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“You can do a lot of damage with $10 billion. It can be used to build a lot of halls of fame and finance a lot of local community groups. In short, $10 billion can fund a lot of porkbarrelling in a lot of marginal seats.

Ten billion dollars is how much (on a conservative estimate) the federal government will make in 2010 from the sale of permits to emit greenhouse gases. Potentially double that amount could be collected – and if so federal government revenue would jump by 10 per cent. Anyone who believes that climate change is a gravy train only for lawyers, accountants and ‘‘environmental advisers’’ should think again. No politician has ever missed the chance to save the planet, especially if they can also garner a few billion dollars as a re-election war chest.

So far the government is not telling us what it will do with the embarrassment of riches it is about to receive.

In a speech last week to the Melbourne Institute, Labor’s climate change tsar, Ross Garnaut, said the additional revenue should be devoted to supporting ‘‘adjustment to a low-emissions economy’’. That sounds chillingly like code for a $10 billion ‘‘industry structural adjustment’’ program.

Garnaut said that whatever funding was provided to enable an adjustment to a low-emissions economy should be allocated ‘‘transparently’’. As someone experienced in the ways of government, Garnaut would appreciate that transparency is in the eye of the beholder. More transparency is better than less transparency, but of itself transparency doesn’t guarantee good policy outcomes. If the government funds the newest and trendiest low emissions technology, it can do so in an entirely transparent way; but that doesn’t change the fact that government is nonetheless picking winners.

One of the things Kevin Rudd could do with his windfall gains is cut taxes. The question is what taxes to cut. Priority should be given to reducing personal income tax as, ultimately, it is going to be individual consumers either directly or indirectly paying the costs of higher electricity prices. But cutting income taxes doesn’t compensate for the effect of raising industry costs on a country like Australia that’s dependent on cheap energy for its comparative advantage in international trading.

In his speech, Garnaut warned that ‘‘continuing disputation about parameters of the scheme, uncertainty, continuing politicisation of the ETS’s [emissions trading scheme’s] operations, would dissipate resources in unproductive activity, and seriously disrupt productivity growth’’.

An unkind person could translate this as ‘‘be quiet and leave it to the bureaucrats’’. The trouble is, bureaucrats don’t have a sparkling track record designing markets – ask anyone who’s had the misfortune of visiting a public hospital lately. Given the massive change that the introduction of an emissions trading scheme involves, it’s entirely appropriate that there be as much ‘‘disputation’’ as possible – particularly given that the scheme is going to begin within two years.

Climate change bureaucrats are going to be busy over the next few years as they invent an emissions trading scheme and scurry back and forth between Canberra and New York, because ultimately the scheme will be in the hands of the United Nations.

Labor has promised that Australia’s emissions trading scheme will be integrated into a global system. A few days ago the global head of carbon emissions for Merrill Lynch spelled out exactly what this means. ‘‘Every single carbon credit that comes in or out of Australia has to have a unique serial number, and that serial number is tracked by the United Nations.’’

The Department of Climate Change estimates that in the next few years this country’s greenhouse gas emissions will be about 600 million tonnes of carbon dioxide. Under the current European emissions scheme, one carbon credit is provided for every tonne of carbon dioxide. Even if only 10 per cent of Australia’s emissions are internationally traded, that still leaves 60 million carbon credits that must be given a serial number and reported to the UN.

There’s a certain irony that Kevin Rudd has pledged to cut red tape. His government is on the verge of imposing an emissions trading scheme with rules so complicated they will make the 8000 pages of tax laws look simple. Whatever complaints there are about the Australian Taxation Office, it is surely a paragon of efficiency compared with the UN.

Having the UN monitor and regulate Australia’s emissions trading almost sounds like an April’s fool’s joke – except that the first of April was three days ago.”

John Roskam is the Executive Director of the Institute of Public Affairs and this article has been republished from the Australian Financial Review with permission from the author.