Aussie Treasurer Josh Frydenberg with Siti Nurbaya Bakar, Indonesia's Minister of Environment and Forestry. By Australian Embassy Jakarta - Pertemuan Konferensi Tingkat Tinggi Hutan Hujan Asia Pasifik Ketiga, CC BY 2.0, link

Aussie Federal Treasurer Pushes for a Climate Unicorn Powered Economy

Guest essay by Eric Worrall

My question – if Australia’s green economy is such an amazing investment opportunity, why is $20 billion of taxpayer’s money needed to make it happen?

Financial markets are preparing for climate change and so must we

By Josh Frydenberg

September 24, 2021 — 12.00am

From the industrial revolution to the digital age, financial markets have been affected by significant structural change. Each time it drives a reassessment of risk and value and, in turn, asset allocation.

Climate change is no different.

Markets are moving as governments, regulators, central banks and investors are preparing for a lower-emissions future. It’s a long-term shift, not a short-term shock.

Historically, Australia has relied heavily on imported capital to fund our economy. Whether it’s in the form of foreign investment, the stock of which currently stands at $4 trillion, or in the form of wholesale funding of our banking system, with around 20 per cent sourced offshore.

When it comes to Commonwealth government bonds, close to half are held by foreign investors. Reduced access to these capital markets would increase borrowing costs affecting everything from interest rates on home loans and small business loans, to the financial viability of large-scale infrastructure projects. Australia has a lot at stake.

We cannot run the risk that markets falsely assume we are not transitioning in line with the rest of the world. Were we to find ourselves in that position, it would increase the cost of capital and reduce its availability, be it debt or equity.

One in 4 Australian households have solar panels, the highest rate on a per capita basis anywhere in the world. Our technology investment road map will guide $20 billion in government funding and is expected to leverage $80 billion in total investment by 2030.

Snowy 2.0 in NSW, Battery of the Nation in Tasmania and new interconnectors around the country will create a more reliable, affordable and lower emissions energy system.

Partnerships with Japan, Germany, Singapore, and the United Kingdom will also drive new energy investments particularly in hydrogen, where we have a comparative advantage.

Read more: https://www.smh.com.au/politics/federal/financial-markets-are-preparing-for-climate-change-and-so-must-we-20210923-p58ub4.html

My problem with Aussie Treasurer Josh Frydenberg’s vision, is none of these amazing green hydrogen markets and technological solutions to renewable energy stability actually exist.

Snowy 2.0 will not even come close to stabilising a 100% Aussie renewable grid. Snowy 2 will be impressive when it is fully “charged”, but how often will that happen? All we need is a series of bad years (not uncommon in Australia), or a prolonged wind drought in winter, and the snowy river hydroelectric “battery” will be way too flat to contribute meaningfully to the stability of the Australian electricity grid.

Another finance minister, Sir John Cowperthwaite, the legendary architect of the Asian Miracle, would have immediately understood the risks of Josh Frydenberg’s plan to throw billions of dollars of taxpayer’s money at the renewable industry.

His hands-off approach meant an almost daily battle with Whitehall. The British government insisted on higher income tax in Singapore; when they told Hong Kong to do the same, Cowperthwaite refused. He opposed giving special benefits to business; when a group of businessmen asked him to fund a tunnel across Hong Kong harbour, he argued that if it made economic sense, the private sector would pay for it (as indeed it did). His instincts were revealed in his first speech as financial secretary: “In the long run, the aggregate of decisions of individual businessmen, exercising individual judgment in a free economy, even if often mistaken, is less likely to do harm than the centralised decisions of a government, and certainly the harm is likely to be counteracted faster.

Read more: https://www.theguardian.com/news/2006/feb/08/guardianobituaries.mainsection

Cowperthwaite, like Frydenberg, pretty much went straight from university to government service. Cowperthwaite could have become yet another career public service nobody. But Sir John Cowperthwaite had a personal revelation which changed the world.

When Cowperthwaite arrived in Hong Kong shortly after the end of WW2, he expected to find the city in ruins, with everyone waiting with their hand out for government help to rebuild their lives. Instead, what Cowperthwaite saw was a bustle of activity. People had simply gotten on with rebuilding their own lives, without government help.

In this moment, the Asian Miracle was born. Cowperthwaite was so moved by what he saw, the revelation that people don’t need government help when what they are attempting makes economic sense, he dedicated the rest of his career to blocking well meaning but foolish attempts by the British Government to interfere with the Hong Kong economy. In time, Singapore, South Korea, Taiwan and eventually even Communist China copied Cowperthwaite’s high growth economic policies.

The Hong Kong businessmen in the story I quoted above ended up building that tunnel across Hong Kong Harbour using private money, because the tunnel made economic sense. The same cannot be said for Josh Frydenberg’s green vision.

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Scissor
September 24, 2021 4:06 pm

Unicorns make good …

ATheoK
Reply to  Scissor
September 24, 2021 7:21 pm

delusions.

Carbon Bigfoot
Reply to  Scissor
September 25, 2021 4:19 pm

They need the $20 billion to pay off the politicians and their crapatalistic buddies.

4 Eyes
September 24, 2021 4:38 pm

The Oz electorate voted against a green economy in the 2019 “climate change” election. Josh must have forgotten.

Peter K
Reply to  4 Eyes
September 24, 2021 4:52 pm

Correct. The opposition lost the last election on the same promises.

So what’s the return on investment. Global temperatures will decrease by 1.5C, CO2 will be reduced by 200ppm, electricity prices will decrease by 10c/unit?

Dennis
Reply to  4 Eyes
September 24, 2021 8:50 pm

How about a report to voters on what zero emissions would look like in the economy and related national prosperity resulting?

A referendum to ask voters what we want?

By the way, the UN is asking for more funding and 10% of every member nation’s GDP a year in future.

Remember The Australian Labor Government carbon tax? They admitted that their longer term plan was to invest the money into the European Emissions Trading Scheme, and in between times they agreed to remit 10% of carbon tax revenue to the UN.

At the roots of climate hoax and warming creative accounting is a grab for money and the powers that money buys.

Mr.
September 24, 2021 4:44 pm

As the “bagman” for Oz, Frydenberg needs to keep a sharp eye on where the $$$s are coming from and going to all around the world.

And with China drifting away as a prize customer, Josh needs to do some sucking up to possible replacements.

But as with all politicians, don’t take any notice of what they say, see what they actually do.

LdB
Reply to  Mr.
September 24, 2021 5:43 pm

It’s called lip service … it’s $20Billion which is aimed at getting $80 Billion in investment.
Work out the tax rate on that and it’s a net zero 🙂

Dennis
Reply to  Mr.
September 24, 2021 8:55 pm

Listen carefully to what the politicians are saying, Australia’s Federal Government is rightly claiming that Australia is one of the very few nations that achieved Kyoto Agreement emissions reductions and now on track to achieve the Paris Agreement emissions reductions, if this achievement was actually necessary, was not in my opinion.

And that Australia will participate in aiming for zero emissions by 2050 but not by penalising the people financially such as imposing a new carbon tax. The objective would be to base emissions reduction on advances in technology when and if achieved.

However, the pressure is coming from not only UN and IPCC, the globalists have managed to capture the minds of bankers and many multinational corporations and The Australian Government is under enormous pressure to cooperate or lose foreign investment etc. In other words blackmail.

Vincent
September 24, 2021 5:08 pm

Advertisements are created to sell products. This new policy announced by Frydenberg is basically an advertisement to encourage investment in Australia.

It makes economic sense within the context that most of our trading partners seem to foolishly believe that we can control the climate by reducing our CO2 emissions.

Dennis
Reply to  Vincent
September 24, 2021 9:03 pm

And all but ignore the major sources of emissions such as China, the designated developing nation now on track to rival the United States of America as the major global economy.

Then consider how many politicians have been involved in business and political activities with Chinese partners since the 1970s. And that many or most of them admit to being globalists first and foremost. Include now deceased Canadian billionaire Maurice Strong who was once a UN employee and later one of the architects of climate based hoax politics, he fled to China for asylum when the Canadian Police and Environmental Protection Agency were after him for illegally extracting water from under a property he owned. He was keen on the controlled and managed free enterprise system China has adopted by chosen citizens, one of his cousins was a close female friend of Chairman Mao Zedong.

China associates, global warming climate hoax (as compared to natural climate change), UN and the globalists and fellow travellers, all in this together and we the people are never consulted.

Sunshine
Reply to  Vincent
September 24, 2021 10:19 pm

In my area, the government is now rewarding electric vehicles by giving them a free pass, aka no toll fees on highways leading to metropolitan areas.

Dennis
Reply to  Sunshine
September 25, 2021 9:24 pm

It seems that too many governments in developed prosperous nations have forgotten that strong economies and prosperity comes from free enterprise, let the consumers and markets choose winners and losers on merit.

Governments should not subsidise and generally assist taxpayers/consumers monies.

Leo Smith
September 24, 2021 5:16 pm

My prime rule of investment is that the moment an investment is given exposure in the media, it has peaked and is being offloaded to a gullible public.

Ed Zuiderwijk
Reply to  Leo Smith
September 25, 2021 1:42 am

I once read a comment by an investment banker to the effect that ‘I know I have to sell when my wife suggests that I buy’.

Thomas Gasloli
September 24, 2021 5:23 pm

“if it made economic sense, the private sector would pay for it”

A sign saying that should be in the office of every politician and bureaucrat and hang in every congress, legislature, and parliament.

Dave Fair
Reply to  Thomas Gasloli
September 24, 2021 9:15 pm

It is much cheaper for the private sector to bribe politicians to get a huge return of “public” money for what they want. Crony Capitalism.

Last edited 23 days ago by Dave Fair
J.R.
Reply to  Thomas Gasloli
September 24, 2021 9:48 pm

We should send this quote to all of our elected representatives. Maybe in the form of bumper stickers.

H.R.
Reply to  J.R.
September 24, 2021 10:25 pm

Yeah, but the bumper stickers should be placed on their foreheads with permanent glue.

mikee
Reply to  Thomas Gasloli
September 25, 2021 2:29 am

And toilet cubicle!

Rory Forbes
September 24, 2021 5:28 pm

The big difference between Britain’s Sir John Cowperthwaite and Australia’s Josh Frydenberg is; Sir John was dealing with real problems in post World War II Hong Kong, an out post of Imperial Britain. Frydenberg is concocting pretentious baffle-gab to justify spending on a fantasy of socioeconomic manipulation.

JamesD
September 24, 2021 7:05 pm

You get $20 Billion and give $2 million in bonus to the owner. He kicks back a few $100K to the politicians. $2 million is a rounding error. The bigger the project, the more you can loot.

Patrick MJD
September 25, 2021 1:38 am

Election year looming.

2hotel9
September 25, 2021 3:52 am

It is only an “investment” opportunity for grifters, conmen, thieves and liars.

Maureen Matthew
September 25, 2021 6:00 am

How cold does it ever get in Australia? I live on the Canadian prairies, and winter temps in Jan can easily hit minus 40c and for 2, 3 ,4 weeks at a time. In fact we has minus temps in June. And it is already getting dark by 5:30 in the evening, soon it will be dark by 4:30 with the sun not up until 9ish. I want heat and power on demand, not whenever the authorities get around to it.

Patrick MJD
Reply to  Maureen Matthew
September 25, 2021 7:29 am

Depends. Absolute temperatures, they are not too cold, and I am originally from the UK. But with advancing years and “familiarity” with temperatures here in Sydney, I do find it cold sometimes. But not minus 40c. At worst a few degrees below zero in winter, plus ~40c in summer.

Maureen
Reply to  Patrick MJD
September 26, 2021 1:54 am

We had a run of plus high 30s C in July and August, the a/c was a joy. And you sound like my parents who grew up on the Canadian prairies but retired to the Vancouver area and complained how cold it was with temperatures of 0c!

niceguy
September 25, 2021 9:17 am

Who promoted these experts?
Who selected this ruling class?

Patrick MJD
Reply to  niceguy
September 26, 2021 6:17 am

In NSW, they are lawyers.

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