There was a telling moment in the Monday night press conference when newly minted Prime Minister Malcolm Turnbull was asked about his approach to climate change. Quick as a flash Liberal Deputy Leader, Julie Bishop, prompted him to say that Australia already has an excellent policy.
Bishop would have known that Malcolm could not be trusted on this issue. He originally lost the leadership to Tony Abbott because of his attachment to a carbon tax. He has since backed the Abbott policy though perhaps more fully articulating the feature which is a targeted cut in emissions by 26-28 per cent by 2030. Abbott was, by contrast, just setting such a target as a holding operation whereby he would not be giving offence to the US President and would quietly drop it over the next few years.
In fact, per unit of GDP, Australian greenhouse emissions have declined considerably. They remain similar to their 1990 levels at around 550 million tonnes a year, while global emissions have increased by 40 per cent. But this is not as a result of impositions through taxes, subsidies and regulations over energy. It is due to regulations over land use which have resulted in emissions from farming being forcibly reduced by 100 million tonnes.
Such punitive attacks on farming (which took place under the Howard and Rudd-Gillard governments) have not been accompanied by any compensation for the land which was “sterilized” and one estimate is that the cost in lost value might have been $200 billion. Lost agricultural productivity is the outcome.
The greenhouse issue represents a fault line among politicians. If carbon dioxide is leading to planetary warming it represents an externality tailor-made for those who would prefer to intervene in economic directions. Of course, as even the IPCC has acknowledged, the cost, if it is taking place, is only one year’s worth of global GDP over the course of a century. This, and the fact that the supposed warming is not actually taking place, is glossed over by those with a preference for directing economies.
Turnbull in his interviews since Monday’s win emphasised the opportunities that Australia has in the ever changing world of technology and market firmament. His guidance is a Schumpeterian howling gales of creative destruction. Schumpeter thought these totally dwarfed the incremental gains made by competitive firms within existing technologies. Yet it is those incremental gains – carving pennies out of transporting minerals and agricultural products, better grading of them to increase value to buyers and so on, that have been massively important to the Australian success story. And it is those sorts of entrepreneurial gains that might be stifled by government, especially one that is less than vigilant over union powers to suppress change and seeks to find new ways of extracting taxes rather than pruning spending.
Economies are cursed by men of vision imposing their own preference. In modern times such preferences have been focussed on rebalancing the gains from production by forcing a greater emphasis on environmental measures and risk reduction. In this respect, one satisfactory outcome of the change of leadership is the Nats wrestling away of the Murray Darling policy from the Environment Department which has overseen a transfer of some 20 per cent of the rivers’ water from irrigation to meet phantom environmental goals.
The test is whether Turnbull can simply carve back spending and regulatory controls or whether he pursues ‘big picture’ positive opportunities that governments always fail to deliver and cripple economies in the attempt to do so.