Climate change and the consequential development of climate policy has run at times parallel pathways when comparing Australia to New Zealand. Both countries have consistently supported the need to reduce greenhouse gases and have developed policies to implement carbon trading schemes. In New Zealand, carbon trading was initially proposed by the then Labour government, however an election intervened, the Labour party lost office and the incoming National party parked the proposal until a thorough review was completed. Subsequently, National has adopted a revised version of the carbon trading policy and the New Zealand ETS came into effect on 1 July 2010.
Whilst independent of Australian policy in a formal sense, New Zealand politics is very mindful of the Australian political situation and the development of Australian policy is carefully studied. Of significance is a commitment of the NZ government to review the ETS in 2011 to determine targets post 2012 and other matters such asthe penalty price and scheme coverage. Australia too had a bipartisan commitment to a national carbon trading scheme. Both major political parties took to the 2007 federal election policies to implement an ETS. The Labor party won in a landslide and the prime minister rode a wave of public support when his first act of office as PM was to ratify the Kyoto protocol.
The federal government then began building the institutional and legislative frameworks necessary for a federal ETS. Professor Ross Garnaut was commissioned to advise the
government and a substantial, thorough and rigorous study was prepared for the government to guide them in the development of the carbon pollution reduction scheme.
After intense lobbying by industry the government moved substantially away from many of Garnaut’s recommendations.
The opposition vigorously opposed the CPRS and the government failed to gain sufficient numbers in the Senate to secure its passage. Bipartisan discussions ensued and the government and opposition developed a compromise CPRS and resubmitted the legislation to Parliament.
It was at this point that an extraordinary political drama developed. The leader of the opposition lost his leadership on this issue and the conservatives took control of
the opposition party, blocked the legislation and began a campaign of criticism of the federal government (to great effect). Incredulously, the prime minister in May this year
decided to defer implementation of the CPRS (seemingly without Cabinet consultation) to at least 2013. This announcement saw his popularity slide from a record high to a view that the prime minister was unelectable and Labor’s power brokers took an unprecedented act by deposing a first term prime minister and replacing him with his deputy.
Australia has now voted and the drama continues. Both major parties took a suite of diluted climate policies to the electorate (Labor remains committed the CPRS but with no definite time frame and the Liberal coalition proposing a series of direct action policies but remaining opposed to the CPRS). Neither major political party won sufficient seats to form a majority and for the first time since 1940, Australia has a hung parliament. Most notable has been the swing towards the Green party who has won the balance of power in the Senate and holds a seat for the first time in the House of Representatives.
Four (and possibly five) independents hold the balance of power and are currently negotiating with the major parties to determine which party can with the support of the
independents form office. The views of the independents on climate policy reflect the divisions amongst the major parties but nonetheless want a see a carbon price in the
market sooner rather than later.
How this political drama will conclude is anyone’s guess. It seems more than likely that action on climate change will continue to dominate the short-term political landscape for Australia and forecasting outcomes for a timetable for an ETS remains the dominate water cooler discussion. Australian business has sought a long, loud and clear signal on carbon pricing. Perhaps 2011 is the year in which this occurs? Watch this space carefully.
Originally published on Point Carbon’s Carbon Market Australia – New Zealand.
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