A climate for change

LAST week we saw Julia Gillard and Tony Abbott as rivals performing genteel courting dances to win over the independents. This week it gets deadly serious, as the four independents must decide who to support. Of the six MPs on the crossbenches, three are crucial. Tony Crook, the West Australian National who unseated Wilson Tuckey, plans to sit on his own but surely will back the Coalition on confidence issues. Melbourne's Green, Adam Bandt, says he will support Labor. And neither side would want to rely on maverick Bob Katter.

That means that to have a secure 76 seats in the 150-member House, either Labor or the Coalition must win over the other three independents as a group, or we will be heading back to the polls well before 2013.

Let's be realistic: Labor has to win over all three. For one thing, all of them want real action on climate change. Abbott is a remarkable political gymnast, but he can't go there. If Gillard can't find a way to do so, gear up for another election.

Andrew Wilkie and Rob Oakeshott are both independent progressives: for them, tackling climate change is central. Tony Windsor is a moderate conservative, but he is also a farmer in the Murray-Darling basin, where climate change is forecast to shrink future rainfall by 30 per cent. If that comes true, he warned Parliament last year, "it will destroy agriculture in that system". In 2008, helped by 65 environment groups, he introduced a private member's bill proposing a target of reducing emissions to 30 per cent below 1990 levels by 2020 using a carbon price, regulatory action across the board, and new ways to store carbon in soils and vegetation.

But in 2009 and 2010, he twice voted against Labor's emissions trading scheme, saying it proposed too much dislocation for too small a target, and aimed to split the Coalition rather than seriously reduce emissions. He has common ground with the Coalition on soil carbon, and with the Greens on an ambitious target. Now Labor has to find common ground with him.

The 22 demands set out by Wilkie, the new Denison MP, show how difficult the task will be. In March, Wilkie stood for Denison at the Tasmanian state election and won 8 per cent of the vote. At the federal election he won 21 per cent, taking votes equally from the Liberals and the Greens. One reason was that this time he had a new issue, telling southern Tasmanians they were not getting their fair share of federal funding because they were in safe Labor seats. So, naturally, his wish list yesterday began with 10 local demands, starting with a new Royal Hobart Hospital, and including funding for broadband, roads, public transport, including a light rail for Hobart's northern suburbs, and a demand that the government withdraw its formal approval of the proposed Gunns pulp mill.

Then there are 12 broader issues: poker machines, climate change, refugees, whistleblower legislation, mental health, dental care, a fairer distribution of schools funding, increasing welfare benefits, same-sex marriage, aged care and a national disability insurance scheme. Abbott might get a tick for his mental health policy, but everything else there is difficult for both leaders.

To me, apart from a couple of caveats, all of it is good policy but it's difficult. And Wilkie is just one of four independents. Katter has made it clear he wants a lot of things for his electorate (which is bigger than France). Windsor and Oakeshott last week were strong on good principles and procedures, but they will also have to demand that the electors of New England and Lyne get their share.

Still, what they ask for and what they get will be two different things. Labor (and the Coalition, if it wants to stay in the game) will have to plead for time to tackle some issues, insist on national program funding for others, and choose carefully what to give away from the very small amount left in the kitty after the campaign.

The first week was encouraging, even if some commentators missed the point. The independents' demands were about principles of government. They stared down Gillard, and got her to agree to improve the way Parliament works. They stared down Abbott, and got him to agree to have his policies properly costed by Treasury and the Finance Department.

That means the Liberals will need to prepare credible excuses for getting some of their costings wrong. I suggest they just tell the truth, which is that the much-vaunted charter of budget honesty doesn't work for oppositions. They need access to the departmental experts when they are planning their policies, and not merely to reveal during the electoral campaign where they got costings wrong.

When Labor was in opposition, Lindsay Tanner proposed that oppositions be allowed private access to Finance and Treasury officials for the last year before an election to help them get costings right. But Labor in government did nothing on that, and shadow treasurer Joe Hockey argues that this solution would put unfair pressure on officials, by asking them to serve two masters.

The Coalition instead proposes to set up a parliamentary budget office, along the lines of the Congressional Budget Office in the US. But on the scale it proposes, that wouldn't work either.

The US office has an annual budget of $A50 million and employs 175 economists and other analysts. The Coalition's proposed office would have an annual budget of just $2 million, which might pay for 10 or 12 analysts at best. The Finance Department has 1000 of them. Get real.

Climate change is one key issue. The key economic issue is to train the young, the unemployed and the workforce dropouts in the skills Australia will need to sustain a long recovery. Could one of the independents please put that on their list?

Credit: TIM COLEBATCH. Tim Colebatch is economics editor.