In search of mates for their unloved climate tax, Labor phoned a friend and the ACTU answered on The Punch last week. That was predictable. But it was the shallowness of Ged Kearney’s contribution which surprised many, because it demonstrated a limited understanding of the debate and scant regard for the best interests of her members.
The ACTU case is simple enough; it’s Labor’s case. Belief in the climate science and that someone must pay. The ACTU’s more nuanced perspective is that their members shouldn’t pay a cent. In the pantheon of climate hypocrisy, that places Kearney right up there next to Paul Howes. Someone must pay; so long as that someone isn’t me.
Credit to Kearney for conceding she isn’t an expert in the field. Nor am I. But ignorance is no excuse for refusing to seek simple answers to fair questions on behalf of her members. It is implausible that an ACTU president could be both unaware of membership doubts around both the science and the tax. It is breathtaking that she is unwilling to address them with reasoned reflection.
While the ACTU is correct that someone must pay, it’s the ‘when and how we pay‘ which really matters. These complex questions have engaged the minds of protagonists globally, but not the ACTU.
Their disengagement on questions of national interest is a concern; questions like when and how to pay, the need for international agreements which reduce protectionism and the role of future technology in abatement. Surely unions care about avoiding carbon leakage and the export of union jobs. They need to urgently establish which of their members benefit and how many may be harmed by a carbon tax so they can play a role in that transition. At the moment, all they appear to want is a free ride.
With such climate conviction, it’s an extraordinary double twist with pike to then demand complete immunity from a carbon tax. Focused on destroying their sworn enemies, it’s all about the ‘big polluting companies’ who should not be ‘let off the hook.’ That tired dichotomy of nasty corporations crushing toiling honest workers resonated in soviet Russia, but that old class warfare mentality isn’t valid anymore.
The ACTU ignores tax incidence by denying taxes on energy generation pass invariably to consumers. Of course the carbon tax will hit union jobs and hip-pockets along the supply chain. The question runs beyond job and income protection. Unions should be asking how variably fuel-stressed union families will be fairly compensated over the medium and long term. Equally, unions should be monitoring whether multinational entities shift effort and reduce domestic hiring as they seek higher returns off-shore.
There is also a bigger picture. Unlike taxing carbon at consumption, current taxes apply Pigouvian principles to hit production. That hurts economies like Australia because we are forced to self-tax our resources which are overwhelmingly exported. Blue collar and middle income earners have the most to lose with this approach, but it is a fact lost on the ACTU. Supporting a tax on production which trickles unpredictably down upon its membership suggests they are more a front for the Government than an advocate for their members.
Finally, the ACTU appears seduced by the ‘finite resources’ argument; that our ore, coal and gas might run out if we don’t have a carbon tax next year. All three are likely to take us into the next century. We didn’t need Mr Rudd’s plan by November 2009 and despite residual hysteria, we don’t need a clumsy carbon tax while around 90% of the world’s commodity exporters are doing nothing. Just like global trade arrangements, climate negotiation will take years and possibly decades to achieve. Forcing up fuel prices at the bowser for Australians in 2012 is political masochism which achieves little.
Australians generally agree that market-based solutions are the most effective. Rudd’s, Gillard’s and Abbott’s all qualify. The question is who needs to be dragged into that market to achieve desired carbon reductions. Economists may prefer the miniscule theoretical benefits of Gillard’s uber-tax but 90% of it is avoidable churn and the administrative costs are enormous. That is why Abbott’s direct and verifiable purchase of abatement is so attractive. Funded through existing consolidated revenue mechanisms and waste reduction, abatement is guaranteed while ordinary consumers with inelastic consumption are protected.
The ACTU can’t be expected to support Abbott’s plans, but their members deserve an honest appraisal. Gillard’s approach risks disproportionately hurting low-income earners who are more reliant on essentials and across a range of fuel-stressed arrangements, impossible to precisely compensate. The ACTU also conveniently ignores the massive waste cuts which the Coalition has promised. Kearney should be more nuanced on these issues rather than refusing to take Abbott’s plan seriously.
Climate debate here and globally is really a battle of economic redistribution. It’s about how much rich people pay to poor and rich nations pay to poor. Redistribution is precisely what tore the Copenhagen negotiations apart. Rudd survived as long as he did by keeping debate focused on the morality of protecting the planet. For Gillard, it’s really just a rich tax where the proceeds are used to buy the support of her voter base through vague promises of compensation.
By global standards, the average ACTU member is among the world’s wealthiest 12%. There are 2 billion worldwide living on less than a couple of dollars a day who will never afford a seven cent per litre fuel tax. That is why the ACTU needs to explain why union jobs and income should be protected in a globally workable scheme.
Agency theory describes aligning the actions of those who represent us with our own. ACTU members pay to have their interests represented. Instead of being ideological puppets for ailing Labor governments, unions should be doing all they can to get the best possible carbon solution for the country, not just blanket exemptions for their members.
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