Australia’s budget emergency: it’s all about carbon

By David Holmes

A new book released today, Power Failure: The Inside story of climate politics under Rudd and Gillard, documents the failings of the Labor government between 2007 and 2013 in tackling climate change.

Written by my colleague Philip Chubb, Head of Journalism at the School of Media, Film and Journalism at Monash University, Power Failure puts in perspective the politically “wicked” problem of climate change and the missed opportunities that Australia has had to implement policies that measure up to its global share of responsibility.

Power Failure (1)Chubb is an award-winning journalist who created the documentary series Labor in Power, and his reading of the power struggles at the centre of Labor’s climate politics is detailed and revelatory.

Having interviewed 74 key political players including Kevin Rudd, Julia Gillard, Wayne Swan, Greg Combet and Penny Wong and relying on some surprising leaks, the book maps out the great fall of Labor from the “greatest moral challenge of our time” moment to abandoning any meaningful leadership over the problem.

The research behind the book is meticulous, and it includes a helpful timeline of the key policy and political events, tables comparing the strategies of Gillard and Rudd, polls and the key quotes and declarations that emerged at the policy pressure points.

Associate Professor Phil Chubb.
Associate Professor Phil Chubb.

As Chubb explains, from the moment he was a newly elected prime minister, Rudd was given executive power to choose his cabinet (and much more), a dysfunctional political culture was to haunt the Labor Party.

Rudd’s early decision to abolish cabinet’s climate change subcommittee and make climate his own personal crusade proved disastrous as he became disengaged from it.

Chubb argues that the communication of Labor’s climate policies was very poorly managed throughout Rudd’s term in office. So too were the regulatory concessions made to big coal, power generators and carbon-intensive industries.

Chubb shows how the period up to 2010 was marked by the appeasement of polluters, whose influence was decisive in keeping an unconditional target of 5% cut in emissions below 2000 levels by 2020: what environmental groups knew to be “shamefully inadequate”.

The fact that the Emissions Intensive Trade-Exposed Industries (EITEs) were to to receive 35% of all their permits under the 2008 settings of the Carbon Pollution Reduction Scheme made the Labor policy not much different from the Coalition’s direct action. Chubb writes:

The government was trying to force companies to change their behaviour, but then paying them so they did not have to change.

Some, like economist Ross Garnaut, saw the policy as an international embarrassment, and questioned whether it was “even worth the trouble”. The relationships between the key fossil fuel lobbyists and Canberra are uncovered to reveal how figures like federal resources and energy minister Martin Ferguson and state premiers were courted by the “greenhouse mafia”.

The animosity between Ferguson and climate change minister Penny Wong was central to the policy paralysis that ensued in 2009. Ferguson’s decision to commission an investment bank, Morgan Stanley, to conduct an open book – and therefore confidential – study of the EITEs was a pivotal moment, in which the perspective of the polluters was able to hold sway. What followed was:

…the amount of compensation ultimately agreed to was a whopping A$7.3 billion, an increase of $4 billion on the May 2009 version of the CPRS.

Power Failure contrasts the different leadership styles of Rudd and Gillard in achieving reform. Gillard would never rival the “Kevin from Queensland” popularity with voters, but was a far better leader, negotiator and administrator.

But as prime minister, Gillard was beset with insurmountable problems, a divided party, perpetual undermining by Rudd and ubiquitous misogyny from shockjocks and the opposition.

Gillard achieved much more than Rudd ever would on climate change, and her announcement with the Greens in February 2011 of an ETS in line with policies overseas was potentially a game changer.

But the intitial fixing of the price on carbon, and the ease with which Abbott could label this as a tax – a label that Gillard herself accepted later – was the beginning of the end. Thereafter ensued what Chubb describes as:

…a public campaign of intimidation by business, media and Coalition opponents the like of which had not been seen since the mid-1970s – and probably not even then.

In opposition, Abbott was able to run with an enduring scare campaign over carbon that was more effective than Gillard and new climate change minister Greg Combet had ever anticipated.

They were never able to force Abbott into a serious debate about climate change and energy policy, as he simply fell back to cross-media reproducibility of three word slogans.

The book is important and timely because it places in context the preconditions for the inaction on climate change of the current Coalition government. The targets for carbon mitigation that were set under Labor fell woefully short of what is needed, meaning that the Coalition actually has a very easy task in matching them.

Rudd aside, it is probably Martin Ferguson who did more than anyone within Labor to ensure policy failure on climate change. Readers will recall the rare, heartfelt speech that Abbott gave for Ferguson at the time of his retirement.

But even with Ferguson’s department having lowered the bar on climate policy, there is every indication that the Coalition won’t even be matching Labor’s ineffective targets. It is reported today that the Australian Renewable Energy Agency, set up by Gillard in 2012 to fund private sector renewable energy projects, is to be axed.

Australia is using up its carbon budget at a rate well above the global targets. The Climate Change Authority estimates that total emissions of 1700 billion tonnes of carbon dioxide equivalent (CO2-e) between 2000-2050 would give the world a 67% chance of keeping warming below 2°C.

To contribute to even this high-risk scenario, keeping emissions to only 5% below 2000 levels by 2020 is nothing short of pathetic. Instead, the Climate Change Authority says Australia needs to aim at 15% below 2000 levels by 2020 and then a whopping 60% reduction by 2030.

Up until 2050, Australia only has 10.1 billion tonnes of CO2 equivalent to play with, which means – as academic and Climate Change Authority member Clive Hamilton has pointed out – we need to be very careful about when we spend it.

In other words, there really is a budget emergency thanks to Labor and it is all about carbon. Or, as Hamilton summarises the Climate Change Authority’s report:

We would have to halve our emissions in 10 years, and even then we would be left with only 14% of our total budget to cover the remaining 20 years.

Failing to achieve these cuts will make Australia, one of the wealthiest per capita countries in the world, a pariah state over climate in the eyes of future generations.

Instead, the current government is obsessing over a financial budget, and declaring a budget emergency in a week where it was up to Clive Palmer to cut through the ideological games:

The issue is that they’re trying to misrepresent the true situation of Australia’s finances so that they can justify a lot of things to give them an ideological advantage over their opponents. But, you know, we’re elected to serve the Australian people in dealing with what the real situation is.

As I said, we’re the third lowest debt country in the OECD; Australia is still one of only 13 countries in the world that has a triple-A credit rating. And if you’re having a debt levy, it should be because you’ve got a debt problem, and there isn’t a debt problem at all with Australia at the moment.

In an economy where the only budget that we should be worrying about is the carbon budget, it is truly terrifying to see that the only political actor making any sense is a coal miner.

 


Power Failure: The inside story of climate politics under Rudd and Gillard will be launched this Wednesday by Professor Ross Garnaut in Melbourne. It is available for purchase in bookshops and online.

This story first appeared in The Conversation