IMO CPRS = FUBAR. The scheme will be even more of a shambles if farmers can sell tree planting offsets while not required buy permits for livestock methane. Boffins will argue over how many gum leaves it takes to neutralise GHGs from a flatulent cow. Next people will want to sell offsets for having a front lawn. Following revelations about fudged oil production data I now suspect that power stations could lie about how many tonnes of coal they burn. Will the government have the nerve to fine those power stations or close them down?

The bugbears of cap and trade type schemes are free permits and generous offsets. Note the schemes that don't have them (eg sulphur dioxide in the US) seem to run quite well. I wonder if it might be simpler just to levy all point sources of fossil derived CO2 a flat fee of say $10 a tonne. That would be on any industry whose emissions can be objectively measured. No offsets allowed and no free permits whether you are trade exposed or some other kind of economic sacred cow. Since brown coal, aluminium etc would no longer be largely exempted that $10 levy could raise billions. All the money would go to home and business energy conservation. The government just has to say no to the rent seekers.

"If farmers aren’t directly penalised by having to buy emissions permits for the greenhouse gases they produce, but can get “carbon offsets” for emissions reducing activities, can they “make money” in net terms out of the deal?"

What I'd like to know is how anyone thinks carbon offsets in themselves wouldn't reduce emissions, tree plantations would have a severe effect on carrying capacity wouldn't they? A reduction is a reduction even if the original emissions aren't taxed.

Geoff also queried: "When do production subsidies applied to selected Australian exports (for example, agriculture) become behind-the-border protection, inviting WTO action?"

My guess would be when the other countries have a tax on ag emissions. We wouldn't expect our farmers to face taxes their competitors didn't would we?

If Global Warming is a not reality, as farmers en-mass believe, one would hope other taxpayers do not carry the burden of carrying farmers through any future droughts, which by their own reasoning, will not occur.

Over a year ago, on another OLO thread, I recall sharing an experience when visiting my rural In-Laws. There was a gathering. The women were in doors sipping tea running down single parents receiving governmnent support; whilst, around the BBQ, the men were downing tinnies, exchanging ways to receive higher government subsidiaries. Those most vocal against social welfare, when came to themselves were agrarian socialists!

Likewise, I can seee farmers saying that there is no such thing as global warming from one side of their mouths, while asking that their areas be disaster areas because of the Drought, from the other.

The debate about whether is global warming or there is no global warming aside, farmers should not be allowed to get away with any hypocracy.

Oliver, droughts will occur, global warming or not. Dont forget the Murray River dried up in the 1920's.

Farmers do need to remove their hands from the collective tax chest, however if we expect them to do that, we need to give reasonable freedom to use their land as they see fit (within reason). Farmers are among the most heavily legislated against industry groups in the country, and most of them are pretty small businesses, struggling to make enough money to put aside for the bad times that come eventually.

Farmers tend to get support to even out the troughs, as few industries suffer such wild swings in economic conditions (granted most have been immune from the GFC). The support that is given to them flows through to the local communities, and thus in an indirect way helps to maintain that community in the face of conditions that might otherwise see it wither and die forever.

The real impact of the ETS on farming is seen in the description of farming as "the only industry that buys retail and sells wholesale" (cant remember who gave the quote, but its pretty spot on). Farmers have little capacity to pass on the costs to any end consumer (which is what this is generally supposed to encourage) - they will simply go out of business. The only export earner we will have is from our big quarry - which one day will run out...then what?

Australia is an arid land and perhaps not really suited to farming despite the peaks of Australia "riding the sheep's back". Perhaps, we should have repositioned ourselves more than we have or farmers should multitask, as has happened in Europe. Unfortunately, we are too small to manufacture and export on a large scale. The manufacturers of the future are likely to be China, India and Vietnam.

Even the US can't compete. My home street has forty houses. There is one Ford and two Commodores. All the other cars, except an Alfa, are Japanese or German.

I guess we are left with Services and niche High Tech. We probably cary our weight here. We need not be in the same situation as Nauru.

Post WW II, soldier settlement broke-up larger properties and led to people living on unstainable properties.

I do realise there will droughts with or without man-made global warming, yet I still see a contradiction to saying that warming specifically is not occuring, whilst asking for aid because of warming, and asking to opt out of responsibilities to be shared. Likewise, with the GFC, we have the likes of Rupert Murdoch saying the Banks had to be saved, "there was no othter choice". His comments are in clear contradiction of his decades long advocacy of a "free market".

A Big Crash if allowed happen can lead to a new direction. The Enclosure Acts and the Industrial Revolution acted the growth of manufacture. The Great Depression led to an orientation away from "selling products" to "consumer marketing".

Your point about farmers having to accept low prices is well understood, as a junior Bank Officer about thirty years ago, I handled the telegraphic transfers between the buyers and the sellers. The situation was probably little different than buying coffee wholesale from Brazil.