EDITORIAL : THE AUSTRALIAN, AUSTRALIA

 

 

WA budget with a narrative 

TOO many governments in Australia are devoid of a guiding narrative but, as yesterday's West Australian budget demonstrated, Colin Barnett's Liberal-Nationals team is not one of them.

Being understandably disssatisfied about receiving just 68 cents of every dollar of GST revenue generated in his state, Treasurer Christian Porter plunged ahead and increased iron ore royalties by $2 billion over three years. That will have major consequences on both sides of the continent.

In the west, it will allow the state to share the reward of the mining boom with those who have benefited little so far. A $1bn investment in welfare over five years, including $640 million for the efficient non-profit sector, will improve housing for the disabled, build new respite facilities and boost support for carers and the cost-of-living rebate for seniors. Schools will be air-conditioned and mental health services and early intervention child protection programs stepped up.

The biggest loser from the budget is Wayne Swan. Not only did the Treasurer mishandle the Rudd government's proposal for a resources rent tax from the outset, he promised miners that any future royalty increases would be rebated once the Mineral Resource Rent Tax was imposed in July next year -- assuming the legislation passed. If it is, rebating producers to compensate for the increase in royalties in WA will blow a $2bn hole in the federal budget bottom line. Given the fact that WA is being heavily short-changed in its GST receipts, federal Labor would find it extremely problematic, politically, to claw back revenue from the state to make up the shortfall.

Given its vast revenue streams from mining, greater fiscal discipline by the Barnett government would have produced a much larger surplus than $422m, well down on the estimated $784m for the current financial year. Unfortunately, the cost of running the public service will increase by 7.8 per cent by June 30 and utilities charges will rise sharply. The projected 4.5 per cent growth rate, however, is healthy and unemployment will remain low.

Aside from taking its economic destiny into its own hands by increasing royalties, the story of the budget is delivering the social dividend the Liberal-Nationals alliance has promised since it won office. In Mr Porter's words, it was time to harness the boom to "make real changes in peoples' lives."

Dealing with the weakest links 

WITH the government struggling on so many fronts, the biggest threat to Tony Abbott at the moment seems to be from within his own ranks, and a review of his frontbench team's effectiveness would be a prudent move.

He might start with opposition communications spokesman Malcolm Turnbull, who is the most able economic thinker in parliament, and Treasury spokesman Joe Hockey, who has failed to get the better of one of the government's lamest ducks, Wayne Swan. The Opposition Leader must maintain discipline if the Coalition is to remain competitive, and should concentrate on strengthening his policy platform. Mr Hockey is a skilled and personable politician but Treasury is a demanding portfolio and he has struggled to get the better of his opposite number. For the second year running, an insubstantial budget reply speech at the National Press Club gave the government ammunition to use the "Sloppy Joe" nickname. It was little more than a defence of middle-class welfare and we suspect Mr Hockey did not have his heart in it.

Mr Turnbull, who outlined his economic vision, including the need for a new sovereign wealth fund, to the Queensland Press Club yesterday, would provide more intellectual firepower. But after his provocative, even insolent, performance on the ABC's Lateline on Wednesday, Mr Turnbull should consider himself lucky not to have been booted off the opposition front bench by Mr Abbott, his longtime intellectual and ideological rival. By suggesting the best feature of the Coalition climate policy was that it could be terminated easily, Mr Turnbull showed a contemptuous disloyalty that would not be tolerated in others. He drew attention away from a government under pressure back on to the opposition. Mr Turnbull is more popular with the Greens and Labor, but it is Mr Abbott who has captured much of Labor's traditional base.

Mr Turnbull has highlighted the waste in the NBN and should be putting Communications Minister Stephen Conroy under greater pressure over the government's failure to undertake due diligence when hiring NBN chief Mike Quigley from the corruption-ridden Alcatel. Being politically smarter than Mr Turnbull or Mr Hockey, Mr Abbott should pick his moment to reinforce Coalition discipline and sharpen its economic focus.

Rhetoric obscures facts in climate change debate 

GRAND symbolic gestures and the warm inner glow are not the way to forge progress in climate change policy.

When Australia ratified the Kyoto Protocol, for instance, it did not change our policies or emissions one iota. Nor did Kevin Rudd's giant delegation at the Copenhagen Summit lead to any significant changes. The way forward on this issue was always going to be through the hard slog of considered debate and policy work. As The Australian said four years ago: "We believe that an actuarial response based on market solutions, rooted in sound economics, is the sensible response." Despite the shifting moods and alliances of the nation's political leaders, we have maintained consistent support for fact-based, market-driven policies to reduce carbon emissions.

Yet the more reality is injected into the climate policy debate, the greater some temperatures seem to rise. This is a pity, because there have been some promising signs of late that governments are recognising the importance of policy over posturing. Put simply, if we need to abate carbon, we should do it at the cheapest price possible. To do otherwise is to put a needless cost burden on consumers, taxpayers, businesses and the economy.

This is the lesson that Greens leader Bob Brown needs to learn. His one-man crusade against News Limited seems to overlook these principles, which were underscored only yesterday on this page when we pointed out that Tony Abbott's direct action plan would lead to higher costs of abatement than a trading scheme or tax. The problem is that Senator Brown and his Labor and Liberal colleagues have never been brought to account for the range of so-called climate change measures that have abated more money than carbon.

Four years ago, The Australian reported how mandatory Renewable Energy Targets were "mad, bad tokenism" that would simply increase the cost of electricity. While politicians of all hues looked for photo opportunities at windmills and solar panel installations, we looked at the numbers. State governments' subsidies for solar electricity have led to carbon emission reductions at a cost as high as $640 a tonne, or 25 times the price under the carbon pollution reduction scheme (or likely carbon tax rate).

That is why NSW Premier Barry O'Farrell has taken the politically difficult step of retrospectively cutting, by a third, the price paid for electricity generated under the solar bonus scheme. Rather than save the planet, such schemes just drive up electricity prices. And the financial burden does not fall on the inner-city Greens voters who might have taken up these generous offers, but rather on working-class families whose power bills make up a large part of their fixed costs and who could never afford even a subsidised solar electricity kit.

Mr O'Farrell is to be applauded for ending this cost-shifting. If people want to pay for tokenism, they should do so out of their own pockets. Federal Climate Change Minister Greg Combet has also taken action, axing a series of rorts such as green loans and cash for clunkers. All governments should end the costly gimmicks and concentrate on an economically viable, market mechanism for carbon. This alone should drive investment towards the most efficient energy sources.