Australia Mines for Mediocrity
Tony Abbott, Australia's climate-change skeptic in chief, may be in for some heated exchanges at the White House next week.
Abbott visits Washington just as President Barack Obama is moving in the opposite direction. A year ago, Australia was in the vanguard of global efforts to set a price on carbon emissions, build a cap-and-trade exchange and tax miners. Abbott has spent his nine months as the nation's prime minister scrapping those trailblazing policies. Now he's letting Obama grab the mantle of climate-change leadership from Canberra. While I'll leave the fallout to climatologists, the economics of what Abbott is doing should deeply trouble his nation's 23 million people.
Abbott rode a wave of public hostility toward the Labor Party, which ruled from 2007 to 2013, to victory. His Australia-is-open-for-business-again mantra struck a chord with voters fed up with Labor's infighting and worried about falling living standards. Little did Australians know how much he meant it. Abbott is repealing taxes on mining profits and carbon emissions and neutering emission-reduction efforts. Now his government is leaning toward killing the budget for climate-change research. While enriching mining tycoons, Abbott is cutting welfare spending for middle-class families, pensioners, single mothers -- Australia's most vulnerable citizens.
It's this backdrop that makes axing the climate research budget so troubling. The proposed cuts are part of a pattern: Abbott continues to deepen Australia's reliance on a mining boom that's clearly on the wane. By lending support and political capital to billionaires digging stuff out of the ground, Abbott is undercutting future prospects for the Australian economy and the vast majority of citizens.
No one doubts mining is an important industry for resource-rich Australia. But the nation's future should be more about ideas, entrepreneurship and moving upmarket in such sectors as science to services than shipping coal and iron ore to China. More immediately, Abbott's focus ignores the fact that Australia's resource-investment boom is over. Such investment upticks are good for jobs and income for a while (for some Australians, at least), but the economic benefits depreciate fast once the mines are dug and related infrastructure is built. Once the industry is operational, it employs much fewer people, even as export volumes rise.
Doubling down on mining could create something even worse than Australia's "two-speed economy" problem, wherein commodities-rich areas -- western states and Queensland, for the most part -- zoomed ahead while the rest of the nation lagged behind. Abbott's priorities risk gutting the scientific research Australia needs to create new industries and good-paying jobs. The government also is scaling back funding for alternative energy.
No sector holds more promise for any nation than inventing alternatives to fossil fuels. The Chinese and Indian markets alone should have governments from Washington to Tokyo pouring billions of dollars into research programs. Yet while the world is moving more and more toward meaningful action on climate change, Abbott is taking drought-plagued Australia backward.
Obama is going the other way -- finally. His plan to cut emissions from power plants by an average of 30 percent from 2005 levels puts pressure on his Group of 20 peers, including Australia. Ironic, considering that before Abbott took office last September, Australia was, in the words of Christine Lagarde, managing director of the International Monetary Fund, "pioneering in this field." Well, that was then.
Like Abbott, I was raised Catholic. There's something I've never understood about Christians who believe, on the one hand, that God created Earth, but on the other that man bears little responsibility for taking care of God's handiwork. People can believe what they want, but Abbott's climate-change denial has global implications. China and India argue that richer nations demanding they pollute less should lead by example.
As such, expect some awkward moments in Washington when Abbott meets Obama. The same goes for Brisbane come November when Obama and the other G-20 leaders hold a summit. Obama, German Chancellor Angela Merkel and others want emissions cuts to be on the table. At the very least, Abbott's policies strengthen the argument that a global deal is needed rather than leaving it to individual governments to do the right thing.
Abbott recently said he "can think of few things more damaging to our future" than not digging all the coal possible out of the ground. Here's one: short-sighted policies that put Australia on the road to mediocrity, not global leadership.
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