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Business-environment conflict now intense, Garnaut says

Economist Ross Garnaut has predicted “trench warfare” over development projects, given the influence business now has with…

Economist Ross Garnaut says there is need to reconcile business, economic and environment objectives. AAP/Lukas Coch

Economist Ross Garnaut has predicted “trench warfare” over development projects, given the influence business now has with government.

Delivering the John Freebairn lecture in Melbourne, Garnaut said it had become difficult to place scientific assessments at the centre of policy in Australia in recent times.

“Big business has never been so directly influential with government and senses that it might be a winner which takes all on environmental matters,” he said.

“The difficulty is compounded by an extraordinary fact - that the four business leaders who have been given the most senior advisory roles to the current Commonwealth government share a strong view that the science is wrong on the most important of the environmental issues under current discussion – climate change.”

Garnaut did not name the business leaders, but was obviously referring to Dick Warburton, heading an inquiry into the renewable energy target; David Murray, in charge of the financial system inquiry; Maurice Newman, chairman of the Prime Minister’s Business Advisory Council, and Tony Shepherd, who headed the Commission of Audit.

“We can expect trench warfare over development projects, delays, increases in the supply price of investment and damage to all relevant interests until this phase of Australian management of the interface between the environment and the resource sector is brought to an end,” Garnaut said.

Conflict between business interests in the energy sector and environmental values was now intense over climate change, the application of unconventional gas production technologies, wind power, geo-sequestration of carbon wastes and local environmental damage from coal production and export.

Garnaut – who was advisor to the Labor government on climate - said the Abbott government’s move to repeal the 2011 carbon laws and replace them with an ineffective Emissions Reduction Fund did not make sense to anyone who understood the implications of modern science on climate change.

Senate consideration of the repeal bills was now bound to be caught up in disputation over the budget, he said.

The disputed budget tax increases and spending cuts that would be at the new Senate’s mercy totalled $12-18 billion over four years. Retaining carbon pricing and rejecting the government’s Emissions Reduction Fund would reduce the deficit by $6-7 billion in 2014-15, and a total of $6-12 billion in the following three years.

“By coincidence, retention of carbon pricing would more or less precisely fill the gap from Senate rejection of some budget measures,” Garnaut said.

“To put it another way, Australia can stay within the boundaries of fiscal responsibility over the next four years as defined by the government in this year’s budget by retaining carbon pricing rather than the array of changes that are at risk in the Senate.

“Which set of measures would be better in their effects on the economy, income distribution and Australia’s contribution to the global effort to reduce the costs of climate change?”

Garnaut said that if the carbon laws were repealed we could expect less effort to match the increasing ambition of the rest of the world.

“We can expect reversal of the recent tendency for total greenhouse gases in Australia to fall and emissions from the electricity sector to fall rapidly,” he said.

“Failure to match the efforts of other countries or to meet even weak targets will have negative consequences in international relations. We will be working strongly against one of, if not the foremost of, the international diplomatic objectives of the President and Secretary of State of the United States of America.”

Garnaut said the rest of the world was “moving awkwardly towards much less carbon-intensive economic activity just as Australia is talking about moving the other way.

“This has the potential to generate tensions between Australia and important international partners and also to separate us from new opportunities in a low carbon world.”

He said Australia needed to restore broadly supported arrangements for reconciling business, economic and environment objectives.

“Reconciliation requires honest science in a central place in official policy.”

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26 Comments sorted by

  1. Brad Farrant

    logged in via email @hotmail.com

    Thanks for reporting on this excellent speech Michelle.

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  2. Thomas Goninon

    Retired school principal

    Thanks for this excellent article Michelle. A sensible, rational debate about a way forward in regard to climate change and big business will never happen while the current PM and his party are in office.

    Evidenced based decision making is an anachronism to our current government.

    It is hard to understand that they have any concern for the state of the planet that their children and grandchildren will inherit.

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  3. Peter Frey

    Project Officer

    Consumer confidence is plummeting - so Big Business and Joe might want to reflect on the social chaos they are promoting on the economy. Something they haven't so far done.

    I don't think that confidence is coming back any time soon.

    Of course, it will be our fault, not the fault of a government with no mandate.

    This story has a long way to go yet Joe and you and the government will never, never be forgiven - Australia's first betrayal by a political party that will, by the time you have finished with us, be so deep, so devastating and long-lasting.

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  4. Ronald Ostrowski

    logged in via Facebook

    Investment in the filthy fossil fuel industry is HIGH RISK given global trends toward renewal industry investment. Despite the gross ignorance in Australia, in light of the fact that an LNP Government was elected to burn and destroy the economy, the environment, scientific endeavour, and a fair social system, our Super Fund managers should lead the way in taking investment dollars away from the decline in fossil fuel industries.

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    1. Neville Mattick
      Neville Mattick is a Friend of The Conversation.

      Grazier: ALP Member at A 4th Generation Grazing Station

      In reply to Ronald Ostrowski

      Ronald I reckon you are correct.

      I fear for the food supply; given the exponential changes I have observed in the landscape in the last fifty years.

      The large scale wind farmers have packed up and left, other projects have developers' sitting on their hands yet again due to Government - appalling for Australia in 2014.

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    2. Felix MacNeill

      Environmental Manager

      In reply to Ronald Ostrowski

      Maybe, for once, those much-hidden-behind fiduciary responsibilities - particularly for fund-managers - might actually make them divest from toxic and soon-to-be-stranded industries like coal and seek instead to invest in new growth industries with a real future, such as renewable energy.

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    3. Mike Hansen

      Mr.

      In reply to Felix MacNeill

      Given the way Tony Abbott's credibility has been shredded by the budget, I wonder if historians will look back on 2014 and designate it "peak denial".

      Compared to the changes to the pension age or the medicare co-payment, the carbon tax is relatively popular.

      "Repealing the carbon tax is supported by a narrow 49-46 margin, but repealing the mining tax is opposed by 56-37."

      "55% opposed the Medicare co-payment with 35% supportive. A massive 69% opposed raising the pension age to 70, with just 21% supportive."

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  5. Kathryn Dawson

    Project Officer

    Why isn't the ALP concentrating its media effort in demonstrating the bloody-mindedness of the Abbott/Hockey budget by abandoning all the positive work, including current and potential investments, in addressing the climate issue.
    Given the recent polling - repealing the Carbon 'tax' is not the number one issue on Australians' minds as Abbott and Co would have us believe.
    If only the new version of Clive could be convinced repealing the Act is contra to the battlers' best interests, maybe this would be another of the Coalition's destructive, vindictive ideological acts that can be thwarted.

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    1. Ronald Ostrowski

      logged in via Facebook

      In reply to Kathryn Dawson

      Fair question. The Abbott Government is a gift which keeps on giving whilst Labor have yet to adapt a clear narrative and communication strategy to capitalised on the sense of betrayal in the broader community. I sense that while Labor fail to understand the vulnerability of the broader electorate to false slogans, fear and smear campaigns, Labor don't. I sadly predict that the LNP's strategy of portraying Labor as responsible for this confected budget emergency will take hold at the next election and see Abbott or another LNP frontbencher become PM. The LNP have a knack to rewrite history while Labor have no clue as to how to defend it.

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    2. Jane Middlemist

      citizen

      In reply to Ronald Ostrowski

      Ronald, I understand why you say that "The LNP have a knack to rewrite history while Labor have no clue as to how to defend it."
      But I think the MSM, (particularly Murdoch's influence over so much of the MSM) is making it difficult for progressive journalists to be "heard" by many of the population.

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    3. John Doyle

      architect

      In reply to Jane Middlemist

      Labor definitely needs some decent strategists. Their performances, actually for the Left in general, are well behind the 8 ball here.
      Dealing with psychopaths like TA is difficult enough already for "normal" people so a much cleverer strategic operator is called for.
      According to George Monbiot, there is a distinct plan afoot to delegitimise the "left" side.
      http://www.monbiot.com/2013/11/04/a-global-ban-on-left-wing-politics/
      It ought be clear by now Governments are in thrall to the international business community. These vested interests are intent on downgrading the sovereignty of individual nations. They are succeeding only too well.

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  6. Trevor Kerr

    ISTP

    If the 'plunder' setting is to be moderated, which comes first - a change in political leadership or a change in that business leadership coterie?

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    1. Michael Hooper

      Research Fellow at UNSW Australia

      In reply to Trevor Kerr

      Is there a difference between the political leadership and the business leadership? If Garnaut is right, then they are one and the same.

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    2. Ronald Ostrowski

      logged in via Facebook

      In reply to Michael Hooper

      Amen to that. I have heard enough from our own crop of business leaders to conclude that they do not measure up to world class benchmarks for astute strategic planning, innovation and creative and people management. They would not even reach the kneecap of a Semler or Bramson or Jobs as world class business leaders.

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  7. Dave Bradley

    logged in via email @yahoo.com.au

    Stranded Assets, listen and think http://www.abc.net.au/radionational/programs/bigideas/stranded-assets/5387738 This government is totally driven by their arguably corrupt connections with corporate greed, ( ICAC anyone?) Alternative energy must be suppressed until as much fossil fuel driven profit can be sucked out of the ground and released into the atmosphere. every tree every water aquifer is at risk until the world stops them from this ruthless carbon rush and the well the planet is at risk. Tony Abbott thinks "Climate Change is crap", Joe Hockey thinks "wind turbines are ugly" also listen to http://www.abc.net.au/radionational/programs/backgroundbriefing/2014-04-27/5406022 and find out why your power bills really went up and why solar panels on rooftops are being discouraged and may even be penalised.

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  8. Craig Somerton

    IT Professional

    Many of us here have been saying this for a long, long time. The disconnect between environment and business has been fomenting for years with business winning the war, to our collective detriment, ably supported by a government that seems hell-bent on ensuring their corporate backers are duly rewarded for their political support.

    At a time when our major customers are shifting away from fossil fuels, our short-sighted insistence on plunging deeper into coal and gas extraction stands completely…

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  9. Edwina Laginestra
    Edwina Laginestra is a Friend of The Conversation.

    Jack of all trades

    I'm pretty sure that every management degree and book says how you need divergent thinkers, devil's advocates etc in your meetings to cover all possibilities. Yet as chief advisors to government, we have a group of old men with fairly limited life experience (have a look at their bios) sitting round rubbing each others....egos. Those meetings must go really smoothly.

    I'm sure they have all used feedback mechanisms to adjust their actions when in their CEO or chair positions, eg increase profit would have stoked David Murrays ego while he ignored consumer and employee dissatisfaction, but surely Tony Shepherd would have got a bit of a slap in the face with the Lane Cove Tunnel farce (oh wait, didn't the government have to pay the difference in expected revenue?).

    I think they take the public as mugs or milk cows. And they have all shown total disregard of other indicators showing a worsening environmental and social situation, because they think we live in an economy.

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  10. Bruce Boyes

    Consultant

    This article, like many others I've read, suggests that the election of the Abbott government has suddenly plunged Australia into a dark age of anti-science and business control over government. Sorry, but that isn't true. The current situation is just another step in a gradual trend that began long ago.

    The previous Rudd and Gillard governments are painted as being comparatively progressive in regard to climate policy. However, as Philip Chubb reveals in "Power Failure", those governments were…

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    1. Ronald Ostrowski

      logged in via Facebook

      In reply to Bruce Boyes

      Maybe the markets may change tact and leave this fossil fuel burning investment portfolios and the nations and governments hanging out to dry. We can only hope. As I understand it, whilst Australia regresses on combating climate change, and consequently ignores great business opportunities in renewable energy industries, there is increasing acceptance of the impact of climate change by businesses and investors. Let's hope, at least for the planet's sake, even though, economically speaking, those who supported Abbott's ascendancy to power have doomed Australia's once bright future.

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    2. John Doyle

      architect

      In reply to Bruce Boyes

      Couldn't agree more with most of this. The evidence for business managed government is only missed by those who can't bring themselves to take note. The fiction that we are a democracy has been getting more and more threadbare for decades. It's been pretty obvious with increasing globalisation.
      I've seen a comment by George Ball [US ambassador to the UN in 1968] who advocated for multinational corporations to neutralise "obsolete" nation states.
      This is now seen in TPP and the like deals where…

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    3. James Hill

      Industrial Designer

      In reply to Bruce Boyes

      When the intermittent nature of renewable energy is matched by reliable, domestic scale energy storage devices and strategies, then those fossil fuel industries will become increasingly stranded.
      Businesses can act to have, as Adam Smith stated, "governments intervene in the market in their favour" or businesses can directly intervene in the market to buy up and keep out of the market any viable domestic scale energy storage devices which appear.
      This may be happening as we write.
      The failure of proponents of renewable energy, to understand and promote the role of energy storage in overcoming the intermittent nature of renewable energy, is making the job of fossil fuel companies to suppress such devices much easier.
      Hopefully some of those involved will begin to wake up to their own strategic deficiencies in this struggle for Australia's future.
      Support domestic scale energy storage, and protect it from market manipulation.

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    4. Sean Douglas

      logged in via email @hotmail.com

      In reply to Bruce Boyes

      Great commentary Bruce, and excellent refs, well done, it's rare around these parts. . re "Labor Govts ...were just pawns of all-powerful business interests" I agree, just add in powerful RW mining and other Unions too. Some inside the Govt and the back benches do not see things that way, but they were outvoted and out maneuvered during the internal 'debates' (not that they really have any challenging discussions among themselves that often anyway).

      But for balance, imho Rudd tried to set the…

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  11. Alice Kelly
    Alice Kelly is a Friend of The Conversation.

    sole parent

    Sadly we can continue this conversation every week. Ross Garnaut can still talk sense for those who care.
    But what will it take for mainstream journalists to do more than a bit of lip-pursing, then keep ignoring these issues.
    And when will business take a stand, rather than moving off-shore or remaining silent.
    We are all very let-down.

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  12. Ryan Farquharson

    Research Officer

    I think business is shooting themselves in the foot. The 'clean green' image of Australian produce will be tainted by our broader climate sins. As the rest of the world cleans up their act, won't Australian industry will be punished through trade mechanisms, or simply informed consumers choosing not to buy Australian?

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    1. Sean Douglas

      logged in via email @hotmail.com

      In reply to Ryan Farquharson

      "I think business is shooting themselves in the foot"

      I think they are happy to shoot their compatriots in the (metaphorical) head and not blink an eye.

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