Tag: The Sydney Morning Herald

Face Facts And Adapt To Warmer World

It might not seem like it, but climate sceptics and climate alarmists agree on a fair bit. One of the biggest flaws with both Kevin Rudd’s emissions trading scheme and Tony Abbott’s direct action plan isn’t that they are great big taxes or climate con jobs. It’s that they are futile.

Any Australian cut in carbon dioxide emissions is worthless if not part of a global effort. And right now it looks like the chances of a global agreement on serious emissions cuts are effectively nil. You don’t have to be a sceptic or alarmist to understand a policy that can’t achieve its goal is a failure before it starts.

The Copenhagen meeting reminded the world the domestic politics and pressures of emerging economies like China and India cannot easily be submerged by a global flood of environmental goodwill. And without including those two polluters, a global agreement will be meaningless.

Worse, it will look meaningless. That is a bigger problem for leaders like Kevin Rudd who wanted success in Copenhagen to endorse their leadership at home. Foreign policy is domestic politics with translators.

There will be another United Nations climate meeting in Mexico City later this year. Don’t get your hopes up. Yvo de Boer, the UN climate chief who retired in February, told the Financial Times he did not expect an emissions treaty in 2010 either. And public support for emissions reduction is dwindling. If you, like our Prime Minister, believe climate change is the greatest moral challenge of our time, you’re probably pretty glum.

But we haven’t had the genuine debate about climate policy.

We could keep trying to stop global warming with taxes, industry plans, corporate welfare, solar panel and insulation subsidies, and fruitless diplomacy. Or we could try to adapt to it. After all, the problem with global warming isn’t the warming per se, it’s the consequences of warming.

Climate change has a disproportionate impact on the poor. The developing world has neither the resources nor the infrastructure to cope with changes in climate. Bangladesh is more at risk from climate change than Holland, even though both are susceptible to flooding.

Bangladesh doesn’t need global carbon dioxide emissions to stabilise. Bangladesh needs to become like Holland. The poor need to get rich. They need economic growth. It also makes countries resilient against disasters not caused by climate change, like the earthquake in Haiti.

Growth produces increasing living standards, jobs, innovation, and individual wellbeing. Because growth is strongest in countries with liberalised markets, rule of law, and representative institutions, it carries with it equality and human rights. By contrast, at best, trading economic growth for lower emissions will just leave us with lower emissions. And we’ll be poorer.

Without an emissions treaty, there’s still reason for optimism. The Intergovernmental Panel on Climate Change says by the end of the century, per capita income will have doubled, at least. The world could be 20 times richer.

Take such predictions with a grain of salt: imagine a bunch of geniuses in 1910 trying to guess what the economy in 2000 would look like. Or what the chemical make-up of the atmosphere would be. (We think we’re pretty smart, well so did our ancestors.)

But the IPCC predicts economic costs of global warming will be a tiny fraction of that growth – between 1 per cent and and 5 per cent of gross domestic product. As the environmental economist Richard Tol wrote in January, “a deep recession wreaks as much havoc in a year as climate change would do in a century. Climate change is therefore not the biggest problem of humankind.” (Tol is an IPCC lead author and therefore not a crackpot.)

It doesn’t really matter whether climate change is caused by humans or part of a natural cycle. It might halve the yield of crops planted in the poorest parts of the world. But if those farmers used the advanced techniques of rich countries, they could more than make up for it.

Malaria caused by rising temperatures could be combated by a co-ordinated political effort to reduce global emissions. Or we could concentrate a fraction of that effort on developing a malaria vaccine.

Growth will fortify us against a climate that always changes.

For if you can’t cure the disease, manage the symptoms

Give Or Take A Million, There’s Nothing To Fear

The Australian population might reach 35 million in 2050, according to Treasury’s latest intergenerational report.
Seems like a lot? Relax. That would make us just slightly more populated than Canada. This horrible possibility (As many people as Canada. Canada! Can you imagine it?) has been greeted with some angst.
In a speech in October, the Treasury secretary, Ken Henry, asked what seems like an obvious question: where will these 13 million extra people live? Clearly we haven’t got around to building their houses yet.
Every time we talk about population growth, we seem to have this same fear: Australia doesn’t have the infrastructure. It doesn’t have enough roads, public transport, and council swimming pools to cope.
But from a historical perspective, these concerns are pretty silly. Infrastructure development doesn’t pre-empt population growth, it follows. People build stuff when they need it.
Sydney’s population jumped from about 40,000 in 1850 to having 482,000 inhabitants at Federation.
That’s a growth of more than 1000 per cent in 50 years. But you’d have looked pretty stupid raving about the desperate need to control Sydney’s growth back then.
By contrast, the Treasury secretary asked how Sydney will cope with just a 54 per cent increase in the next 40 years. And deeply serious commentators shook their heads and stroked their beards and pontificated on the “challenges” of the future. Where will the train networks go? What sort of jobs will these new folks want? (I suspect robot repair, flying car maintenance, singularity co-ordination; you know, things like that.)
It must seem hard to imagine how the human race will cope with the growth of the future. But anti-population activists have been preaching doom for two centuries. We’ve always done fine. If you think this time is different, you need to ask yourself one question: why has everybody in the past been wrong?
My point isn’t to play down the tasks which will have to be completed if Australia is going to service the needs of all these new people. Stuff will need to be built, and some of that stuff will need to be built by government.
So it’s good that there will be 13 million new taxpayers around.
But anti-development lobbyists and activists are a big problem. Urban growth boundaries have to be extended and restrictions on development in inner urban areas relaxed.
Population growth requires governments that are willing to build needed infrastructure – governments which are able to stand up to those who don’t want infrastructure built in their backyards, and to those who don’t want people to have backyards at all. Right now, it seems that state governments are leaning on population concerns to avoid taking the blame for failing to do their jobs.
Nevertheless, the anti-population crowd is a pretty diverse bunch. Maybe you shouldn’t be judged by the company you keep, but they’re not all very sensible.
A federal Labor backbencher, Kelvin Thomson, responded to the population projections by saying that growth would lead to “global warming, the food crisis, water shortages, housing [un]affordability, the fisheries collapse, species extinctions, increasing prices, waste and terrorism.”
But we’ve had war, inflation, busy cities and expensive houses for pretty much ever. Dare I say that, even if the global population “stabilises”, they won’t stop.
And Kevin Andrews took the opportunity to urge the Government to slash immigration for the sake of population. Still, Andrews also wants to raise Australia’s birthrate “back to replacement levels”, so his concerns may be less about sustainability, and more about foreigners.
Those who oppose population growth because of environmental concerns are the most radical. Earlier this year the head of Sustainable Population Australia said Australia should adopt a one-child policy – you know, one like they have in the People’s Republic of China.
Anti-population activists believe that we should get rid of things like the baby bonus, but also have the government actively discourage us – even force us – from making too many babies.
This view is anti-human in the most basic sense. One of our most basic instincts is breeding. Declaring you want to regulate this instinct away is declaring you are against the selfish gene: the basic foundation of life.
Should we have a “population policy” at all? The only people asking for one seem to be those who want to cut it back or slow it down. Those who believe that humanity should keep exploring, discovering, creating, inventing and expanding don’t really feel the need.
Kevin Rudd responded to the population projections by saying that he believes in a “big Australia”, and (of course) “makes no apology for that”. The Prime Minister is right. An Australia of 35 million people sounds like a lot. But it’s nothing to fear.

Small Government Does Not Mean Cheap

If you ever want to feel generous, have a flick through the recent press releases of the Commonwealth’s Department of Innovation, Industry, Science and Research.

You may not realise it but you recently purchased a low thermal mass kiln and waste heat dryer, and you kindly gave it to a company called Lincoln Brickworks in Wingham. It cost just over $300,000.

You also purchased an anaerobic digester, a new distillation column, a reverse osmosis plant and heat pump heating system, and a transcritical refrigeration system. These were wrapped up and shipped off to a few more lucky companies. You also helped a firm called Norvic Food automate its meat-processing line, which is probably much more violent than it sounds.

That’s how the Commonwealth Government handed out $3 million for the fourth round of a program called Re-tooling for Climate Change. Sounds like a worthy cause? Maybe. But there are 100,000 manufacturing companies in Australia. And less than 0.04 per cent of those will get any benefit from these grants. The Re-tooling for Climate Change program is not going to make much of a dent in Australia’s greenhouse gas emissions.

One might even say the program is an extraordinary waste of money.

We all like to imagine the tax we pay only goes towards nice things. You know, things like teachers, judges, doctors and the maintenance of public parks. But let’s face the harsh truth. The Commonwealth Government spends one quarter of our total gross domestic product. And it fritters away a hell of a lot of it.

Take the $20 million we’re handing to a public relations firm to rebrand the entire country. Launching Building Brand Australia, the Trade Minister, Simon Crean, said: “We must find a better way to define our identity.”

No doubt the specifics will be nutted out over a series of long lunches, with many scoping documents and research papers exchanged. And if we’re lucky, it’ll end up being another government ad campaign. Sometimes it seems as if politicians only spend taxpayers’ money to see what colour it makes when it burns.

Both sides of politics are to blame for our massively bloated government. In his first few years as prime minister, John Howard made a valiant attempt to cut back some of the excessive spending of the Keating years.

But by the early 2000s, his government was accumulating policies, initiatives, programs, and, of course, public servants, with the gleeful enthusiasm you expect from conservatives who have made their peace with taxing and spending. In his speech launching his 2004 election campaign, Howard reportedly made spending promises at a rate of $94 million a minute.

But Kevin Rudd was elected vowing to reverse the extravagance of the Howard years, and, endearingly, to “take a meat axe” to the public sector.

Since 2007, the Rudd Government has hired another 7000 bureaucrats.

Kevin Rudd wants his 19 cabinet ministers to fix obesity, deliver broadband, halt climate change, spark innovation, hide internet porn, end cigarette smoking, abolish nuclear weapons and make petrol cheaper.

In October, it even released a Proposed National Strategy on Body Image. Such national strategies don’t write themselves of course, so the government instituted a National Advisory Group on Body Image.

We have government-funded industry innovation councils because politicians presume that industry wouldn’t be able to innovate without their help. We have the politicians handing out “community leadership awards” because, as we all know, people won’t help their communities if there aren’t prizes.

The report of the Government 2.0 Taskforce, released this week, wondered why “none of the major public goods of Web 2.0 have been built by governments”. The founders of Twitter and Facebook didn’t rely on government funding. The task force’s confusion is apparent: don’t all good things require tax dollars?

But when you try to do everything, it’s hard to do anything well. In October, we gave $40 million to Australia’s space program. Did you even know Australia had a space program?

In a speech in late November, the Secretary of the Treasury, Ken Henry, argued that Australia will probably never have a smaller government than it does now.

It’s important to realise that a small government doesn’t necessarily mean a cheap government.

We want to pay top dollar for the best public school teachers, the best doctors and nurses, the best courts, and the best law enforcement.

We’re failing this basic test. Our governments do a lot of things and do them as cheaply as they can get away with.

Still, Henry is right. Maybe Australia’s government will never be smaller. But could we at least try to make a little more focused?

Climate Trumping Needs Of The Poor

At one of those weird, celebrity-laden events they have every few months in New York, Hugh Jackman announced last week “climate change and poverty are inextricably linked”. World leaders furiously nodded their heads in stern agreement.

In a basic sense Jackman is right. Rich societies can cope with changes to climate. Poor ones cannot. Subsistence farmers will struggle more with any global warming than accountants in suburban Australia. But for all the talk of climate aid and sustainable self-sufficiency, the developing world needs to do just one thing to successfully adapt to climate changes: get on with developing.

But the political demands in developed nations for inspiring, grand, historic, operatic action on global warming are putting those stodgy old targets of economic growth in developing countries on the backburner.

Jackman inadvertently gave an illustration of why. Admitting his wolverine claws and mutant powers would be ineffective against climate change, he told of an Ethiopian coffee farmer converting methane from his cows into gas for electric lighting.

It’s a great story. It’s wonderful to hear of anyone using their resources more productively, particularly where those resources are at such a premium. But it misses the point. A greater thing to celebrate would be the coffee farmer being connected to the power grid, or wealthy enough to get decent medical care or education. Or when he is wealthy enough to pay others to generate electricity for him.

Industrialisation and economic growth in Africa and Asia no longer seem a universally agreed goal. Instead, some see it as a potential threat, if not carefully supervised by the West. If growth is to occur, aid agencies believe it must follow a strictly delineated path of sustainability and low emissions.

This new attitude has some dire consequences. According to a new study by World Growth, a non-government organisation, the share of aid directed to economic growth has fallen from 28 per cent 10 years ago to just 12 per cent today. Instead, aid is being focused on social and environmental aims.

The more priorities, the less likely anything will be done. It’s not thrilling to hear the United Nations, the European Union and many national governments repackaging foreign aid as “climate aid”. The EU plans to offer the developing world €15 billion ($25.4 billion) of climate aid as a sweetener to play ball at Copenhagen. This builds on the host of new programs and agencies distributing “climate-specific aid” such as the UN’s Clean Development Mechanism and Global Environment Facility, or the World Bank’s Carbon Finance Unit and Carbon Investment Funds.

With sufficient economic growth, the developing world can cope with the stresses of a changing climate and any number of the other stresses: chronic malnutrition, infant mortality, illiteracy and many diseases we believe to be “tropical” today, such as malaria, but are the consequences of extreme poverty. These problems could be exacerbated by climate changes, but they are problems right now. Only wealth can alleviate them.

From an environmental perspective, we should push for rapid economic growth in the developing world. Wealthy societies are cleaner; the technology to reduce pollution is as much a product of economic growth as the pollution is in the first place. First World factories are cleaner, more efficient, and healthier for their workers than Third World factories. Local industrial pollution in the developing world can be devastating.

Poverty is a dog of a problem. And foreign aid has always been an imperfect way to fixing it. Aid has congealed bureaucracies at the expense of the poor and funded the lavish lifestyles of oppressive dictators.

Nevertheless, a few years ago the theory and practice of overseas aid was getting somewhere. Encouraging development was not as simple as funnelling money from treasuries in the First World to treasuries in the Third World.

More important is allowing nations to build the institutions and legal frameworks that organically grow a productive economy. And we know trade liberalisation, deregulation and open markets are extraordinarily powerful drivers of growth.

Climate aid is just another illustration of what the economist William Easterly calls development paternalism: a belief well-paid international experts, equipped with enough power and resources, should take the third world’s destiny under their benevolent wings.

When those experts shift their priorities from economic growth to sustainability, they make it less likely they will achieve either. Unfortunately, as the Copenhagen looms, it seems the “right to develop” is no longer absolute.

PM’s National Broadband Plan Really Is No Net Gain

Has there ever been a major Commonwealth program more hastily conceived than the national broadband network?

After it was clear their previous $4.7 billion broadband plan was a dismal failure, it was reported Kevin Rudd and the Communications Minister, Stephen Conroy, dreamt up this $43 billion plan while on two flights between Sydney and Canberra in April.

That’s not just policy on the run. That’s policy desperately sprinting from a horde of angry zombies while trying to pretend that the bite mark on its arm is nothing to worry about.

This latest iteration of the great broadband plan is three months old and already behind schedule. The Tasmanian leg – supposed to be available to consumers from this month – has been pushed back until mid-2010.

The project’s conception is still at an embarrassingly early stage. The Government’s financiers haven’t yet been consulted about exactly how the funds for the project will be raised, as a Senate committee heard last month. It’s veiled in secrecy. The Government has told the Opposition they’ll have to cough up $24,000 to see the documents which were supposed to have recommended the Government build the network.

And, unsurprisingly for a project entirely developed by two career politicians in the brief time while the seatbelt sign was off, the broadband network’s business case is supremely flawed.

The economist Henry Ergas has calculated it would have to cost individual subscribers at least $215 a month for the network to pay off its investment, and only if almost every broadband customer in Australia – 80 per cent – signs up.

Furthermore, the Government is discovering to its surprise that it can’t untangle the telecommunications industry’s dense knot of competitive rivalries and regulatory quagmires just by waving around a giant novelty cheque.

Yet to argue that the great broadband plan is perhaps just a tad undercooked is to invite accusations of Luddism. This seems to be because a lot of people view the broadband network as less an infrastructure project, and more the first tranche of broad social and economic revolution – the opening set-piece for the utopian-sounding “digital economy”.

So we’re repeatedly told it is a tragedy that Australia’s broadband take-up rates are somewhat lower than in other developed countries like Korea, because … well … think of all the cool things you can do online!

For these supporters, the technicalities of the national broadband network are just technicalities – what really matters is the internet’s sheer awesomeness.

So, fittingly, the Communications Minister’s pronouncements about broadband are rarely little more than a checklist comprising of a few key terms: “smart infrastructure”, “digital education revolution†and the more mundane “œmobile banking”.

Those are all wonderful, of course. Who isn’t looking forward to “e-Government”? But most e-Gov ideas are usually either stunningly obvious (such as more government information being provided online) or fashionable but pointless (the vapid, machine-written “blogs” of Stephen Conroy and Kevin Rudd).

Another commonly cited benefit from the Government’s broadband plan is its potential to revolutionise Australian hospitals with “telemedicine”.

But hospitals have been the recipients of a decade’s worth of special government programs to deliver them the best internet available. It seems silly to have to point this out, but Australia’s hospitals aren’t on the same ADSL plan the rest of us are.

Sure, your internet connection might have frustratingly capped just before you finished downloading that handicam copy of Transformers. But that doesn’t mean surgeons at St Vincent’s have to wait for another doctor to finish downloading x-rays before they can start the next heart bypass.

The most common argument for government-sponsored broadband is productivity. But the national broadband network isn’t going to be a magical productivity switch. There just aren’t many potential Australian entrepreneurs having their innovative business plans stymied because their broadband isn’t fast enough. Some businesses might find a faster internet connection useful, but few people seriously think our present internet speeds are what’s holding the economy back.

Anyway, our hunger for ever-greater productivity might be better satisfied by allowing the private sector to build the network. (As much as four years ago Telstra was begging the government for a regulatory reprieve so it could build a new broadband network by itself.)

Hell, if it’s productivity we want, perhaps the Federal Government could just reduce a few taxes. That’d give the economy a bit of a kick-along.

Of course, faster broadband for everybody would be delightful. But so would government subsidies for sunshine, flowers and walks on the beach.

Just because everybody loves the internet doesn’t mean that this $43 billion government-owned national broadband project is good public policy.