Labor at crossroads in test of Rudd’s character

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How does Rudd respond to such political pressure?

He insists the ETS is “the most effective and least costly” way of tackling emissions. Rudd’s argument is correct. But he faces a choice: either find the means to implement your policy or walk away from it. This requires from Rudd the conviction to fight and risk seats at a double dissolution for an ETS that Abbott is hell bent on turning into a political dog.

Since he became leader Abbott has been gifted by the Copenhagen fiasco that, in Ross Garnaut’s words, means the major emitters are unlikely to enter binding agreements to reduce emissions.

Abbott’s direct-action plan on climate change has little policy credibility compared with the ETS. But, unfortunately for Labor, this is not the pressing issue.

Rudd’s problem is that his ETS policy is in serious short-term trouble. At home, the ETS is either not understood or being discredited as a giant new tax, a campaign Labor seems unable to deflect.

Abroad, the acceptance of national targets, verification procedures for emissions and the foundations for genuine global agreement to sustain emissions trading do not exist and may not exist for some time. This is the significance of Copenhagen. It showed, again, that China and

India will not enter binding, verifiable agreements. Nor is it likely the US will accept this position any time soon, despite President Obama’s own commitment.

The roadblocks for the US Congress are the economic crisis with its high jobless rate and the impossibility of binding US action without China being tied into similar commitments.

Under three presidents, Bill Clinton, George W. Bush and Barack Obama, the US has not ratified Kyoto. The Kyoto model is broken (as Australia accepts) because it excludes the big developing nation emitters, yet the world cannot devise an alternative model.

Post-Copenhagen, Garnaut warns that “as a consequence the costs of Australia meeting any particular target may be substantially above the levels” previously expected. Given the global diplomatic stalemate Garnaut speculates that Australia should consider “an alternative model for trade in entitlements that does not depend on universal acceptance of binding commitments.” The game is up, at least in the short term.

In philosophical terms Australians have been subject to a hoax on this issue. For years the media paradigm has been a scientific-based universal utopianism that all nations must act together in common cause to save the planet.

This narrative concealed the alternative political truth: that climate change action is about competing national interests. (Just ask China after it sabotaged Copenhagen.) Climate change action is about contested economic advantage, income re-distribution and competitiveness. This is the reason the world, so far, cannot settle on a new agreement.

Political leaders seek both to safeguard their national interests now as well as to save the planet in 2100 and such differentiated goals are integral to the way governments respond to climate change.

An irrevocable lesson from Copenhagen is the need to terminate the UN as fora for negotiating a new agreement. Unless this change is made then future agreement on effective mitigation is finished. The only hope rests upon serious negotiation between the US and China bilaterally or among a small group of major economies that are the main emitters. It would repudiate the chorus of ideologues, greens and NGOs who think they “own” the process and prefer the optics of cheering China’s stooges from the Sudan to any effort to strike a new post-Kyoto methodology.

In summary, at every point Rudd’s policy is under pressure, measured by weak global progress, entrenched delay in the US, flawed international negotiations, uncertainty over the likely carbon price, growing debate about economic alternatives such as a carbon tax and, most significantly, a rising lack of community confidence in the ETS.

For Labor, it is neat to argue the ETS is the best policy and Abbott is just playing politics. This is true but misses the larger point.

In climate change, policy and politics are chained together. Abbott has an elemental grasp of this point. Australia’s ETS only works if other nations make the political commitment to emissions trading (note, by the way, Abbott says he would have his own ETS if the world takes this route). Moreover Rudd’s ETS only works if Australian public understanding is sufficient enough to generate tolerable community trust. That point has not been reached.

Last month Garnaut discussed compromise options to manage the present tribulations. The Greens have initiated talks with the Rudd government over their own fresh compromise, an “interim” alternative to break the Senate deadlock. It involves Rudd ditching his present scheme, legislating instead a two-year fixed carbon price of about $20 a tonne, reducing industry assistance and, post-election, presumably with the Greens holding the Senate balance of power, finalising a new ETS.

This would be a retreat too far for Rudd. He would look weak and intimidated.

Indeed, it would reinforce the idea of a Prime Minister short on belief and too keen to compromise under pressure. It would make Abbott look a giant-killer.

However, the question the Greens raise won’t go away. It is whether the Rudd government, somehow, some way, will devise a Plan B to avoid a double dissolution showdown on the ETS, thereby seeking to deny the full force of Abbott’s populist campaign. Plan B is for a Labor Party that loses its nerve and has no heart. This is a test of Rudd’s character and judgment in the teeth of the Abbott onslaught that Labor never expected.