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13 OCTOBER 2011
Gillard's climate scheme is flawed. Let me count the ways
527 Comments
Diogenes was a Greek philosopher who was famous for wandering around Corinth with nothing except a lamp.
When asked about the lamp he would say, "I am looking for an honest man". His pupils founded the philosophical school of Stoicism which existed for many centuries.
I am still looking for an honest person. Their gender is irrelevant.
I haven't found many of these rare animals amongst the media, the economists and the politicians. I have stuck to the work that feeds and clothes me and haven't had to resort to living in a barrel like Diogenes did.
Recently, I was roundly criticised on ABC's The Drum for attacking the Government's tax approach to climate change. My invariable comment on the issue has been to say that I haven't got a clue about the science.
After 40 years of practice and major legal cases that sometimes went as far as the High Court, I do have some knowledge of our taxation system. My admission of cluelessness seems to have offended or even enraged a lot of people. They seem to think that they either understand the science or accept the "science consensus" and that every other decent person should know about it or take the consensus view.
I spoke to Senator Kim Carr some months ago and said that I was clueless. He sent me along to the CSIRO. They told me a lot of stuff and referred me to their publications. The first problem was that I didn't understand the studies. The second problem was that I didn't have a PhD in science specialising in an appropriate science discipline.
The third problem is that I do understand and am deeply sceptical of econometric models that purport to predict the future of 2020 or 2050 or 2100. Assumptions are, in economics and all other fields of academic endeavour, (I did not say knowledge) a very risky business.
My fourth problem is that a climate change industry exists which is benefiting to the tune of many billions of dollars from government policy. The industry hasn't produced much at all up until now. That may not be a problem, but there are many other industries which aren't receiving government handouts. Our Productivity Commission has ruthlessly eliminated assistance to industries for over 40 years. I know because I worked there in 1975 and was the project director on iron and steel, the introduction of color TV and a range of other manufacturing industries. I then worked for importers, mostly the car importers, for the next 20 years.
For the past 15 years I have worked, off and on, for the ATO as an independent expert on multinational taxes and worked for the multinationals during the same period. This is another area I know a lot about.
So my definition of "clueless" might be a bit different to the definition of other people.
I have read the 600 or so responses to my climate change articles and stand by my view that an emissions trading scheme is a great way for some people to make money out of a new type of derivative. Historically every auction the government has initiated (e.g. for cars, textiles, clothing and footwear import quotas and for pay TV licensing) has ended up in a multi-million dollar rort by smarties who transferred money from the community to themselves with help from the government.
The Government has, of course, also walked away from 40-odd years of consensus on industry policy and not picking winners. Industries involved in climate change legislation and product development are big winners.
In my last article in The Drum I advanced the propositions that Gillard had specifically said she would not introduce a carbon tax before the next election, then after the election she said that she would. Abbott said the Coalition would unravel the tax if the Coalition won government. Then, Minister for Climate Change Greg Combet said it couldn't be unravelled. I don't think defeated governments should leave unexploded legislative landmines for the next government. It is an amoral approach to democratic government.
These propositions are all true.
I would like to be told why this Government has the moral high ground to ignore what its leader said they will do. Perhaps the view is that if an issue is important enough they are entitled to change their strategy, but to ignore the fact that they originally said they would do the opposite of what they are doing.
I believe that the massive policy shift implicit in the climate change measures needs a mandate from the Australian people.
I also said that I expect the Gillard Government to be defeated. That is not a hope. That is my expectation. If this happens, then the emissions trading scheme with a fixed price (which is simply another name for a tax) will not survive for even two years. That is simply a grossly inefficient major tax that will create substantial uncertainty for industry. The adventure will cost the Australian economy at least $30 billion for, ultimately, nothing.
This issue has resulted in a parliamentary melee that goes far beyond the petty denigration and sniping that might be regarded as acceptable. Our Prime Minister has descended to the gutter and is embarking upon a style of debating triumphalism that doesn't match either the likely outcome or what we expect from our leader.
I hope Australians are not divided by an issue that is not really about the survival of the planet in the foreseeable future. Have you seen the water in Eildon Weir? Do we have an econometric model that accounts for that? We need to take a deep breath and stop the denigration that has been obvious at the highest levels of our government.
Martin Feil is an economist specialising in Customs, logistics, ACCC actions, industry policy and international trade related matters, including transfer pricing.
527 COMMENTS
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Zibethicus :
14 Oct 2011 12:11:07pm"After 40 years of practice and major legal cases that sometimes went as far as the High Court, I do have some knowledge of our taxation system. My admission of cluelessness seems to have offended or even enraged a lot of people. They seem to think that they either understand the science or accept the "science consensus" and that every other decent person should know about it or take the consensus view.
I spoke to Senator Kim Carr some months ago and said that I was clueless. He sent me along to the CSIRO. They told me a lot of stuff and referred me to their publications. The first problem was that I didn't understand the studies. The second problem was that I didn't have a PhD in science specialising in an appropriate science discipline."
Right, so let's paraphrase this a little.
You freely admit that you know nothing about climate science, apparently intend to learn nothing about it either.
Yet you claim that you are competent to understand and pontificate upon a tax which is intended to deal with the problems posed by climate science, because you claim to understand a great deal about taxation, and that's supposed to be enough.
OK.
By the same 'logic', would a tailor who knew and wanted to know nothing about medicine be qualified to perform emergency open-heart surgery upon you because he or she understood a great deal about the suit you happened to be wearing when you were admitted to hospital?Zibethicus :
14 Oct 2011 12:06:02pm"My invariable comment on the issue has been to say that I haven't got a clue about the science."
Rapidly succeeded by:
"I hope Australians are not divided by an issue that is not really about the survival of the planet in the foreseeable future."
If you "haven't got a clue about the science" how can you be so certain that the issue "is not really about the survival of the planet in the foreseeable future"?
*
And I for one am now wondering whether you are as 'good' at economics as you are in logic, philosophy and science...Zibethicus :
14 Oct 2011 12:02:05pm"Diogenes was a Greek philosopher who was famous for wandering around Corinth with nothing except a lamp."
Diogenes was also famous for saying that "[s]elf-taught poverty is a help toward philosophy, for the things which philosophy attempts to teach by reasoning, poverty forces us to practice."
He practiced what he preached, living almost entirely without possessions. He threw away one of his last, a drinking cup, when he saw a child drinking from a stream with cupped hands. "This child has outdone me in simplicity," he said.
By the starkest of conceivable contrasts, Mr Fiel urges us to throw away our reason and the unwelcome science on which it is based so that we may continue to 'enjoy' our possessions.
What a shameful abuse of the memory of one of the greatest of philosophers.Redfish :
14 Oct 2011 10:56:42amAnd that has always been the very large elephant in the room, we could reverse all of our emmissions tomorrow and make exactly zero difference. This tripe about we must set the example and others will follow is laughable if it wasn't going to have a devasting consequence on our economy. Since when has China, India, Russia ever listened to or heeded our advise, never.The chinese must be laughing there collective heads off.DocMercury :
14 Oct 2011 11:39:47amA few of the converted in China will be pleased to see that we're making an effort too, but the greater majority of Chinese people will barely rate Australia as much of a mention within their daily routine between meals and sleep, a mention and mind space nowhere close to as much mention and mind space Australians give China, in spite of the numerate population difference between the two, or because of the shortage of time in a crowd to think anything except getting home in one piece without scuffed shoes.
In long retrospect, China has followed New Zealand and Australia with providing the vote to women, such as voting is in the PRC, so I think even Chairman Mao would be complimentary of our fortitude rather than "carnivorous" with mirth at our weakness.
Only the very hungry can become "carnivorous with mirth" even with black lung as a regional tradition.Zibethicus :
14 Oct 2011 12:25:10pm"I think even Chairman Mao would be complimentary of our fortitude rather than "carnivorous" with mirth at our weakness."
The shade of that great blood-letter is probably snickering with the irony of it all, remembering how Lenin said that "The capitalists will sell us the rope with which we will hang them."
These days, 'the capitalists' simultaneously deny climate change and buy their luxury goods from factories in China, because they're cheap, and that's because mainland China is a one-party state which suppresses free trade unions, as well as many other things.
But that doesn't bother the 'free market' advocates, of course. They understand very clearly that the 'free market' was never /supposed/ to be 'free' for /everyone/...
arf :
14 Oct 2011 12:20:37pmActually, China and India are putting a lot of effort into renewable technologies.
janecitizen :
14 Oct 2011 10:55:43amOh my goodness what about the tax implications... the loss of jobs...the unproven science..and those corrupt Corolla driving scientists, you cant trust them, they just want the research grants!.. We are small compared to China and India... Then of course there will be the corruption amongst the green energy industries of the future. They're already salivating at the thought at scamming the govt and ripping off consumers!
You know I don't doubt any of these concerns. I have no doubt that all sorts of illegal and immoral activities will dominate the headlines of the future.
The irony is that these problems usually stem from people who crave money and power, not the guys who spend thousands of hours researching climate data from their CSIRO lab mostly out of love. So why are you siding with them pretending they care?
Are you really that blind? Offer a better alternative allowing for today's political climate of mass denial and I'll listen.
Gillard maybe hasn't done the best job here but at least she has had the courage to lay her political career on the line by doing something. What you guys are proposing is inaction. You require more time until a perfect solution can be found. There is no perfect solution. Unfortunately we all have to pay for this immense change to our worlds infrastructure. No way around this folks!Goanna :
14 Oct 2011 10:41:38amAn odd piece from Martin Feil with many unsubstantiated claims by him. Problems include:
1. His claim that an emission trading scheme is "simply another name for a tax". It isn't.
2. His claim that "the adventure" will cost the Australian economy at least $30 billion "for, ultimately, nothing". It won't.
3. The implication that big polluters have some untrammelled right to pollute the atmosphere to the disadvantage of us all, without penalty. (The rest of us have to pay to have our rubbish removed or disposed of.)
4. The implication in his piece that because he does not understand climate science, then it is not a "real" factor in the argument or the government's motivations.
5. The implication that it is wrong for governments to support industries which are of strategic benefit to Australia - particularly in relation to support for renewable energy.
6. His implication that there is no mandate for an ETS. It was actually put to the 2007 elections (with bipartisan support) and to the 2010 election. It won the support of the electorate.
7. His odd perspective on democratic governments, under which Parliaments and governments are not supposed to give effect to their political agendas if this would be contrary to what the Opposition wants.
8. His confusion about the roles of Parliament and the Executive under the Australian Constitution, or more generally the Westminster system (see his comment: "I don't think defeated governments should leave unexploded legislative landmines for the next government."). It is Parliament that passes legislation, not the Executive.
9. His implication that the Gillard government is a "defeated government". It isn't.
10. His blind spot to the Coalition which also supports carbon abatement measures but through direct action - which relies on picking winners, paid for from consolidated revenue, which is funded from taxes on everyone.
Charles :
14 Oct 2011 10:01:26amThis is a very accurate article by the author and sums up nicely the disconnect between the AGW 'believers' and the rest of us who inhabit reality.
A prime example of this disconnect lies with the SA premier Mike Rann who has advocated the construction of windfarms all across SA. On the one hot day experienced in SA this last summer, there was a record demand on the grid of 2399 Mwh of electricity. Despite having almost exactly 50% of windfarm installed capacity (1190 Mwh) in SA to meet this demand, all we received on the day was a paltry 49 Mwh or ~ 1.5%.
So for all the $ billions spent on wind turbines, thousands of hectares rendered unusable and lives and communities ruined, we have almost exactly nothing to show for it.
It is something that our descendants (yes, including all those children and grandchildren that we are supposedly doing this for) will look at and wonder how we could possibly have been so stupid.
