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I am finding it difficult to keep up with media and political fervour on climate change. That aside, I have first to report that yesterday, for the first time for about two years, The Age published a letter drafted by me (see below). The reason? I can only assume it is because I have become a critic of the Abbott government’s current handling of budget policy

As to climate change, The Age is caught betwixt and between. Having previously strongly supported a carbon tax, it is now forced to recognise that, politically, Labor had already agreed to abandon a fixed pricing policy. Even so, The Age remains opposed to the Government’s Direct Action policy (as do I) and, failing to understand that Labor’s “old” trading-based policy would still involve a tax, persists with the idea that Labor will have to adopt some kind of pricing. But as Labor has not yet decided what that will be (it appears the Labor’s new Shadow Cabinet has yet to meet) , The Age is now forced to say that it (Labor) will adopt a pricing policy near to the next election!

Meantime, we have the still-existing Climate Change Authority established by Labor under the chairmanship of my old Treasury boss, Bernie Fraser, warning that Australia must markedly increase its emissions reduction target from 5 per cent by 2020 (I resigned from Treasury not long after Fraser’s appointment). It appears that Chief Scientist Chubb, appointed by Labor but with no expertise in climate science, is of the same view. I have yet to read this draft report (why couldn’t Bernie get a consensus?) but it is difficult to imagine that it is more than a politically based one.

Finally, amidst turmoil in Iraq we are starting to see the signing off of our military involvement in Afghanistan but without any recognition of what to do about the on-going problem of Islamic extremism which continues there and in other Middle East countries. The most recent worrying report was that relating to the existence in Libya of drums of uranium and their apparent ready availability to interested outsiders. Perhaps Western intelligence agencies are alert to the potential problem but I suspect it is broader than can be handled by such bodies alone.    

Des Moore

Credibility currently lacking
(Letter published in The Age, 29 October 2013.)

The Audit Commission has been asked only to recommend savings sufficient to deliver a surplus of 1 per cent of GDP ''prior to 2023-24''. Those with only a slight familiarity with the spending allocations know there is a need to do so well before 2016-17, when Labor's forward projections showed them at 24.4 per cent of GDP.

A starting point might be to take the last year for which the Coalition could be held (partly) responsible (2007-08). Budget expenditure was then 23 per cent of GDP whereas it is now more than 2 percentage points higher. Most of the additional $30 billion-plus expended by Labor should be savable and this should be done in the first budget next May. That would make a considerable start towards achieving a 1 per cent surplus and improving the credibility now lacking in the Coalition's apparent budgetary policy.

Des Moore, former Treasury deputy secretary, South Yarra

Labor set to bury carbon tax
(Article by Tom Allard and Mark Kenny published in The Age, 29 October 2013.)

Labor is expected to support axing the carbon tax, with senior figures - including leader Bill Shorten - now convinced that its case for action on climate change will be more easily sold if the politically toxic tax is abolished.

The opposition has been wrestling with what to do on the repeal of the tax, with some saying it must hold the line to show voters and demoralised supporters that it still stands for something.

But party leaders have progressed in their thinking to consider what the party should put to voters in the lead-up to the next election.

They argue that Labor proposed to ''terminate'' the tax at the last election and to simply block its repeal would allow the government to continue to punish it politically.

Mr Shorten is also worried that continual focus on the tax will distract from serious flaws in the government's $3.2 billion ''direct action'' policy, which Labor will oppose.

Under direct action, taxpayer dollars are used to pay polluters to reduce emissions and to fund other initiatives in forestry, carbon capture and recycling.

A survey of economists by Fairfax Media found only two of 35 supported direct action over an emissions trading scheme, which uses a floating carbon price driven by the global market.

Labor will continue to back some form of carbon pricing but reserves the right to deliver its policy closer to the election. Meanwhile, it will scrutinise direct action.

Independent analysis of direct action suggests it will not be able to reduce emissions by the bipartisan target of 5 per cent by 2020 without more funding - which has been ruled out by Prime Minister Tony Abbott.

A senior Labor source said the party would not countenance weakening the target, amid concern that the legislation to repeal the carbon tax will change the status of the 5 per cent target from a legally enforceable cap to merely an aspiration.

''We are happy to get rid of the tax but we do think there should be a cap on pollution,'' said one Labor insider.

Mr Abbott has made the repeal of the tax his legislative priority when Parliament resumes in two weeks. He has urged Labor to ''repent'' and support the government.

A number of Labor sources acknowledge there has been a shift in sentiment since the election. Even so, the shadow cabinet is yet to finalise Labor's position and wants to see the final shape of the government's legislation before making any commitment.

Labor's climate change spokesman, Mark Butler, hinted strongly at the weekend that the option of backing the repeal bills was being considered, saying that the final policy ''will be informed by the fact that we took to the last election a commitment ourselves to terminate the carbon tax''.

John Scales of JWS Research said polling showed that the carbon tax had dominated the climate change debate in recent years and undermined support for action.

He said the tax was widely seen through the prism of former prime minister Julia Gillard's broken promise when she introduced the impost, and through its impact on electricity and other prices.

Mr Abbott has already begun to call Mr Shorten ''Electricity Bill'' as he goads him to support the repeal of the tax. With it gone, Mr Scales said Labor would have clear air to make direct action its target and to develop its alternative.

Decades of evidence against 'direct action'
(Editorial published in the The Age, 29 October 2013.)

For all the sound and fury of Australia's debate on climate change, there is a bipartisan target for cutting greenhouse gas emissions. Tony Abbott and his colleagues say they accept the climate science, but plan to scrap their Labor predecessors' policy of carbon pricing. The Abbott government will use a $2.88 billion fund of public money over four years to pay for ''direct action'' by business, industry and landholders. The problem with this policy is that it ignores real-world experience of achieving the most cost-effective emission cuts. Economists are well aware of the evidence of successful cap-and-trade schemes and, as The Age has reported, they overwhelmingly favour the carbon pricing policy model.

Of the 35 leading economists surveyed, 30 endorsed carbon pricing and only two favoured direct action. (One regarded a ''no action'' policy as right for Australia and the other doubted humans were causing climate change.) Mr Abbott has defied economists' opinion before and in 2011 ignored a Productivity Commission report that strongly endorsed carbon pricing and trading. He has also conceded the direct action fund may not be enough to cut emissions to 5 per cent below 2000 levels by 2020, but insists the budget is fixed.

The Age agrees with the economists' informed view based on the observed record of both policy models. Direct action relies on bureaucrats selecting abatement programs to fund, which is a costly hit-and-miss policy and liable to be rorted. This has been the case with pollution reduction programs around the world, including Australia. Some cap-and-trade schemes, however, have been very effective. The verdict on letting the market find the least-cost ways to cut emissions has been very much in since President George Bush snr signed the 1990 Clean Air Act. A 2011 Harvard Environmental Economics Program review found many benefits of the scheme to cut sulphur dioxide and nitrogen oxide emissions that cause acid rain. A 40 per cent cut was achieved three years ahead of target. Emissions halved by 2010.

Second, costs were only 20 to 30 per cent of what had been forecast. The Harvard review found the cap-and-trade policy was ''a success by almost all measures'', with cost savings of 15-90 per cent compared with alternatives such as government-directed approaches that pre-select a pollution-control method or technology. A trade in emission permits lets the market find the cheapest means of abatement at any time.

Call to cut deeper on emissions
(Article by Sid Maher published in The Australian, 30 October 2013)

THE Climate Change Authority has recommend a major increase in the national emissions reduction target for the rest of the decade.

The independent body recommends, in a draft report released this morning, that Australia deepen its target to up to 15 per cent by 2020.

This compares with the current politically bipartisan target of an unconditional 5 per cent reduction on 2000 levels in emissions by 2020.

Authority chair Bernie Fraser described a five per cent reduction on 2000 levels as “inadequate on a number of grounds”.

But the authority has not made a final recommendation on what the 2020 target should be, instead canvassing two options - a 15 per cent reduction and a 25 per cent reduction.

A 15 per cent reduction was considered to be a “minimum option”, the authority said.

Mr Fraser said the government's own conditions for moving beyond a five per cent reduction had been met, and that delaying tougher action until after 2020 would require “very rapid reductions” beyond that period.

Australia played a part in concerted international action to limit the increase in global temperatures to no more than two degrees Celsius, he said.

“A five per cent target would leave Australia lagging behind others, including the United States,” Mr Fraser said.
He said while the authority had not made a final recommendation on what the 2020 target should be, “the five per cent target is not a credible option”.

The draft recommendation will put pressure on the Coalition, which has promised the 5 per cent by 2020 reduction under its direct action policy through its emissions reduction fund, which will essentially run a reverse auction funded by the taxpayer.

Experts believe that lifting the target would require the Coalition to increase the amount of taxpayer money in its emissions fund. The scheme is capped.

Mr Fraser today noted the Coalition’s plans to abolish the authority and the carbon tax, and to introduce its direct action climate policy in their place.

“In the authority's view, this report remains highly relevant despite the changing policy landscape,” he said. “Its primary focus is Australia's goals for reducing emissions.

“The setting of these goals raises the same critical questions, whatever the particular policies adopted to meet them.”

The CCA draft recommendation will spark a backlash from business, which opposes increases in carbon pricing arguing it damages Australia's competitiveness.

Australia has made an unconditional promise to cut emissions by 5 per cent below 2000 levels by 2020 but flagged increasing the target to 15 per cent or 25 per cent if the rest of the world increased its level of action.
The recommendation for a deeper target came as Labor dismissed reports in Fairfax newspapers that suggested the opposition had backflipped on climate change policy and would support axing the carbon tax.

Opposition environment spokesman Mark Butler said the fundamental problem with Tony Abbott's legislation "is not that it terminates the carbon tax on the 1st of July next year, but it throws the baby out with the bathwater".

"It also, for example, gets rid of the idea of there being a legal limit on carbon pollution. This is an utterly critical element of starting to reduce our carbon pollution as a country, yet it goes under their legislation. We're simply not going to support that."

Mr Butler said he was not going to get into a public discussion about Labor's tactics because the party had not yet had a discussion in shadow cabinet and caucus.

"But I have tried to be as clear as I possibly can that we're not going to buy a pig in a poke. Although we support the termination of the carbon tax, we insist that there must be a legal limit on carbon pollution and there must be a proper mechanism to get to that point," Mr Butler said.

Environment Minister Greg Hunt said Labor "cannot decide if it supports higher costs for Australian families or not".

The Climate Change Authority was created under the Gillard government's carbon pricing package but will be abolished under the carbon tax repeal legislation. Its recommendations would also cease to be binding. The authority is chaired by former Reserve Bank board governor Bernie Fraser and includes chief scientist Ian Chubb and current RBA board member Heather Ridout.

Climate Institute chief John Connor said he hoped the CCA report would "break the glass bowl" that Australian politicians had been put in for the last three years.

"People won't be able to continue to pretend that the rest of the world isn't taking action," he said.

Emissions target is too low: climate authority
(Article by Mathew Dunckley published in the Australian Financial Review, 31 October 2013.)

The Climate Change Authority said several other countries that are often compared to Australia are gearing up to reduce emissions more aggressively by 2020, which would leave Australia, with a 5 per cent target, lagging behind. Photo: Peter Braig

The federal government’s advisory agency responsible for setting emissions targets has called for tougher action on climate change.

A Climate Change Authority draft report released on Wednesday criticises the bipartisan commitment to cut Australia’s emissions by 5 per cent by 2020 as not going far enough.

It canvasses the impacts of 15 per cent and 25 per cent reductions saying choosing the right target was “critically important” for the nation.

“The authority’s major conclusion is that the minimum unconditional 2020 target of a 5 per cent reduction from 2000 levels is inadequate on a number of grounds,” said the authority in a statement.

“For one thing, the government’s own conditions for moving beyond 5 per cent have been met. Most tellingly, a 5 per cent target implies very rapid reductions in emissions in the period after 2020, if Australia was to play its part in concerted international action to limit the increase in global temperatures to no more than 2 degrees Celsius (above pre-industrial levels).”

“Evidence is also mounting that several other countries Australia is often compared with are gearing up to reduce their emissions more aggressively by 2020. A 5 per cent target would leave Australia lagging behind others, including the United States.”

The Climate Change Authority is an independent statutory body established to provide expert and balanced policy advice on a range of climate change issues.

The government has promised to scrap the authority as part of removing the previous government’s carbon tax package.

“The authority is well aware that the present government is proposing climate policy approaches which differ in significant respects from those followed in recent years,” it said.

“It is also aware, of course, that draft legislation has been prepared to rescind the carbon price arrangements and abolish the authority.

“That said, this review is being conducted in conformity with existing legislation. Until Parliament changes that legislation, the authority

proposes to pursue its statutory obligations.”

More to come


The Australian Financial Review

The Afghan war was still worth it
(Editorial in the Australian Financial Review, 30 October 2013.)

Afghanistan is no longer the failed state of 2001. There were 50,000 girls in school then, and 3.2 million now.

The Australian Financial Review

Our longest war is winding up after 12 years. It has cost 40 lives, physically wounded 300, and traumatised many more, Some 20,000 Australian service men and women have rotated through Afghanistan since 2001. They have shown that Australians of Generations X and Y can hold the flame alongside their warrior forebears, proving themselves in a nasty unpredictable war of roadside bombs, ambushes, and attacks by Afghan turncoats, fought in difficult terrain and atrocious weather.

Prime Minister Tony Abbott spoke eloquently and fittingly at the Australian base at Tarin Kot on Monday of the “bittersweet” ending of a war in neither victory nor defeat. Indeed Afghanistan cannot be judged in conventional terms as win, loss or draw. Its chief purpose was and is to buy time for Afghanistan’s political system and civil society to establish themselves in admittedly thin soil and finally end the country’s multiple wars and invasions since the early 1970s.

If the Australian forces and the rest of the International Security Assistance Force have done enough to persuade the Taliban militants that they cannot win against the Afghan government once foreign forces withdraw, and will have to negotiate some kind of lasting political settlement – then our troops will still have changed history for the better.

Australia went to war in Afghanistan in October 2001. Both Prime Minister John Howard and opposition leader Kim Beazley agreed on the imperative to join the US strike back at Al-Qaeda terrorists after the terrible events of 9/11 and the Taliban in Afghanistan refused to hand over Al-Qaeda leader Osama Bin Laden. The biggest part of Australia’s ultimately $8 billion war effort began in 2006 when Australian soldiers moved to Oruzgan province to rebuild local communities, train the new Afghan national army and police, and to take on the Taliban in the area. After the massive strategic distraction of Iraq, the Americans turned in strength to their forgotten Afghan war, and our own casualties started to mount too.

If Afghanistan has seemed intractable to Australians, it is not surprising. Its wars have been long and widely encompassing, making it seem less a country than the space on the map between Pakistan, Iran and central Asia in which local tribes and outsiders constantly contest. The enmities are matched only by its constant poverty and backwardness; a zone of anarchy. British invaders in the 1830s fought not just the same tribes, but the same families as their counterparts now. In 2001, the US-led invasion in reality joined in a long running civil war between the Pashtun-dominated Taliban and their tribal enemies whom the US backed. Pashtun nationalist violence spills across the border into Pakistan. But Pakistan in turn covertly backs dangerous militants in Afghanistan because Kabul is an ally of India, Pakistan’s arch-foe in Kashmir. Pakistan plays off its US patrons and the militants off against each other.

Afghanistan’s infant democracy has to ride out these conflicts. Presidential elections are due in April, and US troops will be gone by the end of 2014. But the country is no longer the failed state of 2001. There were 50,000 girls in school then, and 3.2 million now: that is what may be lost if the country lapses badly. Even if a perfect parliamentary democracy proves a tough ask, we must hope the 200 schools Australians built in Oruzgan survive as a lasting legacy for both countries.

Many commentators now compare Afghanistan with the South Vietnam that Australia also helped to defend: puppet government, shaky local army, implacable enemy attacking from cross-border havens, and inevitable defeat. But the Vietnam era had other outcomes, too. In the mid 1960s, south-east Asia as a whole was deeply unstable. Ten years later, after the US had held the line in Vietnam for as long as it could, the era of the Asian economic tiger had been born and the region’s future looked very different. The parallel can be overdone, but sometimes the result of history is not what seems obvious at the time.

The Australian Financial Review

NBN ban on Huawei stays: Brandis
(Article by Christopher Joye published in the Australian Financial Review, 29 October 2013.)

Attorney-General George Brandis has overruled a push by other senior ministers to relax a ban on Chinese telecommunications group Huawei helping build the national broadband network.

The decision is a blow to the world’s biggest manufacturer of telco equipment and could strain ties between Australia and the Chinese government, which are negotiating a free-trade agreement Prime Minister Tony Abbott wants signed within a year.

Since the previous Labor government vetoed Huawei from the NBN in 2012 on security grounds, the company has mounted a vigorous and high-profile lobbying campaign against allegations that its equipment is a security risk to communication networks.

In recent weeks Communications Minister Malcolm Turnbull and Trade Minister Andrew Robb have publicly offered support to the company. But after briefings from the intelligence services, Mr Brandis told The Australian Financial Review the government had considered the matter and wasn’t dropping the ban.

“The decision of the previous government not to permit Huawei to tender for the NBN was made on advice from the national security agencies,” he said. “That decision was supported by the then opposition after we received our own briefings from those agencies.

“Since the election the new government has had further briefings from the national security agencies. No decision has been made by the new government to change the existing policy.”

Last week Huawei’s Australian chairman, John Lord, told Fairfax Media he was “waiting to find out, like you and everyone else” whether ­Huawei would be allowed to supply the NBN under the new Coalition ­government.

“We’ve put in a lot of time . . . on both sides of politics,” he said. “We would hope the new government would have a lot more knowledge [on] Huawei than the past government two years ago.”

The lobbying seemed to have worked. Mr Robb said last week he supported reviewing the ban and the company had a “big future in Australia”. Two weeks ago Mr Turnbull said even if Huawei was assumed to be “an accessory to espionage” it was questionable its equipment could be used for spying.

May not be over yet

Some experts and Coalition MPs still believe there is merit in having Huawei compete to offer equipment for the “outer access layer” of the NBN, which refers to links between households’ modems and the immediate local area “nodes”.

This is distinct from equipment deployed in the NBN’s more sensitive “points of access”, which are larger information centres, and the NBN’s monitoring and control systems, which manage the overall network.

In July, Prime Minister Kevin Rudd told the Financial Review “in the case of the NBN, the government made a risk-based decision in the national interest to exclude Huawei”. He was responding to explosive allegations from the former head of the CIA and the National Security Agency, General Michael Hayden, that Huawei had “shared with the Chinese state intimate and extensive knowledge of the foreign telecommunications systems it is involved with”.

While Huawei strenuously denied General Hayden’s claims, senior Australian intelligence officials said they were pleased to see them published.

Members of cabinet have been concerned about public perceptions of a division in the Coalition’s support for the Huawei ban after reporting boosted expectations of it being reconsidered.

Cabinet ministers said they were anxious about the reaction of the US to a perceived softening in Australia’s stance on telecommunications security and China generally.

Neither Mr Robb nor Mr Turnbull are members of cabinet’s National Security Committee.

Asked whether Coalition division on Huawei risked raising questions in the US government, Joshua Frydenberg, a parliamentary secretary to the prime minister and adviser on intelligence matters to the Howard government, cautioned that Australia “should always be careful to protect our most important security relationship and do nothing that endangers the high level of intelligence co-operation that we currently enjoy with the US”.

He described the US as Australia’s “security guarantor” and highlighted that under the Howard government “information exchange between US and Australian intelligence agencies was strengthened to unprecedented levels”. This is a reference to a little-known intelligence sharing agreements struck between Australia, the US and the UK after the September 11, 2001 terrorist attacks.

In an interview on Saturday, Mr Frydenberg, said he’d “spoken to the Attorney-General George Brandis, who has told me that the government position [on Huawei] has not changed” after updates from intelligence agencies.

“We continue to be guided by the security agencies’ advice as to who should be allowed to tender for major telecommunications projects,” said Mr Frydenberg, also a long-time advisor to former foreign minister, Alexander Downer, who sits on Huawei Australia’s board.

Protecting our closest relationship

By 2003 a new three-nations agreement furnished Australian intelligence and military agencies, for the first time, with access to the “top secret” and “noforn” (meaning “no foreign eyes”) Joint Worldwide Intelligence Communications System used by the US Department of DefenseOK and Department of State. In correspondence with the Financial Review over the weekend, General Hayden confirmed the exceptionally close relationship between Australian and US spy agencies.

He said that when briefing intelligence officers inside the CIA and NSA he would ask, “Who do you think our closest intelligence relationship is?” Officers would respond, “the UK”, to which General Hayden would answer, “No, try again”. The audience would then suggest Canada. General Hayden’s retort was: “No, it is actually Australia.”

Leaks of classified US intelligence by former NSA contractor Edward Snowden have shown that under a program called STORMBREW the NSA collects foreign intelligence with the help of a “key corporate partner with access to international cables, routers and switches”. Experts speculate this is a US telco company.

Almost all nations, including Australia and the US, can legally compel firms to facilitate spying, including the collection of emails and telephone calls, between approved overseas targets.

The CIA’s open source centre alleges that Huawei’s chairwoman Sun Yafang served in China’s foreign espionage service. The company’s founder Ren Zhengfei was a deputy director in the People’s Liberation Army’s Information Engineering Academy, which is responsible for telecommunications research.

Mr Brandis recently appointed the former director-general of the Australian Security Intelligence Organisation and national security advisor to former prime minister John Howard, Paul O’Sullivan, as his chief of staff.


The Australian Financial Review

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