How to shift Australia on climate change

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This post was first published in the newsletter of the Australian Sensible Centre.

For 30 years now, our major parties have promised to respond seriously to the challenge of climate change. And for 30 years they have failed to do it. Not only have they been unable to construct a working consensus on the core issues and build a whole-of-society response that is politically sustainable and economically feasible, they have been unable to hold even their own parties together in implementing the better of their ideas.

Who can remember the early 1990s, when Liberal Opposition Leaders Andrew Peacock, John Hewson and John Howard offered a 20 per cent cut in emissions by the year 2000? That now seems like ancient history. Where might the country be now had they followed through by 2000 and saved us twenty years of indecision and rancour?

In 2009, Kevin Rudd offered a Carbon Pollution Reduction Scheme, which was supported by the Liberal Opposition Leader at the time, Tony Abbott. Rudd unceremoniously dumped his CPRS in 2010. Julia Gillard replaced him, vowing not to introduce a carbon tax, and then promptly dumped that promise. Not to be outdone in inconsistency, the Greens voted with the Liberals to dump the CPRS, while Tony Abbott, after campaigning against the Gillard ‘carbon tax’, then introduced a $2.5bn Emissions Reduction Fund to pay polluters to curb their emissions.

These flip-flops were a national embarrassment.

Ten years later, no-one can be in any doubt that the Labor, Coalition and Green parties are incapable of leading on this most critical of issues. It is not only the absence of intellectual and moral conviction that oozes forth from these parties, it is their inability to refrain from chasing short-term political advantage at the expense of the national interest that now alarms most thoughtful Australians.

Can politicians think in the medium to long-term about anything? One thing we now know for certain is that career politicians are incapable of it. Without limits on terms in parliament (we think three terms in the lower house and two in the Senate is about right), politicians will fail to make decisions for the long-term that transcend their own temporary careers.

But there are two other dynamics at work that are critical in understanding why the political class as we’ve known it in Australia for the last 100 years cannot meet the challenge of climate change. In the first place, they simply don’t understand markets. The Liberals say they do. They say they are the party of market capitalism. But in practice, they are a party of crony capitalism – they’ve always relied on Big Government dispensations of licences and political favours to get things done. And they’ve always favoured big corporations as their natural partners (Big Banks, Big Utilities, Big Miners, Big Agribusiness).

The trouble is, innovation in energy, transport and agriculture doesn’t come from big clunky corporates. It comes from new disruptive firms employing new technologies where quick access to markets, without barriers or Soviet-style red-tape is essential. But Liberal governments don’t think in this way. They think in terms of closed markets, with protective barriers to entry, with a ban on small businesses and consumer mutuals competing with favoured corporates. This is the way of Menzies and Howard and Morrison.

Might farmers be able to produce energy and sell it to the grid? Not under Liberal administrations. Might rural community initiatives to sequester carbon be incentivised? Not under National Party governments. Might neighbourhoods be allowed to produce and store energy in decentralised units? Not under Liberal governments. They don’t do market capitalism, as it turns out.

But here’s the rub. Labor doesn’t do market capitalism either. It’s form of crony capitalism is a three-way deal (with the addition of union officials). Consumers are still excluded, as are small businesses, farmers and enterprising communities.

Without a market-based framework that enables innovation in energy, transport and agriculture to readily substitute low-emission alternatives to high-emission products and processes, emissions from these sectors will not be reduced quickly.

Australian emissions fell by 0.3 per cent in 2019. That is too slow to be globally significant. It can only be accelerated if innovations are permitted free and open access to markets. Subsidies are not the game-changer: renewables that seek subsidies from taxpayers are not the real deal. The game changer is free and open markets, stripped of the protective paraphernalia of crony capitalism.

The second dynamic needed to meet the challenge of climate change is community initiative. This, too, is beyond the comprehension of our political class. The neo-liberal paradigm that both Labor and Coalition parties have swallowed over the last 40 years recognises only individual consumers and corporate providers. Groups of people – as consumers, residents, farmers, or small business proprietors – are invisible. Co-operatives and mutuals are therefore invisible. Community energy companies are invisible. Consortia of farmers and city innovators are invisible.

Groups of consumers and aggregates of small producers need open markets. Without open markets, community initiative is stymied. The climate change responses of the major parties are top-down, cumbersome and slow for a reason – they exclude community initiative and they exclude open markets. This is why there is a disconnect between the appetite of Australians for innovation in response to climate change, and the abysmal record of our governments.

Would taxing carbon be helpful? If we could rewind the clock to, say, 2008, we would adopt the British Columbia model of a revenue-neutral carbon tax Рregarded internationally as an outstanding success and supported by conservatives and progressives alike in western Canada.  It is simple in execution Рplace a tax on carbon to encourage consumers to go to cheaper alternatives, with 100 per cent of revenue raised returned directly to taxpayers in the form of a cash rebate.

Australian Labor couldn’t get its head around the idea of a revenue-neutral carbon tax. True to its century-old instincts, it wanted to keep the revenue from a carbon tax and let bureaucrats spend it. This model would never have flown in British Columbia. And it didn’t fly in Australia. Labor killed the idea – and made it impossible to bring back.

What about targets? Does it help to adopt a target of zero net emissions by 2050? Without a plan to get there, in which you have at least some control over the variables that influence your progress, no. That doesn’t take you any closer to real reductions in emissions. It is too distant to be meaningful. And the thirty year time frame is too slow in reducing emissions. Big technological breakthroughs must be permitted to enable deeper reductions as soon as they become available.

Climate change turns the old pattern of politics on its head, and the traditional players have still not caught up. The Left doesn’t understand markets or community initiative, so it remains fixated on subsidies and targets. The Right doesn’t understand them either, so it will lurch from a state-funded Snowy 2.0 fantasy to a state-funded coal-fired power station to state-subsidised hydrogen hubs, throwing public money down the drain, shamelessly gouging taxpayers in the unending search for political advantage.

The majors cannot cope with the challenge of climate change. As a matter of urgency, new political actors are needed in parliament in 2022, able to exercise the balance of power in both houses to drive policy sanity and build a national consensus on these issues. The incumbent parties – Labor, Liberal and Greens – cannot do this.

Our policy statement on climate change is available here.

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Radix is the radical centre think tank. We welcome all contributions which promote system change, challenge established notions and re-imagine our societies. The views expressed here are those of the individual contributor and not necessarily shared by Radix.

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