Greens' strategy for the future

Meteorology and climatology are complex subjects. How could they not be, when unpredictable weather patterns are one of the prime examples used to illustrate deterministic chaos?

It's because of the very complexity of the subject that there is so much debate concerning global climate change -- with many remaining unconvinced that global climate change is a serious cause for concern and many others equally convinced that global climate change is the greatest challenge we as a species face during this century.

If climate change could lead to our extinction, then peak oil could hardly be less of a challenge, could it? It's believed that the effective end of affordable fossil fuel resources for the planet could lead to economic turmoil on a massive scale and return us to a pre-Industrial Revolution stage of development.

But as with climate change, there are those -- primarily the oil industry and allied lobbyists -- who take the contrary view and refute that we've reached peak oil or that we will in the immediate future.

Seeking to avert calamity of either sort (climate or oil supply) are bodies such as Greenpeace, the Australian Conservation Foundation and the Greens, who represent environmental interests in Australia's Parliament.

Last week, during the LCT furore (more here), the Carsales Network spoke with Christine Milne from Tasmania, representing the Greens in the Senate.

Senator Milne, it must be said, is politically astute and has arguments to sway the public's opinion beyond the traditional green sentiments that we'll all be 'rooned' by climate change and 'cottage industry employment' as a consequence of peak oil. 

For a start, who likes traffic congestion? As Australia's population grows, traffic can only worsen -- all the more reason to reduce the number of cars on the road through improving public transport infrastructure.

"Our driving policy position here is to reduce Australia's dependence on peak oil and to reduce our greenhouse gas emissions by getting people to drive less -- and when they do drive, to drive more efficiently," says Senator Milne.

"So that's the position we begin from and that's why we've argued strongly to move into a huge investment into public transport, more investment in cycle ways, more people-friendly mass transit... all that."

So the argument is about road rage, but what if you get around in a chauffeur-driven Maybach or Rolls and don't care about traffic?

Well, perhaps you own a company that is an OE parts supplier to the local automotive manufacturing industry or perhaps you have shares in a company with a stake in such a company or you have some unspecified financial interest in the local car-building concerns -- even if it's just that you're a Commodore or Falcon fan.

If that's you, the Greens say, you'll be affected by the increasing cost and paucity of fuel -- and the consequences for international trade.

"[We're] saying that the Australian car industry will have no competitiveness in the future unless it switches to highly efficient vehicles which have low carbon-dioxide emissions -- and the only way to do that is to tie any subsidy to the car industry to producing those vehicles," says Senator Milne.

The Senator observes that the local car (manufacturing) industry is potentially under serious threat from China and, to a lesser extent, Europe.

"The Chinese have just imposed a 40 per cent sales tax on vehicles with an engine size of four litres and 25 per cent sales tax on vehicles between two and four litres.

"The aim of that is to try to stop the Chinese of taking up the option of imported four-wheel drives -- which are big cars that, in many Chinese cities, are just impossible to get around in -- and also to protect the Chinese vehicle manufacturing and vehicle parts industry, because what China has done is slapped on a very high vehicle fuel efficiency standard.

"By imposing this high sales tax, it's acting as an import barrier effectively, and helping the Chinese to build cars which are going to be more fuel-efficient and cheaper than anybody else's.

"So they'll build themselves a huge export market -- which is the risk to Australian manufacturing. Unless we do the same and build very efficient cars, then we are not going to have a market, because the Europeans have got the low emissions and high vehicle fuel efficiency, because the European Union have set such high standards on emissions and efficiency -- and they will dominate the luxury end of the global market.

"The Chinese are now moving with this initiative to try to dominate the mainstream market. So where is the Australian niche going to be unless we set ourselves some rigorous standards? -- and so that's why I'm saying everything should be internally consistent to drive that outcome.

"Put in our $500 million for our green cars -- and I support even the Bracks review saying 'make it a billion to do that' -- but tie it to procurement, tie it to taxation, tie it to getting rid of the fringe benefits tax concession and so on, so we get the transition we need to the cars that we need to have for the future."

The fringe benefits tax appears to be a particular thorn in the Senator's side.

"The [fringe benefits tax] concession is more attractive, the more you drive, so you get the 'March rally' each year, with public servants and others driving up and down the eastern seaboard from Melbourne to Brisbane and back, in order to get into a different category.

"This is ridiculous. Driving less and driving more efficiently is not just about fuel efficiency and peak oil -- it's also about getting people out of their cars, reducing congestion on roads, all that sort of thing as well.

"It's that perverse incentive to drive further in order to get a greater concession that we want removed."

Nonetheless, as unintentionally detrimental to the green cause as the FBT is, the Senator still subscribes to the school of thought that a good way for a government to change behaviour across an entire society is through the incentive (or disincentive) of taxation.

"In terms of the tax system, what we've said to the government is that overall our position is to try and phase out the Luxury Car Tax altogether, and phase in a tax on the vehicle fuel inefficiency and/or emissions -- because they're slightly different, but nevertheless in that direction.

"Of course, the government was clearly unable to do that immediately, in the sense that you can't just do that overnight, so they agreed to refer that to the Henry tax review to look at shifting the tax burden in that way, because we've said that if you want to tax wealth and income, you should do it through the income tax system, rather than use a luxury goods tax -- which is effectively what this is."

Overall, Senator Milne would rather see a carbon tax based on fuel, rather than bringing transport into the emissions trading scheme.

"We should get rid of the current fuel excise and tax fuel on the basis of embedded carbon, so that those fuels which had the highest amount of embedded carbon attracted the highest excise and those that had no carbon embedded attracted no excise -- again, driving the change in behaviour.

"And we would have preferred that for example, than to have gone to putting transport into the emissions trading system. We think it would have been much better to go with a carbon tax on fuel which would have been on embedded carbon and, that way, if a fuel was genuinely low-carbon or zero-carbon, then you would have been rewarded on price.

"Our view of the whole thing in the first place was emissions trading scheme should not include transport. That should be dealt with through a carbon tax on embedded carbon in all fuels -- and then you get a fair measure against which to measure all fuels -- but the government went the other way and put transport in the emissions trading system and then neutralised the price signal on the carbon by giving a rebate.

"That has been the most ridiculous public policy position."

As the Senator sees it, a carbon tax on fuel would also serve the purpose of placing biofuels in the proper context. They're renewable fuels, unlike petroleum, but in the main they can be 'carbon intensive'.

"[A carbon tax] also sorts out the issue of biofuels, because what it does is say that if you look at the full carbon cycle that goes into a biofuel, if you use a food crop essentially to produce a biofuel, it will actually be quite high in its carbon intensity because of the chemical input to the land, the crop in which it's grown -- plus all the petrol and diesel used in the machinery in processing and transport and so on... whereas if you got a second generation biofuel -- which was lignose, cellulose or processing newspaper using a cellulose waste product -- then presumably your embedded carbon is going to be much lower.

"So it really is about saying to the innovation industry out there, if you can come up with a fuel that is zero-carbon and a vehicle that can run on it, then you'll be rewarded by having the cheapest option in the long run.

"That's why electric vehicles are so exciting, but they have to be powered by renewables. It's no use having an electric vehicle powered by coal fire."

Senator Milne sums up her party's position with an argument that's hard to refute.

"In my view, the policy outcomes should be in the context of getting off our dependency on imported oil, reducing our emissions, getting rid of congestion in cities, improving people's health at the same time and building competitiveness and resilience in Australian manufacturing."

What Senator Milne and the Greens appear to be saying is that even if you don't believe in climate change and peak oil, there are plenty of people around the world -- whole countries, in fact -- who do. And they're acting on those beliefs, leaving us behind in an altogether new world order.

Given the delicate balance of power in the Senate, the Greens stand a real chance of passing or delaying legislation that will further or hinder their ends, respectively. In that scenario, there's likely to be some very rapid changes in our taxation system in coming years -- and a substantial part of that will be about motivating you, the consumer to change your driving habits and the type of vehicle you choose to own.

As a consequence, expect the local manufacturers and importers to change the product range they offer in this country -- in very short order.

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