Ross Garnaut has gone out with a policy bang, leaving behind him instructions for a major economic reform program that would dwarf the GST and match in one hit much of the reform program of the Hawke and Keating governments.

It’s a measure of how little policy credibility this government — indeed this current parliament — has that Garnaut felt inclined, when asked to update his previous work on climate change and emissions trading, to stray far beyond his brief and eventually propose a program not just dealing with a carbon price but pulling in Henry Review recommendations addressing workforce participation, welfare and tax efficiency, and dealing with electricity markets and the way we approach innovation policy.

A carbon price on its own would, despite the pleadings of rentseekers, the Coalition and their News Ltd cheerleaders, be roughly comparable to the GST in terms of its impact on households — and probably somewhat smaller, even at the top end of Treasury modelling for a $40 a tonne price. But Garnaut suggests we don’t stop there, but use the household compensation component of the pricing scheme to drive other reform — but principally to strengthen incentives for people — especially mothers — to rejoin, improve the efficiency of the taxation system and overhaul the regulatory arrangements for electricity markets to curb gold-plating and over-investment at the expense of customers. He also thinks we need to be smarter about how we drive innovation in low emissions technologies.

It’s an innovative, big-picture approach that figures if you’re carrying out one major reform, why not try to throw in some complementary ones as well that will further reduce the cost of the transition to a low carbon economy. For Garnaut, a carbon pricing scheme is only “the central element in a set of policies that will secure reductions in Australia’s emissions at low cost to the Australian economy”.

Along the way, he calls out several key rentseekers in a way he hasn’t previously done. He devotes a whole chapter to rentseekers, Chapter 7, “The Best of Times”, and calls them out, one by one. First the Business Council of Australia — he shows how the council has had a very mixed history indeed in its support for reform, and has “reverted to its old type” in complaining about a carbon price. Then Graeme Kraehe of Bluescope Steel cops a detailed critique of his whining about a carbon price, with Garnaut accusing him of willfully confusing the impacts of the structural change occasioned by the resources boom with the impact of a carbon price, and wildly overstating the cost impact of a carbon price. Then he nails Paul Howes — traditionally an opponent of Kraehe, Garnaut notes — on his demand that “not one job” be lost because of a carbon price. As Garnaut notes, there are lots of jobs being lost currently:

Australia is enjoying a resources boom and for each new coal mine or gas plant that opens up, there must be a cut in jobs and investment in some combination of tourist hotels and restaurants, universities, steel mills, farms and other businesses producing exports or competing with imports. If it is a big investment in gas and coal, a lot of jobs and investment have to go. Prop up jobs in one area, and even more have to go in others.

Then it’s the turn of BHP and Jac Nasser, busted for engaging in that time-honoured business trick of calling for reform, but only for everyone else.

Garnaut’s intention isn’t (only) to parade a rogues’ gallery of rentseekers and protectionists. He uses that as a springboard to explain the real basis for his wide-ranging approach to reform: the resources boom has masked a decline in productivity growth and engendered a dangerous complacency among Australians and their leaders. That’s why he wants to use a carbon price as a driver for more substantial reform — to snap us out of the reform malaise we’ve sunken into. For Garnaut, this is the key reason why a market mechanism is needed for pricing carbon.

The threat that the 21st century return of the anti-productive Australian political culture will be longlasting is much greater if regulatory approaches are taken to reaching emissions reduction targets. The opportunities for vested interests to influence the policy process are much greater because the government must negotiate individual solutions to mitigation challenges as they arise. The difficulties of establishing a basis for international trade in entitlements are greater. The technical difficulties of assessing assistance levels through objective and independent processes are greater. And the danger that vested interests in other countries will persuade their governments to punish Australia for not doing its fair share in mitigation is greater.

In short, Garnaut is calling out not just Graeme Kraehe and Graham Bradley and Paul Howes and Jac Nasser, he’s calling out our entire political culture. That culture has failed not just on carbon pricing, but failed on the task of building on the economic reforms of the ’80s and ’90s — despite the material prosperity of the resources boom being available to cushion the impacts of reform in a way that never happened when the Hawke government took on tariff reform. He wants governments to get back in the reform game, not just on carbon pricing but elsewhere as well.

It’s unlikely he’ll be successful — this is a government that figures it already has enough on its plate just getting a carbon price up and running without using it as a driver for the vast slabs of the Henry Review it ducked last year. But then again, it can’t do much worse than it is already doing. As Paul Keating said to John Button when trying to encourage him to sign up to a more ambitious tariff reform program, “in for a penny, in for a quid”.