Phew.

Thank goodness Australian motorists have been spared having to pay an extra couple cents a litre on petrol until 2013 in a market that could thump on an increase of a hundred times that by then. Environmentalists may cry that Rudd is bowing to political expediency by cutting petrol excise to offset any price impact from an ETS, but actually the politics of this decision aren’t that great.

Without getting into the pros and cons of the climate change debate itself, the political problems of what the government has done is pretty evident. For a start it undermines its domestic political message that this is a national emergency. It is pretty hard to talk up the dire need for sacrifice if a few cents a litre on the cost of petrol is now accepted as too much. It doesn’t help the international message either. Moralising to developing countries about the need to constrain growth to save the planet is a bit harder from a government that can’t even persuade its wealthier citizens from paying a bit more for petrol.

But more fundamentally it aggravates the government’s basic problem. This government doesn’t have a problem of having to make unpopular decisions. This government has a problem of struggling to find any unpopular decisions to make. With no real economic program possible, climate change at least allowed the government to look as though it has a principled agenda that requires it to take unpopular decisions for the greater good. There was the added advantage that climate change action wasn’t even unpopular, except in the imagination of the media. Even raising petrol prices to beat global warming was accepted by more than not. But it seems on petrol prices, that such support was not enough and that this government needs overwhelming approval before it can put a foot forward.

It is important in looking at the political impact of the climate change agenda to see it upside down from how it is being portrayed in the media. The Rudd government is being presented as drifting along but now faced with a major political challenge that could make things worse, requiring it to give in to political pressure on petrol prices to save its neck. In reality the government needs the climate change agenda to prevent that drift from becoming worse, just as Howard, also without any real domestic agenda, needed the War on Terror (and to exaggerate it) to save his pointless government.

It is this political drift that has driven the petrol debate. Anyone listening to the recent furore around petrol prices would think prices were sailing along until recently when they suddenly spiked. Actually this is not the case. The increase in prices over the last year has not been that out of line with much of the decade and indeed it followed a decline so they have only just passed their previous high in 2006.

We are hearing about petrol prices now more for political reasons than straightforward economic ones. ‘Insensitivity’ to cost-of-living was an anti-political mood exploited effectively by Rudd last year. Nelson is trying to use it this year but is having less success because he treats it at face value as really just about cost of living rather than the anti-political sentiment it is, explaining why his 5c excise cut was a flop.

It is vulnerability to this anti-political mood that underpins the New Sensitivity and the political class’s indulgence of complaints about living standards in what are actually buoyant economic conditions. It also influences how the government has responded to Nelson’s petrol excise and is proceeding on climate change. Ultimately that vulnerability is a sign of its loss of a social base now in the final stages with the ALP’s last break with the unions and the implosion of its one remaining effective faction. Uncertainty over core support means the government does not feel it has a platform to rely on when it wants to take on opposing interests. Sensitivity to the real basis of its support is also probably why it looks to be following Howard’s tactic of avoiding by-elections where it can, as now appears the case for Mayo.

Such a government response may keep the dogs at bay for the moment but does not solve the problem in the longer term. The decision takes away a position that Nelson used to keep both of the warring sides of his party from each other’s throats, but it does add to his credibility. Nelson’s tactics were making him vulnerable to that most grave charge of the day, ‘short term politics’, which Rudd tried again on The 7.30 Report last night. Unfortunately, this decision makes it looks as though Nelson was raising legitimate concerns.

ETS is about using the market mechanism to change behaviour but the New Sensitivity means the government seems reluctant to allow it to do so. Yet neither can the government stand still. Without moving forward in this issue, the government is likely to find the same anti-political mood that brought it into power turned against it. Nelson is vacillating to survive but he occasionally stumbles on the right note, such as when he raises suspicions that this is just a revenue-raising exercise. It continues to be anti-politics cynicism, rather than the hip-pocket nerve, that threatens to corrode this government’s agenda as it did for the last one. It is why the government keeps on being asked for guarantees that no-one will be worse off from the compensation measures, because no-one trusts government not to screw them in the end. It would seem that to counteract this, sooner or later the government will need to up the ante again.

Posted by The Piping Shrike on Thursday, 17 July 2008.

Filed under Key posts, Tactics

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