Labor Sells Australia Out To The Business Lobby

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Kevin Rudd’s extremely weak greenhouse gas emission target cannot by any rational argument be justified as being in the national interest. The reason is simple: every economic study has shown that reducing our emissions will cost the nation very little.

Even the driest of the dry economic models, from the Australian Bureau of Agricultural and Resource Economics, shows GDP growth would be reduced by only a fraction of a percentage point. We would still, by their modelling, be much richer in 2050 than we are now.

More realistic studies, that take account of practicalities generally overlooked by economic models, show we could actually save money by eliminating wasteful practices, and those savings could pay for further reductions. For example a study by McKinsey Australia showed we could reduce our emissions by 20 per cent in 2020 for no net cost. We could reduce them by 30 per cent for a modest cost.

The key to the McKinsey result is to stop being wasteful, so that we dramatically improve the efficiency with which we use energy. To do this we need, for example, to upgrade our space heating and the systems that pump air and water in buildings and factories. All new buildings and factories can be built to much higher standards, and we can invest in retrofitting the old ones.

A big political attraction with this approach ought to be that it can contain household energy bills. Energy will be more expensive, but we will use less of it, so it won’t cost much more to keep our houses warm. Rudd’s approach, on the other hand, will increase household energy bills.

If it’s so cheap and attractive to reduce our emissions, why is Rudd not taking this approach? The reason for this is also simple: winners and losers. It’s good old fashioned politics of the most sordid kind.

If we reduce our energy needs, then we need less fossil fuel, and the fossil fuel industry makes lower profits. To accomplish our long-term goals, we would need new kinds of energy sources, and that would put the fossil fuel industry out of business. There would be new businesses to replace them of course, which is why the economic models show little net cost. But the fossil fuel industry doesn’t care about other industries, it only cares about itself.

Neither does the Australian Chamber of Commerce and Industry care about new industries or the national interest. Its member industries care only about themselves.

What is comes down to is that Rudd is not governing for the national interest. The Prime Minister is governing for sectional interests. He is governing for the presently rich and powerful.

To try to clothe himself in some shreds of reasonableness, Rudd has even resorted to the term “environmental extremists” to describe those, including most of the world’s climate scientists, who call for much stronger action.

The Rudd strategy is virtually guaranteed to fail. Carbon capture and burial is presented by the coal industry as the big fix, but it is the most speculative of all the projected energy technologies. There is no assurance at all that it could work on the required scale, it would be hugely expensive and it would only address a fraction of our emissions.

The fossil fuel industry already benefits from multi-billion dollar indirect subsidies, and Rudd just dropped another $4 billion of our money in their laps. That money could have insulated a lot of houses, could have saved on a lot of people’s heating bills, could have started reducing our emissions now instead of in a decade, or three, or never.

Fossil fuels have no future, and Rudd is tying Australia’s future to the fossil fuel industry. His path is a virtual guarantee that we lose the Great Barrier Reef. It is, according to the latest science, quite likely to lead to runaway catastrophic warming.

Rudd’s stance is indefensible and pathetic. His is a monumental failure of leadership.

Geoff Davies

Dr. Geoff Davies is a scientist, author and commentator. He has been exploring economics for the past fifteen years or so. He is a retired Senior Fellow (now a Visiting Fellow) in geophysics at the Australian National University. He blogs at http://betternature.wordpress.com/, and at http://sacktheeconomists.com. He is the author of Economia: New economic systems to Empower People and Support the Living World (ABC Books, Sydney, 2004), the eBook The Nature of the Beast: How economists mistook wild horses for a rocking chair (self published, 2012), and the eBook Sack the Economists and Disband Their Departments (BWM Books, 2013).

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