Learn from Canada about climate policy

In Australia it is increasingly common to hear lectures, invariably dressed up as speeches, from European politicians or the European Union itself about climate change and all that. However, Australia's economy has little in common with that of Britain or most of the other western European nations. Rather, our economy most resembles that of Canada - also a mineral-rich, primary producing nation - and to some extent the United States.

In view of this, the likes of Swan and Prime Minister Julia Gillard along with Opposition Leader Tony Abbott would be well advised to take a break from the budget preparations and focus, for a while, on last week's election in Canada - assuming that they have not already done so.

In a surprise result Stephen Harper, Prime Minister of the incumbent minority government led by the Conservative Party, has been returned to office with an absolute majority of seats. This was not on the agenda just a few months ago.

There was one key issue that distinguished the Conservatives from their rivals. Harper declared that he was opposed to what he labelled as "the socialists and the separatists" - all of whom supported a cap-and-trade scheme (similar to an emissions trading scheme). The Conservative Party's policy was clear - under Harper's prime ministership, Canada would not introduce climate-change policies before those supported by President Barack Obama's administration and passed by the United States Congress.

In other words, Harper stated the belief that Canada should not go ahead of the field on climate-change policies - when such key nations as the US, China, India and Japan had not signed on to a carbon tax or an emissions trading scheme.

Previous administrations in Canada had endorsed the Kyoto agreement but Canada had consistently failed to meet its carbon reduction targets. The Canadian Conservatives campaigned that a cap-and-trade system would lead to an increase in fuel and power prices. It worked.

There were other factors, of course. Despite its minority status, the Harper government had presided over a sound economy and had restrained the growth of spending in responding to the global financial crisis. Even so, the key division between the Conservative Party and the others turned on its opposition to cap and trade.

In budget week, there is something to be learnt by both Gillard and Abbott in the surprise Canadian election result. Labor wants a carbon tax and the opposition advocates direct but expensive measures to reduce carbon emissions. In Canada, the Conservatives are running a line that goes something like this: Canada is a responsible nation and will play its part in reducing carbon emissions but only when the likes of the US, China, India and Japan do likewise.

This line worked for Harper in Canada. There is no obvious reason why such an approach would not also have appeal in Australia.

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