More than 130 years ago, socialist dreamer William Lane ventured to Paraguay to establish a “New Australia”.
He failed.
On Wednesday at the National Press Club, two of our most esteemed econocrats will outline a latter-day utopia on home soil: driving The Superpower Institute to change the narrative and ambition on decarbonising the economy.
Ross Garnaut and Rod Sims aren’t radicals like the forlorn Lane, but many will dismiss the grandeur of their framework as a foolishness of a similar kind.
Their track records and post-job security provide the political and professional cover today’s assorted chiefs could not claim.
Dealing with the core issues behind the energy transition – for the budget, managing inflation, driving innovation, maximising retirement savings – is what keeps top-paid officials, CEOs and fund managers awake at night.
As I understand it, Garnaut and Sims are spruiking strategic industry policy to hasten the development of industries that can drive the energy transition and then be of a scale to profit from it decades down the track, funded by a Carbon Solution Levy on fossil fuel producers here and abroad.
They believe this tool will not only drive down emissions here to meet our obligations but we’ll punch above our weight by supplying green metal, and other products, to the world
Context is everything. We’ve lived through the climate wars. Australia is committed to 2030 Paris targets, trying to ramp up renewable energy sources, and must reach net zero by 2050.
Having ditched a market mechanism to price emissions, as global economic agencies have urged us to use, we’re in the territory of second-best.
Or third or fourth or worse.
One thing clear from the home-grown climate edifice of acronyms, mechanisms, and off-budget money pits is taxpayers and governments are going to be at the heart of reaching global targets.
America changed the game via the Inflation Reduction Act, offering mammoth subsidies to suck in capital for renewables from the rest of the world.
You can stand and watch – at the horror for competitors and terror of what the IRA will do for US deficits – but at some point you have to act. Garnaut and Sims declare it’s time.
They argue the invariably politically toxic CSL, set at the European carbon price, is the market-mechanism we’ve been waiting for and need ASAP.
It would embed a green-premium into our “zero-carbon goods” in the global market.
As well, the CSL would generate a lot of revenue to reduce the budgetary cost of developing many flash new industries and infrastructure.
The CSL’s retail bonus would subsidise the cost of fuel for road users and electricity for households and business.
In a macro sense, they claim it would lead to lower inflation and interest rates.
They say the export of zero-carbon goods “can underpin a long period of high investment, rising productivity, full employment and rising incomes in Australia”.
In perhaps their greatest leap of faith, this great big new tax on everything carbon may look like a political doomsday cult but the alternative is worse: national decline, a poisonous bequest to our grandchildren and shirking our global duty.
To build this superpower we’ll have to devote 5 per cent of national income, or $125bn in today’s dollars, or more for several decades – a permanent mining investment boom.
And it will require the rarer and enduring political consensus that’s behind, say, Medicare or superannuation.
Will anyone sign up to this brave net-zero New Australia?
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