Published in Open Forum (Sydney), 18 March 2009
As Kermit the Frog famously sang “It’s not easy being green”. Well, it certainly isn’t if you’re a politician. Green policies may be popular and they may even win you votes. But the flipside is that such policies usually come at a price to the consumer and the taxpayer. So the temptation for politicians is to find a way that will make them look green without actually hurting anyone.
The Australian government’s policy towards the car industry is a good example. You could hardly claim that the cars currently driving on Australia’s roads are the world’s most fuel-efficient. In fact, the proportion of V6 and V8 gas-guzzlers is extremely high in Australia- we love our big Commodores, Falcons and Utes.
But with rising fuel prices, even horsepower-addicted Australians have started to move away from these fuel-thirsty cars towards cars with smaller engines, using less petrol. There’s only problem: Such cars are not being produced in Australia. Holden and Ford, in particular, had completely missed the trend towards compact cars.
Enter the government: In November last year, Prime Minister Kevin Rudd and Industry Minister Kim Carr launched their ‘New Car Plan for a Greener Future’. They presented it as a ‘green measure’ to help develop more fuel-efficient cars for Australia’s car manufacturers. However, if you look at the plan a bit more carefully it is not a ‘green plan’ at all. In fact, all that it amounts to is a piece of industrial policy that is a poor substitute for a genuine approach to tackling fuel consumption in transport. All it does is pay good old-fashioned subsidies to Australia’s car makers in return for their promise to build more efficient cars.
If the government were serious about cutting fuel consumption, why would they want to wait until Australia’s manufacturer had finally developed new engines? It may take years until Toyota has developed their new hybrid technology and Holden their new 4 cylinder car.
In the meantime much more fuel efficient cars are already available in other parts of the world. Where petrol prices have been much higher than in Australia, local car manufacturers have developed cars with much greater fuel-efficiency. It would be easy to import them, and in fact that’s already happening. Four in five cars sold in Australia are now foreign-made.
Unfortunately, the government has put obstacles in the way of importing more fuel-efficient cars. There is the import tariff and on top of that the Luxury Car Tax, which particularly hits premium European sedans. There is no need to reinvent the wheel and develop an Australian-made green car when there are hundreds of fuel efficient models available on the world market already.
The contradictions in the government’s green policies don’t end with this kind of protectionism, either. The most striking inconsistency in government policy is to exclude petrol from its planned Emissions Trading Scheme. If they were really serious about the emissions from cars we drive, why would they take them out of their flagship emissions policy?
There is only one possible explanation: drivers (and voters, for that matter) don’t like paying higher taxes. Increasing petrol prices would be extremely unpopular with the public.
And this is where Kevin Rudd’s ‘green car plan’ comes in. It helps the Prime Minister to bolster his green credentials, doesn’t show up in higher fuel prices and even keeps the workers in Australia’s car factories happy. But the final bill for this dubious policy will be paid by you and me, the taxpayers.
Kermit the Frog knew it, and Kevin the Prime Minister knows it too: It’s not easy being green.