ALP split over climate change

This week's conference on global warming points to a practical way forward which will not wreck the economy

THERE was more theology than meteorology in the response of the environmental lobby to this week's inaugural meeting of the Asia-Pacific Partnership on Clean Development and Climate. Activists argued the meeting of ministers and business leaders was a talk-fest that will do nothing to force big polluting countries and companies to end their evil emissions of greenhouse gases. They did so in support of their old argument that Australia and the US should have signed the United Nations Kyoto Protocol on climate change and cut their energy use, or paid penalties. The media coverage of the conference was something of a propaganda triumph for the environmental movement, mainly because much of it sounded like a Greenpeace press release. But some sensible voices have spoken out in favour of what in reality was a path breaking meeting. And what will puzzle the green lobby, and its mates in the media, who assume that anything involving government and business must be a capitalist conspiracy, is that the conference was endorsed by a Labor Party frontbencher_ a senior left-winger to boot! Yesterday The Australian exclusively reported Labor resources spokesman Martin Ferguson endorsing the Partnership. Demonstrating that at least some members of the Labor left do not take their ideological orders from Bob Brown, Mr Ferguson said the meeting had been a step towards developing cleaner, greener, energy technologies and properly involved business. He is quite right on all counts. The conference brought together Australia, the US, China, India, Japan and Korea. Between them, these countries account for around half the world's energy consumption and greenhouse gas emissions. Australia is not a supporter of the Kyoto Pact because, as a major coal exporter Kyoto discriminates against us. Neither is the US. As developing countries China and India are exempt from its strictures and Japan and South Korea are major energy consumers. For anybody interested in global warming these are the essential six. And the outcome of the meeting, a commitment to invest in cleaner energy without crippling economic growth, makes sense.

But not according to the prophets of doom, for whom it is an article of green faith that the world's climate is changing for the worse, because coal-fired power plants pump greenhouse gasses into the atmosphere. Environmentalists blame Western consumers for this, especially Americans and Australians who they say are addicted to energy-intensive lifestyles. This is a bit rich given that while Australia's per capita production of greenhouse gasses is large, overall we are only responsible for 1.6 per cent of global emissions. And while environmental activists say science shows fossil fuels are responsible for a global warming crisis, which may be right, they could just as easily be wrong. It seems certain the world is warming, but no one knows how long the trend will continue, or why it is happening. Just this week scientists in Germany announced that plants, not power stations, emit anything up to 30 per cent of the world's methane, a potent greenhouse gas. Nor do green zealots explain how unilaterally reducing the right of nations to produce all the electricity they need from coal-fired power stations will do much overall good. The skeptical environmentalist, Bjorn Lomborg, argues global warming will continue, whatever humanity does, and for the world to comply with the cuts in greenhouse emissions required under Kyoto would cost $200 billion a year – enough to provide the most poor people on the planet with clean water and more education and health care than they have now. And it never appears to occur to those who denounce Australia for not adopting Kyoto that the green credentials of the agreement's European supporters are less doubtful than nonexistent. If there is anything environmental activists hate more than coal-fired power plants, it is nuclear energy. But Europe relies on nuclear power – France draws nearly 80 per cent of its electricity from 58 plants run on uranium. The Europeans like Kyoto because it flicked responsibility for greenhouse gas containment onto the developing world and coal-rich countries such as Australia. Curiously, none of this is ever mentioned by environmental opportunists in organisations such as Greenpeace who make the running on the need to cut energy outlays. This is because they are in the catastrophe business and use science as a selective source for points to push in their fund raising. Kyoto also meets their ideological preference for bureaucratic solutions imposed on private enterprise. Nor do they offer an alternative, other than cutting power consumption – even though we will not know until 2012 whether the Kyoto protocols have had any effect in signatory countries. Despite all the windy optimism, alternative energy cannot compete with coal-fired power stations, on grounds of either efficiency or economy. The only energy source that comes close to coal is nuclear power.

The reactionary response to the Asia-Pacific Partnership meeting this week demonstrates that support for Kyoto cloaks the green movement's real desire – to see capitalism stop succeeding. Extreme greens cannot bear to accept that our best chance of reducing greenhouse gas emissions will occur when free enterprise has incentives to implement solutions. While power providers and big electricity users will howl, we need a national carbon trading scheme, with permits bought and sold in the free market, as a means of meeting greenhouse reduction targets set by Canberra. And we need tax concessions for industries that develop new technologies to clean up power supplies. In the long term geo-sequestration, which buries carbon dioxide pumped from power plants, may be a solution. And research into technologies to clean the coal burned in electricity generators is already under way, including development of a power plant in Florida designed to deliver much lower emissions. When the incentives exist business will use technology to find a way. For a century London was plagued by pollution that killed people. No longer. People now fish in the great lakes of North America which were once sludgy industrial swamps. And the idea that cars could emit much less pollution would have seemed impossible to environmental doomsayers 30 years ago. They would not have even conceived that commercial cars could run on batteries, with hydrogen power on the horizon. Whatever the extreme greens say, we can address global warming without adopting a medieval mindset that sees electricity as inimical to the environment. This week's meeting was a practical step forward by six nations whose legitimate energy requires continued use of coal – perhaps with more nuclear energy to follow. It worried environmental activists – because it showed up their messages of doom for what they are – hot air.

Costello's tax racket
Time for root-and-branch tax reform, for rich and poor alike

LAST Sunday, when Peter Costello talked about helping families with dependent children come the budget, he forgot to mention how he intends to pay for such help – by allowing the tax that people pay to creep up as wage inflation pushes them into higher tax brackets. Elizabeth Colman's exclusive story in The Weekend Australian demonstrates how bracket creep is a nice little earner for the Treasurer – and robbery for everyone slugged with his silent, selective tax hikes. Thanks to bracket creep, in 2008 a top-income earner, receiving a salary of $125,000, will be paying almost $110 a week more in tax than they were in 2001.

The fate of anyone earning a much more modest $30,000 is proportionately much the same, being slugged an extra $30. Certainly, only 3 per cent of wage earners make $125,000 a year, the sum at which the top rate will apply at mid-year. But they pay 47 per cent of every dollar over that in tax. And one million people now pay the almost equally excessive 42c rate _with another 400,000 set to join them over the next three years – thanks to bracket creep. But wait, there's more, and it's worse! Because of the way the tax and welfare systems interact, Australians who are not particularly poor make no tax contribution at all – and low-income people, singles and couples pay for them. A single person on $25,000 a year pays $3300 in tax. But a family on $50,000 with a mortgage and two children under 13 pays absolutely nothing – their welfare payments match the income tax owing.

It is hard to imagine a more cunning or cynical stunt than appealing to young families in marginal electorates – the people who have already elected the Howard Government four times – with money taken from poorer working people. It is time for real tax reform, an end to bracket creep by indexing thresholds, and a reduction in the confiscatory top marginal rate. And it is time to end the way the Government requires the working poor to subsidise middle-income families. Given the way his strategy serves his political interests, it is not all that surprising that Mr Costello shows no interest in the reform task. But his inertia gives Labor an opportunity to fight the next election as the party of lower, and fairer, taxes.