One of the defining moments for soon-to-be Prime Minister Scott Morrison was when he brought a lump of lacquered Hunter Valley coal into parliament in February 2017. “Don’t be afraid, don’t be scared, it won’t hurt you,” he said, as he handed it along the grinning front bench, “it’s coal.” The point was to ridicule the Opposition’s support for renewable energy, and it was a stupid stunt. But it put on full display how impossible it was for many of our political leaders to imagine Australia’s future with- out fossil fuels. Australia is the world’s second-largest exporter of coal, and in 2019 we overtook Qatar to become the largest exporter of LNG. So we are now the world’s third-largest exporter of fossil fuels, behind only Saudi Arabia and Russia.

In 2018–19, Australia’s top exports were iron ore, coal, natural gas, international education and tourism, in that order. Coal became our top-earning export commodity in the mid-1980s and has been at number one or number two ever since, vying with iron ore, which needs metallurgical coal to be transformed into steel. The production of LNG has increased rapidly over the past decade since the massive developments in Gladstone, Queensland, and it is now our third-largest commodity export and rising fast. Between 2018–19 and the previous financial year, its export value grew by 60.9 per cent. Coal, LNG, iron ore: in 2018–19 these three earned 41.8 per cent of our export income.

Australia is a trading nation. We have a small population, so exporting enables our companies to grow by reaching larger markets. We need the foreign income earned by our exports to pay for the goods and services we import, and to service debts to foreign lenders. Our exporters also contribute to the national economy by paying taxes, distributing dividends to shareholders and employing people. All this is true of the fossil-fuel exporters, but there are costs to having an export profile so skewed to one sector.

The term “resource curse” was first used by the British economist Richard Auty in 1993 to explain why some resource-rich countries suffer from slow development and corrupt, authoritarian political elites: for example, Nigeria, Angola, Venezuela. At worst, the country embarks on a spending spree, using the export income earned to buy expensive imports, and is left with little when the limited resources run out, as happened most notoriously to Nauru. For a few decades, the money flowed from its phosphate deposits, but when the phosphate ran out, the economy collapsed.

The idea of the resource curse is highly contested, and a country’s institutions are crucial in preventing the worst outcomes. A strong civil society, functioning democratic institutions and the rule of law can limit corruption and underpin a functioning diverse economy like Australia’s.

Australia’s success in exporting first wool and then minerals created an economy with a dual economic structure, in which the industries earning our export income produced far fewer jobs than the sectors producing goods and services for domestic consumption. For most of the twentieth century, protected manufacturing for the home market was a big employer, but it was inefficient and uncompetitive by world standards. When it did start to compete, it was too late and is now in poor shape. The big employers are health care and social assistance, retail, accommodation, hospitality and education. Tourism and international students gave an export focus to the service sector.

The mining industry cannot be blamed directly for the weakness of Australian manufacturing, even though its success drove the dollar higher and undermined manufacturing’s competitiveness. The blame lies mainly with political elites of both sides of politics, who waited too long to dismantle Australia’s protective tariffs. Once the most recent resources boom roared into life, most of our leaders gave manufacturing little thought.

It is climate change that has turned the dependence of Australia’s export income on minerals into a curse, and not all minerals. As renewable energy sources are developed, we can continue to export iron ore, bauxite, gold and other non-fossil-fuel minerals without contributing to the rise in global temperatures. It is only coal and gas we will have to give up and it is the fossil-fuel lobby that has turned our dependence on minerals into a political curse.

The fossil-fuel lobby has benefited greatly from the polarised politics of the last three decades. It is a moot point when this polarisation started. Some put it in 1975, with the ill will flowing from the Dismissal, but I think the current period of discord began when Keating was prime minister. Brilliant at invective, he sharpened up lines of division around race and Indigenous politics and Howard transformed these into the culture wars.

When serious pressure began at the turn of the century for governments to reduce carbon emissions, many cultural warriors transformed smoothly into climate warriors. Although the issues were very different, the enemies were mostly the same, which for many politicians is what counts. The fossil-fuel lobby deliberately stoked the polarisation, fostered climate change denialism among Australia’s conservative political elites, and rewarded its political advocates with jobs. But it could not have created the climate wars so easily without the preceding culture wars.

The culture wars were less destructive of our national politics than the climate wars have been because they had little to do with economics. Howard could introduce an economic reform like the GST, and try to reform industrial relations, even as he denounced black armband history. The climate wars are different because they are about what we export and how we produce the energy that drives our economy and they have made it impossible for successive Coalition governments to sustain a coherent economic narrative to support reform. The past fifteen years of climate wars have, in the words of Alan Kohler, “ruined Australia’s ability to conduct any kind of sensible discussion about economic policy and to achieve consensus on anything.”

The climate warriors’ support for coal and gas depends on a cascading series of arguments. The first is that the planet is not heating so there is no need to cut fossil-fuel emissions; second, even if it is, it is not caused by humans; third, even if it is, Australia’s emissions from both what we burn and what we export are so small that stopping them won’t make any difference; fourth, the drug dealer’s defence: if we don’t sell the coal and gas, someone else will; fifth, the predicted damage will not be that bad and doesn’t warrant the economic costs. The commentator Greg Sheridan even argued that if “these crook environmental outcomes are going to come about anyway, would you rather confront them as rich people or as poor people?” The first two and fifth are refuted by science, the rest by both ethics and by political realism. We cannot expect other countries to allow us to escape contributing to the global effort to reduce emissions without some sort of payback.

This is an edited extract from Judith Brett’s Quarterly Essay 78, The Coal Curse: Resources, Climate and Australia’s Future. Out now.

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