The truth is that there is no policy difference between the Government and the Opposition on Carbon Tax. They are both going to reduce emissions by 5 percent and they are both going to put a price on Carbon. In the end neither scheme will have much impact on emissions. In other words they are both examples of gesture politics; the advantage of the Opposition scheme is that it will do less damage to the economy.

The Opposition scheme has two major mechanism for reducing carbon; the first is through soil improvement and reforestation. The problem with this is that it costs money and there may not be enough of that in the budget to make any significant impact. The second mechanism is by offering money on a tender basis for projects that reduce Carbon. This can be done either by specifying the amount of Carbon to be lost and seeing who can do it cheapest or alternatively seeing who can reduce the most Carbon for a fixed amount of money. Either way the result is a price for Carbon is established by the process. It is probable that the tender process will be more expensive than simply buying Carbon permits on the international market, which at the present time is the cheapest way to reduce emissions.

The problem with the Government's approach is that it is the equivalent of a punt on dog three in race four at the dishlickers. If the rest of the world (the US and China) adopts an international price on Carbon, Australia will be ahead of the curve on structural adjustment and will be able to reap the advantages of being an efficient low emissions economy. On the other hand if the rest of the world decides that there is unlikely to be an agreement on a Carbon price between the US and China anytime soon, then Australia will have undergone a painful adjustment for no reason at all. That is assuming that the Carbon Tax is really intended to cut emissions by 5 percent by 2020. In this case we will probably have the highest Carbon price in the world by a long way. On the other hand, the Government may just be indulging in a sophisticated form of spin; introducing a mechanism that has no impact on the economy and no impact on emissions.

If this is their game plan, they are going to have to hope that the Greens are prepared to play the Hoodwink game with them. If Bob Brown went along with the gesture approach then it would give the scheme credibility in the short term and destroy him in the long term. It would probably be enough to get the Government a shot at re-election and that is probably its main motivation. In the meantime the environmental damage would continue unabated.