New climate deal needed for investment confidence

During the election campaign The Australian drilled down into Labor’s climate change policies. While many in the media world were entranced by the “vibe” of huge cuts in emissions, radical renewable energy targets and “desire” to transform to electric the nation’s vehicle fleet, we asked — and kept asking — some basic questions. How much would Labor’s policies cost? What effect would they have on jobs and economic growth? Bill Shorten dodged and weaved, hoping to win a mandate for bold action — by 2030 reducing emissions by 45 per cent on 2005 levels and having 50 per cent of power from renewable sources such as wind and solar — without the nuisance of costing this energy revolution. First Mr Shorten said there was “no cost difference” between Labor’s climate policy and the Coalition’s more modest abatement target of 26 per cent to 28 per cent under the Paris Agreement.

Presented with modelling on the economic costs of Labor’s proposed cap and trade system, Mr Shorten simply rejected the exercise. Then he said it was not possible to put a single price on the cost of Labor’s emissions reduction target. Certainly it’s a complicated task, utterly dependent on key assumptions, such as the so-called “abatement curve” and proportion of international permits required to hit targets. Mr Shorten then sneakily tried to reframe the question, asserting our “economy will continue to grow”. Yes, but how much against the baseline scenario? Bizarrely, Mr Shorten used Big Macs as a metaphor to explain greenhouse gas reductions. Finally, he threw up his hands and settled on the vibe, arguing the “cost of doing nothing” was far greater than the cost of acting on climate change.

Two weeks before polling day we said Labor needed to level with voters on climate policy: “Mr Shorten must explain there will be short-term job losses, rises in wholesale electricity prices, higher costs to employers and a hit to the budget.” He fudged it and lost. Voters outside the “goat-cheese circle” of urban areas turned against Labor, especially in regional towns and Queensland. As we reported in August, this electoral self-harm was noted by influential internal lobby group the Labor Environment Action Network. LEAN told the ALP’s post-election review the party must reconsider its climate change policies and how they were communicated. One of the key issues identified by LEAN was the party’s inability or refusal to put a price on its climate change action plan. “It couldn’t say how much it would cost, where the money was coming from or what economic dividend it would deliver or save. It is basic Australian politics — how much, who pays, what does it save. We had no answers.”

In a speech on Wednesday, opposition resources spokesman Joel Fitzgibbon called on his party to reach a “sensible settlement” and adopt the Morrison government’s 28 per cent emissions reduction target. He argued such a goal would be a “meaningful achievement” and allow Labor to refocus its attack on the government’s failure to meet its Paris targets. Given it has forfeited three years in power on the road to 2030, 45 per cent is beyond Labor’s grasp. Mr Fitzgibbon said if it could demonstrate the lower target was being met without damaging the economy and destroying blue-collar jobs, Labor could more credibly make the case for bolder 2050 targets. A new deal, he added, could help to restore investment confidence and possibly lead to lower energy prices.

A pragmatic man from the Hunter Valley, Mr Fitzgibbon is one of the few Labor MPs from outside the cities and suburbs. Naturally, the Greens warned of impending doom if Labor changed tack, while Energy Minister Angus Taylor welcomed a cross-party consensus. It’s a pity opposition climate change spokesman Mark Butler immediately slapped down his NSW colleague’s ideas as a breach of the Paris Agreement. Mr Butler says the 2016 treaty is a bedrock position for his party and the government’s target does not reflect the Paris principles. We know these principles are a movable feast in the hands of politicians and officials. Perhaps Labor is still hooked on the vibe, which can take it only down the climate rabbit hole along with the Extinction Rebellion clowns and purist Greens, who’ll always be an impotent protest outfit. But a party that aspires to government needs to embrace what’s possible. As Mr Fitzgibbon argues, if the party is to win office, Labor MPs must be “realists, not idealists” on emissions.