The Australia Institute: climate wreckers

30 August 2018

This opinion article by Jennifer Westacott was published in The Australian Financial Review on 30 August 2018.

It’s important that groups like the Business Council are clear on the policies that matter to all Australians – such as education and skills, tax reform and of course energy.

I don’t usually like to engage tit-for-tat but when our critics, who refer to themselves as “think-tanks”, verbal our positions and make demonstrably misleading claims, it’s important to set the record straight.

In response to yesterday’s opinion piece on climate change policy by Ben Oquist from The Australia Institute, here are some facts about the Business Council’s position on energy and climate change policy.

The Business Council believes unconstrained climate change would have serious economic, environmental and social consequences for Australia.

And that’s why we have consistently supported Australia ratifying the Paris Agreement.

We strongly support the implementation of the National Energy Guarantee (NEG) as a durable mechanism to reduce emissions in the electricity sector whilst also prioritising the affordability and reliability of our energy system.

We support a technology neutral approach to energy generation. One fuel source should not be favoured over another.

We must stop trying to pick winners, even the playing field and allow the market to determine the most cost-efficient, reliable and clean portfolio of energy generation.

And finally, the Business Council considers an economy-wide emissions reduction target of 26 per cent below 2005 levels by 2030 a sensible and appropriate starting point. There has been little analysis of the economic cost of adopting a 45 per cent target.

We believe it is excessively risky to adopt such a target without:

  • an understanding of the suite of policies that would deliver this abatement, including the treatment of emissions-intensive trade-exposed industries;
  • the range and cost of technologies that will be available to reduce emissions; and
  • the availability and price of international permits.

In contrast, The Australia Institute has failed to constructively engage in the development of climate change policy time and time again.

These critics decried the NEG at every opportunity – dismissing it as “ineffective” – and called the CPRS “pointless”.

They have spread spurious claims that the NEG would result in “no investment in further renewable energy generation after 2021,” when, in reality, there is nothing preventing investment in new renewable generation provided it is the most cost-effective form of generation to meet demand.

For an organisation that professes to fight for low-income earners, it should recognise that the bottom fifth of households spends four times more than the top fifth on electricity and gas, as a share of their disposable income.

Sniping from the sidelines might boost your public profile, but it won’t serve those people sitting at home today wondering how they’ll pay their next power bill.

The Australia Institute also misrepresents economic modelling to support their claims that increasing the emissions reduction target will not harm the economy.

Suggesting that the 2015 modelling undertaken by former RBA board member and renowned economist Professor Warwick McKibbin found that the costs of a 45 per cent target would be minor, is simply false.

Just last year Professor McKibbin rejected the claim, saying, “If you go for a steeper target, you get an increase in investment for a couple of years because you have to rebuild the system — it leads to a GDP gain upfront. But by 2030, you’re well and truly worse off.”

If the Australia Institute has itself modelled the effects of a 45 per cent emissions reduction target they should make it public, so that the community can see what effect that would have on energy prices on households and businesses, or the Australian economy more broadly.

But why let the truth get in the way of a good story?

If the Australia Institute wants to be taken seriously it should spend more time playing the ball, not the man.

The Business Council has constructively engaged in the debate about and development of energy and climate change policy for more than a decade.

Australians expect power to be delivered when they want it. They expect it to be affordable. And they want to see action on climate change.

Solving these three challenges is not simple and it requires mature participants to come to the table to find a workable solution. The Australia Institute should focus its energy on this rather than wasting time blaming the Business Council.

Jennifer Westacott AO is the chief executive of the Business Council of Australia


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