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Reforms and other Direct Actions

17/03/2011

The Prime Minister Julia Gillard gave an interesting speech last night at Flinders University. It seems we no longer have a politics of the left and the right, but the extremes and the centre.

“Neither of the extremes in Australian politics can deliver this reform,” the Prime Minister said.

“The Coalition has surrendered itself to fear-mongering and denying the power of markets.

“The Greens are not a party of government and have no tradition of striking the balance required to deliver major reform.” Ms Gillard also vowed that not one cent of the funds raised by the carbon tax would go to Treasury.

http://www.theaustralian.com.au/national-affairs/pm-vows-to-stop-carbon-jobs-going-offshore/story-fn59niix-1226022832982

It is an interesting assessment of politics in this country and one that was confirmed in that WikiLeak that concluded there were no socialists left in Australia and with the current political situation, they are not a party of the left, but the centre.

The PM argues that a reform of this size and scope can not be provided by a Coalition that is beholden to business and industry more then they are letting themselves be beholden to Australians as a whole.

She claimed the Greens will not be able to create a reform that keeps industry intact and yet still make the 5% emission reduction by 2020 and allow incentive to drive business into the future without damaging the economy.

The PM is basically saying that the ALP is the only party that can address the concerns of the environment and the concerns of business and the concerns of Australians as a whole.

Last week there were some hints made by the Coalition on how a Direct Action scheme would work. I must admit my mouth was a little agape as they did. It seems the idea is to tender for pollution assistance.

That is businesses will tender to the government a price and an amount of reduction and the government will then allot the billions of dollars in abatements. This will then help that business in its ability to trade  internationally with countries that have carbon pricing mechanisms etc so any tariffs or carbon taxes they have to pay in that country is paid by the government and that of course means the Australian people.

Cool. But wait. Lets take a closer look.

Lets say we have two companies producing the same product at the same price. They both go to tender. One company wins. The other receives no support. They then compete internationally and the company that received assistance WILL be at a cheaper price then the one that did not receive assistance. Simple really. It means the company that did not receive assistance may indeed sack staff to cut costs or even pull out of the market.

Lets take this further as what was reported was the ability for a company to reduce its emissions will win out of a company that reduces theirs less. Sorry I should not say reduce as they companies that receive abatement assistance are under no obligations to meet their tender.

But lets say of the two companies above, one produces an excellent product and the other a mediocre one. The company that produces the excellent product does so because it spends more care and time manufacturing a product with the best materials it can find from around the world and import those resources here. All at a carbon cost.

The other company uses cheaper resources and has less manufacturing time.

So the first company, despite the product quality, may not receive assistance as they have a bigger carbon footprint. The company that produces the inferior product is the company that then makes more profits, expands to other markets and grows while the company that provides the superior product will need to close markets, raise prices, reduce working hours and even sack staff to compete with the cash assisted opponent.

Not sure about you, but this sound inherently flawed. The market system that had created the superior product is now to be replaced with a lucky dip draw.

Is this really how the Coalition wants business to run? Is this what can be described as a free and open market system?

Oddly enough, the Greens support Direct Action too.

A. Ghebranious  2011  (All Rights Reserved)

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One Comment
  1. Jennifer Baratta permalink

    Commercialism at the new age of greenbusiness Oh boy this will be fun. NOT!

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