Energy Lunacy: A Disappointing Policy Episode From the Rudd Government

The return of the Labor government after 11 long years of miserable conservative rule saw "The Pigs" take holiday. The 'fire in the belly' (read 'indigestion') caused by more than a decade of the Howard government had subsided. With it went any inclination to add to this blog.

The antics of the Federal Opposition and some questionable policy decisions by the government have rankled to the extent that the urge to write has returned. If those urges persist is another matter.

The first stirrings were caused by the bleats of the well off to sensible means testing of government handouts.

The issue that finally forced me back to the keyboard was the pathetic responses from both sides of the parliament regarding the rapid increases in energy prices.

Brendan Nelson's policy to reduce the price of petrol by five cents per litre was a cheap grab for popularity, a stance begging to be ridiculed by the government. Rudd should have emphasised that the oil price is set by supply and demand in the global energy market, and thumped the Opposition's lunatic policy that would increasing the demand of a limited resource.

That the government seems spooked by Nelson's announcement, to the extent that they've mooted the possibility that petrol prices may be reduced by re-jigging the calculation of GST, is gutless, narrow minded policy of the worst kind.

If the government is worried by the issue, and they should be for other than political reasons, then they should be proposing that fuel taxes be used for sensible medium term measures that will lower fuel demand. Here's a few suggestions:

1. Revamp tax on new cars to make economical vehicles cheaper.
2. Remove the tax concession on new off road vehicles.
3. Revamp the novated car lease tax scheme by removing the incentive to drive further to reduce tax.
4. Provide tax breaks if you use public transport to get to work.

Sensibly, the government should increase fuel excise to reinforce the issue, because, apart from climate change (which is related), exceeding the limits of oil production (Peak Oil) is likely to be the defining issue of the 21st century.