last six years is like a watching someone giving a pack of matches to a pack of delinquent kids and then feigning horror when the house goes up in flames.

The most obvious example is the Greens refusal to pass the Carbon Pollution Reduction Scheme. Now I hear Greens supporters cry: "But the CPRS was crap and would have locked in failure. The carbon price scheme is a much better scheme."

There is a certain amount of truth in that:- even though the essential design features of the CPRS and carbonnprice are the same, the latter achieved an important independent governance framework through the Climate Change Authority; set aside a $10 billion fund for renewable energy; and put in place a review of industry assistance through the Productivity Commission.

But won't perfect policy look dandy by the middle of next year when the Coalition succeeds in gutting it ?

Let's take the sliding door moment in 2009 and imagine what would have happened if the Greens had supported the CPRS.

By now, there would have been in place a price on carbon for nearly four years; making it much harder to repeal. Yes, it would have been a very, very low price - around $1. However, it would have laid a foundation for much stronger action down the track, instead of the smouldering ruins of the carbon scheme that will soon come to pass.

Contrast the approach taken by the Greens in dealing with the GFC stimulus package to the CPRS. I'm not arguing the stimulus package was not an important factor in helping Australia ride out the GFC but it could have done so at a much lower cost.

If the Greens had taken a responsible balance of power party in the Senate they would have taken a bit more critical look at some of the stimulus package components.

The cost of the School Halls program alone - nearly $16 billion and well exceeding any benefit to the community - was around half the budget deficit when Labor left office, and it was delivered long after needed to respond to the GFC.

But what did the Greens do ? They waved it through after tacking on additional money for bike paths which as the Australian National Audit Office subsequently commented was not stimulus related and did not "seek to focus funding consideration on those projects that would maximise job creation and retention outcomes for the funding  awarded  in  the  areas  of  identified  greatest  need."

However, the much bigger consequence of the Greens action in the Senate, was to start the creation of a deeply divisive political environment in which it has become nearly impossible to get anything done in climate change policy. It sewed the seeds of Tony Abbott's rise to power and of Prime Minister's Kevin Rudd downfall and that of his predecessor Julia Gillard.

Faced with the rejection of the CPRS in the Senate, Rudd took a downward spiral - panicked, rejected the option of double dissolution, dumped the CPRS, and botched the introduction of the mining tax. It worked to the benefit of the Greens at the 2010 election with scores of disillusioned Labor voters flocking to the party.  However, in the long run it has been to their detriment. 

But that's the thing about the Greens; regardless of their claims to be different from the traditional parties, they too are focused on the short-term politics rather than the long-term. It looks great on a wrist band but isn't often doesn't work so well in practice.

But I digress. Back to 2010.

After the election, buoyed by their success at Labor's expense, the Greens drove a hard bargain and demanded a coalition agreement with Gillard. As usual, it seemed like a great idea at the time but has had serious negative long-term consequences for both Labor and the Greens.

But the problems really began when they negotiated the carbon scheme. The problem was not so much the Greens demanded in return for supporting Labor - even though they should have supported the CPRS in 2009 - but rather the scheme's design features.

Unable to secure agreement from the Greens on a national emissions target, Labor had to agree to a compromise - a three-year fixed price. The Greens also set their sights on a high price - up to $40. With the talks set to collapse, Labor eventually agreed to $23. In hindsight, that high price along with the three year fixed price period made it much more difficult to sell publicly.

Now I hear the objections.

"But we need a high price on carbon, if we are to bring on more renewable energy, replace fossil fuels and urgently tackle climate change".

However, it is not the price today or next year or the year after  that which will determine investment in renewables in the long term. Rather, it is the long-term price trajectory and guess what ? We don't have one now.

A far smarter approach politically would have been to start with a much lower price and then leave it to the Climate Change Authority to set targets and a long-term emission trajectory.

But as usual, the Greens went for the policy perfect rather than make compromises that may have seen a more durable scheme. 

However, more importantly,  the Greens went for the short-term political win in order to wave around a high starting price for the gratification of ill-informed supporters.

As a result, we now have a scheme that goes from $24.15 to zero next July and a Coalition Government in power for the foreseeable future. Good job.

But not content with lumbering Labor with a carbon scheme that was electoral poison, the Greens then waited for the most politically opportune movement to shaft Gillard.

Sensing the political tsunami awaiting in September - that they helped create - the Greens then pulled then pin on the coalition agreement and sunk the boot into Labor, which was already lying in a battered foetal position on the floor.

Milne portrayed the decision as one of principle but her speech to the National Press Club couldn't disguise what was a deeply political strategy of brand differentiation to again win support from disaffected left Labor voters.

But it counted for little.  Voters didn't buy it - the Greens fell to their lowest vote since 2004. They achieved 342,000 fewer first preference votes in the lower house, a swing against it of 3.2 per cent. In the Senate, the national swing against it was 4.5 per cent – in the party’s homeland state, Tasmania, the Green vote fell by more than 8.5 per cent.

By a stroke of luck and a smelly preference deal with the very man who epitomises everything they profess to stand against, the Greens managed to scrape back with the loss of at most only one Senate seat. However, if the vote is replicated at the next election, they are likely to face a rout in the Senate.

In the wash up from the election, former Greens campaign manager Vincent McMahon put the Greens problem best.

"At issue is whether to be a party of protest or to have broader appeal. The former consigns the Greens to minor-party status," McMahon said.

"If the Greens broaden their appeal and display a maturity to move beyond being a party of protest, they can rebuild voter trust and become a third force."

On cue, McMahon's analysis met with howls of protest. But McMahon is spot on: every time the Greens define themselves by who they are not - Labor - they lose the opportunity to define their own agenda.

However, the Greens have not learned their lesson and they are back to their old tricks in parliament; playing the short-term political game and eschewing a smarter long-term agenda.

Last week, the Greens voted in the Senate with the Coalition to prevent an inquiry into the repeal of the carbon bills and force a vote much sooner on the legislation. Given the complex transitional issues for business associated with the repeal of the carbon price, an inquiry makes sense. But Milne is unmoved.

"The reason the Greens will not be supporting an inquiry into the current legislation is that we do not want to avoid a vote on this. It is time to take it straight up to the coalition government. It is time to say: this legislation is working. We are not going to cast doubt; there is going to be no equivocation on this."

To the barricades comrades and damn the logic ! Bringing the vote forward achieves nothing; even if Labor and the Greens block the legislation, it will still probably pass after June.

But the short-term political logic of the move is obvious - Labor is internally divided over whether to block the carbon repeal legislation and the Greens stategy is designed to embarrass Bill Shorten. If Shorten can prevent a vote being taken until after July 1, Labor's vote in the Senate will no longer be needed. However, Milne won't let the opportunity pass to score points and wedge Labor.

"Now is not the time to delay or equivocate," Milne said.

"Labor have back-flipped on global warming so many times already, and now they want a delay so they're not forced to vote down Mr Abbott's bad policy."

However, there is considerable risk in the Greens strategy. Labor could block the repeal legislation on the first occasion and then buckle under extreme pressure from business to pass the Bill before 1 July.  Alternatively, Labor could block the repeal bills twice and hand Abbott a Double Dissolution trigger. In the ensuing election, Labor and the Greens could then be wiped out and even more right-wing minor party senators elected

Either way, another classic Greens rat...k.

Labor's lot on carbon

One of the hardest things about going from the Government benches to the Opposition is losing all the resources that go with them.

Labor has probably already worked that out but the first week of parliament will really bring that fact home. 

The Coalition will this week introduce legislation to repeal the carbon scheme and Labor has signalled its intention to try to amend it to introduce an emissions trading scheme.

Now that is easier said than done. The Government has all the resources of the Office of Parliamentary Counsel to work on its legislation; the word on the street is that the poor schmuck who drafted all the CPRS and Clean Energy Future bills was locked in the same dark room to draft the repealing legislation. 

With no such drafting resources it will be interesting to see how Labor goes about amending a Bill, which is pretty much one line; Schedule 1, Item reads - "Clean Energy Act 2011: The whole of the Act: Repeal the Act." 

The rest of the amendments are basically transitional arrangements for the phase out of the carbon scheme and consequential amendments to other pieces of legislation.

One option for Labor would be to cut and paste the amendments hurriedly drawn up before the caretaker period earlier this year. But that will face some procedural hurdles.

Despite these difficulties, it's a bit different from the course of events one ill-informed scribe was over-confidently predicting in his recent "Labor backflip" yarn. Word of advice: heed the lesson of the last three years- if you're going to rely on an unnamed Labor Right factional hack, make very sure you're not being used to fly a kite in caucus.

Not to be dissuaded the same scribe was ruminating this week that Abbott's achilles heel on his plan to repeal the carbon scheme was the weather. 

Well yes its true, public support for taking action to tackle climate change was highest during the Millennium drought. But as I argue here the recent bush fires in NSW don't mean there will be a resurgence of support. The argument that public support will return for putting a price on carbon when the weather turns foul conveniently overlooks that it didn't in 2009 after the Victorian bushfires nor did it in 2010 after the Queensland floods.

Nice idea. But I fear it's a bit of a pipe dream.

However, the prize for the most widely optimistic claims goes to the chair of the Australian Competition and Consumer Commission Rod Sims, who reckons that it will be a fairly easy task to strip carbon out of electricity prices.

"It's not a massively complicated process,'' Mr Sims said this week. ''Electricity prices went up fairly quickly on the way up and they will go down fairly immediately on the way down.''

That claim would have had a few energy market experts scratching their heads. Anyone who has taken any time looking at Australian energy markets knows one thing for sure and that is that they are "massively complicated".

And as is becoming increasingly clear, it is not a simple matter of going back to old energy prices come 1 July next year.

The biggest problem confronting energy companies is what happens if the carbon scheme is not repealed by 1 July next year. The Abbott Government has made clear even if the repeal bills are not passed until after 1 July they will take effect retrospectively.

But again, easier than it sounds. For a start, state energy regulators can't make pricing determinations for 2014-15 just on the basis of an "expectation" the carbon scheme will be repealed. As a result, they will  need to wait until after repeal to redo retail energy pricing and that will take at best 2-3 months.

During this time, the law is the law and generators will most likely still be passing through the cost of carbon to customers through the retailers. 

At the same time, customers will expect to be getting cheaper power and newspapers will be crying blue murder running story after story of pensioners doing it tough.

But it won't be a simple case of refunding retailers and customers 10 percent when the changes come through.

As explained by the Energy Supply Association of Australia, unlike the impact on goods and services of the introduction of the GST in 2001, there is no easy way to calculate what the carbon component is of energy prices.

"It is impossible to precisely quantify the extent to which the carbon price has increased wholesale energy prices, as they vary based on the changing mix of generation output. In a competitive market, price discovery is dynamic, and participants’ ability to recover carbon costs will vary. Renewable generators (wind, hydro) also benefit from those higher prices, even though their costs are not increased by a carbon price.

Further complicating this scenario is the inability to attribute to the carbon price a specific value at the time of trade."

Then there are all the forward contracts that have been entered into by retailers to hedge against the volatility of the wholesale market that have carbon factored in. Says ESAA:

"Forward contracts are based on expectations of wholesale spot prices over the period of the contract and can be bought and sold several years in advance.....

Where a carbon “pass-through” clause has been used in a bilateral contract, the arrangements differ. There is a standard form contract approved by the Australian Financial Markets Association (AFMA) that has a price ex-carbon and a formula for calculating a carbon component based on the prevailing price."

So it isn't as straight forward as Sims would have people believe. Nevertheless, the ACCC from 1 July will be running the fine tooth comb over energy prices to determine whether they are "unreasonably high"  using the new powers being conferred by the Abbott Government. These new powers go much further than the ACCC's powers when the carbon scheme was introduced, which merely addressed whether companies were making false or misleading claims about the price impact of carbon tax.

So that brings us back to Labor's lot. With the ACCC breathing down energy companies necks, you can bet they will start bringing pressure to bear on Labor to pass the repeal Bills before 1 July rather than roll the dice with Clive Palmer.

There is more than one way to skin a cat

The draft report of the Climate Change Authority is as much about trying to inform the direction of Direct Action as it is about making recommendations about Australia's national emission target.

Predictably, the Authority's finding the current target of minus five percent on 2000 levels is "inadequate" has been viewed in the context of the Coalition's plan to repeal the carbon scheme and that its amorphous Direct Action scheme will have trouble even reaching that level.

On the flip side, the Coalition's plan to abolish the Authority seems at first to make its recommendations somewhat academic. 

But that would be a short-sighted reading of it. It does a disservice to its chair Bernie Fraser, a pragmatic and canny political operator.

For a start, the CCA finds falling demand for power, reduced land clearing, changes to the economy and Australia's surplus under the first period of the Kyoto Protocol to reach the current 5 percent 2020 target. Was a result, it is going to be easier to hit the target with Direct Action than previously thought - the big swing factor will be what happens to energy demand.

More importantly, the CCA report shows there is more than one way to skin a cat when it comes to reducing emissions. The CCA board - like a number of other experts in the field - are trying to work out how to make something serviceable out of Direct Action.

Bear in mind that the United States is on track to achieve its target of reducing emissions by 17 percent, not with a direct price on carbon but through regulation and rapid expansion of its unconventional gas industry.

With clear awareness the days of the carbon price scheme and the Authority are numbered, the CCA has laid down markers and provided guidebook to the Coalition for reducing emissions without an explicit price on carbon.

Only last week, environment minister Hunt released an issues paper calling for submissions in relation to, among other things, "the likely sources of low cost, large scale abatement to come forward under the Emissions Reduction Fund".

"The ERF will provide incentives for companies to reduce their emissions," Mr Hunt said on releasing an issues paper.

In releasing its draft report, the CCA has obliged by providing advice on possible likely sources of low cost, large scale abatement. And it has gone out of its way to be positive about the Coalition's plan and deliberately refers to "price incentives' rather than  a carbon price.

According to the draft report, the scenarios in it are "largely based on the current legislative arrangements in the Clean Energy Act 2011 (Cth)"

But, the carbon price can be seen as a broad proxy for "incentive"- based measures, the CCA says. 

"The results show the potential scale and source of emission reductions available in Australia at different marginal costs," the report said. 

"Depending on the policy design, the Government’s Direct Action Plan may mobilise many of the same opportunities."

Store that away - it's not often you will hear climate change specialists speaking in such terms about the Coalition's plans. But the truth is that Direct Action will mobilise many of the same opportunities as a direct price on carbon; the problem is more that it is likely to do so at a much higher cost.

However, on the upside, direct contracts with polluters - envisaged under Direct Action - may provide more investment certainty to invest in low-emission technology than a carbon price scheme. While a carbon scheme is intended to provide a price signal to invest, uncertainty around future price path and the current low price act as a disincentive to investment.

As a result, the CCA has gone out of its way to provide pointers to the Coalition as to how it could target Direct Action through investment in low-emissions technology and also regulation.

"Other policies, including the Direct Action Plan ...could create price incentives to reduce emissions. Such policies may mobilise similar emission reductions opportunities to those identified in the modelling.

"There may also be a number of differences depending on the detailed policy design. "

The CCA has focused particularly on investment in low-emissions technology in the energy sector, where about half of the least-cost domestic opportunities to reach Australia’s minimum 5 per cent emissions reduction target could be found.  Energy efficiency measures come in for special mention but the CCA makes pointed reference to the need to ensure measures are "cost effective". 

"Incentives for emissions reductions could be established at different levels of government, using a wide range of policy tools. The type of emissions reductions and the rate at which they are realised will be affected by the relative costs of low-emissions technologies."

The CCA also - strategically- identifies the importance of the Renewable Energy Target.

"Pitt & Sherry (2013a) estimates that about 40 per cent of the reduction in emissions from the NEM in the year to 2013 was due to lower electricity demand, and 60 per cent due to the uptake of lower emissions electricity generation. AEMO’s (2013a) forecasts note the effect of the RET in lowering the emissions intensity of electricity supply."

In the transport sector - which is not currently covered by the carbon scheme and accounts for 15 percent of emissions - "sustainable biofuels, vehicle electrification and mode shift " could be deployed.

"Fleet-average fuel economy or carbon dioxide emissions standards for light vehicles have been adopted in many major markets, including the European Union, the United States, Canada, China, Japan and South Korea. Such standards warrant further investigation for Australia. "

Similarly, in direct combustion, beyond efficiency improvements, the main opportunity to reduce emissions could be to substitute alternative lower emission energy sources, such as biofuels.

And almost half of the estimated emissions reductions in the industrial processes sector in 2020 and 2030 could be delivered by nitrous oxide conversion catalysts for nitric acid production. The other significant emissions reduction opportunity is in the destruction and replacement of synthetic greenhouse gases.

But the problem in all of this is the growth of Australia's fossil fuel exports.

"The main challenge to reducing fugitive sector emissions  is strong growth in LNG and coal production, which could outstrip improvements in emissions intensity. "

Agriculture emissions are also projected to grow in the period to 2030 in all scenarios modelled, driven primarily by strong growth in demand for Australia’s agricultural exports.

Then of course, there is the big problem of how to increase the national target about minus five percent under Direct Action. A major factor behind the CCA's recommendations is the fall in the international price on carbon and the ability to increase the national target by purchasing overseas abatement with relatively little further cost.

"While there are extensive emissions reductions opportunities available in the domestic economy, the modelling also shows that international emissions reductions can help Australia meet its targets in a cost-effective way. There are many options for securing emissions reductions from other countries."

While the Coalition has been adamant it will reach the five percent target exclusively through domestic abatement, it has been silent on what will occur if it increases the target, which Mr Hunt has indicated may occur in 2015. Indeed, in some discussions Mr Hunt as even hinted the Coalition may look to purchasing international abatement if the target is increased.

And the CCA has picked up on these hints in its report and goes into detail about how to ensure the integrity of international carbon permits.

"In the Authority’s view, the Government should consider allowing the use of international emissions reductions to go beyond its minimum 5 per cent commitment, paying careful attention to the environmental integrity of the emissions reductions allowed,". Moreover, the Government could consider using genuine international emissions reductions to complement domestic efforts to achieve Australia’s minimum 5 per cent commitment. "

It seems unlikely - given Tony Abbott's strong views against international abatement - this would occur in the short term.

But the CCA is playing the long game, despite its limited short-term future. 

"The Politics of Climate Change" - Speech to La Camara conference on renewable energy, 24 October 2013

It is a statement of blindingly obvious that the present is a period of great uncertainty in the renewable energy sector. So I want to start with what we do know. Then I want to move to what lessons have been learnt over the last six years that might be applied in the next year.

So, let's start with the busy timeline for the next nine to 12 months:

·            Carbon repeal legislation to be introduced in November parliamentary sitting

·            Release of Green Paper on the development of the Emissions Reduction Fund for public comment in late 2013;

·            a White Paper containing final policy design to be released in early 2014.

·            Legislation for Direct Action to then be introduced and operational from 1 July 2014;

At the same time:-

o   there will be a RET review in early 2014

o   And an energy white paper that will focus " on those economy-wide reforms relevant to the energy sector, including streamlining regulation, improving workforce development, and stimulating research and development

What do know about the future of the RET ?

We have been assured by Greg Hunt the Coalition is committed to the current fixed 41000 gigawatt hour target. However, there will be a review of it early next year and we also know there are different views within the Coalition - for example new energy minister Ian Macfarlane who has hinted strongly in consultations with industry groups that if demand continues to fall it will be recalibrated; to outright opposition from the newly elected member for Hume Angus Taylor and other backbenchers such as Senator Chris Back.

However, one of the interesting aspects of the reshuffle of ministerial responsibilities, responsibility for the RET has gone to Greg Hunt. Hunt is counting on the RET to help  Australia to hit the minus five percent target. However, the problem for Hunt is that he may not have strong support within the party for his position.

The draft carbon repeal legislation released last week contained amendments to RET legislation to remove the Climate Change Authority as the review body of the RET. However, and this is important, the terms of that review remain the same. BUT there is now uncertainty about further reviews after next year's with the amendments giving the minister discretion over whether two-yearly reviews are done.

It seems highly Minister Hunt will ask his Department to review the RET. In that way he will keep control of its outcomes.

What do we know about Direct Action ?

It was developed in the lead up to the 2010 election - using as a starting point - a directive from Tony Abbott that it not impose a new tax and not impose additional regulatory burden.

The policy includes Abbott's Green Army and 1 million solar roofs for low income households. However, the heart of policy is the Emissions Reduction Fund;

Essentially, it is a baseline and credit emissions intensity scheme based on the Frontier model produced for Malcolm Turnbull and Nick Xenophon in 2009. However it is funded from the budget and. cost capped.

Mr Hunt, a former McKinsey consultant, tells us a reverse auction will be used to buy the lowest cost per tonne up the abatement "cost curve".

The so-called “incentives” model is the basis of the United Nations’ clean development mechanism. In Australia, it was used in the NSW greenhouse gas abatement scheme and also the carbon farming initiative commenced in 2011.

All have faced major challenges in defining real abatement and project baselines and the schemes are administrative complexity.

This is because it is inherently counterfactual to say this particular project reduces emissions from what they otherwise would have been.

Winning bids will enter a contract to cut emissions over a defined term with payment on delivery. However, it is not clear what length of the term will be and this could be critical for companies interested in bidding.

Hunt expects to buy abatement at $8 - $12 a tonne of carbon (based on industry estimates prior to the 2010 election. However, he has subtly changed his language from suggesting the principal source of emission reductions will be tree planting and soil carbon to focus more on energy efficiency.

There will be penalties. However, the Coalition thinks few companies will pay it. This is because it will be an emissions intensity baseline and historical experience is that most companies become less emissions intensive over time not more as they become more efficient.

To progress this plan an emissions reduction taskforce has been established within the Department of Environment. Last week, Minster Hunt released a one page issues paper  asking for submissions to assist in the development of Direct Action:-

·            the likely sources of low cost, large scale abatement to come forward under the Emissions Reduction Fund;

·            how the Emissions Reduction Fund can facilitate the development of abatement projects, including through expanding the Carbon Farming Initiative and drawing on the National Greenhouse and Energy Reporting Scheme;

·            the details of auction arrangements to deliver cost effective outcomes;

·            the governance arrangements that will support the Emissions Reduction Fund,

·            including the role of key institutions such as the Clean Energy Regulator;

·            the details of the monitoring, verification, compliance and payments arrangements for

·            successful bidders at auction;

·            transitional issues relating to the existing Carbon Farming Initiative; and

·            the design and operation of a mechanism applying to emissions above the business as usual baseline.

The key item will be the last; working out how the baseline is set and at whether it is applied at a facility or corporate level.

Repeal of carbon price scheme

The Government has made clear it will not extend the carbon tax beyond 2013-14, even if the Parliament does not pass the carbon tax repeal bills until after 1 July 2014. Lawyers better than I have highlighted the transitional problems that this commencement date will pose if it is not passed by this date. There are particular problems in the energy sector with supply contracts and calculating the carbon component in wholesale spot prices. On top of this, there will be the ACCC looking at whether prices are "unreasonably high" after 1 July 2014.

Labor has said it won't pass the repeal bills but the Coalition is confident it will in the same way they passed the WorkChoices repeal bill after they lost in 2007. However, there is no sign that will occur. In fact, quite the opposite - after suffering such an electoral backlash in 2010 when back-flipping on the CPRS and again following the election, there are many who think they are better off standing firm on a key party policy.  Former climate change minister Mark Butler, has also retained the portfolio in Opposition and in my view would be unlikely to support a repeal.

It's highly likely the repeal bills will be referred to a parliamentary committee and with Labor and the Greens having the numbers in the Senate it seems unlikely that will be a short inquiry

As a result, the Coalition will find it difficult to quickly get a double-dissolution trigger, which the Coalition is threatening to pull if Labor does not pass the repeal bills.

As a result, it seems more likely that the bills will not be passed until after 1 July causing the transitional problems I referred to earlier. It also seems unlikely the Coalition will want to risk a double dissolution given it will reduce the Senate quota, making it even easier for micro parties to get elected.  So I won’t go through in detail the D-D procedure.

This brings us to the big uncertainty after 1 July in what form the repeal bills come out of the other side of the Senate. New micro-parties – particularly the Palmer United Party - in Senate means the outcome and form of repeal of the carbon price and Direct Action is highly uncertain. As a result, it seems highly likely Labor will come under strong pressure from industry to pass before 1 July to avoid this scenario.

Double Dissolution ? Unlikely

Under Section 57 of the Commonwealth Constitution, the Governor-General can dissolve both Houses of Parliament if a bill is twice rejected or “fails to pass” the Senate, or if it passes with amendments which are unacceptable to the House of Representatives.

However, there needs to be a three-month interval between the Senate first rejecting, failing to pass or amending a bill and the second occasion.

In 1975, in similar circumstances, the High Court ruled the Petroleum and Minerals Authority Act was not eligible for the double-dissolution process as it was not one the Senate had failed to pass. Judges highlighted the Senate was entitled to a “proper opportunity for debate” and to undertake ordinary “deliberative processes”. Said Justice Harry Gibbs in that case:

“Nothing in the section favours the notion that the House of Representatives can require the Senate to treat as urgent any bill that the House happens to think ought to be treated urgently.”

This brings me to the second part of the speech

What have we learnt from the last six years ?

Nicola Roxon last week began Labor's painful post mortem of how it went so wrong over six years of power with her take on the removal of Kevin Rudd.

In such a post mortem there will need questions asked about how an issue that helped propel Labor into Government in 2007 and was a key cause of its loss in September - climate change – with the second lowest vote in a century.

From this post mortem lessons about policy making and implementation will need to be learnt by all sides of politics if there is to be major but necessary economic reform in the future.

As someone who covered the carbon pricing debate in some detail, I want to offer my own assessment of what went wrong.

By way of summary, here are the lessons that I believe can be cystallised from the last six years:

·            There is a need to properly explain policies and reasons for pursuing them

·            Language is important

·            There are dangers of over egging it - eg "greatest moral challenge"

·            There is a need to bring the community along

·            Support for tackling climate change may turn on weather events. But not always;

·            There is a danger in conflating weather events with climate change;

·            People like something they can have a personal experience of eg Solar.

Let me deal firstly with the first of those two points. I don't think there is any doubt that Kevin Rudd squandered the goodwill he earnt from the electorate in 2007 over climate change. He failed to properly explain the reasons for the carbon pollution reduction scheme and how it worked. Instead, he used it as a battering ram to undermine two Coalition leaders, Brendan Nelson and Malcolm Turnbull. There is a clear lesson in this as well for the Coalition which looks like it will attempt to use the Carbon Repeal process to damage a new Labor leader without adequately explaining its own Direct Action policy.

Secondly, Rudd made his task more difficult by calling his emissions trading scheme the rather unwieldy "Carbon Pollution Reduction Scheme". As I understand it, it was a title devised by Kevin Rudd’s former chief of staff Jordan over the objections of government advisers and senior bureaucrats who wanted the simpler title Emissions Trading Scheme. CPRS was an acronym that came to signify the scheme’s incomprehensibility. When it came to carbon price scheme mark 2, climate change minister Greg Combet tried again and came up with "Clean Energy Future" as it signified what the Government was working to achieve. But again it didn't really signify what the policy was or how it worked in the same way that the simple "emissions trading scheme" moniker would have done.

Rudd made matters worse by initially referring to climate change as "the greatest moral challenge of our time" and then refusing to take the issue to a double dissolution when the CPRS was blocked by the Senate and instead shelving the scheme. I’ll come back to this point about over-egging it.

The failure to properly explain and bring the community also plagued the policy process and implementation of the carbon price package. With a hung Parliament, a deeply divided Labor Party and a pre-election commitment not to impose a carbon tax, the Gillard government had none of the necessary conditions for major economic reform with a divided party and a hung parliament. As a 2010 research paper by the Organisation for Economic Co-operation and Development made clear:

“It pays to have an electoral mandate for reform,” says the working paper. “The cohesion of the government is also critical: if the government is not united around the policy, it will send out mixed messages, and opponents will exploit its divisions; defeat is usually the result.”

As a result, there was a real need for the Gillard Government to properly explain the policy and reasons for doing so. However, Gillard fell into the trap of conceding the scheme was effectively a "tax" in order to explain its operation - despite the fact it was an emissions trading scheme with a three-year fixed price. That concession - apparently in breach of her 2010 election promise - more than anything else undermined the electorate's trust in her Government. It left the way open to Tony Abbott to undermine it even further.

To make matters worse, Gillard and Combet announced the bare bones of the scheme in February and then spent five months in confidential negotiations trying to work out the detail. With the Government effectively vacating the field, the Opposition and opponents had free reign to speculate about possible scheme design, and suggest extreme outcomes. When the Government eventually got around to explaining the scheme, it was complex and it was almost impossible to rebut a simple and devastating Opposition attack on it.

Having said all that though the unremarked success story of Labor's six years in office has been the growth of household solar. Of course, small-scale solar subsidies are by no means the cheapest and most cost-effective form of renewable energy but there is no doubt that they are the most popular and potentially effective. I believe their success reflects an obvious political truth - people want to feel as though they have a personal stake in tackling climate change. They don’t want it to be imposed from on high. As the cost of solar PV drops worldwide, power prices rise and various schemes to incentivise the uptake have been rolled out, the uptake of solar is having a major impact on the energy market.

Dangers of Egging It

I want to now spend the rest of the speech dealing with something I believe really needs to be considered going forward, particularly with a new Coalition Government. And that is the need to cool the temperature of the climate change debate.

In the lead up to the release of the most recent report of the Inter-Governmental Panel on Climate Change an information kit was sent around to environment groups by a PR firm engaged by the IPCCC .

Contained in the kit was material the groups could use in their climate change campaigns including a sample opinion piece groups could submit to media organisations. According to that opinion piece the IPCCC report contained important information for people "who don’t like to end up in flames".

As is if to illustrate that point, within weeks large bushfires began raging throughout NSW after the hottest start to spring on record. And it didn't take long for some people to start pointing the finger at climate change.

Greens deputy leader Adam Bandt went one step further and attempted to link it to the new Government's plans to repeal the carbon.

Those statements make eminent sense to those who already understand the likelihood and intensity of such events increases as a result of climate change. But they continue a strategy that too often is counter-productive. With the election of a new Government there is a need to assess whether the traditional forms of advocacy and environmental campaigning are suitable.

The most obvious problem with Bandt's comments is that repealing the carbon price alone will do little to prevent future climate change. Much rests on what happens in China and its annual 10 percent emissions growth, rather than a country that accounts for 1.5 percent of global greenhouse gases.

More importantly, one of the lessons of the last 10 years of the climate change debate has been the danger of making overly dramatic claims. As the IPCCC report details there is a range of possible temperature increases and sea level rises. Yet too often, it is the top-end of those ranges used to underscore the need to take urgent action.

Consider for example, prominent scientist Tim Flannery's claim in 2004: "There is a fair chance Perth will be the 21st century's first ghost metropolis."

Three years later he was at it again saying:

"In Adelaide, Sydney and Brisbane, water supplies are so low they need desalinated water urgently, possibly in as little as 18 months".

Such claims have provided endless ammunition and mirth to people who seek to discredit the science of climate change. I remember speaking to one internationally respected climate change scientist who said he and his colleagues dread whenever Tim Flannery gives a speech as inevitably they have to go in afterwards and clean up.

Flannery's comments also highlight the dangers of conflating long-term climate change with short-term weather events. It is not possible to say whether one large bushfire or drought is due to climate change but only that they are consistent with a trend where such events become more probable.

Even so, Flannery's comments made at the time of the record-breaking millennial drought, helped feed public concern about climate change and acceptance of the need to introduce carbon pricing.

Yet when the millennial drought ended and public concern swung to the impact of the Global Financial Crisis, a great deal of the public momentum to introduce carbon pricing fell away.

After this time, other major weather events - the 2009 Victorian bushfires and the Queensland floods - failed to stir the same public opinion, so highlighting the dangers of basing a campaign on long-term climate change simply on short-term weather events.

Another of the problems of the climate change debate over the last 10 years has been how otherwise intelligent people become more and more entrenched in their climate scepticism as more and more scientific information about the likelihood of damaging climate change becomes available. It is the most curious paradoxes of the whole debate. There is a also seeming contradiction in the fact that those arguing most fervently against a market based mechanism to tackle climate change are those who otherwise believe markets are the best and most efficient way of dealing with social and economic issues.

 In the United States,  there is an increasing body of academic research that political ideology—and in particular conservative or free marketeer —is a major factor preventing acceptance of climate science.

One US study found individuals’ worldviews explained individuals’ beliefs about global warming more  fully than any other individual characteristic; So-called "hierarchs" and individualists tend to dismiss the claim that global warming is occurring and is serious threat to our society due to the belief it would lead to a redistribution of resources, whereas egalitarians and communitarians take the opposite view.

Further, it found with increasing levels of scientific literacy, liberals ("egalitarian communitarians") and conservatives ("hierarchical individualists") become more polarized over global warming.

However, the same research showed people who endorsed free-market economic principles become less hostile when they are presented with policy responses that do not seem to be as threatening to their world view, such as geo-engineering or nuclear engineering. In one experiment, subjects were supplied with one of two versions of a newspaper article. In both versions, a report was described as finding that the temperature of the earth is increasing, that humans are the source of this condition, and that this could have disastrous environmental economic In one version, however, the scientific report was described as calling for “increased anti- pollution regulation,” whereas in another it was described as calling for “revitalization of the nation’s nuclear power industry.” Those subjects receiving the “nuclear power” version of the article were less culturally polarized than ones receiving the “anti-pollution” version. 

In a recent New Scientist article Cardiff University research associate Adam Corner said the implication of this research was that climate change communicators needed to understand that debates about the science were often simply a proxy for more fundamental disagreements.

"Too often, they assume that the facts will speak for themselves – ignoring the research that reveals how real people respond.

If communicators were to start with ideas that resonated more powerfully with the right – the beauty of the local environment, or the need to enhance energy security – the conversation about climate change would likely flow much more easily."

There is some substance in that suggestion when you examine Prime Minister's Tony Abbott's oft-stated views on "practical environmentalism". In announcing his "Green Army" signature policy earlier this year he stated:

            Australia has a beautiful environment and Australians want to look after it.  We are all conservationists now. But as well as climate change, important  though that is, we have very big environmental challenges much nearer to  home, chief amongst them are our degraded land and our polluted  waterways

In other words, if people are concerned about climate change and want to convince the new Government to take action now, they need to come with better and smarter ways of doing so than simply expecting moral outrage and condemenation to suffice.

So let me finish with my three take-outs from these lessons.

·            Remember your audience;

·            Keep it measured;

·            Keep it simple - don't over complicate. However, that is different from being simplistic.

The first two of those take-outs are pretty much to summarise what I have just been saying. So I will finish by explaining the third. Many, many times when speaking to clean energy lobby groups and companies I have been bombarded with facts, figures and colourful graphs. In an extremely complicated and technical area, a lot of knowledge about the energy market, the RET and carbon pricing was also assumed. In order to rebut the simple claim, the RET was the cause of high power prices, I was given data on the South Australian wholesale market and NSW IPART's findings. It seemed to be based on an assumption that rational enlightment would result from providing more and more data and information. As we have already seen, that won't always be the case. And even if the listener does not have a fixed position, the complexity of the subject often ends up confusing rather than enlightening. So my final message is where possible keep it simple and remember your audience.