Published daily by the Lowy Institute

Rudd should scrap, not hasten, EU carbon linkage

Published 12 Jul 2013 09:36   0 Comments

Fergus Green is a researcher specialising in climate change policy.

Here we go again. The Labor Government is contemplating weakening the carbon scheme for what must be about the seventh time since Rudd Mk 1 was elected in 2007. Rudd cabinet Mk 2 is rumoured to be considering curtailing the current fixed price phase of the scheme (the so-called 'carbon tax') and bringing forward the commencement of the floating price phase ('emissions trading scheme' or 'ETS') from its currently mandated start date of 1 July 2015.

The politics might be irresistible, but this would be a bad policy.

Under the existing arrangements, the switch to the floating price phase will entail a link with the European Union's ETS, enabling liable Australian firms to acquit up to 50% of their carbon liability using internationally sourced allowances from Europe (or from the Kyoto Protocol's Clean Development mechanism, up to a 12.5% limit). The effect is that the European carbon price will effectively set the price of Australian carbon units as well.

The problem is that EU carbon allowance prices are farcically low (currently trading at around €4.50 or A$6.30) and likely to stay low for at least the remainder of the decade. Prices this low are nowhere near the 'true' cost of carbon and fail to induce structural transformation in relevant sectors of the economy.

In a recent article I discussed the reasons behind Europe's low carbon prices and analysed the prospects for price-boosting structural reform of the European ETS. The European Commission is pursuing a two-stage approach. First, it wants to defer the release of 900 million EU allowances until towards the end of the decade (when the Commission assumes European economic growth and hence demand for carbon allowances will have risen). This would smooth the price and buy time for the proposed second stage, which would involve deeper structural reform (such as cancelling surplus allowances, removing them from the scheme altogether) to push prices higher overall. [fold]

In April, the European parliament failed to pass the first stage of the reforms, known as 'backloading', and it was unclear whether the European Council, represented by member states, would accept the backloading proposal. This fuelled my pessimism about the prospects for European carbon price reform, and hence about Australian carbon price projections.

Since I wrote that article, the European parliament has passed the backloading measure (on its second attempt, last week). However, the European Council has yet to vote on the matter and crucial member states, including Germany, remain undecided. It is thus far from clear whether backloading will gain the qualified majority needed for passage through the Council. While the parliament's support for the measure at least keeps hopes of reform alive, the backloading measure itself is not expected to have a substantial impact on prices, and the road to deeper structural reform will be longer and bumpier.

As such, Australia's carbon tie-up with the EU remains deeply problematic. The Australian floating carbon price will remain hostage to EU politics of the sort currently playing out. Why let something as important as the Australian carbon price — and, through it, the composition and emissions profile of Australia's industrial economy — be determined by the intricacies of EU law-making processes, or domestic politics in Germany?

Carbon trading enthusiasts will resort to the ideology of 'lowest cost abatement': the argument that emissions reduction targets should be met at lowest possible cost, wherever in the world that may be. But this is only plausible if the targets equate to a defensible climate objective, which they manifestly do not. What is needed is deep structural change towards a zero carbon world, not the precise hitting of a meaningless target at the lowest possible cost.

Deep structural change requires a steadily rising long-term carbon price that generates confident market expectations of a very high future price, along with a host of regulatory measures (which I have discussed elsewhere).

An alternative answer is that accelerating the floating price and associated EU linkage is politically appealing, since it will mean the cost of carbon in Australia is extremely low. But, one year in, the fixed $23 carbon price (now $24.15) has not caused the economic armageddon or popular backlash claimed by the Coalition and other opponents of the scheme. The Lowy Institute's polling shows that popular opposition to the scheme has fallen over this period, while serious concern about climate change and associated support for strong action (even at 'significant costs') has risen for the first time in six years. While a narrow majority of Australians, on this measure, still oppose the carbon pricing scheme and remain less concerned about climate change, these results suggest that weakening the scheme now is hardly a political necessity. More detailed polling on attitudes to climate policy undertaken by the Climate Institute reinforces the conclusion that public hostility to the scheme itself is relatively low.

Moreover, the earlier we shift to an EU linkage, the lower Treasury's receipts from the scheme will be, and so the more problems this poses for the politics of fiscal management in future years.

It thus seems that the political 'justification' is a much shorter-term one: it will allow Rudd to distance himself from the 'carbon tax' through a superficial exercise in pre-election rebranding.

On climate change, yet again, short-term politics appears set to undermine long-term policy.

Photo by Flickr user Andrea Kirby.

Do voters want to repeal carbon pricing?

Published 3 Jul 2013 10:15   0 Comments

John Connor is CEO of the Climate Institute.

The past year has been historic in Australia, with around 300 businesses beginning to pay for their greenhouse gas emissions for the first time under carbon laws that had a troublesome gestation and a difficult birth.

The last year and the couple before it were chock full of scare campaigns, rent seeking and tough political battles in what Professor Ross Garnaut described as perhaps one of the worst examples of public policy debate in Australian history. It is perhaps no surprise, then, that polls conducted by the Climate Institute and the Lowy Institute have tracked a decreasing desire for climate action as well as confusion and opposition to the complex policy solutions of carbon pricing and emissions trading.

The decline has come since the somewhat heady days of 2006 and 2007, which John Howard described as a perfect storm of support for climate action.

I don't need to remind readers of the roller-coaster ride on climate and clean energy policy since then, perhaps the most significant juncture of which was the shattering of bipartisan support for emission trading as the most cost-effective policy solution in late 2009. This helped plunge public discourse into partisan and ideological trenches that would sink deeper as the ALP first deferred and then re-introduced carbon pricing legislation after the remarkable outcome of the 2010 election.

The triangulated policy development process between the ALP government, the Greens and the independents added zest to what already was a strong brew of policy intrigue. [fold]

The findings in the 2013 Lowy Institute poll, with data collected in March, show a rebound of support for climate action. It also reveals declining (but still majority) opposition to the legislation which it describes as 'a fixed price on carbon that will then lead to an emission trading scheme'.

Last week The Climate Institute released some data from its Climate of the Nation poll, to be released in full in a few weeks, which asked different questions regarding whether carbon pricing legislation should be repealed, and asked about support for a double dissolution on the legislation. It also explored whether the forthcoming election was a 'referendum of on the carbon tax' by asking about the reasons behind Coalition voting preferences.

Our data, collected in June, found a significant drop in the numbers supporting repeal to 37%, with 36% uncertain and a fairly steady 27% opposing repeal. Support for carbon pricing remains soft but opposition is decreasing. It may be that the double whammy of complexity in the Lowy Institute Poll of 'carbon pricing' and 'emissions trading' reinforced a stronger negative view, but polls from Essential, Nielsen and others have tracked a similar decline in opposition.

The lack of intensity in opposition is highlighted in views on whether there should be a double dissolution should the Coalition win and be unable to get carbon pricing laws abolished. This was opposed by 43%, supported by just 34%.

Our probing of the reasons behind Coalition voting preference revealed some telling results on the question of whether the upcoming election is indeed a referendum on the carbon tax. Similar to the Lowy Institute's findings, management of the economy was by far the most significant issue, followed by perceptions of lies and broken promises. The next most significant was 'the carbon tax lie' followed by a number of issues before 'the carbon tax' itself, nominated in the top two reasons by only 13%. This reinforces the view that voter concern is higher around the process than the policy, which remains poorly understood.

Our forthcoming report will delve into these matters in greater detail and is also backed by the results of rolling focus groups conducted over the last 12 months. I invite Interpreter readers to look out for our next Climate of the Nation as a companion to this important Lowy Institute Poll.

Photo by Flickr user Tim J Keegan.

Has Gen Y really gone off democracy?

Published 27 Jun 2013 14:56   0 Comments

In Kevin Rudd's victory speech last night, he went out of his way to address young Australians:

Mr Rudd said many young people had not liked or respected much of what they had seen. "As I rock around the place talking to kids, they see it as huge national turn-off," he said. "I understand why you switched off. It's hardly a surprise. But I want to ask you to come back and listen afresh. It's really important that we get you engaged in anyway we can."

Let's quickly pass over the cringe-inducing attempt to connect with the kids ('As I rock around the place') and focus on substance. We can't be sure if Kevin Rudd saw the Lowy Institute's poll results or the media coverage, but as Alex Oliver noted yesterday, the 'democracy question' was again heavily reported this year, and as Rudd suggested, what we're hearing is that Gen Y seems worryingly unattached to the concept of democracy.

I think Alex's list of reasons for the possible disaffection among young Australians is a good one. But I'm not ready to embrace the pessimistic view shared by Rudd and various commentators just yet.

Consider the context in which the question is presented, and the question itself. The respondents are asked twenty-odd questions before they get to the democracy one, about a mix of issues relating to other countries, Australia's foreign policy, asylum seekers, emissions trading and Australia's economic performance. In other words, some questions are about the world, and others are about Australia.

Then comes the democracy question. Note that it does not specifically refer to the respondents' own country until option 3 ('it doesn't matter what kind of government we have'). Respondents are asked to choose one of the three options rather than express a level of agreement with each: [fold]

I am going to read you three statements about democracy. Please say which one of the three statements comes closest to your own personal views about democracy:

  • Democracy is preferable to any other kind of government.
  • In some circumstances, a non-democratic government can be preferable.
  • For someone like me, it doesn't matter what kind of government we have.

My point is that respondents may have a number of things on their minds by the time they reach this question, and when they answer, they could be thinking of other countries rather than their own. 

I should note that the wording of this question is not ours. The Lowy Institute uses the same phrasing as the Pew Research Center, because we wanted to be able to compare our results, including those we've gathered in Fiji, Indonesia and India over the last two years, against those Pew collects in other countries. But I don't know about the context in which Pew asks the question when it is polling in, say, Lebanon or Pakistan.

If it is the case that respondents were thinking of other countries rather than their own when they addressed this question, then we might interpret the results somewhat differently. It would still suggest an ambivalence about democracy, but perhaps not so much ours. For instance, it could be an indicator that Australians have seen the failure of attempts to impose democracy on countries such as Afghanistan and Iraq, and have concluded that there is value in having strong centralised leadership in weak states.

It could also suggest that authoritarianism, at least in foreign countries, is somewhat in vogue. I doubt Australia's youth want a Chinese-style system for themselves, but perhaps they see it working for China.

Photo by Flickr user noideas.

2013 Lowy Poll on Gen Y and democracy: What's going on?

Published 26 Jun 2013 14:45   0 Comments

For the second year in a row, the annual Lowy Institute Poll has found that less than half of 18-29-year old Australians (loosely termed Gen Y, roughly in line with Pew and other definitions) choose the statement 'Democracy is preferable to any other kind of government' when presented with three options about forms of government and asked to say which one comes 'closest to (their) own personal views about democracy'. The three options:

  • Democracy is preferable to any other kind of government.
  • In some circumstances, a non-democratic government can be preferable.
  • For someone like me, it doesn't matter what kind of government we have.

Sam Roggeveen, I know, is going to write about the wording of the question and its provenance.

In the meantime, the response to our publication of these results for the second year in a row indicates that this finding generates a range of reactionsdismay, mystification, and despondency among them.

I am setting out below the results, both from this year and last year's polls, and from Lowy Institute polling in India in 2012* and Indonesia and Fiji in 2011.**

Researching the issue in preparation for a speech on 'Democracy and Civility' to a CHASS forum last week, I found a good deal of material about civil discourse, political engagement and young people. It prompted me work up a list of hypothetical reasons why young Australians might value democracy less than their elders — if indeed that is what the data means. Here is my list: [fold]

  • The tone of modern political discourse has caused younger generations to become disillusioned with government, and by extrapolation, with democracy.
  • Democracy is becoming more of a global norm, so that Australians, especially young Australians, take it for granted.
  • Young Australians are the beneficiaries of decades of prosperity and peace, making them complacent about the value of democracy.
  • Civics education in schools is lacking.
  • Capitalism and consumerism have bred a generation with a different range of priorities and preoccupations.
  • Prosperous non-democracies in our region are exemplars of non-democratic systems at work.

Also set out below from last year's Lowy Institute Poll are Fergus Hanson's finding that 'Australians have stronger views about human rights, particularly those directly affecting themselves'. 91% 'strongly agreed' that the 'right to vote in national elections' was 'important for you here in Australia'. Which leads to the question: do 18-29 year-olds equate democracy with the right to vote, or do they not?

Ideas, anyone?

* Conducted in collaboration with the Australia India Institute.

** The Lowy Institute Indonesia Poll 2012 was partially funded by the Australia-Indonesia Institute and the John D and Catherine T MacArthur Foundation; The Lowy Institute Fiji Poll 2011 was funded by the Myer Foundation Melanesia Program at the Lowy Institute and a private donation from Mark Johnson AO.

Photo by Flickr user Leo Reynolds.

Warming up to Indonesia

Published 26 Jun 2013 08:52   0 Comments

Most of us Indonesia groupies have long been nonplussed at how Australians are so luke-warm (and so ill-informed) about Indonesia, as confirmed by the latest Lowy poll.

I agree with Dave McRae that we need more person-to-person links. But there are already quite a few. What about all those Indonesians who have studied in Australia? There are, for example, four Australian alumnae in the current Indonesian cabinet. Even if we acknowledge that some of the 600,000 Australians who go to Bali annually aren't really aware that Bali is part of Indonesia, they can't go there without brushing up against the real Indonesia, with its pluses and minuses.

When the poll first started, I suggested an additional question, more closely linked to this person-to-person idea: ask about the people, not the country. My guess is that most Australians have met enough Indonesians to have a view on this basis, and I'm pretty confident that an overwhelming majority would have a positive view. Person-to-person, we usually like each other.

Part of the problem is the overwhelmingly negative media reporting. This is not really a case of media bias; rather, most of the stories which rate as news show Indonesia in a poor light, the latest being the fires and smoke from Sumatra blanketing Malaysia and Singapore. Judged against Australian standards of normality, Indonesia is often found wanting.

If the reportage focused more on ordinary people and their lives, Indonesia would prove an endless source of fascinating and weird stories, each illustrating how people try to make sense of their lives within a different culture and with vastly different economic resources. Many of the perceived deficiencies might then be seen as reflecting economic constraints or a still-evolving democracy. [fold]

Maybe the print media isn't interested (although the SMH ran a great story on the Holden club that drag-races up the main highway of Jakarta in the small hours of Saturday nights). But Waleed Aly made a good go of it on ABC Radio National, and perhaps the social media will be a better medium. Geraldine Doogue has explored this territory too, both on The Interpreter and her ABC programs. Whenever the celebrity chefs have gone to Indonesia, they have had a lip-smacking good time. It's just so different!

Of course we could do better on routine reporting, too. Fairfax's John Garnaut showed us all what can be done with his reporting from China. Sure, China is big and important, but it's also closed (who can really know what's happening in Chinese politics?) and linguistically inaccessible. Yet, through the sheer excellence of his reporting, John persuaded the Sydney Morning Herald to run three China articles a week.

Indonesia presents an easier challenge, but whether it is the correspondents or the editors, none has yet found the equivalent formula for Indonesian reporting. We need to hear the stories of refugee boats and NGO-identified human rights abuses. But we should leaven them with some of the rest of what's happening in Indonesia.

Photo by Flickr user otabi.

Interview: Dan Flitton on the Lowy poll

Published 25 Jun 2013 18:26   0 Comments


When I posted the Annabel Crabb interview earlier today I alluded to an interesting divergence in explanations for the strong preference Australians show for the Coalition on most aspects of Australia's foreign relations (one of the headline findings in our latest poll of Australian attitudes to the world).

Whereas Annabel focused on the different ways the two major parties are perceived today, senior correspondent for The Age Daniel Flitton, another of our panellists at yesterday's poll launch, favours a historical analysis. In fact, Dan's explanation of why the Coalition is so far in front brings to mind the 'mummy' and 'daddy' construct for explaining the differences between our two major parties. Here's a description:

One theory, proffered by the commentator Don Arthur, is that the left-right divisions of Australian politics have been replaced. Instead, voters see Labor as the caring and nurturing party, better suited to state issues such as health and education, while the Liberals are seen as the strict father, best put in charge of the nation’s finances and defence and border protection.

A little condescending towards modern mums and dads, and definitely non-PC, but it makes a useful point: each party has a distinct reputation and character which makes them seem more competent on particular areas of policy. These party profiles seem to endure despite specific policy positions; certainly the Coalition's implicit acquiescence to Labor's defence cuts have not damaged its image as the preferred party on national security.

Interview: Annabel Crabb and Abe Simpson explain the Lowy poll

Published 25 Jun 2013 11:20   0 Comments


Our thanks to ABC chief online political writer Annabel Crabb for helping us launch the annual Lowy Institute Poll yesterday, and for sitting down for this short interview. Look out for Annabel's analysis of why there is such a strong split in this year's poll in favour of the Liberal-Nationals Coalition on foreign policy. A little later we'll post an interview with Daniel Flitton from The Age, who comes to quite a different conclusion on the reasons for this split.

PS. The first reader to identify Annabel's Simpsons reference gets a shiny new donkey. Email me at

Why don't Australians trust Indonesia?

Published 24 Jun 2013 15:22   0 Comments

This year's Lowy Institute poll reveals Australians' lack knowledge of Indonesia and a pronounced mistrust of our northern neighbour. Only 33% of Australians agree that Indonesia is a democracy, fifteen years and three rounds of democratic elections after the fall of Suharto's authoritarian regime. 54% think Australia is right to worry about Indonesia as a military threat. Meanwhile, only North Korea and Iran rank significantly below Indonesia on the annual thermometer scale of warmth of feelings towards selected countries.

Why? Two reasons that readily come to mind is that this is part of an overall aversion to engagement with Asia, or that hostility to Indonesia is part of a broader hostility to non-democracies. But at first glance, the poll results do not emphatically bear out either explanation.

Australians appear to see value in engaging with Asia. This year's poll was fielded roughly six months after the release of the Asian Century White Paper, and shows 75% of Australians feel either that the Government has its emphasis on Asia about right or that it should be doing more.

On democracy, no clear pattern is evident. Several non-democratic states — Singapore, Fiji and Vietnam — in fact rank well above Indonesia in terms of favourable feelings.

One thing that does appear to be an important contributor to Australian attitudes is the underdeveloped state of people-to-people relations. With many Australians having never meaningfully engaged with Indonesia, knowledge deficits persist, as do prejudices. When bilateral controversies arise, as they regularly do, the lack of interaction creates space to generate further negative public opinion.

Many, myself included, have highlighted the need for the Australian Government to exercise leadership to improve people-to-people ties. But increasing Australians' knowledge of Indonesia should also be the responsibility of the Indonesian Government. For each country, if they value the relationship, it is time to invest in it.

Lowy Institute Poll 2013

Published 24 Jun 2013 09:20   0 Comments


Today, the Lowy Institute for International Policy releases the results of its annual poll on Australian attitudes to the world.

The Lowy Institute Poll 2013 finds that more Australians of voting age (by a margin of over two to one) think the Coalition would do a better job than Labor on five of eight key issues: managing the economy, foreign investment, asylum seekers, the US alliance and national security. Labor leads on two issues: managing the relationship with China and the response to climate change. There was no clear difference between the Government and Opposition on the issue of managing relations with Asia.

Despite most Australians seeing China as the most important economy to Australia, more Australians place a higher value on our relationship with the US than with China. Australians still overwhelmingly support the US alliance, and support for basing US forces in Australia has increased to 61% (up 6 points since 2011).

Meanwhile, sentiments towards China have cooled, its 'thermometer' rating falling 5 points, and 57% of Australians think Australia is allowing too much investment from China.

Nevertheless, the vast majority (87%) say it is possible for Australia to have a good relationship with China and the US at the same time.

Above, watch Lowy Research Fellow and poll author Alex Oliver discuss the key findings in this year's poll with Michael Fullilove. Over coming weeks The Interpreter will have analysis from Lowy Institute fellows and others on key themes in this year's Poll. Please feel free to submit your thoughts via You can follow the Twitter debate via the #LowyPoll2013 hashtag.