Lack of policy leadership in Australia

Leadership is still about "that vision thing." But it's also about being able to prosecute it within your sphere of influence for challenges you can respond to.

For those of us enthusiastic about public policy, the Australian debate is rather depressing. Sound bites rule. Substance doesn't seem to matter. Scant regard is paid to outcomes. What's most concerning is that the lack of policy leadership is intertwined with the enormity of the challenges we face.

Broadly speaking, the private sector is fine. Australia's relative ease in sailing through the global financial crisis' choppy waters demonstrates the importance of a flexible liberal economy. If Australia had industries propped up by the false foundations government regulation and protectionism provides we would have struggled to adapt.

We haven't struggled. Not that everything is perfect. But considering events overseas, every morning Australians should wake up and be thankful for their good fortune.

But our political leaders have lost the plot on influential leadership resulting from the international alignment of Australia as a country worth emulating because of survival through the crisis.

The Rudd and Gillard government's efforts to 'show leadership' in tackling climate change by introducing a carbon tax, succeeded by an emissions trading scheme, is foolhardy. No one disputes the government's commitment to cut emissions. But it's an absurd proposition to suggest we are going to take on significant economic costs for a global environmental challenge and then expect the rest of the world to follow.

Based on the government's logic, the rest of the world would have followed our lead in unilaterally liberalising their trade barriers in the 1980s and 90s. After all it would have been in their economic interest. But they didn't. Instead many have maintained trade barriers ranging from heavy industry subsidies, tariff protection to local content restrictions that make their economy less flexible, dynamic and capable of responding to economic downturns. In short, they're worse off.

So if countries won't follow us in helping themselves, it remains a fascinating proposition that they'll follow us in imposing economic pain. The European Union's longstanding emissions trading scheme also shows it unlikely.

You cannot lead by sound bites when you're extending beyond your zone of influence.

Australia can reasonably have an impact by imposing a domestic carbon price. But greenhouse gas emissions are a global challenge, the externality is also global, and can therefore only be addressed with a global carbon price.

Australia showing leadership may make us feel warm and fuzzy, but it doesn't address the challenge if there is no global price to feed into.

Considering a World Bank Carbon Finance Unit survey of international carbon trader found around only 20 per cent believe there'll be a new international agreement that could provide the pathway to imposing one by 2020, shows we're over reaching.