Carbon price thoughts

What more can be said about the Gillard government finally passing its carbon price legislation? Typically, the right wing blogs are in a frenzy about the death of democracy, the coming glorious electoral defeat of leftism for all eternity, etc. (Have a look at this joke of a post at Catallaxy, where the resident obsessive about Say's Law quotes James Delingpole as some sort of authority.) I assume Alan Jones' radio show was absolutely chock full of this sort of guff today, and will continue in the same vein for the next couple of days at least. 

But once legislation like this is passed, it's hard to imagine any media figure being able to keep it as hot an issue for the next 12 months.

I have previously expressed here great doubts about an ETS being better than a carbon tax, but basically, it seems that credible and moderate economists (that is, those who are not wholly dedicated to right wing, anti-tax, as-small-a-government-as-possible ideology) think otherwise, and I'm willing to go with their judgement. I do get the impression that lessons have been learnt from the problems with the European ETS. Let's hope that's right.

How it will all pan out is still highly uncertain. As papers have already been noting today, Abbott's pledge to revoke it actually leaves some businesses in a bit of a limbo as to what to do over the next year or two. I suspect that most will have to assume that the tax will survive, and some will start to call on Abbott not to revoke it before the next election.

And honestly, if Abbott is to be taken at face value (in reality, most people who are strongly opposed to a carbon price hope that Abbott is lying about his intention to reach the same CO2 target) he is not going to find an economist around who is going to say that his means of achieving a similar reduction is going to be better than the ETS. Tony Windsor is on Lateline tonight making this point as I type.

The worst scenario is that the world economy tanks badly in the next 8 months, and the scheme commences operation at a time of great economic pessimism. Abbott's pledge would presumably then remain popular, and a double dissolution threat to ensure it is achieved may seem like a good bet.

I hope it doesn't come to that. There will never be an obviously "good" time to introduce such a scheme, but it would be bad luck indeed if this turned out to be the very worst time to introduce it.  

Finally, although you can be cynical and say that Gillard made a rod for Labor's own back by being wishy washy on an ETS after its initial failure under Rudd, I think Annabel Crabb is right to note that what she has been forced by circumstances to achieve still shows off her skills and practicality:

In bringing the Parliament to this point, Julia Gillard is picking up the can that has been kicked down the road by John Howard, Kevin Rudd and, in his own way, Malcolm Turnbull. It's maimed all of them, this diabolical issue, but Julia Gillard is still standing, and has today pulled off a legislative feat that - under the circumstances - deserves recognition even among the non-enthusiasts.

Bringing regional independents together with the Greens, to reach agreement on a fiendishly difficult economic reform like this one? Convincing the Greens to exempt petrol from the scheme?

Prevailing upon Bob Brown - hardly an International Man of Steelmaking, ordinarily - to rescue $300 million in assistance to steelmakers after Tony Abbott refused to vote for it?

All of these outcomes looked fairly unlikely as the New Paradigm was lowered nervously into place, and yet they have come to pass. Where her predecessor ached to be popular, this prime minister has made unpopularity into something of a personal art form.

In light of this, I find those on the Left who want to see Gillard replaced by Rudd, like John Quiggin, to be exercising perversely strange logic. This is actually an achievement by Gillard, and she should be given the opportunity to reap any benefits from finally being seen to take action. Success on the mining tax should also be seen as an achievement by the Labor base, and that is another thing Rudd didn't achieve.

Replacing Gillard anytime soon makes no sense, and I have much greater confidence in her achieving results than I had in Kevin Rudd.

The population at large is still easily conned by the boyish, earnest facade of Rudd, but that does not mean he is actually capable of good leadership.