It might seem a dangerous proposition, but perhaps this is one occasion when an economist should be allowed the opportunity to practice what he preaches.

Professor Ross Garnaut, the government’s main climate change policy advisor, manages to present an eloquent and reasoned carbon price policy framework that not only allows Australia to play its part in reducing global emissions, but does so in a manner that he argues has little impact on the economy, on trade-exposed industries, or on consumers – much less, he says, than any of the GST, the surge in global crude oil prices, movements in the value of the Australian dollar, or even of daily weather fluctuations on electricity prices.

Sadly, to implement policies the western world has invented a system that involves politicians, and it was possibly at that time that the concept of expedience was invented.

The Labor government knows all about this, having used climate change policy as a battering ram against the Opposition in 2009, and then turning on its heel when the Coalition returned the favour. It dumped its leader, excised climate change from its policy platform and then promptly doubled back and embraced the concept all over again, when the support of the Greens and Independents was needed to retain power.

Garnaut can see that this is maybe a one-off opportunity to implement sensible policy, so he too has embraced the concept of expediency in his latest update to his 2008 Climate Change Review, the chapter on carbon pricing and industry assistance. His principal recommendations are not so much different from those of three years ago – a fixed price of between $20 and $30 a tonne, a rise of 4 per cent per annum, a quick transition to a free-floated carbon price via an emissions trading scheme by 2015 (no floor price or cap), and the establishment of an independent body to manage the crucial long-term policy levers of emissions targets, pricing and compensation.

Where he does give in to political expediency – or lets call it pragmatism – is on transitional assistance measures to trade exposed industries. He temporarily abandons his previous stance of a “principled approach” to compensation, based around the idea that industry should only be compensated on the price difference to their products caused by by a carbon tax, arguing that there is insufficient data to implement the plan. Instead he comes out in favour of allocating, for an interim period until the ETS comes into force, free permits based on the average emissions intensity of an industry – the controversial compensation measures endorsed by two previous political leaders in the ill-fated CPRS.

Garnaut does say there is no case for the “recession buffers” needed to win the begrudging acceptance of industry. Assuming a carbon price starting at around $A26 per tonne, these rates of assistance effectively result in emission intensive, trade-exposed industries facing a carbon price for their emissions of between $2.60 and $10.40 per tonne of carbon dioxide equivalent. In steel, this translates into an average carbon cost of $5 per tonne – tiny, Garnaut says, in comparison to huge increases in other key inputs, such as prices for iron ore and metallurgical coal in the past year.

So why did Garnaut recommend this “arbitrary and approximate approach”? He says it has the merit of having been worked out in detail, and at one stage having been widely accepted within affected parts of the business community. And he says if it is restricted to an interim measure, and then succeeded by his “principled approach,"  then it can avoid the worst aspects of the policy – which he said would have “exploded over time” under the weight of compensation. “That won't happen under this approach,” he told journalists. “This time, I’m tying to make sure that the principled approach gets up.”

In doing so, however, he has abandoned – at least temporarily – a principled position that has also been held dear by the Greens, and which has been the basis of their contention that their policies were economically responsible. The Greens hated the CPRS compensation measures – it’s why they didn’t vote for the CPRS last time around. Garnaut is inviting them to join in the spirit of expediency. Heavy emitters wanted a CPRS-plus, and Garnaut has suggested a CPRS-minus. Will the Greens accept the offer?

In the three years since his first Review, Garnaut has learned much, certainly the art of pragmatism. His other recommendations are politically quite clever: He would include transport, but he proposes to offset the impact of price rises at the petrol pump by dropping the ridiculous fringe benefits tax incentive on motor vehicles; and he caters for the lower half of the income bracket by embracing some of the tax reforms proposed by the Henry Review. In one single bound, he has offered the government the opportunity to counter the “great big new tax” line with a “great big new tax cut” and deliver increased productivity.

He also offers much for regional Australia, suggesting the government should allow Kyoto-compliant credits to be bought from farmers participating in the carbon farming initiative and for non Kyoto credits to be bought by the regulator. He says the combined investment could total $2.25  billion a year, the same size as the country’s wool clip. He has plucked a new industry, quite literally, out of thin air. He argues that the scope of carbon pricing should be broad.

So, has he found the middle ground that could offer the compromise between the government and the Greens? An unanswered question about these updates is whether they remain his personal advice or a synthesis of what he sees as the various positions put across at the Multi-Party Committee.

The biggest question will be how far the government embraces the spirit of expedience. No more than they have to, is the hope. But the track record is not good. The Gillard government’s climate change policy will be framed by elections past and future. The carbon tax – despite the potential damage done by an electorate focusing on a policy backflip – was a necessary compromise with the Greens because without it there was no way they would be able to agree on an emission reduction target, the essential ingredient of an emissions trading scheme.

How far will Gillard prepare the ground for the next election? Garnaut may well insist that a $20 fixed price will have a minimal impact, but Gillard might be tempted to go for an even lower price – at least for the first year – just to make sure that that there is not a procession of business people turning up on current affairs programs complaining how the carbon price destroyed their business. It will be important for Labor to present themselves at the next election able to demonstrate that the carbon price has not killed the economy.

And then, of course, there are the special interest groups. On this matter Garnaut sounds a warning – with particular reference to the current state of the political debate in Australia – which is worth repeating:

“The role of an independent centre of the Australian polity in the policy process, with focus on the public interest, has declined markedly since the extended period of productivity-raising reform in the late 20th century,” he writes. “The balance between special and public interests in the policy process has returned to that of the unhappy days of 'protection all round' and chronic Australian underperformance.

“The political economic malaise of the early 21st century introduces a special risk to policy-making on climate change. Policy based on myriad regulatory interventions, rather than general principles applied by independent institutions and implemented through market processes, is especially vulnerable to capture by special interests. The economic adjustment associated with carbon pricing to reduce greenhouse gas emissions itself has small economy-wide effects – much smaller than the removal of endemic protection or the introduction of the GST.

“A carbon tax can have favourable efficiency effects if used to reform highly distorting taxes, but these are relatively small because the tax switch is relatively small. By contrast, a botched regulatory approach to reducing emissions, that unleashed the old proclivities of the Australian political process to respond to pressure from special interests by granting tailor-made favours, would not be small in its economy-wide effect. It could come to mark an historic and unhappy turning point in Australian economic policy and performance.”

For all of that, Garnaut did express some optimism that the carbon pricing debate would be resolved this year. He had not, in 2008, anticipated he would be back at the National Press Club in 2011, still banging on about the same subject. He certainly hopes he will not be back with yet another update in 2014. Perhaps he will be – but as the head of a newly established independent Carbon Bank of Australia, or its equivalent. Either him or Ken Henry.