Perhaps these two gentlemen have explained climate change to Brendan Nelson

As part of its ongoing 'climate change is a myth perpetrated by green leftists' series, The Australian recently published the work of Messrs Evans and Jensen. Dr David Evans, a self-styled 'rocket scientist', is a former employee of the Australian Greenhouse Office. In hindsight, that appointment was probably as constructive as say, appointing Senor Fawkes pageboy for the House of Commons, for the good doctor appears to have had his head turned rather too swiftly for someone intimately involved in the climate modelling process. Dennis Jensen is one of the handful of Western Australian MPs who subscribe to the 'Howard as demigod' thesis, and are on the record as skeptical of the IPCC-inspired policies adopted by almost every social democratic party in the world.

Evans' piece, which has been dissected by Tim Lambert, boils down to three essential points. First, Evans does not give credence to the very modelling he was engaged to produce and hence will not accept any conclusions that either correlate observations with modelled outcomes, or predict the effect of various phenonmena on climate. This means Lambert's references to such visions of orbital forcing or carbon dioxide effects on temperature will fall on deaf ears.

On top of this rejection of modelling, Evans also rejects data showing temperature rises and adopts a very short-term view of climatic variability, suggesting the Earth is now cooling again. What makes me suspicious of such claims is the fact that climate skeptics do not suggest the Earth is reverting back to normal service but is in fact cooling (from the hottest part of the last several hundred years!).

Evans' third tenet is that the Vostok ice cores no longer support the C02-warming causal link as the warming follows the C02 by 800 years. This is widely accepted. He uses this fact as a stick to beat Al Gore as a misleading alarmist politician. Evans' problem lies in the second bit of data: for 800 years the temperature rises but C02 does not, then the two rise together for around 4200 years as the Earth emerges from an ice age. This supports the argument that increased sunlight raises temperature, gradually warms the earth and releases C02 and methane via melting permafrost. Has anyone spoken to Putin and Medvedev about the double-decker carbon sink they have in Siberia?

Basic common sense should cause someone with a scientific background to act cautiously and take appropriate precautions. Evans makes no mention of what will happen to the oceans absorbing ever larger concentrations of C02, nor the chemically proven fact that carbon dioxide is less soluble in warmer water. He ends his piece with the charge of 'criminal negligence and ideological stupidity' against the ALP. I would counter that by saying that if the ALP knew of both great environmental risk and the impending threat posed to our major coal and steel industries and did nothing to reposition the economy the charge would be made out.

Mr Jensen appears to be following Kipling's injunction to keep his head when all around him are losing theirs. His piece is basically a cry for nuclear power, regardless of climate change. It is also a cry for debate, although given those who seek that debate are largely disinterested in observations, conclusions, logical inferences and fair play, one does wonder what sort of debate the member for Tangney is advocating. Jensen believes that energy measures are tokenistic and that solar and wind are 'as yet unproved'. He implies climate advocates are today's flat-earthers, suggesting he subscribes to the Galileo Complex. Given most of Jensen's fellow-travellers would gladly locked Signor Galilei up for the term of his natural, it seems an odd piece of identification.

On the cost of emissions trading, Jensen states:

If all carbon in the stationary power sector were to have a $50-a-tonne price of carbon dioxide imposed (as is the case for the European price for CO2), it would mean a cost burden of $660 a year for every Australian, or more than $2500 per household, according to data I have received. These would not all be direct costs from the emissions-trading scheme, but also from higher prices of products that would flow through as a result of increased production costs. Those higher costs would make some businesses unviable, and they would have to close or move offshore.

Firstly, the Rudd Government's Green Paper indicates that $20 per tonne is the starting carbon price. Australia is years behind the EU and the $50 per tonne mark is unlikely to be reached for some years. Jensen makes no allowance for increased use of gas or an escalation in renewables (Rudd's 20% 2020 target seems to have escaped his notice). If we use the average power bill of $1020 per annum, we get a $163 rise at $20 a tonne for carbon. This means a $50 per tonne price adds $407.50 to your average bill. Assuming no renewable uptake, this means $252.50 is the price rise from stationary energy usage alone by business. All of which is great, except Jensen fails to include the compensation payable for price increases: remember, it's supposed to be the polluter pays, not the consumer. Also Jensen needs to answer, if these businesses are unviable because of associated emissions costs, is that because they cannot pass them onto the consumer? In which case, his $252.50 per household secondary emissions costing is surely higher.

Being a nuclear advocate, Jensen does not include the transport sector in his calculations, and the imposts created by high oil prices on freight costs. The biggest threat to business at present comes from oil prices and interest rates, and it will only be businesses that do not reform their practices early that will be vulnerable to the degree Jensen postulates. Given nuclear will require tremendous government support, surely that would feed into major stationary energy price rises of the very ilk Jensen criticises.

It is these true believers in business as usual (with nuclear variations) that Nelson's policy seeks to placate. Rather than offering certainty, the central demand of business, these dictates would add great uncertainty: whether any action would be taken at all under a Coalition Government and indeed the very viability of an export sector propped up by extractive carbon-intensive industry.

For the rest of us, we should learn some basic chemistry about carbon dioxide, keep a weather eye out to see if the birds are singing earlier this year and do what we can to make a difference, whether that be recycle, turn off the lights or push our politicians for action. Those are our best guides in sorting the climate fact from fiction.

Dr Nelson slips his Freudian

I wonder if when the erstwhile Dr Nelson was responding to the indefatiguable Australian campaign to draft our former Formula 1 treasurer to the opposition leadership, he intended to say this:

"If Peter decides he is going to continue his political career, and serve the people of Higgins, and indeed the Liberal cause, I can assure you he will be on the frontbench with a bullet"

Would that be Mr Rudd's missing silver bullet or one to the back of the head, in the traditional manner of deserters?

Rudd's political honeytrap

The Rudd Government's Green Paper will no doubt earn the ire of some climate and environmental organisations for its gradualist approach to emission reduction.

Petrol is in the scheme but compensated by 'cent-for-cent' excise reductions until 2013. Agriculture is out until further notice (possibly starting in 2015) and coal power generators will receive government assistance. The Government appears to be easing voters into copping nanoeconomic pain, by hitting them first with upfront power bills (softened to an extent by increased government payments). This suggests that fast tracking renewable energy - as indicated by the proposed 20% national renewable energy target by 2020, is seen as a more palatable and effective option for achieving emission reductions. If stationary energy emissions make up 50% of all emissions, rising to close to 60% by 2020, a 20% rise in renewable market share would achieve between 10-12% emission reductions. That would suggest that Rudd's interim emissions target cannot be much higher than about 15% by 2020 from the current nominated suite of abatement options. Even to achieve these savings will require a considerable improvement in fuel efficiency and or energy efficiency at the current target levels. Such a target looks low by world standards and will barely be in the pack once developed nations crunch the carbon numbers.

This may well be the genius of Rudd's plan. The bar is so low that it reflects a pragmatic Liberal policy wish list. So low that in one sentence Nelson chastisted Rudd for lifting their excise-permit neutral idea and in the next called it a petrol tax. The end result of Labor's policy is that it puts the onus on the people to push it to take more action. It is almost the minimal possible response without jeopardising the integrity of action altogether. Rudd has effectively offered an election year handout with the electricity rebates and absolved the government of responsibility for excessive petrol hikes.

Nelson is left in nanoeconomic limbo. He has to either junk the scheme entirely or have a technical debate over the merits of 2012 action. Nelson has flirted with a faux policy debate about the hybrid model but if anything has smacked of 'The Hollowmen' in national politics, that search for an alternative was it. Possibly locking Turnbull, Hunt and Bishop into his Central Coast caravan for a weekend and designing a proper policy alternative would be more beneficial both to the debate and the long-term coherency of his party.

At the minute his argument boils down to 'there's a right way to do it (mine) and a wrong way (Rudd's)'. If the excise cut is my idea it's good policy and if it's his policy it is bad. The fact that all this operates in the future - i.e. after the battle has been won at the polls, makes Nelson's 'Rudd's 2013 review is Rudd-speak for ending the excise cut' ring hollow. If Rudd is to pay for injudicious action it will be in 2010. If he is to pay for inaction it will be 2013.

The scheme offers so much to the vulnerable polluters and the kind of targeted compensation scheme now becoming the Rudd trademark that it is highly unlikely the final draft will be any weaker. If anything, the challenge is being thrown down to voters to tell the government they want action and are prepared to pay for it.

Watching Penny Wong at the Press Club demonstrated a player in control of her material, confident in the merits of the argument and open to being pushed to further action. Watching Greg Hunt on Lateline demonstrated a puppet forced to parrot a line he did not believe in, wishing he had something coherent if not constructive to say. Only when Hunt got onto his pet subject of solar panel rebates did he seem to have conviction. Perhaps he should show some boldness and adopt the German bipartisan solar feed-in tariff where homeowners get four times the price for their surplus solar energy fed into the grid.

The danger with Rudd's policy is that in forcing the Liberals over the climate cliff, it will force a very swift acceleration of targets in the medium term. But by then Greg Hunt might be PM.

A Liberal dose of climate chaos

Opposition is tough enough when your party is roughly on the same wavelength. When your party is undergoing a crisis of relevance and historical purpose, it becomes akin to herding cats. Brendan Nelson was elected to the leadership based on being a compromise candidate. Instead, he has become the compromised candidate who seems to be the last person to know when his policy has changed.

This has been the case on WorkChoices, the apology debate and now climate change. Nelson is frequently trying to be both progressive and conservative in the same sentence and the first thing that goes is the syntax of his sentences, then subjected to Rumsfeld-style ridicule.

The diabolical mess that is the Liberal party's position on climate change comes from Nelson's futile attempts to reconcile two mutually exclusive positions. On one wing we have the bipartisan actors such as Greg Hunt and Malcolm Turnbull who genuinely want to get the carbon reform ball rolling. On the other lie the science deniers led by Tony Abbott, representing the growth-is-king mantra of the Howard era. One suspects that they hold exorcism ceremonies around a portrait of Bob Brown clad with faux-Viking horns such is their distrust of Green policy. Whereas a compromise on the apology was possible but looked churlish and nonsensical, there is no way to balance these two positions down the middle. Either Nelson must lean towards the do-nothing denialists or he must lean toward the progressive wing of the party.

Nelson seems to have realised this himself but has not conjured up the escape route. His first attempt was to stand by the Howard policy of an ETS commencing in 2012. However, while Rudd can deal with both nanoeconomic and enviro-economic issues in turn, Nelson has based his entire leadership (if that's what one can call it) on nanoeconomic pain alone. He emotes on behalf of carers, pensioners, shoppers and motorists and is thus rendered allergic to price increases.

So by default Nelson is left with a leadership philosophy which does not allow him to support any price rises. Hence the compromised nonsense of 'petrol included but no net increase in taxes'. Perhaps he got caught in the GST comparison. While both the GST and the ETS result in pricing realignments, the essential purpose of an ETS is to input the price of carbon emission rights into the economic system. That means that products requiring higher level of carbon emissions will increase in price relative to those that require lower levels. Its operation can only be revenue neutral in the short term by government recompense.

However the reality that caused Howard to adopt the 2012 ETS in the first place has not changed. So Nelson cannot ditch the policy entirely but reopens it to consultation, digging up the hybrid alternative that Howard's Shergold report left on the cutting room floor. It will not take very much effort for Penny Wong to start citing Shergold's reasons for rejecting Nelson's proposal and exposing it as a fig leaf for denial. Denying climate change is as politically toxic now as advocating for asylum seekers was during the Tampa saga.

Further, the incoherency of Nelson's position makes him look an incompetent and weak leader and will do nothing for his electoral stocks. By not developing a progressive, innovative, liberal-philosophy based position on climate change, Nelson is not just undermining bipartisan action but his own party.

Rudd's Climate Change Game Plan

Much of the media talk, well at least prior to the spectacular Liberal policy implosion, on climate change has centred around the difficulties it presents to the Rudd Government. This is largely based around a conventional view of Australian politics which casts Labor as the union-worker party and the Liberals as 'good economic managers'.

However the odd thing about this analysis is that it ignores the fact that it was the previous Labor government that introduced free market reforms which made the market economy paradigm a bipartisan project and hence an inherent part of the political landscape. Consequently, the supposed opposition of former ACTU members such as Martin Ferguson is seen as fatal to Rudd's project. The narrative goes that coal mining unions will revolt and suburban battlers concerned with the new nanoeconomics of interest rates, fuel and grocery prices will descend on Canberra with pitchforks and lead Kevin to the one-term electoral guillotine.

The flaw in this theory is that it relies on the assumption that the public's long held interest in climate action will dissolve in the face of the economic consequences. It is clear that when Rudd was elected, the public flicked the switch from concern over Labor's macroeconomic credentials to a more nuanced worry about nanoeconomic issues and the integration of environmental and economic concerns. Not only that, but whereas immigration eroded Labor's position (roughly 70% of voters supported Howard's detention programme at its height), a similar level of support exists among Liberal voters for climate action. Given climate change and its economic underpinnings challenge the very basis of conventional politics, failure to act with bipartisanship may deal a cruel blow to the future of the Liberals.

In order to turn Liberals to the Labor cause, Rudd needs to complete the evolution process begun during the 1980s by breaking the final bonds with the vested coal industry interests. He also needs a second economic reform programme. Hence the Garnaut Report. It is no coincidence that Garnaut played a key role in the 1980s reforms. Rudd's plan appears to be to offer bold action on climate change, hence his defence of the 2010 starting date for the ETS. Thus he will get credit for 'strong action', but also leaves the way open to 'listen to the people' if problems arise that need a 2012 date. If the Liberals fail to at least meaningfully contest the climate action field, they are setting themselves up for irrelevance.

The draft legislation for the ETS is not due until late this year. This will give ample time for the customary Rudd technique of kite flying to see which measures the public will bear and which need more careful handling. Hence the equivocation on petrol, which may depend as much on the oil price in November as anything else. Rudd will probably remove the GST on excise as a minimum and possibly mandate no GST on carbon permits. As the essential purpose of an ETS is for prices of carbon fuels to increase, the Liberal policy of 'no net tax increase' contradicts this basic aim. A coherent policy either leaves petrol in and increases the price, or leaves it out and places the burden on other sectors. Energy price compensation will be means tested in line with the strategy pursued with the solar panel rebate, remembering of course that while energy usage does not change much versus income, the ability to purchase energy efficient appliances does.

On the global front, Rudd will push for Australia to play a major role as an emissions intense middle power, bridging China, India, the US and Europe into some kind of coalition. China has expressed interest in an emissions trading scheme and expect Rudd to cite the ETS and Chinese moves as complementary. This also dovetails with Labor policy to increase the role of Australia's financial services sector in China and India.

The Rudd Government has demonstrated a committment to climate action and expect to see a lot more claims to be exercising national and diplomatic leadership in this area, while we are told how we are acting behind the rest of the world. This paradox is vital to understanding the politics of climate change and their implications. The need to act is clear but the traditional sense of caution towards major reform is also alive and well.

Rudd's first statement: in debt according to the voters of Gippsland

By-elections are traditionally unfriendly terrain for governments. They are something like a political Twenty-Twenty match, exaggerating the effect of local issues and suppressing the overall standing of the party leaders. With the government out of election mode, there are few policy handouts to focus self-interest. This leaves the voters to 'judge the government' on its operating machinery, rarely an enterprise the government comes out on top in.

The Gippsland result was consequently never likely to produce a Labor win, however the magnitude of the defeat bears some examination. It is questionable whether Labor's candidate was particularly strong, being neither particularly popular nor having much of a message for people straining under high petrol and food prices. It is possible that he was the fourth or fifth best candidate running. Labor did terribly in La Trobe, Victoria's coal heartland, which was no doubt due to concerns over climate change mitigation taking jobs, living costs and the 'Bundy and Coke' backlash, plus the Liberal candidate was well-known in those parts. It suggests that Gippsland will become a progressively safer seat for the conservatives as time goes on. Indeed, it points to a loss here being catastrophic for both the Liberals and Nationals.

Sheer mathematics may have exaggerated the size of the defeat. There is some argument that the Liberals' decision to field a candidate contributed to some of the anti-National protest vote going to the Liberals and then back to the Nationals via preferences. Certainly Gippsland has a high proportion of former One Nation voters who would not be in broad sympathy with Rudd's agenda on climate change, Asian engagement or reconciliation.

However the effect of these local factors does not excuse Canberra altogether. Following Rudd's election last year, Peregrine made the following observation on the reasons for his high approval:

Rudd's approval rating seems to not be giving him the type of blank cheque voters offered a Coalition government running on 'keeping interest rates low' and border security. It is a loan that he has taken out on promises of taking concrete action on climate change, restoring the position of employees in the labour market, fixing the health system and improving the position of 'working families' on housing affordability, rents, grocery and petrol prices and child care.

The big question will Rudd have the political capital to pay up when the voters collect their debts.

The early evidence from Gippsland is that Rudd might not have spent much political capital but he has not repaid the trust shown in him yet either. The nanoeconomics of petrol and grocery prices are dwarfing all other issues, and Rudd has yet to have any concrete policy achievements on health or housing affordability. On the Gippsland climate change index he is even further behind. Here not only will action be critical, but retraining and business restructuring will be vital as the coal industry plays a major role in this part of Victoria.

In short, Gippsland represents a vote of confidence in the local National candidate and a vote of concern against a government that has not done anything to inspire confidence that jobs will be protected and services will improve. Instead all some voters have seen are long-term aspirations and short-term price rises, things they find even less appealing than Brendan Nelson.

Things fall apart, the centre cannot hold

Our political culture is in great flux. The admirable work of the Piping Shrike has detailed this in a series of posts as a political realignment. The major parties are catching up to the fact that they have no social base and hence are hostage to the nightly news cycle. This gives an apparent fragility to Rudd's stratospheric polling. However it rather forgets what has happened federally is merely an extension of the decline of state Liberal parties to the point of irrelevance. So much so, that in South Australia the Liberal party is now experiencing defections to the federally moribund Family First. A small group of pundits have either diagnosed Rudd as acting as permanently on campaign or like a political bubble ring - held in a kind of stasis by the vortex of his activity. Presumably they believe that Julia Gillard is the dolphin responsible.

Rudd has decided that the media is for the dissemination of this messages, and his chief conduit to said media is rumoured to have a nasty habit of abusing them. Consequently they are taking it personally and according him very little favourable coverage. It also fits within their frame of reference that budgets mean something to politics and that the opposition is merely dormant, to be revived under the appropriate leader once Nelson nicks one to the slips. Hence Rudd is nothing remarkable and will come down to earth once his honeymoon ends. The thought does not enter their collective heads that this is the new reality. Instead, we hear the Whitlamesque fairytale that Gillard will storm the barricades and burn the Treasury benches to the ground like Boudicea. Some in the Canberra Press Gallery witnessed the Whitlam crash firsthand, no one has ever witnessed a federal government sustain ratings in the high 50s.

Into this breach step the Howard-era acolytes, now spurned by the new regime and left to ply their trade on the fringes of mediocrity. They demonstrate a bitter, visceral resentment of Rudd for removing their great leader Howard. The great citadel of Howard's media support is the Australian, which has now altered its brief from acting as government gazette to Her Majesty's loyal opposition. Loyal to Washington, specifically the neo-conservative, market vision, where private wars and global hegemony are de rigeur. Ad hominem argument suits this band as their voice, their tribe, their man is always right and their opponent is always wrong. Hence distracting bloggers by trolling and pouring vitriol is acceptable in the name of new-age Foucauldian information politics. So while taking down those that support the agendas they oppose, they also fly assorted kites to either make the Liberal position appear mainstream, or change the mainstream altogether and push the polity in the right direction. This ad hominem strategy extends to the truly bizarre and inconsistent criticisms of the Rudd government, one minute pro-business, then anti-business, pro-China, then anti-China.

As the polity has moved right through waves of economic prosperity, the traditional Liberal party's role has become almost irrelevant. With Labor concentrating on technocracy, encouraging education and removing the complexity of business regulation, politics shifts to the nanoneconomics of petrol and grocery prices. The Liberals are left with an emoting leader and little else. Climate change represents the position perfectly. The agreed solution is an emission trading scheme - a market mechanism - yet the free market, user-pay Liberals strain to support it and even now seek to make political capital.

If Labor wins the battle on emissions trading, the Liberals will be split between the caterwauling right and the moderate left. The caterwaulers will most likely head to Family First. How much of the party ultimately survives depends on whether Labor can successfully manage this fundamental change into a new political constituency. If economic management becomes covalent with environmental management, then Labor could well benefit from demographic change and make serious realigning inroads into those leafy seats that polls make so tantalising. If the green barrier dissolves in the political sphere, it will dissolve in the minds of voters. One suspects though that long-term ideological, logical and intellectual poverty will eventually cause the party to split unless strong leadership can hold the strands together.

If, however, the politicians fail to act appropriately, then the results could be apocalyptic for all of us.

Fuel poverty and the emissions trading debate

Much as I hate cheap jargon, expect to hear a lot more of the phrase 'fuel poverty'. Basically it means paying a high percentage of your income in fuel costs (whether that be electricity or even petrol). Given high interest rates, rising inflation particularly in essentials such as food and constrained wages, the usual fury over fuel prices has been exacerbated as people actually start to feel like they are impoverished, not just inconvenienced by petrol prices. The potential for political trouble with the impending emissions trading scheme is palpable. Peter Garrett getting into contortions about including petrol into the emissions trading scheme demonstrates this clearly.

A major problem with emissions trading is the impetus for power companies to pass on the permit costs to their customers, namely the 90+ percent of them who have not taken up Greenpower schemes. The obvious solution is to redistribute the permit costs back to consumers. It seems likely this will be done by a tax credit system, which will probably have to pay credits quarterly in line with utility bills. The system would then be revenue neutral, provide almost no cash-flow issues for ordinary people and achieve carbon reduction targets by the government's overall cap on tradeable permits. The ACCC would have a key role in preventing price gouging by power companies inflating their carbon abatement costs.

However energy usage does not necessarily equate with income either, so government, in conjunction with power companies, will have to even out the discrepancies by commissioning large scale insulation and energy efficient appliance roll-outs to retrofit existing homes in line with new standards. Water companies are currently using similar tactics to improve water usage habits. Another option may be to commission a buyback of inefficient appliances and vehicles, an idea that Tim Flannery has recently floated. For those still under grave threat, short term payments could be made to top up tax credits for excess bills. A further key part of the puzzle lies in switching new power plants to gas co-generation or renewable sources. Government could mandate all new vehicles be run on either LPG or hybrid technology systems.

Running some decent advertising equating energy usage (or abuse) to extra power costs would create more of a sense of personal responsibility rather than government-imposed tax grabs.

The main challenges needing action are to compensate people affected by higher prices, spread the risk from energy bills more evenly across the population and most importantly, educate the people to understand how they can help with climate change and how the government is not committing daylight robbery.

A possible related reform could be brought into business taxation. Business could sign up for an eco-charter where they pay a reduced tax rate in exchange for signing up to stricter environmental standards and responsibilities. This could be particularly useful for corporations in counteracting the 'only duty is to shareholders' mantra, which has left corporate social responsibility aspirational at best. This would eliminate the need for onerous carbon input systems or providing wholesale tax credits for business.

Emissions trading is not a panacea but a market correction mechanism that allows lower emission fuels such as gas, renewables such as solar, wind and tidal and higher emission fuels such as coal to compete on an environmentally level playing field. Designed appropriately, it could potentially restructure our economic foundations in a way that promotes sustainable growth well into the future.

I shredded my economic credibility and all I got was this lousy 5% preferred PM bounce

Forgive the headline but that may just be what's going through Brendan Nelson's mind this morning. For he has set up his party to either indulge in fiscal vandalism or show a fatal lack of policy consistency. Of course, when dealing with Brendan's Libs, you feel like Rosencrantz and Guildernstern in Tom Stoppard's play, as they vainly shout 'consistency is all I ask'! While there are occasional bursts of passion, there is too much confused thought between them.

There may be a large section of the media who believe Rudd is some kind of self-proclaimed messiah and an equally large section that feels he is well-qualified for the spin vacancy created by MacGill's retirement. However, if one looks at the nonsensical suggestions coming out of the Liberal bunker, it becomes clear that the Nationals are not the only party struggling for relevance.

Nelson's budget response appears to consist of blocking the alcopops tax and FuelWatch and raising the possibility of blocking the Medicare surcharge changes. It seems having totally mismanaged its Senate majority in government, the Libs are set to do so in opposition by a display somewhere between petulance and wilful obstructionism.

It is almost as if they believe some of the dribble that Rudd's government will implode in Whitlamesque fashion. Whereas Whitlam's mantra was crash or crash through, Rudd's mantra may as well be commission an inquiry to see if there's an obstacle ahead and then go around the back way.

Precisely how the Libs plan to pay for this nonsense is another matter. Given they cannot decide either whether there is severe inflationary pressure or not, it suggests they should seek to reduce government spending, not government revenue. The alcopops tax and the excise combined will cost something between $3-4 billion, and the Medicare surcharge (by Brendan's admission) around $500 million. It does not compute.

Nor should Nelson get too carried away with that 5% preferred PM bounce - it's not that they like him any more - his dissatisfied numbers actually crept up (within MOE) to 40%, they're just not too happy with Rudd's performance last week, probably based on a false impression of what he actually promised. Given the correlation between those who think Labor promised lower prices and those unhappy with last week, Rudd might become the first politician in history to run ads reminding us of what he promised at the last election.

So the Libs got nowhere from blanket media coverage on a hot button issue that Labor got major mileage out of in opposition, and what gains their leader made are based on a misrepresentation of Labor's election promises. That does not augur well for the future of a credible or responsible opposition.

Rudd's seismic faultlines

Kevin Rudd has commanded a very degree of support against an initially stale then plain out incoherent alternative. However that megalithic support does not come without risks, some of which are now poking out into the collective consciousness. Most of Rudd's risks stem from a clash of worthy but contradictory policy positions, complicated by prejudices and assumptions inherent in the Australian political context.

The most obvious - and yet to be played out fully - is the clash between his firm support for climate change action and his emphasis on government minimising the pain felt to households through higher grocery, fuel and utility prices. This clash is further complicated by the national addiction to cut-price (compared to world standards) fuel. Complicating this clash further is the need to protect the mining workforce from suffering while alternative technology is being developed. It is interesting to note that the Resources Minister, Martin Ferguson, is a former head of the ACTU and an advocate for carbon capture and storage. Ferguson is not going anywhere in the forseeable future, as he will clearly be needed to persuade the unions as much as Garrett is required to persuade the public.

Labor needs to work out a way to deliver meaningful carbon cuts, restructuring mining industries and protecting the public from economic pain in a way that is both environmentally and philosophically sustainable. One suspects one will need continuing, almost indispensable levels of popularity among the party faithful to push through such an agenda.

Another brewing clash operates on a more personal level, but still exhibits the dynamic of clashing policy imperatives within a wider political context. Rudd came to power with considerable support from the anti-WorkChoices juggernaut. While Rudd clearly wants to distance himself from the more onerous of the ACTU's demands, the issue of the infamous work/life balance remains moot. Rudd's slogan ad nauseam is working families - and an essential part of that work is not working them to the bone, like WorkChoices could potentially do without the compensation of penalty rates.

However at the same time, Rudd is an acknowledged workaholic. Whereas Garrett might have sung for Midnight Oil, Rudd burns the stuff on a par with China's growing carbon emissions. Not only that, Rudd is rumoured to suffer from a bad case of 'unempathetic boss syndrome'. Sufferers of UBS believe that their employees should work exactly the same amount they do, regardless of their other commitments or the level of importance of their work. Anyhow, this is bringing howls of protest from the public service, which Rudd is currently using to flay the previous government with. Fortunately for Rudd, everyone believes the public service is lazy, but if this problem escalates to strikes or mass resignations then it could potentially expose Rudd's position on work issues as hypocritical and counterproductive.

There is just the smallest possiblility that this crack in the facade could open up and start to make Hockey the WorkChoices salesman look like his amiable self again. If the Liberals do recast themselves as caring, sharing populists, it might lead to appalling policy on their part but at least keep them competitive when history suggests they are two steps away from being booted out the tenth storey window.

Under Nelson, the opposition looks set to capitalise on whatever whingeing group of disenfranchised it can and feel their pain. If they are genuinely badly off, that will give credibility to the whole approach. While Nelson and his acolytes seek to hold off their inevitable demise (either by extinction or Turnbull) they will clutch to any old piece of flotsam going past. Rudd needs to maintain integrity in his decision making and policy program to convince the people of the merits of his government and the flimsiness of the alternative.

Ten things we should be debating instead of FuelWatch

How to turn the 122,000 plus vacant properties in Sydney into accommodation for the homeless, or at the very least lower the cost of renting.

How to reform our transport and power sectors so we don't go catatonic when oil goes up by $15 a barrel.

How to solve the problem of baseload power and how it can be sourced solely from renewable energy.

How to protect the less well-off from higher energy prices under a carbon trading/mass greenhouse abatement scheme.

How to ensure our farms can keep feeding us and save the Murray from becoming permanent sludge.

How to extricate US forces and allies from the mires of Afghanistan and Iraq while preventing those countries descending into theocratic feudalism.

How to prevent speculative nonsense like the CDO debacle happening again.

How to reform our international institutions on a multilateral, global and regional level to deal with problems of poverty, food security and irrational dictatorships.

How to manage the emerging power balance shift between the US, China, India, Japan and Brazil.

How to ensure our health and education systems deliver the best quality support for all of us at optimum cost.

On populism and political correctness

Two phrases that pop up more than perhaps they should are populism and political correctness. Populism has connotations of supporting the 'people' over the 'elites' (another horribly abused phrase in recent times). That would suggest that any policy that favoured, say pensioners over pharmaceutical corporations could be termed 'populist'. There is a clear hint in the term that such a policy choice is bad. However, as almost any economist this side of Genghis Khan will tell you, the PBS represents a world best practice model for reconciling drug delivery with low/middle income patients. So while technically it is 'populist', it is not bad policy.

However saying that policy helps the people must surely be a truism if we even imagine to live in a democracy which works in the best interests of the people. A better use of the term 'populist' might be to describe policy ideas that are at first glance 'popular', but on closer analysis reveal themselves to be bad policy. Such an analysis might apply to the petrol excise debate. The difference made by a 5 cent a litre cut would save a family maybe $3 per week in fuel, yet the excise cut would cost $1.8 billion. The policy would have little real effect on its target audience (beyond the psychological comfort of 'something being done'), but would potentially eat into funding for other areas such as health. It would also seriously compromise greenhouse abatement efforts and provide a perverse incentive for people to use more fuel, rather than move towards energy conservation and efficiency measures. On those measures, the excise cut call represents a populist policy in its truest sense.

Political correctness is one rather horrid phrase dreamed up as a backlash by right-wing bigots and their acolytes in response to greater ethnic and gender diversity in workplaces and society at large. The phrase is viewed by its proponents as a form of 're-education', akin to the worst excesses of Maoist zeal. By assailing measures aimed at reducing prejudice, political correctness becomes a de facto assertion of a right to maintain and exercise prejudice free from either government or commercial interference. How this is a good idea in an increasingly globalised world where disenfranchised individuals are easy prey for extremist movements of all persuasions remains to be seen. The recent Camden school controversy demonstrates a large group of Anglo-Saxon Australians either think exercising prejudice is not racist or they are locked into conservative doublethink which inverts anti-racist policies as de facto racism against Anglo-Saxons. Clearly the Howard-era messages of the dangers of political correctness have permeated the fields of Albion.

The concept of political correctness should be scrubbed from the political lexicon. In short, it is a backward-looking victim-mentality view based on pig ignorance and wilful misguidance by so-called conservatives. If anti-discrimination provisions and policies were recast as part of the rules of democratic society, safeguards rather than fetters, it would improve the prospects that the shock jocks and columnists would get the message. It is interesting that the very people who claim to be law-abiding citizens of the highest order are the first to denigrate laws put in place to safeguard the very order of the society they seek to defend.

A curious irony

One fact which no one appears to have picked up on in the current smoke and mirrors game which is the petrol debate is that the price could easily be even higher. Australian petrol prices are a function of two factors - world crude prices as indicated by the Singapore-based Tapis index and the exchange rate of the Australian dollar to its US counterpart. Due to our Indo-Chinese boom wake economy, our interest rates remain stratospheric compared to the US Reserve's offerings and consequently the Aussie dollar is worth a fair bit more. Those extra rate rises that so undermined the Howard government are effectively protecting people from paying (temporarily) in excess of $1.70 per litre.

What is odd about the current oil price surge is that it is counterintuitive. The Northern hemisphere is currently in summer, traditionally requiring the lowest demand on oil supplies. Further, the slow down across much of the world caused by the credit crunch and its aftermath is eating into economic growth and hence should result in less demand for oil. So that old adage applies, what goes up must come down.

One thing that is true though is that the higher a price peaks, the less likely it is to reset to its original level. Which means that an old oil price of around $60-80a barrel may well be history. So we should start adapting our fuel appetites by increasing fuel efficency standards and lowering oil reliance, rather than just talk of tinkering at the margins on issues such as Fuelwatch and beefing up the Trade Practices Act.

2020 Summit Part II - The Final Wash-up

This is a very belated post completing this blog's evaluation of the 2020 Summit, now fading into the rear view mirror of history. The Summit represents something of a lost opportunity, with dark suggestions that ideas were planted to endorse government proposals and that many of the ideas were not especially revolutionary. The whole thing in hindsight looks like a bunch of high-powered minds locked in a gilded cage, constrained by the tight timeframe and need to fit the results of their labours into the pre-packed report summaries. It is hard to see how the Summit could have operated differently, as alloting more than a weekend risked reinforcing the idea of it being a think tank rather than a symposium. Perhaps cutting the numbers to 500, removing the government co-chairs and allowing a staged reporting of group conclusions might have been a less political approach.

On the ideas front, the main runner to date is the HECS-for-volunteering scheme which appears to be an adaptation of the Clinton (I) AmeriCorps program. Macquarie University has already mooted a compulsory community scheme for students from 2010. This idea looks useful for closing the gap between students from our various social and cultural backgrounds. One big negative of the Summit was the treatment of climate change. The recommendations of the climate change group are about as strong as miso soup. Green protests suggest that Rudd's hands were tied by virtue of the coal industry's efforts. More on this position in further posts.

The range of taxes suggested by most groups to fund particular initiatives such as preventative health centres was predictably attacked by the don't-tax-me-I-didn't use it crowd. Interestingly the much-maligned Cate Blanchett-steered Arts group did not propose any additional taxation, even offering a suggestion that the arts be directly financed by every other government department.

Curiously it was the economists who came up with some of the more innovative ideas such as the business-schools support program and the Golden Guru program to use the skills of older Australians. The governance stream produced the usual menu of republican sympathy and international institution building without providing clear pathways on solving the issues of governance and increasing the quality of democracy.

Overall, the Summit got the headlines, but hamstrung by offering few concrete solutions on either governance reform or carbon transition of the economy, it was left to the little nuggets to carry the day. The use of so many stars in the arts group risked turning the coverage into a branch meeting of the Hollywood Democrats and probably did not help public respect for the project.

High degree of difficulty but relatively modest success. 6/10.

Evaluating 2020: Part I - Perspectives

Evaluating the 2020 Summit is a massive task which the Great Kevin has rightly decided cannot be guaranteed until the end of the year. It remains to be seen whether this is a Pizza Hut style deal where failure to deliver hot reasons will result in the delegates receiving their money back. Accordingly, Peregrine will devote two posts to the Summit. For openers, a brief look at perspectives of the Summit.

What you make of the Summit depends largely on your perspective. Conservatives largely consider it a contemptuous revival of Keating-era elitism, journalists a cynical political exercise in ideological suffocation, attendees a robust exchange of ideas and ultimate settlement on a surprising number of themes. Bloggers (of the idea-based rather than ideology-based kind) are divided between those who consider it the start of a new Rudd post-politics order, a stupendously unoriginal recycling of ideas and a wasted opportunity. Poor old Brendan Nelson does not seem to know what he thinks of it and appears to be still reeling from his encounter with the representative of the Sex Workers Union.

The Summit has again highlighted the discomfort Australians have with the idea of an elite group of intellectuals showing their faces in public, however it also offers the encouraging idea that we do not mind big thinking and ideas themselves. Nelson's political response could have been stronger, or at least coherent, if he had complimented the idea of the Summit but criticised the lack of ordinary Australians, or in the alternative, announced his own counter-summit, or some such gathering beyond his nebulous listening tour. The Summit's profile, focus, purpose and relevance stand in stark contrast to Brendan's aimless tour lacking both form and substance. If the good ship Nelson comes any further onto the reefs of irrelevance, he will be donning a black wig and taking up resident on Lygon Street.

In short, we like ideas, but as an egalitarian nation, we like our share in the conversation. The lesson from this weekend, a reiteration of Malcolm's Republic referendum, is talk down to the people at your peril. It will be very interesting to see how Liberal resident intellectual Malcolm Turnbull responds to the new climate of big thinking and government recasting given his form as head of the elitist vanguard.

Just because its spin, doesn't mean they won't win

Much as I agree with Mr Andrew Bolt that free speech should be encouraged, I prefer not to have a torrent of that speech funnelled down my alternative media channels. That said, it has given me the opportunity to read his blog firsthand. Bolt has clearly set up his stall as chief prosecutor of the Great Kevin for crimes against statistics. Bolt's argument boils down to everything Rudd does is premised upon media management - i.e. it is spin - and hence it is of no consequence to the good governance of the nation. Rudd's astronomic preferred PM ratings are thus evidence of the greatest con perpetrated on the Australian people.

Spin is a useful tool in two great arenas of Australian experience. One is in politics, where politicians of all persuasions aim to put the issues in the best light for their side. The other is in sport, specifically cricket, where the ability to impart prodigious spin on the ball is one of the greatest assets a bowler can have. The key here is that it is one thing for a batsman to recognise the ball is spinning, but if seeing the spin was enough, Shane Warne would be nothing but an out-of-work poker player. Batsmen have to devise a method to anticipate the spin and respond to it with some smart footwork or composed thinking of their own.

At present, Australian conservatives are as hapless as the infamous Daryll Cullinan was against Warne. Currently Bolt's spin odyssey, where nothing Rudd can say or do has any substance, betrays the collective political poverty of conservative politics. The Libs and Nats are getting comprehensively smashed because they have old ideological struggles, internal machinations and arguments over nomenclature rather than offering alternative policies. Worse, the Federal party seems to be in freefall, with Nelson's leadership marked by walking contradictions.

Whereas Howard constructed a universe of his own making through wedging a hapless and flat-footed Labor party, Nelson is seeking to oppose the government by constructing either media beatups or acts of historical revisionism. He seems petty, carping, confused and irrelevant, a situation reflected in the preferred PM ratings.

The worst part about the spin defence is that it feeds in to a perception that no effort is required to win, indeed your side is the only party with the answers to the great questions. This leads to laziness, arrogance and an unhealthy sense of self-righteousness. The irony is that the more this attitude prevails, the less electable the party becomes.

The traditional division of politics has been on economic policy. What has happened is that Labor has adopted many of the economic policies of the conservative side and hence become indistinguishable. Only Howard's visible obsession with liquidating working conditions caused division to appear. Labor is now rebadging the debate to one where the community is their focus while grasping individualism is the residue left for conservatives. As the issue is now economic and service delivery, Labor is constructing impregnable fortresses against oppositions obsessed by foibles. While the conservatives rail, they become ever more irrelevant, left to fight over labels rather than ideas.

Paler shade of Crean

It appears that the most effective opposition to Kevin Rudd is coming from the grave. Not the graven undertaker like-manner of the Opposition Leader, but the political grave of one JW Howard and the physical one of one Joh Bjelke Petersen. Howard has lacerated Rudd's IR reforms and Iraq policy in one of his paid junket American conservative love-ins. Rudd turned up on Four Corners' Joh retrospective the other night in his former incarnation as 'Dr Death'. One of young Kev's coup de grace was the locking of a bunch of Joh-engrained civil servants in the basement until they dutifully resigned. Given this masterstroke, it is clear when the PM talks about dealing with the public service, he is not kidding.

From the actual opposition, we have the kind of attitude usually seen by schoolkids in the last days of Year 10, before the reality of study in senior school really kicks in. Downer, Vaille, MacGauran and the rest seem to be on an endless summer, turning up when they want and generally treating Nelson with the disdain usually reserved for casual teachers. His authority is crumbling at roughly the same speed as the programme that put him there, with nuclear power, workchoices, AWAs, Kyoto and the apology being dropped in the most mangled and painful fashion conceivable. Other than putting up candidates against Labor, there is not a lot left of the old Howard legacy and even less in its place. Nelson and Turnbull have mounted a token defence of the economic record, but quite frankly a bit of mea culpa about productivity might give the Liberals a bit more credibility in the eyes of punters still smarting at having their private economic hell consistently denied by Howard.

Herein we come to Nelson's problem. His poll numbers are lower than Crean because his voice disappears into a haze before it reaches the viewers, he is caught in the continuing gravitational vacuum left by the collapse of the Howard government and he has absolutely no policy ideas on the table. His opposition performance relies on picking holes in positive policy, but even this is ham-fisted. Until he at least comes up with something, those numbers will remain trapped in their downward spiral.

Battling cynicism inflation and the expectation deficit

The wave of enthusiasm that swept Kevin Rudd to power creates a unique set of problems. There is an enormous sense of energy and movement about the government, with major milestones such as Australia's induction into the Kyoto Protocol's membership and the apology to the stolen generations already complete within the first hundred days. Such symbolic touchstones of policy formed one part of Rudd's appeal. The other was the promise to address those microeconomic 'kitchen table' issues such as interest rates, rent and grocery prices. The very issues accentuated by the Howard Government's blind pursuit of macroeconomic success.

The ruckus over the membership of the 2020 steering committee demonstrates one part of the danger for Rudd. As a progressive vehicle for facilitating the development of a future vision, the bald announcement of nine male (mostly balding) chairs and one solitary female chair was not 'a good look'. It later turned out that numerous women had declined posts, which Rudd swiftly remedied by appointing six female ministers as deputy chairs. The assorted complaints from Eva Cox and Susan Ryan, among others, that the committee membership was a hoary throwback to men-only decision making, meant that the somewhat oddly-maligned summit was overshadowed by more controversy. Rudd does however, need to be careful that in areas such as indigenous and foreign policy he is not seen to adopt the same posture as his predecessor. The controversy over the self-congratulatory 'First 100 Days' pamphlet, led more than the odd voter to say this behaviour reminded him of Howard's prolifigate use of government adveristing.

In an interview in his capacity as chair of the social inclusion committee, Tim Costello referred to the summit as an exercise in 'expectation management'. The danger created by high expectations is an equally high risk they will be disappointed. The great risk for Rudd that his gestures towards price insulation for his new constitutency will be seen as mere window dressing. It is very hard to be free market and cut red tape on one hand and use regulatory measures on the other. It is especially hard to maintain fair prices for items such as groceries and petrol, particularly in a climate with rising fuel costs. Rudd needs to be seen to maintain his empathy with struggling voters and they need to see his efforts to improve their position.

In search of the next compromise candidate?

The Federal Liberal party is in a mess. Howard's failure to adhere to his own formula for departing, 'so long as it is in the best interests of the party', saw his leadership explode in the mighty supernova that was the 2007 election. Like many supernovae, the remnants of Howard's pull on the party have become a black hole, tearing the tenuous strands holding it together. Howard's legacy was to leave the party reliant on a motley brew of wedge politics and social conservatism. He ran hard lines on issues such as immigration, national security, climate change and reconciliation. His biggest problem was that he could parry Costello's fractionally less aggressive approach, but not his deputy's sense of entitlement. Costello did not have time to become Howard's slightly more innovative clone.

The result was a thrashing and a leadership no one either the electorate or the party could tolerate. Turnbull, the people's choice, has a Whitlamesque streak which gets straight up the nose of Howard's guardians. His style is pugnacious but his politics is dubious to the conservatives, being the former champion of Keating's republic. Abbott, the hardliners' choice, is nicknamed 'People Skills' in the same manner that redheads earn the moniker 'Bluey'. He is the perfect choice to lead a right-wing band straight into the wilderness and become the Iain Duncan Smith of Australian politics. As neither had the numbers and Julie Bishop's Liberal-model Julia Gillard was still in Frankstein's workshop, the hapless Brendan Nelson was drafted into the leadership.

In picking Nelson, the Liberals must have hoped for a concillator capable of ameliorating the harshness of Howard's legacy. Instead, they got a weak leader being killed by the kindness of Kevin. Nelson has been asked to join a war cabinet on indigenous health and take part in the great apology ceremonies. Nelson's speech was somewhere between a brave attempt at policy on the run and an absymal disaster. He tried to strike a Crean-like mood of supporting the people, but not the policy, imitating the former Labor leader's take on farewelling troops for Iraq. The audience got a mishmash of homily and 'rose coloured history' which was difficult to follow and even harder to swallow. The latest poll figures render Nelson the political equivalent of camomile tea, weak, soothing and of little consequence.

After Friday's farce, seemingly led by Joe Hockey rather than the morose Nelson, the Liberal leader seems well on his way to becoming an ex-parrot. The question remains do any of the contenders want the job. Turnbull is gaining traction against Labor's trainee Treasurer, Wayne Swan, and might want extra time to increase his stocks. Abbott still remains unelectable, but is running hard on the Burke links to Rudd to improve his profile as arch headkicker. Both may want to keep their powder dry behind a more moderately inclined leader. Bishop is still building her experience and profile, and has had to capitulate over AWAs, so she is not in favour.

This leads us back to Joe Hockey, who seems to have the appropriate taste for absurdity to take on the job. Anyone who declares Rudd to be lazy with a straight face has gumption. Whereas Nelson was the compromise for Abbott, Hockey would be the paler version of Turnbull.

Lame excuse for a bunch of lame ducks

The good burghers of the Liberal party are going to stick their collective heads together and ponder where everything is going wrong. In a unique inversion of recent Liberal machinations, the Federal leadership in the person of Brendan Nelson is not invited. In explaining the omission of His Hairship, Victorian Liberal leader (and now senior budgie-smuggler following the post-election demise of Peter Debnam) Ted Bailleu said that Nelson had not been elected when the invitations went out.

That seemed a little trite, given that Queensland's bunch of herded cats changed its leader after the elevation of Nelson to the Federal leadership. The new leader, Mark McArdle, appears to have been invited. Precisely what advice Mr McArdle, the compromise one step removed from the old Athenian 'draw straws' method could offer remains moot. Given the Nationals are trying to absorb the Liberals, it probably is not going to be on the subject of electoral viability. Furthermore, the newly minted Western Australian opposition leader, Troy Buswell, gets the pleasure of a phone-hook up. Troy-boy was elected last week, presumably on the basis of polls which showed that people want to vote for the Libs, it is just that the leadership is mediocre at best. After saying he needed more experience, the next story was Buswell's election. Apparently he needed only a couple of hours.

Apparently Nelson will call his own meeting later in the year to discuss the party's future direction. Which is fine, except it looks horribly like his fellow leaders are plotting whether they actually think he is in their best interests and that he announced his conference in response to theirs. That an octet of leadership with the collective colour of a miso-soup menu left him off their bill and that Nelson could not put a stop to this meeting and re-direct discussions onto his agenda shows a remarkable loss of coherency in the party and a marked lack of respect for the leader. Perhaps Liberal state leaders are left in a quandary: having determined public service provision was not their bag, and with the federal parties encroaching on their areas of traditional responsibility, they do not actually know where they fit in the modern political landscape. In that light, it would make sense to have a provincial level conference of leaders. However, given the discussion is about the essential role played by Liberal parties at all levels of the process, both practically and philosophically, and that Nelson has considerably more experience of anything close to power than most of his counterparts, his omission sends a not so subtle message.