No.13 …….Lucky Last

We have taken note of some readers’ wishes at least.  We have decided to slightly reduce the size of Express and will now attempt to restrict ourselves to 13 items/articles an issue. It is difficult because there is so much good material out there. So for the Lucky Last feature this week we draw on some sensible words from a politician past – former Coalition Leader John Hewson. He appeared on Sky News the other day and here’s a report from  the ABC, showing that party politics is not all it is cracked up to be. He also criticises the media for focusing on the colour of the political debate rather than the substance of the science. He has publicly put the proposition that “in a true carbon economy, where everyone understands their carbon footprint and is working to reduce it, and where the government’s target is something realistic like a 40% reduction by 2020 towards a 90% reduction by 2050, the introduction of a relatively ‘pure’ market based ETS will be substantially positive in terms of growth and employment”. Read More

By Online political correspondent Emma Rodgers

Former Liberal leader John Hewson has taken aim at Opposition Leader Tony Abbott’s climate change policy, accusing him of using fear to win over voters.

In an opinion piece for the ABC’s The Drum which denounces both sides of politics for “squibbing” action on climate change, Dr Hewson has also criticised the media for focusing on the colour of the political debate rather than the substance of the science.

Dr Hewson has urged both Mr Abbott and Prime Minister Kevin Rudd to show leadership on the issue instead of “wallowing in the colour and movement of grossly irresponsible politicking”.

“I am particularly disturbed by the way our current ‘debate’ on the challenge of climate change is unfolding,” he writes.

Dr Hewson’s comments come as today’s Nielsen poll in the Fairfax media shows voters prefer the Coalition’s policy over Mr Rudd’s emissions trading scheme.

Recalling having been “done slowly” by former prime minister Paul Keating over his doomed attempt to bring in a GST before the 1993 election, Dr Hewson says Mr Abbott’s strategy could work because it will gain media attention.

“The media fascination back in 1993 was in the colour and movement of my slow death,” he writes.

“To be clear, Abbott’s response is mostly political.

“While there is merit in soil carbon, tree planting, solar, etc, if they were to be well developed policies , as part of a more broad-based overall response, his strategy is the belief that you can frighten and fool most of the people, all of the time.”

In selling his policy to the public Mr Abbott has used the line Mr Keating employed in his campaign against the GST in which he told voters: “if you don’t understand it don’t vote for it”.

Dr Hewson says Mr Rudd has failed to counter Mr Abbott’s “scare campaign” with an adequate explanation of how the emissions trading scheme will work.

“Rudd has the resources of Government,” he writes.

“He should be able to expose a political fear campaign for what it is.”

The Government has the option of a double dissolution election on climate change, with its ETS legislation already having been defeated twice in Parliament.

But it has re-introduced the bills into Parliament and debate will continue today over the scheme, which puts a price on carbon and charges companies to pollute.

Mr Abbott’s alternative policy involves spending $10 billion over 10 years to encourage business and farmers to use direct action measures to reduce emissions.

Source: www.abc.net.au

Former Liberal leader John Hewson was also talking on Sky News the other day, confirming his genuine belief that climate change was very real and we can – and must – do something to deal with it. He has some strong views on how this country can deal with emissions on a much higher level than the Labor Government has even considered. Here’s what he wrote a year ago on Open Forum:

In my professorial days I used to tease my students, in an attempt to encourage them to think for themselves, to think beyond the text books, by asking them what particular conclusion they wanted to reach on some economic policy issue, and them claiming that I could build an economic/mathematical model to “prove” it!

I was particularly keen to ensure that their thinking was not constrained by any particular theoretical or model framework and to get them to understand the limitations of any particular models that they were working with.

In those days students, and their teachers, had become enamored with, if not addicted to, the “precision” or “science” of economics, and there was a danger that these “models” would become an end in themselves, rather than just a means to an end, simply a means to aid their thought processes. 

It was all too easily forgotten that the discipline of economics is as much an “art” as it is a “science”, and we are hoping to develop a “society”, and not just an “economy”.

Against this sort of background, I am of course disappointed by the recent climate change debate, and in particular the discussion about the likely consequences of a sensible and responsible set of targets for emissions reductions by 2020/2050, and the introduction of an emissions trading scheme.

Today, almost everybody has their own economic model which they claim “proves”, or at least “shows”, the mostly negative effects of an ETS etc. But all they have really done is prove my point that you can build a model to substantiate your conclusions, to show what you want to argue. They still have to demonstrate that such conclusions are sensible, reasonable and responsible.

They all mostly start with the assumption (and a model’s outcome is always predetermined by the assumptions, provided of course that the model is internally consistent) that the introduction of an ETS, which if effective simply puts a market price on carbon, must have a negative effect on economic growth and employment, the key point of their exercise simply being to demonstrate just how much negative.

However, there is absolutely no reason why we should start with a negative assumption. And in saying this, it is most important to recognize that it is really beyond the capacity of Treasury-type economic models to properly capture the effects of the development of significant new industries in this context.

I don’t have the time or space to demonstrate by way of a new model, but let me develop the argument by way of anecdote and personal business experience.

I start with the proposition that in a true carbon economy, where everyone understands their carbon footprint and is working to reduce it, and where the government’s target is something realistic like a 40% reduction by 2020 towards a 90% reduction by 2050, the introduction of a relatively “pure” market based ETS will be substantially positive in terms of growth and employment. The debate and onus of proof should therefore concentrate on just how positive.

Being involved with the National Business Leaders Forum on Sustainable Development for many years, six years as Chairman, and that Forum having brought the likes of Al Gore to Australia some five years ago in an attempt to stimulate debate on climate matters (alas somewhat ahead of our time), I became frustrated with the paucity of the business interest and skepticism and decided to get involved with a number of New Age climate response industries to satisfy myself of the significant and profitable(in time) business opportunities that would inevitably flow from an appropriate national response to the challenge of climate change.

I was, and in some cases am still, involved with the early development of alternative technologies for the treatment of household waste, energy efficient lightbulbs, biofuels including  the building of the largest biodiesel plant in the world, and green data centres , as well with as a host of proposed new technologies and businesses. I am also presently involved with a large carbon credit trader that is in the process, even in this recessed economy , of hiring some 2000 new staff in relation to its installation of home efficiency packages.

In every case the economic growth and employment consequences were substantial, and my limited experiences are just the tip of the iceberg of what I firmly believe will be a technological revolution, which will lead to a substantially new and significant industrial base to our economy.

The opportunity is there for us to grasp, or lose!

There are interesting parallels with the protection debate of the 80s and early 90s. The “old guard” industries lobbied governments to sustain or increase their tariff and other forms of protection, threatening dire growth, trade and employment consequences if they weren’t listened to.

True, some of these protected industries declined and, in some cases, disappeared, but only to be replaced by new ones, to the extent that our economy went into probably the longest period of sustained growth with historically low unemployment.

The point is that our present industrial structure and lifestyle is unsustainable. The challenge is how we most effectively make the transition to a “carbon economy” and maximize our long tern economic, business and lifestyle opportunities.

We simply must reduce our dependence on fossil fuels, dramatically improve our energy, soil, water and transport efficiencies, reduce our carbon emissions wherever possible, by developing new, more carbon efficient ways of doing things.

In these terms, we can learn much from the protection and other past debates particularly, I believe, about the most effective ways to cushion and facilitate the essential industrial transition with appropriate financial support, re training, etc, where perhaps it wasn’t done as well as it could have been in the past.

We also have a significant opportunity to lead the world in the development of some of these technologies with considerable export possibilities, the most obvious being clean coal technologies- but to refer back to my own experience, we are already doing it with alternative waste technologies.

The transition must be made. Time is of the essence! It’s not an issue where we can hope to play catch up! It’s not an issue that can be fobbed off to someone else’s watch!

Unfortunately, the climate change debate to date does not adequately reflect this inevitability, this urgency. Indeed, it’s dominated by blatant, short term vested interests and political game playing of the worst kind.

We all have an economic, social and a moral responsibility to do better!

Dr John Hewson is an economic and financial expert with experience in academia, business, government, media and the financial system. Dr Hewson’s business career, before entering politics in 1987, was as a company director and business consultant, including a role as Executive Director, Macquarie Bank Limited. Dr Hewson’s political career included seven years as a ministerial advisor and a further eight years as the Member for Wentworth. He was Shadow Finance Minister, Shadow Treasurer, Shadow Minister for Industry and Commerce and Leader of the Liberal Party and Coalition in Opposition for four years. Since leaving politics in 1995 Dr Hewson has run his own investment banking business and was, until December 2004, Member, Advisory Council of ABN AMRO, having previously been Chairman of the bank. He is Chairman to Osteoporosis Australia and KidsXpress. He is also Director of a number of other public and private companies. Dr Hewson also writes a regular opinion column for the Australian Financial Review. In February 2009 he will take on the role of Chairman of the GAP initiated Carbon Economy Taskforce.

Source: www.openforum.com.au