When is a tax not a tax? When it’s a rhetorical device for people opposed to emissions trading schemes.

For a while Barnaby Joyce and his fellow National greenhouse denialists have thought they had stumbled onto a winner with the ETS, by calling it a new tax. Joyce, in one of the great moments of Australian political wit, has started calling it the “Extra Tax System”.

Joyce may be an accountant in real life, but I’m bloody glad he’s not doing my books. His grasp of taxation appears about as flaky as his grasp of economics. But the idea has spread, aided by some support in the right-wing media.

Malcolm Turnbull — inexplicably — returned to front Alan Jones on Sydney radio again yesterday, having been monstered by him last Friday. Jonesy doesn’t believe in this climate change rubbish. It’s got to go. Battlers doing it tough on Struggle Street haven’t got time for this UN-inspired nonsense.

“Do you think that the tide is turning a little on this carbon dioxide tax business?” Jones immediately demanded of Turnbull. “Might you be caught in the slipstream as the tide in favour of all of this stuff goes out?” Turnbull had the air not of someone caught in some weird hydrological phenomenon, but of a man carefully humouring a lunatic. “I think it is still a high priority,” he told Jones, who responded to that arrant nonsense with an impressive cavalcade of clichés. Gauntlets were thrown down, snakepits were leapt, breaches were stepped into as Jones went on at length about how the ETS was a tax. Turnbull had to politely correct his host. “I think there is no question that it is a tax. It is a tax with the ability to trade and to, in effect, buy credits in from other sources and that enables the overall cost to be reduced.”

So, sort of not like a tax at all.

By this stage Jones was well on his way to interrogating a clearly mystified Turnbull about the use of Ritalin on children. However, he had time to observe that the Government’s CPRS would “rely on that same sort of cowboy market, trading in complicated carbon permits for money” that caused the financial crisis. “I mean Lehman Brothers were well known proponents of carbon credit schemes.”

This is a sort of “greenies caused the financial crisis” line being pushed by some conservatives, possibly because the “encouraging housing for poor people caused the financial crisis” line turned out to be a crock. The Minerals Council’s chief, prominent Workchoices advocate Mitch Hooke, warned “the CPRS will create new financial derivatives that will no doubt be exploited by the same people who got us into the global financial crisis.” And it’s not just on the Right. Paul “look at me, look at me” Howes has attacked the CPRS on the same basis, although Paul seems as confused about the difference between a tax and emissions trading as Jones, saying “the biggest cheerleaders of carbon taxes have been the banks and audit firms.”

What’s fascinating about this debate is the ideological confusion of opponents of emissions trading. They want emissions trading to be like a tax, so it can fit into a simplistic “government & taxation = evil” framework. But emissions trading is preferred over a simple carbon tax by most economists because it enables markets to respond far more flexibly to the task of reducing emissions than the blunt instrument of a tax. You know, because markets are supposed to be more efficient than governments.

That the Government’s CPRS won’t do this is neither here nor there; the CPRS is not an emissions trading scheme, it’s a vast paper chase masquerading as one. Far from removing tens of billions of dollars from the economy like a tax, it recycles large amounts of money from those who don’t pollute very much to those who do in the form of free permits, and pumps money into regional developing economies by way of imported permits.

The likes of Jones and Hooke are right, though, about the opportunities for desk jockeys in investment banks that will be provided by the CPRS. A permit trading market will rapidly emerge and like any other form of financial product, and the likes of Macquarie Bank will be in like Flynn to see how much they can extract from it.

But the pro-polluter design of the CPRS will open up entirely new areas for traders. Unlike a properly-functioning ETS, the CPRS has different classes of participants – the really big polluters, who’ll pay virtually nothing for permits, the big polluters, who only pay about a third of the cost of permits, and the rest, who have to pay the full price. That’s a structure rife with possibility for exploitation by smart lawyers and investment bankers, particularly as the more the big-polluting sectors grow, the more permits will be made available to them. At least the Americans have started from the premise that compensation to big polluters should not accommodate their expansion. We actively encourage big polluters to expand and new polluters to start-up by offering them more permits.

In short, it’s rich indeed for representatives of polluters like Hooke to complain about the CPRS being exploited when it is rentseeking clowns like him who have been responsible for the maximising potential for the Macquarie Banks of the world to exploit it.

In the end, we’d be far better off with a flat carbon tax, because clearly the task of implementing an effective ETS is beyond our politicians. And at least Barnaby Joyce would be telling the truth when he attacks it.