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Episode Transcript:
Are the Liberals allowing the Nationals to punch them in the face by ditching a net-zero carbon emissions target that remains popular in the urban seats they need to regain to form government? Hasn’t this just put attention on their internal divisions when they should be focused on Labor’s failure to retain Australia’s traditional cheap energy advantage? Or have they picked the moment when global expert and popular opinion is moving against the 2050 target to minimise global warming?
Perhaps all of the above. Of course, it’s highly unlikely that Labor’s existing climate and energy policy will meet its emissions reduction targets for 2030. 2035 or 2050. It’s hard to imagine how the world’s big emitters, like China, the US, India and Russia, will reach net zero by 2050 or soon after. And the clean energy transition of Australia’s fossil fuel economy is proving to be more expensive than promoted.
As the CIS energy team has explained, the cost of electricity seems to increase, not decrease, as the renewables share expands. The task is so challenging, it doesn’t make sense to limit the supply of gas to help back up unreliable renewables or to ban the use of zero-emissions nuclear power. Surely, everything should be on the table. One question is why climate policy is more fraught and has claimed so many more political victims than in other developed economies.
My hypothesis is that it stems from the guilt complex of a highly-urbanised nation that derives its affluence from a fossil fuel-based economy. That would suggest, however, that the loss of Australia’s cheap energy advantage is yet to be fully priced into the political market. The steel works and aluminium, copper and lead smelters now at risk of falling over were built in the 1960s, ‘70s and ‘80s on the back of Australia’s cheap coal-fired electricity. Among other things, this competitive energy advantage helped sustain Australia’s high wage economy.
Later today, I’m due to deliver a speech, Confessions of an Industrial Relations Reporter, at the annual conference of the HR Nicholls Society in Melbourne, harking back to my days as a cadet journalist in the 1970s. I’ll argue that the loss of this cheap energy advantage will put pressure on Australia’s uniquely-prescriptive industrial relations laws, including the award system with its thousands of different job classifications, pay rates, penalty rates and allowances.
It’s no longer a problem of old-fashioned union strikes driving double-digit inflation and high unemployment. It’s more about a system based on regulating a supposed inherent conflict between employers and employees rather than on encouraging a joint interest in creating more productive workplaces. As the former ACTU vice president and now Fair Work Ombudsman Anna Booth (above) said in 2012, Australia’s workplace system “is essentially an attempt to institutionalise conflict, not to forge productive workplaces”. This workplace regulation has become more intrusive, not less, since then.
Like the loss of cheap energy, the perverse result will be to make it more difficult to sustain Australia’s over-regulated high-wage structure, which will become more apparent as the economy continues to under-perform.