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Don’t sacrifice workers on altar of climate change

By Jeremy Gilling, John Muscat and Rolly Smallacombe - posted Wednesday, 6 December 2006


While progressive commentators hate to concede that Australia emits less than one per cent of the world’s carbon, they love Stern’s estimate that it will cost one per cent of global GDP to avert disaster. This sounds trivial. When apportioned to individual domestic economies, however, the costs of Kyoto are substantial. Several studies assess slower growth or contraction should we adopt Kyotoesque caps, taxes and emission (or permit) trading schemes. Last July, the Australian Bureau of Agricultural and Resource Economics (ABARE) estimated that should we reduce emissions by 50 per cent below 1990 levels by 2050 - a Kyoto target - our GDP in 2050 would be 10.7 per cent lower than otherwise.

Gore’s film is devious on this score. Its all too brief treatment of the economic issues surrounding climate change dodged the 800-pound gorilla - Kyoto means economic dislocation. The Sydney Morning Herald’s economics editor, Ross Gittins, is one greenhouse believer who does not fudge the economic downside:

… depending on how you go about it, achieving a big reduction in emissions could involve significantly higher costs to consumers and losses of economic growth and jobs. The economic risks are heightened for Australia because we're such a big exporter of fossil fuels, particularly natural gas and coal, as well as that “congealed energy” known as aluminium. Were we to get tough with our energy-dependent export industries before other countries, we could simply drive them offshore.

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The price for stunted growth is always paid by the same people - blue collar or unskilled and semi-skilled workers, their families and their communities. They are the expendable fodder of progressive zeal. Blue-collar workers stand to suffer across the whole economy, but damage would be concentrated in sectors like mining and power generation.

The coal industry employs 25,000 directly and many more indirectly. It contributes around $12.5 billion to our GDP per annum. Suburbs and regions living off these industries - the Hunter region of NSW for example - would face a grim future. Environmentalists get off on punishing corporations, but it is workers who cop it in the neck. Of course, Stern asserts that short-term pain is necessary to avoid long term cataclysm. But that assumes his forecasts are accurate, and that his remedies are workable and necessary. Kyoto’s record doesn’t inspire much optimism.

How magnanimous of our green-tinged elites to risk thousands of workers for a symbolic gesture.

Despite the media frenzy, there is a better way. In the real world, each country will fashion a policy framework adapted to its own needs and conditions. The common objective should be transition to a lower emitting energy sector with a minimum of socio-economic dislocation. In Australia’s case, Kyotoesque measures are tantamount to using a jackhammer to crack a walnut.

Actually, Stern’s views are more nuanced than the media coverage suggests. Speaking on ABC Radio National’s breakfast program on November 3, Stern said: “You can say that all coal-fired power stations in Australia after some date should be carbon capture and storage. You can do it by taxing, you can do it by carbon trading, you can do it by regulations and standards. But people have got to have an incentive to use these new methods or many of them would not do so.”

Regulations and standards? This raises the interesting question of why environmentalists, of all people, insist on a so-called market solution. If the virtue of markets lies in their efficient allocation of resources, emissions trading regimes achieve the opposite. Through government intervention, they distort otherwise efficient markets for non-economic ends. Stern claims global warming represents "market failure”.

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So why must we address the issue with the oppressive apparatus of a phoney market? Can it be that anti-industry environmentalists are more interested in forcing a transformation of social values than cutting carbon emissions?

In one of the most sensible contributions to this debate, Robert Samuelson was spot on: “The trouble with the global warming debate is that it has become a moral crusade when it’s really an engineering problem.”

The real, as opposed to the symbolic, key to reducing carbon emissions lies in the successful approach to other forms of airborne pollution over recent decades: the development, application and diffusion of new technologies.

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First published in The New City, a web journal of urban and political affairs in November 2006.



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About the Authors

Jeremy Gilling is a co-editor, along with John Muscat, of The New City, a web journal of urban and political affairs.

John Muscat is a co-editor, along with Jeremy Gilling, of The New City, a web journal of urban and political affairs.

Rolly Smallacombe is a co-editor, along with Jeremy Gilling and John Muscat, of The New City, a web journal of urban and political affairs.

Other articles by these Authors

All articles by Jeremy Gilling
All articles by John Muscat
All articles by Rolly Smallacombe

Creative Commons LicenseThis work is licensed under a Creative Commons License.

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