EDITORIAL : THE AUSTRALIAN, AUSTRALIA

Petrol fuels growing heat in climate change debate

GIVEN the incendiary nature of petrol pricing in the national political debate, it is not surprising an embattled Prime Minister has sought to inoculate her carbon tax from a fuel firefight.

But her announcement on Sunday that "ordinary" motorists would be exempt from any carbon tax impost on petrol is another example of the government holding itself hostage to the news cycle. Julia Gillard's pronouncement was an attempt to buy 24 hours of positive media coverage when a more considered, long-term approach might have been wiser.

Certainly, this newspaper, along with the voting public, has been crying out for more detail on the carbon tax plan, but the trouble is this half-cocked announcement raises more questions than it answers. Excluding petrol flies in the face of the recommendation from the government's former climate change adviser Ross Garnaut, who suggested a one-off cut in petrol excise to neutralise the initial impact, before the carbon tax subsequently flows on to petrol prices. This is an approach that would appeal to the economic and environmental purists by providing some relief, to smooth the introduction before allowing an uncomplicated implementation of the tax. That way, the price pressure would help reduce transport emissions, which make up almost 20 per cent of all emissions.

The petrol exclusion, of course, is driven by politics and the need to blunt Tony Abbott's cost-of-living attack. To be fair, Ms Gillard is not the first leader to adopt questionable economic policy when meddling with the hip-pocket sensitivity of petrol prices. The Howard government fiddled with petrol taxes and axed excise indexation when it found itself feeling the voters' ire after the introduction of the GST. That decision has cost the budget ever since, and provided little discernible benefit to motorists. This newspaper was critical of John Howard for favouring populist politics over sound economics then, and we have similar misgivings about Ms Gillard today.

The petrol decision does proffer one encouraging sign: it suggests the Greens are prepared to compromise, although it must be said we don't know what they have extracted for this concession. Still, this appears to be a softening from when they rejected Kevin Rudd's CPRS, and therefore it provides hope that Bob Brown will be similarly pragmatic when it comes to the more important decisions, such as the level of assistance, or exemptions, for the major electricity generators and the emissions-intensive, trade-exposed industries.

For now, questions remain about just how the petrol used by motorists will be excluded while the carbon tax is imposed on other fuel users -- presumably the transport companies and other businesses, who will pass on the costs to consumers. The exclusion system could be unnecessarily complex, creating burdensome compliance costs for either the effected businesses, the bureaucracy or both. In taxation, governments should always aim for, among other things, simplicity.

Against this backdrop it was perhaps understandable that the Prime Minister yesterday tried to shift the debate to the science, with a shrill plea for urgent action to prevent worst-case climate scenarios. This just serves to underscore how, for Ms Gillard, it is the political climate that is most dangerous.

Thailand's chance for stability

IT has always been difficult to see Yingluck Shinawatra, leader of the Pheu Thai party that has won a landslide victory in the Thai election, as anything but a stalking horse for her brother, the deeply divisive former prime minister Thaksin Shinawatra.

Thaksin fired perceptions of Ms Yingluck as a puppet manipulated by him from exile in Dubai, describing her as his clone. The party's campaign slogan, "Thaksin thinks, Pheu Thai acts", also fostered such perceptions. The issue of what to do about her brother is central to her prospects in a country notorious for military coups (a dozen in the 80 years since it became a constitutional monarchy) and which remains deeply divided following the putsch against Thaksin in 2006.

Ms Yingluck needs to move with the utmost caution, for though her success resulted from the massive endorsement of Pheu Thai by the long-marginalised rural and urban poor, the Red Shirts to whom Thaksin is a hero, the powerful military establishment remains implacably hostile to him. It is a cause for optimism that the military has pledged it will not get involved in the post-election process. Ms Yingluck should lose no time reaching a working accommodation with the generals that ensures they stand by that pledge. A return to the protracted street violence of recent years would be a disaster.

They key to stability is Thaksin and whether Ms Yingluck can both corral him and assert herself as the country's democratically elected leader, rather than as his puppet. Promisingly, he has said that while he wants to return home, he wants to be part of a solution, not create new problems. His sister should hold him to that. Ms Yingluck would be wise to leave it to the courts to deal with her brother's appeals against his conviction for corruption and abuse of power rather than provoke the military by ordering an amnesty.

During the election, Ms Yingluck showed she was a brilliant campaigner and worked hard to persuade voters that they were supporting her and not her brother. She should take office on that basis and get to work on the critical imperatives of stability, national reconciliation and economic stagnation that confront her.

Ms Yingluck has won a stellar victory. While it goes a long way towards vindicating her brother, Thaksin must accept that it is his sister and not him who will be prime minister, and leave her to get on with the job.

Cattle impasse will test Rudd

An illustration by Peter Nicholson. Source: The Australian

AFTER initially being out of the loop about the Gillard government's decision to suspend live cattle exports to Indonesia last month, Kevin Rudd will need all of his considerable diplomatic skills when he sits down in Jakarta on Friday to help resolve what is now a major crisis.

 At stake is a $320 million industry, thousands of jobs and the fate of tens of thousands of cattle that stricken farmers will begin shooting within weeks if the impasse is not resolved. Belated as it is, the "team Australia" approach involving Julia Gillard, the Foreign Minister, Trade Minister Craig Emerson and Agriculture Minister Joe Ludwig is warranted, and should have been in place from day one.

Given the appalling mistreatment of Australian cattle in substandard Indonesian abattoirs, the government was right to ban live exports until decent practices were put in place. But the issue has shown that Senator Ludwig is out of his depth. He and the Prime Minister should have brought in Mr Rudd and the Department of Foreign Affairs and Trade to consult with the Indonesians from the outset rather than handing Mr Rudd a fait accompli to tell Indonesia's Foreign Minister, Marty Natalegawa, of the ban when both were in Budapest. Nor were some industry officials or the states consulted adequately about the impact of a ban.

The frustrations of the Western Australian government and cattle producers over Senator Ludwig's failure to act on the regulatory proposal presented by the industry working group as well as the Meat and Livestock Australia plan is understandable. The $9 million scheme would hasten the progressive resumption of the live export trade through the appointment of up to 20 animal welfare inspectors working closely with Indonesian counterparts, installation of additional stunning equipment and the redesign of abattoir infrastructure in consultation with Indonesia and a traceability system to ensure that Australian cattle were processed only at accredited abattoirs. Indonesia has delayed issuing cattle import permits for the next three months but it is encouraging that Agriculture Minister Suswono is committed to improving treatment of cattle in abattoirs. After the government's mismanagement, the industry needs Mr Rudd to make substantial progress on Friday.