Cabinet Papers: Keating MPs Considered Carbon Tax To Tackle Climate Change

The Guardian

Cabinet debated how to cling on to government’s ‘no regrets’ policy while maintaining Australia’s influence at international bargaining table
Australia’s response to climate change and meeting international obligations proved difficult for Paul Keating’s government in 1994 and 1995, according to cabinet papers. Photograph: Getty Images
Australia’s response to climate change and the challenge of meeting its international obligations proved as difficult for the Keating government in 1994 and 1995 as it would for future governments.
Cabinet papers released by the Australian National Archives on Monday show that much of the debate in the Keating cabinet was about how to cling on to the government’s “no regrets” policy while maintaining Australia’s influence at the international bargaining table.
The “no regrets” policy meant Australia would consider only measures that involved cutting emissions without any adverse impact on the economy or trade competitiveness. That ruled out most measures to tax fossil fuels, which would increase the cost of electricity.
It meant Australia relied mainly on creating carbon sinks by limiting land-clearing and planting trees.
Australia had signed on to targets at an international conference in Toronto in 1990 on the basis that the convention would recognise Australia’s high dependence on fossil fuels.
But by September 1994 ministers were told Australia was falling woefully behind the implied target set in the Framework Convention on Climate Change and the interim planning target it had set itself.
The interim target involved stabilising greenhouse gas emissions at 1988 levels by 2000, with a 20% reduction by 2005.
The cabinet was told Australia would achieve only 54% of the target, mainly through the One Billion Trees program.
“Estimates of Australia’s greenhouse gas emissions and sink activity for 2000 indicate that Australia will not achieve either the implied target in the convention or the IPT,” the cabinet documents say.
The papers note the Australian government was under increasing pressure from Europe and Pacific island nations to take tougher steps to reduce carbon dioxide emissions.
The truth was that the “no regrets” policy made Australia’s efforts to cut emissions ineffectual, as officials acknowledged in the cabinet papers.
But instead of taking tougher measures, most of the discussion in cabinet was about how to manage Austalia’s “relatively poor domestic greenhouse gas response”.
The cabinet devised a two-pronged negotiating strategy for the next round of international meetings: advancement of the principle of “equitable burden sharing” and the “promotion of realistic and achievable means to to involve developing countries in emissions reductions”.
“Equitable burden sharing” was a nebulous idea that countries who were similarly dependent on fossil fuels should “share the burden” in the way the EU was doing across its member states. The cabinet identified Norway, Canada, the Russian Federation and Poland as possible allies, as well as Sweden and New Zealand.
But it warned there could be opposition from fossil fuel importers such as the EU – in particular Germany – and from Japan and Austria.
The second leg of the negotiating policy was to press for some type of commitment from developing countries. This was a theme that would continue throughout the negotiations of future agreements and was taken up with gusto by the US president, George W Bush, after 2001.
A 1994 cabinet paper included an option of withdrawing from future negotiations altogether but it warned that Australia faced a real risk that it could have bans placed on its exports as a result.
By December 1994, with a further conference looming in March 1995, the cabinet was again wrestling with Australia’s poor performance.
It began developing further “no regrets” policies.
Among the policy responses considered was a carbon or energy tax. But modelling by the Australian Bureau of Agriculture Resource Economics found the tax would be at about $US118 a tonne by 2000 compared with an average of $US24 for OECD countries.
The costs of meeting the IPT target with a carbon tax alone would be prohibitive, the papers warn. Again there was discussion of abandoning the target.
Instead the cabinet agreed to implement a voluntary program for industry called “Response to the Greenhouse Challenge”. The cabinet was told there was support for the voluntary approach from manufacturers and the mining and electricity sectors.
There was also discussion of a spending package to boost renewable energy and tree-planting, which ranged from $45m to $78m.
The finance department was highly critical, saying it “questioned the essentiality” of bringing the submission forward outside the 1995-96 budget. It described the spending as “mostly short-term” and said it would have little impact on the target gap.


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