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QUARTERLY ESSAY 33 Quarry Vision

 

Correspondence

Bernard Keane

One of the more disconcerting aspects of Guy Pearse’s Quarry Vision is the frighteningly organic way in which carbon dependence has been built into the Australian polity, as if its roots were every bit as deep as the coal we have so much invested in digging up. While much of the essay focuses on the success of climate sceptics and the carbon lobby under the Howard government, Pearse also stresses the success of the resources sector in influencing policy under both the Hawke-Keating government and, now, the Rudd government.

The failure of successive governments to understand the need for action to slow the growth of, and then reduce, carbon emissions has been a failure of Australia’s entire governing class: its MPs, its public servants, its media of influence, its union and business leaders. 

Such an observation is not intended to damn all members of that class, but to suggest that there has been a systemic failure as much as a moral and intellectual failure by particular individuals. 

On balance, this failure is unusual in Australia in recent decades. Australia has been served by its governing class reasonably well since the early 1980s. Both the Hawke-Keating and Howard governments had their policy failures, and both, especially the latter, drifted to their deaths having lost all fiscal discipline. But the long period of economic growth recently concluded by the financial crisis – including an extended period of above-average productivity growth in the 1990s – was a direct consequence of a commitment to economic reform by Australia’s most senior politicians, public servants, business and union leaders. In particular, the Hawke government’s decisive abandonment of manufacturing protectionism, the Keating government’s embrace of decentralised wage-fixing and competition policy, and the Howard government’s reform of the taxation system were, probably in descending order, important elements in creating and sustaining the long economic boom Australia enjoyed after the recession of the early 1990s.

The abandonment of carbon protectionism, however, looks to be a reform too far for both sides of politics. The necessary but not sufficient characteristic of any major economic reform is genuine will on the part of governing officials to pursue it, based on an understanding of its long-term benefits. This leads to a willingness to accept the risk of short-term political damage in undertaking the reform, on the basis either that such long-term benefits will provide a political pay-off, or, as with Paul Keating or John Howard, that “good policy can be good politics.” With Keating’s once-in-a-generation political skills, economic reform was not merely less damaging politically, it actually became glamorous. And John Howard, despite the narrowness of his victory in 1998, was able to craft a GST reform agenda based on the perceived need for Australia to take its taxation medicine. 

With a few exceptions, however, none of Australia’s governing class genuinely accepts both the need for, and opportunities implicit in, the transition to a low-carbon economy.

Worse, the environment for serious policy debate in Australia has dramatically worsened in the last twenty years. Two factors have contributed significantly to this deterioration: the proliferation of “alternative” sources of policy advice, and the development of a permanent cadre of politically connected players.

The proliferation of sources of advice and opinion in any polity would, normally, be a welcome development. Until the 1980s, policy advice to governments was the preserve – indeed, the monopoly – of the Australian public service, especially given the lack of ministerial staff. Staffers began proliferating in the early 1980s. Think-tanks – usually but not invariably conservative – began emerging, with an explicit goal of influencing the political agenda. More importantly, the private sector entered the realm of policy research and development, and consultancies – large and small – working in public-sector fields of expertise began sprouting in Canberra, usually staffed by former public servants and ministerial advisers.

Consultants will always have an automatic advantage over public servants: they will provide whatever advice was asked for. Public servants had – and still have – an unfortunate tendency to call bad policy bad policy. Consultants aren’t burdened by such recalcitrance. Again, this is not to condemn an entire profession. The majority of consultants are professional and intellectually rigorous. But they are also adept at sensing what is required by those who pay them, and what will generate repeat business. Ironically, they also come with the cache of being “independent,” when of course they are anything but. Such “independence” proved enormously attractive to the Howard government. Senior bureaucrats and ministers quickly realised that the Howard Cabinet would be much more accepting of a proposal if it came backed by a report from an “independent consultant” rather than public servants.

The private sector quickly caught on to this trick, and these days it is a rare policy pitch from lobbyists that is not backed up by a glossy report from a prominent consultant. As a perfect case in point, the biggest beneficiaries of the emissions-trading debate in the last twelve months have been Canberra consultants – some of whom Pearse singles out – paid by polluting industries to offer analyses that suit the agenda of the polluters. Consider the career trajectory of Brian Fisher, the former head of the Australian Bureau of Agricultural and Resource Economics (ABARE). Fisher, latterly having joined right-wing economist and Liberal adviser Henry Ergas and former Howard staff at Concept Economics, was hired by the Minerals Council to prepare an independent analysis of Treasury’s modelling of the impact of emissions trading. Fisher was then, remarkably, hired without any selection process by a Coalition-controlled Senate committee to continue his attack on Treasury’s modelling at taxpayers’ expense.

The proliferation of such “expert” opinions available for hire has dramatically lowered the quality of economic debate in Australia. The media remains oblivious – perhaps wilfully oblivious – to this. The claims of “independent” consultants and the outcomes of their modelling are reported without question. Most journalists, including those in the press gallery, lack an economics background and thus the capacity to question the material pumped out by industry, and lack sufficient understanding of the policy process to contextualise what they are being fed. Laziness or outright bias is another factor. In one case, the Minerals Council’s claim, via Nationals senator Barnaby Joyce, that the government’s emissions trading scheme would cost 50,000 mining jobs in Queensland was reported without demur in the house organ of climate scepticism, the Australian, when a quick check of ABS statistics would have shown there were actually fewer than 50,000 people in the entire Queensland mining sector. 

Also slow to cotton on has been the environmental movement, which traditionally has been weak on both economics and an understanding of the policy process. The self-interested claims of industry have only rarely been contested, and more usually left on the public record as something approaching Holy Writ. In the circumstance where politicians may have been genuinely open-minded about the impact of climate change and the need for urgent action, there has been little balance to the spin and outright lies coming from industry and their modellers-for-hire.

Pearse also perceptively notes how many lobbyists for big polluters are former advisers to politicians, or politicians themselves. The development of consultancies, lobbying firms (including the new American-inspired trend of lobbying activities provided by legal and accounting firms) and the PR and government-relations arms of major companies and industry groups has established career paths for the politically connected that simply did not exist two decades ago. 

It is now a well-worn career path for men and women to move from the youth wings of their respective parties or, in the case of ALP members, the trade-union movement, into ministerial offices as advisers, into parliament once preselection is secured, or into lobbying or government relations, with occasional detours into journalism, PR or a senior public-service position. This means Australia’s political class grows ever more incestuous and uniform in its views, even if those aligned with parties currently in opposition have limited access to power (the reason why the most successful lobbying firms have representatives from both sides of politics in their senior ranks). Those with the best connections expect, and obtain, access at the most senior level. Political donations smooth the way. The Australian Petroleum Production & Exploration Association (APPEA), headed by former senior Commonwealth public servant Belinda Robinson and represented in Canberra by high-profile lobbyists Parker and Partners, paid the Labor Business Forum $15,000 for a table at a fundraiser on the anniversary of Labor’s election victory last November – while Cabinet was determining the details of industry-compensation arrangements in the emissions trading scheme White Paper. The White Paper extended compensation to a number of APPEA members.

These structural features of Australia’s governing class mean that a genuine debate on the need to address climate change is currently impossible. Future generations have no lobbyists; the environment hires no consulting firms; while polluters bring the heaviest policy artillery to bear.

Yet this is slowly changing. The Climate Institute – the target of criticism from much of the environmental movement – is devoting significant resources to economic research on the emissions trading scheme and climate-change issues. The Australian Conservation Foundation has done excellent work revealing the extraordinary generosity to big polluters of the government’s proposed ETS. Industries that stand to lose – or are already losing – jobs as a consequence of climate change are speaking up about the real job losses consequent to a business-as-usual approach. But far more needs to be done to make the policy debate a genuine and informed contest rather than one heavily biased in favour of those with the deepest pockets.

One of the most significant changes in the debate has been the Garnaut Review. While Pearse, and others, criticise Garnaut’s conclusions and targets, they overlook the fact that Garnaut’s work established an economically credible case for action on climate change. After Garnaut, there is nowhere for anyone with economic credibility to hide on climate change. Instead, sceptics and rent-seekers had to switch their argument to one of timing, urging delay until the rest of the world – and in particular India and China – agreed to take action.

The reaction from advocates of climate-change action has been to argue that Australia must take action both on moral and diplomatic grounds: that as the beneficiary of 200 years of carbon-based industrialisation, we cannot fairly demand that developing countries make sacrifices when we ourselves are not prepared to make greater ones; and that the chances of a global agreement are maximised by Australia taking a unilateral first step, and a significant one. Both are fair points.

But the awful significance of the global nature of climate change doubtless never occurs to those who warn against Australia taking action before the rest of the world. The decisions Australia takes in relation to addressing climate change – whether to undertake unilateral action or await a global deal, how quickly or slowly it starts its transition to a low-carbon economy – will not significantly affect how seriously climate change affects our country. It is a meaningless debate, based on the assumption that Australia is master of its own destiny. In fact, Australia is at the mercy of the rest of the planet. Climate change will hit Australia faster, and sooner, than virtually anywhere else. The costs of adaptation will be greater, and be incurred sooner, here than elsewhere. We are likely already paying them now. Australia’s economic future and perhaps the future viability of many currently populated areas depends heavily on the rest of the world making a determined choice to seriously address climate change, rather than on whether we decide to take action.

In such a world, our status as one of the world’s leading carbon exporters is deeply ironic. When the impacts of climate change mount, and the cost to the Australian economy begins to soar, and we beg the community of nations to take strong action to curb emissions, they are unlikely to look favourably on a nation that cannot give up its own carbon addiction.

 

Bernard Keane is Crikey’s political correspondent in Canberra. 

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This correspondence discusses Quarterly Essay 33, Quarry Vision. To read the full essay, subscribe or buy the book.

This correspondence featured in Quarterly Essay 34, Stop at Nothing.


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