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Australia’s Tribal Climate Wars Sap Its Energy and Economy

Paul Kelly, The Australian

Australia is being convulsed by its contradictory identity: a fossil fuel-endowed nation enriched by its resources set against a middle-class moralism hooked on climate change action — an internal division that plagues the voting base of both Coalition and Labor.

Party values and voting loyalties are being trashed. As climate change activism turns into an anti-coal mantra buttressed by a finance sector unwilling to invest, the clash over competing economic interests and cultural values will provoke large-scale political disruption. Both Scott Morrison and Bill Shorten are trapped in these dilemmas.

Labor’s fidelity to immensely popular renewables highlights its alienation from coal and the wider industry as the CFMEU mining division in Queensland joins with the state’s mining industry to ­assault the Palaszczuk government over de facto sabotage of the Adani mine.

Shorten’s ability to hold together his contradictory political coalition is stretched to breaking point. Labor is entrenched as the renewables party in its astute alignment to harness the climate change vote and protect its progressive flank. But what works in middle-class suburbs cannot work in regional Australia.

CFMEU mining division Queensland president Steve Smyth warns that the union will fight the anti-mining activists ­because their campaign extends far beyond Adani, and will campaign against MPs including Labor candidates unless they back the job-creating venture seen as the trigger to open up more mines in the Galilee basin.

With Queensland a pivotal state in the national election, Labor suffers a twin liability: its disastrous resurrection of the border security issue and a regional revolt against its anti-coalmining progressive mindset. As the CFMEU attacks Labor for its turn against coal, the Greens increase the bidding game on Labor’s Left with MP Adam Bandt introducing the “termination” steps — a bill to prohibit thermal coalmining in the Galilee basin, thereby outlawing the Adani mine and a bill to phase out thermal coal ­exports by 2030.

Australia’s split character and polarised politics is beyond ­bizarre.

This is a country where much of the public turns against coal, our main export, returning $67 billion this year and helping to fund health, education and the return to budget surplus. It is evidence of a truly complacent country where significant opinion rejects its main export industry.

It is folly to think the Morrison government is immune. The climate change/energy policy disputes that have created havoc within the Coalition for a decade are far from settled. The government has no energy policy after the demise of the national energy guarantee. This week it launched an assault on the economic costs of Labor’s renewables policy, yet the government faces a critical test: does it include coal in the list of energy projects prepared by ­Energy Minister Angus Taylor and designed to be underwritten by government?

Will Morrison intervene to promote coal or back-off?

It is a decisive moment for the Coalition and Liberal-Nationals relations as it struggles to reconcile its conservative pro-mining, pro-coal communities with the climate change awareness of its wealthy support base in the inner suburbs of the capital cities.

The climate change debate, supposed to be about science, is besieged by cults. Witness the messianic Green New Deal in America that has taken hold in the Left of the Democratic Party or the populist conservative push in Australia in recent years for the government to finance and build a coal-fired power station.

The quest for climate change action is a contradictory amalgam of rationality and quasi-­religious faith that denies ration­ality. It comes with an ­inevitable cost of climate change action that is usually denied or exaggerated. A cogent policy geared to energy transition need not provoke a permanent war between coal and climate change commitments, yet Australia has proved unable to find this path.

The policy chasm between the Coalition and Labor undermines the energy sector and feeds an ideological clash that shows no sign of expiry. Shorten and Morrison face near-irreconcilable internal tensions fuelled by global developments: witness this week’s decision by the nation’s biggest coal producer, Glencore, to cap coal production at 2019 levels, a smart move, yet a smashing victory for the anti-coal movement.

It is folly to think political leaders are dealing with forces they can control. Competing regional interests and values are making this year’s federal election into a ­series of regionally based mini-elections, all of which are vital but demand contradictory responses, depending on the ­region.

Regional disparities in this country — over incomes, industry, climate change and cultural outlook — are exploding. What works in Gladstone is different from what works in Melbourne. Pro-coal central and northern Queensland has a different ethos to the progressive paradise of pro-renewables upper-middle-class Melbourne.

The old climate change debate about a carbon price is long dead. The stage has changed but the music is the same. With Labor now committed to an ambitious 45 per cent emissions reduction and a 50 per cent renewable ­energy target, this week the government launched the next phase of its campaign to document the economic and household costs being imposed by Labor.

Its weapon was the modelling report by former Bureau of Agricultural and ­Resource Economics head Brian Fisher showing Labor’s policy will see a fall in real annual wages of about $9000 a year by 2030 compared with a fall of $2000 under Coalition policy.

Shorten will be unswayed. Taylor, as Energy Minister, says Labor cannot be allowed to run a campaign without confronting the consequences of its climate change activism and the impact for every worker, miner, farmer and tradie.

“Which industries will Bill Shorten close first?” Taylor asks. “Will it be agriculture or aluminium, mining or manufacturing?”

The Fisher analysis says the Coalition’s 26-28 per cent targets mean a loss in GDP of about $19 billion compared with Labor’s targets that equate to a $144bn loss by 2030. The former means the economy would grow at 2.8 per cent a year over the decade and the latter a growth rate of only 2.3 per cent, compared with a rate otherwise of 2.9 per cent.

Labor, unsurprisingly, rejects the analysis. So far the government has hammered Labor’s targets for two years with little discernible electoral impact. The public likes renewables despite blackouts and price hikes. They blame the energy companies for high prices; they think renewables are a plus for emissions cuts and price containment.

The government cannot attack renewables as an option and says instead it aspires to technological neutrality. The focus of its attack is price but the related trick is what the government actually does in the sphere of reliability and price containment. Morrison once took a lump of coal into parliament but with the falling cost of renewables and rising financial risks surrounding coal, this is a shifting platform that bedevils the Morrison government.

There is one certainty the government must avoid: being trapped into a renewables versus coal contest. That is a sure prescription for defeat.

Cabinet ministers are divided on whether to include coal in ­Taylor’s final list of projects to be underwritten by government. The aim is intervention to boost new generation and competition into the market. Gas projects are certain to be picked. What about coal? Is the government prepared to commit and underwrite coal, thereby making itself into an election target of attack from Labor and the Greens?

The more Labor’s anti-coal prejudice looms large, the more the government may be tempted. But with Victoria the most difficult state for the Liberal Party, hoisting up the pro-coal flag would threaten electoral suicide in some progressive-orientated Melbourne seats the Liberals now hold.

The further reality is that Morrison and Josh Frydenberg have sorted their campaign strategy. Energy is not the priority. That strategy was on daily display this week — attacking Labor over tax and border protection. The key to any Morrison clawback is controlling the news agenda.

That means franking credits and borders.

Morrison must run on energy. The truth, however, is that energy cannot deliver as the vote-­changing issue he needs to win the election. Casting the government as a champion of coal offers some regional dividends, yet it is a national risk. The pro-coal message must be quarantined to selected areas, but how feasible is this?

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