Gillard seeks to entrench carbon tax laws

Not sovereign?

There is a general principle in constitutional law that the “sovereignty” of Parliament ensures that a future parliament cannot be bound by its predecessor. In other words, if a parliament enacts a law, then a subsequent parliament should be entitled to repeal it. However, two articles in The Australian have demonstrated that the Gillard government is trying very hard to breach this principle, and entrench the carbon tax legislation in the statute book.

Firstly, Henry Ergas, writing yesterday commented:

IT was Mark Dreyfus QC, Parliamentary Secretary for Climate Change, who let the cat out of the bag.

Once the carbon change legislation is in place, he said, repeal would amount to an acquisition of property by the commonwealth, as holders of emissions permits would be deprived of a valuable asset. As a result, the commonwealth would be liable, under s.51(xxxi) of the Australian Constitution, to pay compensation, potentially in the billions of dollars. A future government would therefore find repeal prohibitively costly.

That consequence is anything but unintended. The clean energy legislation, released this week, specifically provides that “a carbon unit (its generic term for a right to emit) is personal property”.

This, the government says, is needed to give certainty to long-term trades. But that claim makes little sense, for even without such protections there are flourishing markets for fishing quotas and other tradeable entitlements.

And internationally, governments have generally ensured pollution permits are not treated as conventional property rights, precisely so as to be able to revise environmental controls as circumstances change. Rather, this provision serves one purpose only: to guarantee any attempt at repeal triggers constitutional requirements to pay compensation, shackling future governments.

Nor is it the only poison pill built into the legislation. Also crucial is what happens if a new government rejects the emissions reductions recommendations made by the carbon regulator, the Climate Change Authority.

In that event, unless the government can secure a majority for an alternative target, permitted emissions are automatically cut by up to 10 per cent in a single year, crippling economic activity.

A Coalition government, or even a Labor government less wedded to the Greens, would therefore find itself trapped. (source)

And Paul Kelly, writing today, also considers the problem of repeal:

As incoming PM, Abbott would find himself having to check and reverse one of the deepest policy convictions in the senior ranks of the public service: that carbon pricing is far superior to his own direct action agenda.

Beyond that, he would need to replace an economy-wide scheme that priced carbon, treated emission permits as a property right, granted tax cuts and transfer payments as compensation and created an elaborate new structure of governance with a Clean Energy Regulator, a Climate Change Authority and a Clean Energy Finance Corporation.

Comparisons with Work Choices are false. Acting on its 2007 mandate, the Rudd government with Gillard as relevant minister replaced Howard’s laws with the Fair Work Act. But dismantling Labor’s clean energy structure is a far more formidable task. It penetrates to issues that will alarm business, face possible rejection in the Senate and could finish in the High Court. Gillard’s purpose is to entrench the new system and create a new status quo.

Labor’s scheme is one of the most elaborate in the world. The initial price of $23 a tonne from July 2012 will be fixed rising at 2.5 per cent per annum in real terms. From July 2015 it will transition to a flexible price estimated at $29 a tonne en route to an 80 per cent emissions reduction target by 2050. The coverage will be wide, reaching two-thirds of Australia’s emissions.

Upwards of 500 of the biggest polluters must pay for each tonne of carbon pollution they release. The flexible price means our scheme will be linked with other carbon markets. The heart of the policy is that companies can take action at home or purchase an international unit, thereby reducing carbon pollution abroad. This recognises that climate change is a global phenomenon and ensures domestic action occurs at the lowest cost.

The opposition is fixated on winning the political battle and how to unscramble the scheme in office. It has legal advice suggesting the issue may end in the High Court. The question is whether an Abbott government would be liable to compensation for removing property rights that were created only by this legislation. It is, unsurprisingly, a grey area.

“This is an attempt to sabotage the democratic process,” shadow finance minister Andrew Robb told The Australian yesterday. “We won’t be intimidated and we won’t be bullied. We will repeal this. If we have to return to the people at another election then we will.” (source)

It should come as little surprise that a government that has no mandate for the policy and treats the electorate with contempt takes such a cavalier attitude to constitutional norms of our democracy. This is a government hell bent on getting its way, and making sure that the Coalition are hamstrung if (when) they are elected in 2013 or sooner.