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Environment Cabinet Papers 2003: An Emissions Trading Scheme was (almost) a lay-down misère

by | Jan 31, 2024 | 2 comments

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Back in 2003, the Australian Government was grappling with greenhouse emissions, inland water, conservation of the Great Barrier Reef and land clearing. Twenty years on, no-one could claim we’ve successfully addressed any of these issues so what were we thinking we might achieve back then? Just released Cabinet Papers throw valuable light on those deliberations. An emissions trading scheme was a ‘no-brainer’ back then from a policy standpoint, but PM Howard wasn’t having a bar of it.

I’m only a little embarrassed to admit to being a nerd. Each New Year’s Day, while others are sleeping off the previous evening’s revelry, I like to read the latest batch of Cabinet papers released by the Australian Archives.

This year, Archives released documents from 2003. Of course, given the documents are two decades old, large parts of what these papers canvass is water under the bridge. But 20 years is not that long ago. There’s still a lot to learn, particularly if you’re interest in policy narrative, as I am.

So, just what were officials advising government about the environment in 2003? And, given that many Australian cabinet documents are prepared under the authorship of a minister, just what was the environment minister telling his cabinet colleagues about the environment and how to fix it?

These questions were particularly relevant this year as Robert Hill, perhaps Australia’s best-ever environment minister, was offering commentary on the newly released documents.*

Five submissions, four important issues

Five of the 2003 cabinet submissions dealt with four significant environmental issues: a proposed domestic emissions trading scheme (ETS); conservation of inland waters, particularly in the giant Murray-Darling Basin; conservation of the Great Barrier Reef; and land clearing in Queensland, the state where the lion’s share of that activity was occurring.

I intended to cover these topics together, but I’ve found so much meat that I’ve had to break the story into bite-size chunks. I’ll deal with the ETS here, and cover the rest later.

Australia’s Climate Change Policy

Australia was long-regarded as a foot-dragger, a pariah even, on climate issues. A privileged rich country, we had used the principle of ‘common but differentiated responsibilities’, which was designed to accommodate developing countries, plus the threat of veto, to insist on a special deal for ourselves at the Kyoto climate negotiations in 1997.

Our Kyoto target for 2008-12 was an 8% increase in emissions from a 1990 baseline, while other advanced economies were accepting targets as ambitious as an 8% cut. To rub salt into the wound, we had decided in 2002 not to ratify the Kyoto agreement, even though we were on track to meet it.

Much of this was down to Prime Minister John Howard’s personal position. From the outset, his narrative had been defensive, an argument that ‘we will not accept an unfair share of the burden’ rather than than the obverse ‘we will do our bit to help solve this existential problem’.

It seemed that Howard was flatly opposed to environmental regulation, unless everyone signed up to bear the burdens equally.

An Emissions Trading Scheme for Australia?

Against this background, the narrative of the submission was all about winning John Howard over. For starters, the submission came not just from the environment minister, but jointly from the ministers for environment, foreign affairs, and industry, and from the treasurer. The implicit message in this was that all our key vulnerabilities were covered: environmental, economic, industrial and international.

The narrative of the submission was very strong, almost a lay-down misère.

First, all the experts seemed to accept that an emissions trading scheme was the economically the most efficient approach, so it was right in principle.

And it would save the government money: a significant part of the approach to date had been the use of government money from the Budget to buy emissions reductions. This clearly was not feasible long-term.

Further, the scheme need not apply until the next emissions target period, after 2012 (ie, nine years hence), probably after Howard had retired. Moreover, a decision to introduce an ETS nine years down the track should not have been too controversial (back in 2003), as we were on track to meet our existing 2008-12 targets at an estimated cost to GDP of approximately — wait for it — zero**.

Not what industry wanted

Howard was not convinced. He adjourned the deliberations and went off to consult with ‘industry leaders’, returning later to advise Cabinet that industry were opposed.

That was the end of that. The views of Prime Minister and a few top business representatives trumped rational policy argument, at low cost and low political risk, put by the four most relevant Cabinet ministers.

For good measure, in taking its decision, Cabinet noted a point long-emphasised by Howard, that unless there were a globally agreed approach to reducing emissions, a policy position that discouraged investment in Australia would come at a cost to us without delivering a global environmental benefit.

While recognising a truth (that collective action problems can’t be solved by unilateral action) this point ignored our capacity to design an emission trading scheme to deal with international inequities, through either a carbon border adjustment or exemptions for trade-exposed industries. Presumably Howard was not just putting the kibosh on the proposal, but seeking to head off any later attempt at a re-run.

What were they thinking?

So what does the submission tell us about what ‘they’ were thinking? Or, more accurately, what were the top people in government telling each other about the environment?

This was not so much a narrative but a conversation. Howard’s colleagues were telling him that his entrenched views were standing in the way of sensible policy and that now was a good time to back down with minimal risk and minimum loss of face.

In reply, Howard was telling his colleagues that his political instincts were right and that the most important players, key Liberal Party backers, agreed with him. Moreover, as Prime Minister, his views trumped those of his colleagues.

The irony was that, while Prime Ministerial power might trump policy power, people power trumps the lot. Two elections later, in 2007, Howard adopted an election policy favouring an ETS. He had seen the writing on the political wall, but by then it was too late and he lost government.

So, the ETS went nowhere. How have we gone saving the Great Barrier Reef, our precious inland water ways and native vegetation cover? I’ll reflect on what the cabinet papers have to say on these issues in a forthcoming blog.

*Each year, one minister from the year in question speaks at the National Archives as part of the document-release process. Hill was Minister for Defence in 2003, but had been Environment Minister from 1996-2001.

** The actual estimates provided to Cabinet ranged from a small decrease in GDP to a small increase, ie, on average, roughly zero.

Banner image: So close but so far. Back in 2003, four ministers (environment, foreign affairs, industry, and the treasurer) argued strongly for an Emissions Trading Scheme; it was simply the right thing to do and came with little cost. PM John Howard thought otherwise. (Image by Steve Buissinne from Pixabay)


  1. Bruce

    Not sure you can attribute Howard being kicked out in 2013 due to a tardy introduction of an ETS any more than to say that Gillard/Rudd were kicked because of their introduction of a Carbon Tax – election results are never that simple.

    • David Salt

      True. But we know from opinion polls in 2007 that the government’s lack of action on climate change was a major problem for the Howard Government and one of the causes he (and his government) were thrown out.


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