NOEL TURNBULL. Morisson has rent seekers salivating.

Australia’s pre-eminent rent seekers must be salivating at the thought that the PM might ‘evolve’ its policy on climate change and will be counting up the billions they may reap from his likely emissions ‘reductions’ schemes.

The Prime Minister has already made clear the constraints he will place on any climate change policy ‘evolution’. He recently told the ABC that “We want to reduce emissions and do the best job we possibly can and get better and better and better at it. I want to do that with a balanced policy which recognises Australia’s broader national economic interests and social interest.”

“In the years ahead we are going to evolve our policy in this area to reduce emissions even further and we’re going to do it without a carbon tax, without putting up electricity prices and without shutting down the traditional industries upon which regional Australians depend for their livelihoods.”

Wonderful stuff for a negative election campaign but not much use in the real world. For instance, in the EU carbon dioxide emissions fell by 22% between 1990 and 2017 while the economy grew by 28% – all under policies Morrison abhors. An influential paper, The Return of Nature by Jesse Ausubel in 2015, demonstrated that consumption of the sort of commodities Morrison is keen for us to continue exporting will start falling as the nature of industry and consumption changes and that we need to plan for a transition.

While many agricultural practices have been environmentally destructive much modern agriculture is becoming so productive that there will be many opportunities to return land to nature. All these issues have been discussed in Andrew McAfee’s More from Less and perhaps the PM should take some time off from consulting biblical injunctions and read the book.

Nevertheless, putting aside the nonsensical nature of Morrison’s statements – let alone the Emile Coue every day, in every way, we’re getting better and better mantra beloved of those who really, really believe in self-improvement and the uplifting value of faith – the statement both defines some major constraints on what Morrison might do and gives a pointer to what he could do.

Indeed, the logical outcome of the constraints is that the Government will probably ‘evolve’, expand or replace its existing Climate Solutions Fund – the successor program to the failed Emissions Reduction Fund – or create something new but similar.

The end result will inevitably be another example of how modern Liberal-National Governments distrust markets (other than artificial asymmetric ones which allow private providers to exploit the aged, technical students, those with disabilities and others) and favour interventions which subsidise the usual suspects – rural producers, irrigators, power generators, resource companies and others – in the form of tax expenditures or direct funding rorts.

But before considering what Morrison might do it is worth looking at what successive Liberal-National Governments have done and whether it worked or not.

The Government says; “On 25 February 2019 the Australian Government established a Climate Solutions Fund to provide an additional $2 billion to continue purchasing low-cost abatement, build on the success of the Emissions Reduction Fund and continue the momentum to reach Australia’s 2030 emissions reduction target.”

“In 2014 the Government invested $2.55 billion in the Emissions Reduction Fund to boost agricultural productivity, support jobs for Indigenous communities, improve biodiversity and water quality, and reduce greenhouse gas emissions.”

What it didn’t say was that little of this worked, as Ian A. MacKenzie, Senior Lecturer in Economics of The University of Queensland has demonstrated, in arguing that the program should not be continued.

Even the Australian Financial Review has focussed on the ERF projects which failed – a proportion which would suggest to any sensible organisation, let alone a responsible government, that this is not a strategy worth pursuing.

It has also said it would look at subsidising new coal-fired power plants to generate ‘cheap’ electricity. This would also be a failure like the ERF as the state of the market and the reluctance of investors to get involved means that such a policy would be impossible to implement without massive government subsidies.

All in all – unless Morrison risks a major party split – the likely scenario is something like the ERF or the Climate Solutions Fund re-branded for the third time. They could of course reconsider the NEG but the internal political risks would be enormous even if this was the least worst solution.

The common denominator of all these options is that – rather than using the market – they rely on subsidies resulting in a rush of pigs to get to the trough and which would require accounting worthy of Bernie Madoff to keep the budget in surplus.

Meanwhile, as Australia’s tragic summer has shown failure to address the problem will impose a massive and growing social, health and economic cost on the country.

The tragedy is that it could all have been different. A carbon tax could now have been having further positive impacts on emissions if Abbott had not destroyed it with the zeal of a mediaeval witch-hunter.

We could also have had substantial financial resources to fund major transformations – even the odd subsidies – if we had not squandered the national good luck of the resources boom.

While the Government celebrated the fact that we have now surpassed Qatar as the world’s biggest LPG exporter hardly anyone other than Michael West (and certainly not the ALP which was complicit in the stupid policy) mentioned that the return to Australia is minimal after tax and other credits. With any reasonable tax regime we would have netted billions of dollars.

Addressing multinational tax evasion through tax havens (even if that would upset Rupert Murdoch) would have provided us with even more community riches.

Equally, while the Government says it will increase productivity by cutting red and green tape, the impact of poor regulation of electricity distribution increases prices and continues to deliver to investors a system which the tycoon Li Ka-shing has described as the most generous investment returns he has ever obtained. That is probably one set of regulations which won’t be addressed – on some dodgy grounds such as alleged sovereign risk.

So more financial resources, cheaper electricity and lots of other goodies – just by following some sound market-based policies rather than ideological obsessions – might mean we were getting better and better in every way.

We will find, however, that Morrison and his staff have not changed their spots. Each day on their way down this path there will be all the daily things which are designed to make it appear the government is doing something: announceables, important meetings, photo ops and all the other tactical things he and his staff cannot seem to give up and which are infuriating the public. A strategy and some policies might work better. After all the public is tired of repeats and same same sequels and wants something new.

Noel Turnbull is retired and blogs at http://noelturnbull.com/blog/

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Noel Turnbull is a blogger who has had a 40-year-plus career in public relations, politics, journalism and academia.

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3 Responses to NOEL TURNBULL. Morisson has rent seekers salivating.

  1. Avatar Ken Oliver says:

    It’s tragic. Though it is a tragedy repeated in many other countries; humans really are incredibly shortsighted.

    You mention a carbon tax. But an ETS with tradeable quotas is a better idea for several reasons, one of which is precisely that they create rents. When Clive Palmer holds a shedload of tradeable emission permits he’ll be pushing the government to limit supply of those permits (ie cut carbon emissions), just as taxi drivers try to limit the number of taxi plates. The political economy of an ETS is far more favourable than that of a tax.

    If you’re going to make rorts make sure the rorters have the incentives you want.

  2. Avatar Max Bourke AM says:

    As someone who has been involved in various aspects of agriculture much of my life and indeed started, then closed down because John Howard would not sign the Kyoto Protocol, the first “carbon farming” business in Australia, let me assure you the rent seekers in this space have so many potential rorts available it will make managing the waters of the MDB look like small beer! Just examine scientifically some of the ‘schemes’ for carbon soil sequestration for a start.

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