Daily Archives: May 13, 2022

‘The Coal curse: Resources, Climate and Australia’s Future’ by Judith Brett QE 78

2020, 75 p. Follow up correspondence in QE 79 The End of Certainty, Katherine Murphy

My son will testify that I have about 50 Quarterly Essays on my shelf, most of which have not even been opened. I seem to put them aside thinking “Ooooh- I must read this after I have finished reading….” and somehow I never do. I was impelled to read Judith Brett’s The Coal Curse, released in 2020, after hearing her participation in Matt Bevan’s Australia, If you’re Listening podcast.

She started writing her essay just after Christmas in 2019, when our cities had been smothered in smoke and our newspapers carried those stark hell-red photos of people on the beach at Mallacoota, waiting for small boats to evacuate them. She finished writing it in May 2020, in the midst of our early coronovirus lockdowns. As the fires burned, she was angry. Ross Garnaut had predicted fires of this scale back in 2008 but Angus Taylor had returned from the Madrid UN-convened climate change conference, declaring that we should be proud of our climate change efforts.

I have written this essay in an attempt to do something constructive with my grief and anger, and my fear for our collective future; not just to fume and blame, but to try to understand.

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As a historian, she looked for explanations in the past – in those decisions and events that have shaped our present actions and future possibilities.

This is just a fancy way of saying that history matters, but it does shift our attention from the contingencies of events and personalities to structures and institutions. This essay is about the history of Australia as a commodity-exporting nation and its political consequences. Economic history is unfashionable nowadays. Economists focus on the modelling and management of the present and historians are more interested in stories and experience, and in uncovering diversity and neglected voices. Economic history is dry and hard to narrativise. But how a country makes its living can explain a lot.

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Her essay is in two parts: first, a historic overview of how Australia came to become ‘resource cursed’ and second, how the resource lobby has captured successive Australian governments, but most particularly the Liberal/National Party coalition. She notes that in 2017 Australia came 93rd out of 133 economies ranked according to the diversity and complexity of exports. New Zealand was 51. In 2018-19 seven of our top ten exports were from the quarry and one from the farm (just as Donald Horne warned in The Lucky Country). In order, they were: iron ores and concentrates, coal, natural gas, education-related travel services, personal travel except education, gold, aluminium ores and concentrates, beef, crude petroleum, copper ores and concentrates. Neither the quarry nor the farm really generates much employment, no matter how much they crow about their importance to “jobs- jobs- jobs”. When Australia was first settled, our economy relied on wool being loaded onto sailing ships for Britain, our major export destination until Britain joined the European Common Market in 1973, after years of signalling that it would do so. Australia was saved by Japan and its demand for iron ore to make steel, replacing Britain as our top export destination in 1967. In 2009-10 top spot went to China. Between 1980 and 2013 there was a tripling of coal exports. In the early 2000s liquefied coal seam gas joined the ranks of the top exports, and we are now the world’s largest LNG exporter.

Against this reliance on primary produce and mineral wealth, neither of which require a large workforce, Australia needed to industrialize in order to create sufficient jobs for its population, especially after the gold rush. Victorian liberals (i.e. colonial liberals coming from the state of Victoria) were protectionists, flying in the face of both NSW policy and the current British economic theory of Free Trade. Protection won the day when the Australian states federated, with a goal of Australians buying Australian-made goods. Australian manufacturing was turbo-charged by WWII. Migration, foreign investment and protection combined to create a greatly expanded Australian manufacturing sector, peaking in the late 50s-early60s at just under 30% of GDP. We could have developed an export-oriented manufacturing industry, but tariff protection made local management lazy. But Australia was swimming against the international tide, which was increasingly moving to cut trade barriers. Under a Liberal government, the Tariff Board under the chairmanship of Alf Rattigan itself proposed a review of tariffs in 1967; and with a change of government Whitlam cut tariffs in 1973 (although Fraser reinstated some of them). By the time Hawke came to power in 1983, neoliberalism was becoming dominant, and it was a Labor government that, with the aim of revitalizing manufacturing, floated the dollar, opened the banking and finance sectors, and reduced tariffs to a single rate of 5% by 1996, with exemptions carved out for textile, clothing and footwear, and the car industry. However, looking back, this policy failed in revitalizing manufacturing, if that was its aim. Tourism and education thrived, but manufacturing did not. From 12% of GDP in 2000, by 2006 manufacturing was just over 10% of GDP, 5.8% by 2013. Its share of employment at 7.5% was just a third of 2007’s 21% of the workforce. The rise of China and its cheap goods knocked manufacturing out completely, but the demand for iron ore disguised the effect. It was China’s demand that helped Australia weather the 2007-09 Global Financial Crisis, and by now Australia has lost the capacity to manufacture things- something brought home painfully by the COVID pandemic and the supply chain problems that continue more than two years later.

This might not be a problem, were it not for the rising carbon dioxide levels, with a discernable effect on global temperatures. But it is a problem, and the entrenched fossil-fuel industry is fighting back. At first the fight was against indigenous land rights and the ability of indigenous owners to veto mining development. In this, the Australian Mining Industries Council joined with the National Party in opposing native title, thus promoting a grizzled human face in an akubra hat to an industry dominated by machines. Having hobbled native title, the mining industry entrenched its power further by lobbying, political advocacy, donations – and most disturbingly – the churn of personnel between government and lobby groups and back again in what Guy Pearse called ‘The Greenhouse Mafia’. It is certainly alive and well. Just look at the way that the government pounced on a ‘gas-led’ recovery as the solution to COVID, our indecent haste to ship coal over to Ukraine, and most recently, the number of mining-industry-related people that the LNP government has just appointed to the Administrative Appeals Tribunal.

Two decades of cultivation of a network of climate skeptics by the Lavoisier Group, the IPA and the Murdoch press have made climate change a toxic brew for any government. Many of our politicians, predominantly on the Coalition side but also amongst Labor, have been captured by this lobby. But resistance is rising from unexpected quarters. The Lock the Gate movement opposing coal and coal seam gas developments is challenging the social licence of the fossil-fuel companies, and renewables are becoming more attractive as an investment. However, Brett is clear-eyed about the continuing power of the fossil-fuel lobby, and the probability that

…our leaders will stick with what they know and eschew innovation, like the men of the early 1960s, when Donald Horne complained that decades of tariff protection had produced a “look-no-brains attitude”. The signs are it will be more business as usual than embrace of the new.

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One of the advantages of reading a Quarterly Essay months (ahem- years) after it has been published, is that you get to read the correspondence generated by the essay in the following volume. Most of the correspondents in Issue 79 concurred with Brett, although rather predictably Andy Lloyd (Rio Tinto) came out with most of the fossil-fuel lobby talking points that Peter Christoff (University of Melbourne) predicted (e.g. we don’t contribute much to carbon; if we don’t sell, someone else will; technology -especially CCS- is the answer). Tim Buckley from the Institute for Energy Economic and Financial Analysis pointed out that many investment and superannuation funds are divesting from fossil-fuel industries. I really enjoyed Zoe Whitton from Citi’s Environmental, Social and Government Research Team, who wrote of the paradox that residents of the New Jersey shore who survived through Hurricane Sandy were even less likely to believe in climate change than before. She cited George Marshall’s book Don’t Even Think About It: Why Our Brains are Wired to Ignore Climate Change, where he suggested that the desire to return to something like normal, to rebuild anew, to express solidarity and perseverance meant that people resisted the prospect that the same thing could happen again. Often the alternatives are so unappealing that we choose not to consider them.

It is outside the scope of Brett’s 2020 essay of course, but I think of the flood waters that have swirled around homes in Queensland and northern NSW multiple times in recent years, and successive floods occuring even within weeks. These ‘events’ are not one-offs anymore, and the lie in terms like ‘one in 1000 year flood’ has been exposed. The cost of rebuilding communities razed by fire, and the piling up of mountains of sodden furniture and carpets, again and again and again will eventually sap the will to persevere and rebuild.

Perhaps then we can shake off the Coal Curse.

Rating: 8/10

Sourced from: my own Quarterly Essay subscription