Good morning and thank you very much to the Green Building Council and the Property Council for the invitation to be here. I’m particularly pleased that I’ve been asked to talk about the big picture. A politician likes nothing more than asked to steer away from details and just focus on the very broad brush strokes.
I’m also very pleased to be able to follow Ross Garnaut, one of Australia’s outstanding public intellectuals, particularly in this area of policy - and not just a public intellectual in the abstract sense but also in a doing sense.
I’m reminded that 10 years ago, Ross was busy beavering away at the climate change review for a number of state governments and the new Rudd Labor Government, and I noticed that next week is exactly 10 years since you released your emissions trading scheme discussion paper. How there was such promise back then. Both parties had taken an ETS as their policy to the 2007 federal election - indeed, later that year Barack Obama and John McCain both took a cap and trade scheme to the 2008 presidential election. There was great hope that we would be able to build on that apparent political consensus and put in place an enduring, stable reform - a functional carbon price, as I understand the acting lord mayor described it earlier today - and grab those opportunities that Ross just talked about.
But it was only a short time after, in the following year, that the emerging consensus imploded in Australia and ushered in the climate wars. Those climate wars and the dismantling of the emerging consensus have had entirely predictable consequences.
We've seen the entire dismantling of our carbon price framework, still the only country to entirely dismantle a legislated climate change policy. We saw the reversal of what we thought were deeply embedded reforms, particularly at state level around land clearing. And we saw very significant investor uncertainty ushered in, particularly into the energy sector but also the industrial sector, among big energy users and in transport. Investors saw Canberra as, frankly, paralysed in its ability to develop enduring policy reforms that would last the life of some of these very long-lived assets. Australia is perhaps not entirely unique in having deep policy paralysis and ideological division in the area of climate change, but we are very unusual. I often draw attention to the contrast with the United Kingdom, a country which has very similar political systems and ideological fault lines, and a very similar media market that I think has been important in development of the climate wars here in Australia.
At the same point in time, when Australia’s emerging consensus around climate change policy was imploding back in 2008-2009, the United Kingdom’s policy consensus was being embedded in bi-partisan climate change legislation introduced by Labour and supported by David Cameron, the new-look Conservative opposition leader.
That framework has endured through the decade since, including through some incredibly divisive political moments in the UK’s history. Most notably, the fifth carbon budget under the legislation was endorsed unanimously by the UK Parliament only a matter of weeks after the divisive Brexit vote which led to pretty much every UK political leader losing their job. It’s an ambitious budget; it would see carbon levels in the United Kingdom cut from 2005 levels by 61% by 2030.
Now the data released by the Australian government just before Christmas, literally just before Christmas, indicates that, under current policy settings, Australia’s carbon pollution levels will have reduced by just 5% - not 61%, but by 5% - over that same time period, 2005-2030. And that’s really only because of an accounting change to the way that land sector emissions are treated wiping literally millions of tonnes off the books with a stroke of a pen.
The policy paralysis in Australia is divisive - it's debilitating for the Australian economy and shirks our responsibility to future generations.
It’s important to point out that while the UK is able to embark on this globally ambitious de-carbonisation agenda, they're maintaining their industrial base. As Ross pointed out, de-carbonisation and a strong industrial base are not inconsistent. The UK still makes three-times as much steel as we do in Australia; they still have 800,000 workers employed in the automotive industry at a point in time when Australia has shut down its car making capacity.
The policy paralysis you see in Canberra simply can’t go on. We see from our data that carbon pollution is rising, we’re failing our responsibility to future generations and the rest of the international community, and we’re starting to see the private sector simply move on in spite of what the government isn’t doing. You just have to look at the debate last year over whether Australia should embark on building a new coal-fired power station. The only business figure who stuck their hand up at Malcolm Turnbull’s invitation to indicate some interest in building coal-fired power stations in Australia was Clive Palmer, whose last great idea was building Titanic II. Everyone else indicated that their plan for building energy into the future was squarely based on renewable energy and the sort of vision that Ross just talked about.
It’s not just that renewable energy is cleaner and increasingly cheaper, it’s also because investors increasingly are alive to climate related financial risk. The sort of risks that Mark Carney from England and the Taskforce on Climate-related Financial Disclosure talked about last year. It’s a risk that regulators including here in Australia are alive to as well, particularly led by the work of APRA now.
Your sector is a shining example of one that is moving ahead in spite of policy paralysis. But the movement you see in the built environment is still not ubiquitous. While parts of your sector are at world’s best practice, many other parts are not. We know, for example, that a new office building built today under our national construction code will be about 20% less energy efficient than a similar building built under the construction codes in the United State and China.
Whilst we welcome changes to the code in the commercial sector that will be ushered in in 2019, we share the sector's frustration at the slow pace at which similar improvements are being made in the residential code, and also your frustration at the lack of a medium and long term trajectory that sets a pathway for de-carbonising this sector, along with the rest of the economy.
Obviously time doesn’t permit me, unfortunately, to talk about the broader challenges in the energy sector, particularly the development of a policy framework to guide investment in the sector beyond 2020. The latest idea from the Government - the National Energy Guarantee - we hope can still be the basis for a possible bi-partisan solution this year. But we are concerned that, on Bloomberg’s analysis of the modelling released thus far, the NEG or the National Energy Guarantee would see a 95% cut in investment in large-scale renewables through the course of the 2020s when matched against current investment levels. That can’t be good for the future of our country.
Labor is also committed to giving a heart-starter to energy efficiency in this country, which the latest NEPP or National Energy Productivity Plan report shows is slowing even against our historically slow rates. The latest NEPP report indicated that the last full year results saw energy efficiency in Australia improve by only 0.4% against a 15 year average of 1.7%.
The Australian Investment Guarantee that Labor announced yesterday that will see an immediate depreciation of 20% of investments, including investments designed to improve energy efficiency, is part of our attempt to give that heart-starter to the cause of saving energy - rather than just taking a supply-side perspective to energy policy.
So with those brief thoughts can I thank the Green Building Council and the Property Council for a number of things: for continuing to develop innovative thinking in this area and de-carbonisation more broadly- for pushing governments and oppositions at state and federal level to be more ambitious in this area, and for showcasing the great work that already is happening in the built environment.