The Politics    Wednesday, December 16, 2020

Bad investments

By Nick Feik

Image of Treasurer Josh Frydenberg during Question Time last week.

Treasurer Josh Frydenberg during Question Time last week. Image © Lukas Coch / AAP Image

What will it take for the Coalition to give up its fossil-fuel addiction?

The government continues to be caught between mounting the case that it’s serious about climate-change action and trying to stymie it by every practical means. Several stories in the media draw attention to the utter hypocrisy of its approach. Today, the ABC revealed that the Future Fund – Australia’s sovereign wealth fund – has invested more than $3 million in an Adani company building a rail link from the controversial Carmichael coalmine to a port on the Great Barrier Reef. Nine Media reports that Treasurer Josh Frydenberg has thrown his support behind a proposed inquiry that will grill financial regulators and banks choosing not to fund or insure mining projects due to climate risk. Guardian Australia reports that a leaked government discussion paper on an electric vehicle strategy, which it’s been working on for 18 months, includes no policies that would make it more affordable to buy electric vehicles. And earlier this week it was widely reported that Energy Minister Angus Taylor is putting together a new package to subsidise local oil refineries. Does the government think no one will notice that its words don’t match its actions?

Coalition MPs have been able to operate in a state of functional denialism for so long now – with support from News Corp and without significant challenge from Labor – that they seem to believe there is no impediment to continuing down the same merry road, until it literally melts. But the signs emerging from beyond our shores, at least, indicate the end of the road is approaching faster than anticipated.

Following last week’s embarrassing snub for Morrison in relation to the UN climate-change summit, and China’s blacklisting of Australian coal, it’s becoming ever harder to look away from the intense glare of global opinion. Equally important, the rising financial risk of denialism is becoming impossible to refute, despite the government’s best efforts. 

The decision by the Future Fund to invest in a Carmichael-linked company is simply bizarre. The chances of the mine going ahead, and making a profit, are now vanishingly slim. China’s decision this week is probably the final nail, but it’s not like any responsible investors have been calling the mine a great opportunity in recent times. (And we won’t even mention the immorality of investing Australian taxpayer earnings into a climate time bomb.) 

Worse, though, is the treasurer’s support for an inquiry into banks’ lending strategies. Big banks have ruled out financing new coalmines and coal-fired power stations for a reason: they are likely to be terrible investments. Coal companies are haemorrhaging globally, and Australian coal has been blacklisted by China. I’m going to repeat that again, for the benefit of the treasurer, who may be hard of hearing: Australian coal has been blacklisted by China. It happened this week. Why, now, would you pressure banks to invest in Australian coal? 

As the Nine report points out, “The Australian Prudential Regulation Authority and Australian Securities and Investments Commission, both under Mr Frydenberg’s portfolio, are also expected to be asked to attend hearings, after they directed financial institutions to better consider the financial risks of climate change and international shifts away from fossil fuels.” Global ratings agencies and insurers are also wary of climate risk. And so they should be.

A few further points need to be made about Frydenberg’s decision. First, banks have the fundamental right not to invest in coal or fossil fuels. It is absurd for the government even to contemplate pressuring them to invest in declining and destructive industries. Who carries the rising risk to borrowers’ and lenders’ money? Not the government. 

Second, Frydenberg personally looks ridiculous supporting an inquiry set to be chaired by Coalition climate sceptic George Christensen. Other Coalition MPs have been arguing for the best part of forever that the market decides where its money should flow. Now it’s George Christensen who decides? Frydenberg, the treasurer, who represents a Melbourne electorate strongly supportive of climate-change action, is setting a terrible example.  

Third (and related), only three months ago, Frydenberg announced that the government would in effect dump the responsible-lending laws imposed by the Rudd Labor government following the global financial crisis. This was meant to lead to “less red tape” for banks, a loosening of credit rules and greater emphasis on self-responsibility. Now he’s implying that banks might be forced to make bad investments. As the kids say: LOL.

Finally, if the inquiry goes ahead as expected, we can look forward to a series of senior financial managers and analysts pointing out to Coalition sceptics that their attitudes are dangerous and outdated. 

Banks, insurers, major trading partners, the UN, the OECD, scientists, public opinion… what will it take for the Coalition to give up its fossil-fuel addiction? 

“At the end of one of the most challenging years we have ever faced in Australia in terms of our collective mental health, and following Prime Minister Morrison’s impassioned release of the long-awaited Productivity Commission report, many have asked what’s the government’s plan of actions for 2021? Well, it turns out that the answer is yet another inquiry!”

Mental-health expert Ian Hickie excoriates the federal government for ignoring the sector’s $3.7 billion reform proposal and instead announcing yet another inquiry.

“These sectors were targeted following an economic impact assessment that showed they were the most critical to support regional economic recovery in NSW.”

A Department of Regional NSW spokesperson explains why Anthony Pratt’s Visy has been awarded $10 million from Australia’s bushfire recovery fund while people in Cobargo and other fire-afflicted regions are still living in caravans. Pratt is one of Australia’s richest men and a major political donor.

Australia’s responsibility for the Christchurch massacre
The royal commission report into the Christchurch terrorist attacks led to an apology from the New Zealand government. But in Australia, there’s been an unwillingness to grapple with how the shooter was steeped in a culture of far-right extremism.

The original tender price, in 2016 dollars, for Australia’s new submarines, according to Defence Minister Linda Reynolds – that’s approximately twice what the price was said to be in 2016.

“Prime Minister Scott Morrison and Health Minister Greg Hunt will on Wednesday reveal an extra 10,000 home care packages, at a cost of $850 million, to be funded as the government expands its response to the Aged Care Royal Commission.”

The details of the packages will be confirmed in Thursday’s midyear budget update, and come on top of the $1.6 billion announced in the October budget, which was to deliver 23,000 extra places.

The list

“As the bookshops die
in country towns
it’s department stores
that stock reader shelves”

“The ADF continues to benefit from the myths created a century ago, but the images those myths evoke – perhaps the slopes of Gallipoli, or the trenches of Pozières – seem very far away from the activities and the behaviour of the SAS in the hills of Afghanistan. Given the ADF’s protected status in the nation’s cultural politics, we might have expected Brereton’s revelations to provoke a response similar to, and perhaps even more furious than, those that followed the exposure of cheating cricketers. So it’s worth asking why they have not.”

“Soon after the government began its assault on Tigray, Mary says that basic supplies – water, telecommunications, electricity – were cut off in Mekelle, as well as access to local banks and airlines. ‘I immediately just panicked. I obviously had no way of contacting my family and touching base with them or speaking to anyone back home,’ she says. ‘Trying to get information was out of the question.’ The worst was yet to come. Just a few days later, she would witness an airstrike – the first of what would become a regular occurrence.”

Nick Feik

Nick Feik is a former editor of The Monthly.


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