As history proves, change is inevitable and we will thrive

Adani’s Rugby Run solar farm in Moranbah, central Queensland.

For more than a century, Australia’s main export was wool. The wealthiest Australians were woolgrowers, and wool accounted for fully half of exports in 1950. The nation rode on the sheep’s back, with the health of the economy closely linked to the global wool markets.

The surge in wool prices during the Korean War created a terms-of-trade boom, enriched country towns and created currency headaches for the Reserve Bank. As late as 1970, wool and wheat constituted half of Australian exports by value.

Today, these two commodities account for less than 2 per cent of our exports. Instead it is minerals and energy that dominate our export trade. Iron ore, coal, natural gas and gold together now make up around half of our exports. The breakneck growth and industrialisation of the Asian economies to our north have been the drivers of our resources sector.

Tourism and education, sectors almost unknown in 1970, now account for two of our top six exports. The iron ore price in particular drives our terms of trade, the value of the Australian dollar and the budgets of state and federal governments.

We still produce and sell wool, and it provides a livelihood for many Australians. But it does not dominate our balance of payments in the way it once did.

What happened to wool? Nothing spectacular. Nobody outlawed wool. There was no global wool boycott. But it fell victim to technology and changing consumer demand. New synthetic fibres emerged, of which oil was the main ingredient, that were cheaper than wool. Heated offices and homes lessened the demand for woollen clothing.

Open and trade-oriented economies like Australia are in the process of continual change. Just as our economy looks nothing like it did in 1970, so too it will look vastly different come 2050.

Changing global demand, new customers and new technologies elevated the importance of our resources sector, just as they diminished the importance of the wool sector. And it is these same forces that will reshape our economy.

This is not a question of policy. Australia does not get a say over how these global forces operate. This is just a statement of fact. And one of the most profound global forces reshaping the world right now is the energy transformation under way as the world hastens towards decarbonisation.

In terms of reshaping our economy, it is likely to be at least as profound as the information revolution, which has created the engine rooms of the modern economy. This energy transformation has immense potential for Australia. We have huge comparative advantages and opportunities in a low-carbon global economy. As a recent report by Beyond Zero Emissions shows, “green” exports such as clean hydrogen, green steel and green aluminium could be worth some $333bn to Australia by 2050.

This is why the government’s Technology Investment Roadmap is focused on ensuring Australia secures a first-mover advantage in these technologies, by supporting the early research and development needed to support commercialisation.

But equally, if we end up on the wrong side of these historical forces, or try to pretend or wish them away, it will jeopardise our future prosperity and living standards.

Australia’s current export mix is emissions-intensive. Unless we take the steps now to decarbonise these sectors where we can, and support the emergence of new sectors, we leave ourselves dangerously exposed in a decarbonising world. Our success as a nation has been inextricably tied to our pragmatic recognition of evolving global circumstances. We are astute readers of the global weather, and have shown ourselves willing to tackle thorny domestic issues when national interest demands it.

It was the Menzies government in 1957 that opened the doors to trade with Japan, when memories of World War II were still raw in the minds of returned Australian servicemen, and when many wanted to see Japan contained. The Australia-Japan Commerce Agreement has been a cornerstone of Australian prosperity and exports since.

The Holt government dismantled the White Australia policy in 1966, again in the teeth of domestic opposition, because it recognised Australia had to forge a future in our immediate neighbourhood of Asia. Australia has since gone on to become one of the most successful multicultural nations on Earth, with our pluralistic society a source of social and economic strength.

The debate over net zero by 2050 is no different. The world is already heading in this direction, whether Australia elects to do so or not. We can either get on board, or we can get left behind.

Australia should adopt the target of net-zero emissions by 2050, embrace the inevitable and focus our efforts on supporting the technology, research and development that will ensure Australia prospers in the energy industries of the future.

Dave Sharma is a former diplomat and the Liberal member for the seat of Wentworth.