Latest news with #RossGarnaut
Sydney Morning Herald
11-05-2025
- Business
- Sydney Morning Herald
Ross Garnaut: Prophet with a sunny vision of our glorious future
What we need is some sort of economist prophet who can help us overcome this existential threat, not an army of blinkered economists telling us all that matters is raising our material standard of living. Fortunately, among the profession's abundance of unproductive thinkers is a lone prophetic, and so productive, thinker, Professor Ross Garnaut, who sees not only how we can minimise the economic cost of the transition to clean energy, but also what we can do for an encore. What we can do to fill the vacuum left by the looming collapse of our fossil fuel export business (which, by chance, happens to be our highest-productivity industry). Because economists are such incurious people, Garnaut seems to have been the first among them to notice that, purely by chance, Australia's natural endowment also includes a relative abundance of sun and wind. Until now, we thought these were non-resources and of little or no commercial value. It took Garnaut to point out that, in a post-carbon world, they had the potential be our new-found comparative advantage. To provide us with a whole new way of making a bundle from exports, while generating many new jobs for the miners to move to. When you add the possibility of structural change to the rules of conventional economics, you get what's a scary thought for many economists: maybe our natural endowment isn't ordained by the economic gods to be unchangeable through all eternity. Maybe there are interventions fallible governments should be making to move our economic activity from one dimension of our natural endowment to another. Maybe such a switch is too high-risk and involves too many 'positive externalities' (monetary benefits than can't be captured by the business doing the investing) for us to wait for market forces to take us to this brave new world. Loading Maybe changing circumstances can change the nature of our comparative advantage in international trade, meaning the government has to nudge the private sector in a new direction. It was Garnaut who first had the vision of transforming Australia into a 'Superpower' in a world of ubiquitous renewable energy. And it was he who uncovered the facts that made this goal plausible. Exporting our fossil fuels is cheap, whereas exporting renewable energy would be much more expensive. So whereas it was more economic to send our coal and iron ore overseas to be turned into steel, in the post-carbon world it soon will be more economic to produce green iron and other green metals in Australia and then export them. In a speech last week, Garnaut acknowledged that, in its first term, the Albanese government began to lay the policy foundations for the Superpower project. The economic principles are set out clearly and well by Treasury's 'national interest framework' for A Future made in Australia, released after last year's budget, he says. The re-elected Albanese government has already restated its commitment to the project. Garnaut says there's much more for the government to do in creating the right incentives for our manufacturers to re-organise and expand. Loading Research sponsored by his Superpower Institute finds that Australian exports of goods embodying renewable energy could reduce global emissions by up to 10 per cent. So we can contribute disproportionately to global decarbonisation by supplying goods embodying renewable energy that the high-income economies of Northeast Asia and Europe cannot supply at reasonable cost from their own resources. This would 'generate export income for Australians vastly in excess of that provided by the gas and coal industries that will decline as the world moves to net zero emissions over the next few decades'. Garnaut concludes: 'The new industries are large enough to drive restoration of growth in Australian productivity and living standards after the dozen years of stagnation that began in 2013.' The present fashion of obsessing with productivity improvement for its own sake is counterproductive and probably won't achieve much. We should get our priorities right and focus on fixing our most fundamental problems – unfairness between the generations, action on climate change and fully exploiting the opportunities presented by our newfound strength in renewable energy – and let productivity look after itself.
The Age
11-05-2025
- Business
- The Age
Ross Garnaut: Prophet with a sunny vision of our glorious future
What we need is some sort of economist prophet who can help us overcome this existential threat, not an army of blinkered economists telling us all that matters is raising our material standard of living. Fortunately, among the profession's abundance of unproductive thinkers is a lone prophetic, and so productive, thinker, Professor Ross Garnaut, who sees not only how we can minimise the economic cost of the transition to clean energy, but also what we can do for an encore. What we can do to fill the vacuum left by the looming collapse of our fossil fuel export business (which, by chance, happens to be our highest-productivity industry). Because economists are such incurious people, Garnaut seems to have been the first among them to notice that, purely by chance, Australia's natural endowment also includes a relative abundance of sun and wind. Until now, we thought these were non-resources and of little or no commercial value. It took Garnaut to point out that, in a post-carbon world, they had the potential be our new-found comparative advantage. To provide us with a whole new way of making a bundle from exports, while generating many new jobs for the miners to move to. When you add the possibility of structural change to the rules of conventional economics, you get what's a scary thought for many economists: maybe our natural endowment isn't ordained by the economic gods to be unchangeable through all eternity. Maybe there are interventions fallible governments should be making to move our economic activity from one dimension of our natural endowment to another. Maybe such a switch is too high-risk and involves too many 'positive externalities' (monetary benefits than can't be captured by the business doing the investing) for us to wait for market forces to take us to this brave new world. Loading Maybe changing circumstances can change the nature of our comparative advantage in international trade, meaning the government has to nudge the private sector in a new direction. It was Garnaut who first had the vision of transforming Australia into a 'Superpower' in a world of ubiquitous renewable energy. And it was he who uncovered the facts that made this goal plausible. Exporting our fossil fuels is cheap, whereas exporting renewable energy would be much more expensive. So whereas it was more economic to send our coal and iron ore overseas to be turned into steel, in the post-carbon world it soon will be more economic to produce green iron and other green metals in Australia and then export them. In a speech last week, Garnaut acknowledged that, in its first term, the Albanese government began to lay the policy foundations for the Superpower project. The economic principles are set out clearly and well by Treasury's 'national interest framework' for A Future made in Australia, released after last year's budget, he says. The re-elected Albanese government has already restated its commitment to the project. Garnaut says there's much more for the government to do in creating the right incentives for our manufacturers to re-organise and expand. Loading Research sponsored by his Superpower Institute finds that Australian exports of goods embodying renewable energy could reduce global emissions by up to 10 per cent. So we can contribute disproportionately to global decarbonisation by supplying goods embodying renewable energy that the high-income economies of Northeast Asia and Europe cannot supply at reasonable cost from their own resources. This would 'generate export income for Australians vastly in excess of that provided by the gas and coal industries that will decline as the world moves to net zero emissions over the next few decades'. Garnaut concludes: 'The new industries are large enough to drive restoration of growth in Australian productivity and living standards after the dozen years of stagnation that began in 2013.' The present fashion of obsessing with productivity improvement for its own sake is counterproductive and probably won't achieve much. We should get our priorities right and focus on fixing our most fundamental problems – unfairness between the generations, action on climate change and fully exploiting the opportunities presented by our newfound strength in renewable energy – and let productivity look after itself.
ABC News
10-05-2025
- Business
- ABC News
Ross Garnaut says Labor's historic victory could change global energy trade
Ross Garnaut says this moment is significant. Four days after Labor's historic election victory last weekend, the leading economist delivered the opening address at the national conference of the Energy Users' Association of Australia (EUAA) in Melbourne. It was Wednesday morning, and the room was full of representatives from Australia's electricity and gas retail markets, regulators and academia. Garnaut told the audience that Labor's historic victory should toll the death knell for the political conflict and policy instability that had plagued Australia's energy "debate" for so many years. He didn't mince his words. "Companies represented here in this energy users' conference have contributed their fair shares to the dysfunctional political disputation that has disrupted and blocked good policy over the past dozen years," he told them. "Few companies now would prefer the instability and dysfunction of the past dozen years to the carbon pricing that was working effectively from mid-2012 to mid-2014. "But major energy companies contributed to the destruction of a sound, market-friendly approach to removing emissions. "Somehow we have ended up subsidising coal-power generation, and with average prices for coal and gas power many times those for the renewable energy that we are meant to be encouraging. "The decisive Albanese victory last Saturday creates an historic opportunity to change — for the government, and for business relations with the policy process," he argued. And that wasn't all he said. You can read his speech here. Garnaut told the audience Prime Minister Anthony Albanese's historic victory was reminiscent of John Curtin's famous victory in 1943 that paved the way for policies that led to decades of full employment with rising incomes after World War II, which altered Australian history. He said another epoch-making opportunity beckoned this time, but with energy and trade policy. He said the scale and nature of this moment for Labor was set out in The Superpower Institute's paper, The New Energy Trade, which was published in November (Garnaut is a director of the Superpower Institute). He said that paper explained how Australia could change the global energy trade, and drive domestic economic growth for decades to come, by leveraging its vast renewable energy capacity to become a leader in the so-called "superpower trade". As the paper explained: "This world-first analysis examines the potential for Australia to export green energy-intensive goods — such as green iron, steel, aluminium, silicon and ammonia — that embed clean energy into essential materials for the global economy. "With world-leading solar and wind resources, abundant land, and a relatively small population, Australia has the capacity to produce renewable energy at scale and export it in the form of energy-intensive goods. "This comparative advantage positions Australia as a natural leader in the global clean energy trade. "The superpower trade offers economic opportunities that far exceed the scale of traditional fossil fuel exports. Revenue from green exports could surpass coal and gas earnings by 6 to 8 times, driving the creation of high-value jobs and new industries. "At full scale, Australia's contributions to global decarbonisation could reduce global emissions by up to 9.6 per cent of 2021 levels by 2060." Garnaut said it was understandable if most people still hadn't grasped how significant this could be for Australia. But he said the new industries involved in the "superpower trade" would be large enough to drive the restoration of Australia's productivity growth and living standards that was so desperately needed after "the dozen years of stagnation that began in 2013". Garnaut said Australia's diplomatic community had a crucial role to play now. He said our future prosperity depended on international cooperation continuing in the climate space, and Australia's superpower transformation would require other countries to keep cutting emissions. "Contemporary and emerging international conditions allow Australia to make a strong start in exporting zero-carbon goods," he said. "Australian diplomacy and policy can help to preserve and expand those conditions." He said that in a world in which many countries wanted to keep cutting emissions, the economics would favour Australia. Why? Because Australia had unique resources to capture a valuable "green premium" in the global production process by using "green hydrogen" to produce zero-carbon products for export that were currently made overseas with Australian coal and gas. Green hydrogen is hydrogen that's produced with renewable energy sources (such as solar and wind) without emitting greenhouse gases. "We need other countries to be reducing emissions," he told the audience. "We can make a good start in building profitable superpower export industries if other countries are making a good start with reducing the emissions-intensity of economic activity." He said the Trump administration's rejection of scientific physics and its withdrawal from international climate agreements and trade co-operation had not yet reduced the prospects for "the Australian superpower" either. But Australian diplomacy would have to ensure that that remained the case, he said. "China, already having accelerated its own decarbonisation as the economy moved out of its COVID slump, has seen geopolitical as well as economic opportunity in strengthening commitment to international cooperation beyond the US on both trade and climate," he said. As an aside, that adds another dimension to the comparison between Labor's historic election win last weekend and John Curtin's famous victory in 1943. In the 1940s, Australian diplomatic effort was spent imploring other countries to adopt full-employment policies after World War II, on the logic that full employment in other countries would help Australia to maintain full employment at home (and lift incomes and living standards for everyone in the process). This time around, a similar logic would apply to Australian green diplomacy. What do we need for this economic transformation to happen? Garnaut said the reason why we hadn't seen much investment in the industries of the future, despite Australia's advantages, was because the policy foundations hadn't been properly laid. The last dozen years of political conflict and policy uncertainty haven't helped. But he said that in the past three years the policy foundations had begun to be laid, and Australia's federal and state governments now had the opportunity to build on those foundations within a more predictable policy environment. "Get the policy foundations right, and we will be surprised how rapidly and cheaply we move to zero net emissions in the energy sector," he told the conference. "And we will be surprised how quickly growth in energy-intensive export industries drives productivity and output growth through a major transformation of the Australian economy. "By mid-century, the electricity system driving Australian economic development can be 10 times and more as large as that which powers Australia today. "Let's make sure that our thoughts about policy are big enough to allow that future to emerge," he said. And he said the rumours of hydrogen's death were exaggerated. "Several of the most important potential superpower industries use hydrogen made with renewable energy," he said. "Recent announcements that many prominent hydrogen projects have been closed or shelved have generated talk that hydrogen is dead or too underdeveloped for independent life. "Like Mark Twain's death, those rumours are exaggerated. "Apply sound economic principles to policy and the first hydrogen-based investments in new export industries are ready to go now." He said hydrogen-based iron-making was ready for investment now in the Upper Spencer Gulf of South Australia. He said Whyalla would have a sustainable future in iron-making based on green hydrogen, or it would have no sustainable future at all. "Once in place, no-one will ever again consider investment in extending the life of old, or building new, coal-based or gas-based iron-making in the five states covered by the National Electricity Market," he argued. "The world steel industry's eyes will turn to Australia as the locus of much of the solution to decarbonisation of an industry accounting for 8 per cent of global emissions. "We will have placed Australia on the escalator to the superpower," he said.
ABC News
06-05-2025
- Business
- ABC News
Economist urges Labor to follow in footsteps of Curtin and Hawke with ambitious reform
The Albanese government has an opportunity to "change Australia forever" in the next three years, economist Ross Garnaut says. He says Labor's historic election victory on the weekend was reminiscent of John Curtin's famous victory in 1943 that paved the way for policies that led to decades of full employment with rising incomes after World War II, which permanently altered Australian history. "There's an opportunity to do something like that again," he told the ABC. Historic opportunity to reshape Australia Professor Garnaut was a key member of Australia's last generation of genuine economic reformers. He was principal economic adviser to Labor prime minister Bob Hawke from 1983 to 1985, a period in which Australia's dollar was floated, Australia's first affordable and universal system of health insurance was introduced (Medicare), and wages and income policies helped to finally rid the economy of stagflation. He said the Albanese government had a lot of work to do and it would not be able to do everything in this next three-year term. Photo shows Ross Garnaut leans on a dead tree. Ross Garnaut says we have an opportunity to pursue "transformational economic reform" by tackling the rising problem of economic rents, writes Gareth Hutchens. But it could still do "a lot of big reform" with the policy framework it put to the election on the weekend, and it could build on that foundation. And, he said, its desire to deliver productivity-enhancing reforms would benefit from focusing on two things in particular in the next three years: a return to full employment, and getting the energy transition right. "Australia's had unnecessarily high unemployment for too long, certainly since 2013, and we can take unemployment lower without risking inflation," Professor Garnaut told the ABC's The Business. "I think the Reserve Bank's been learning lessons about mistakes it's made over the past 12 years, and it's ready to support the government in moving to genuinely full employment. "That will do wonders for the budget deficit. It will also lay the foundations in the community for acceptance of the structural change that's necessary for rising incomes," he said. You can see his interview in the video below. Loading YouTube content Professor Garnaut said the Albanese government had to get the energy transition right in this term, and grasp the opportunities to build new zero-carbon industries that would be in great demand in coming decades. "These are the most important things that have to be done, and the government has laid a foundation in its first term for doing them," he said. He said the government was now free to push ahead with its "Some will be necessary, but we're actually using less gas now than we did a few years ago, and we will need less in a few years' time than we need now," he said. Photo shows Mining haul trucks working in an open cut mine. Australian policymakers have blown the mining boom, and it will take years to turn things around, says former Treasury secretary Ken Henry. And on the topic of tax reform, he said there were great ideas sitting in the Henry Tax Review that could be implemented, especially the idea of a minerals resource rent tax, and Australia's economy would benefit from having a carbon price, but those could be ideas for down the track. "They'll be in no hurry to add new things to what's a pretty big agenda," he said. "I don't think they'll start with that, but let's let the policy discussion run, and if we have a good discussion about what's necessary for raising productivity in Australia, raising Australian incomes in the longer term, if business talks the truth and is prepared to point out the advantages of carbon pricing so we can let markets work, if all those things happen, then a foundation can be laid for carbon pricing sometime in the future," he said. In late 2023, Professor Garnaut pointed out that Australia's government would now be collecting He said that money could have been used to pay for a lot of important tax reform in the last decade. Time for major tax reform Other economists say the time is ripe for Australia to have a genuine conversation about tax reform. Sally Auld, NAB's chief economist, says the first nine months of last year were "pretty difficult" for the economy but things did seem to pick up in the fourth quarter, and she expected that momentum to continue into this year. She said the improvement in the economy would provide a decent foundation for 2025 and beyond. NAB chief economist Sally Auld says we need to fix the tax system and improve productivity. ( ABC News: John Gunn ) "One of the good things we have going for us in Australia at the moment is the government starts its second term with the unemployment rate very low, [and] with inflation … almost where the Reserve Bank wants it to be," she told the ABC. "That's a really encouraging starting point for us. "The global backdrop is clearly more challenging, and you know, a lot of that has come about through quite a significant shift in US trade policy. Businesses that are exposed to that global environment are clearly facing into very elevated levels of uncertainty. "But all else equal … we do think the Australian economy is probably well-placed to navigate some of those challenges," she said. Ms Auld said the Albanese government's election win, which resulted in an increased majority, would provide financial markets, investors and forecasters with a sense of certainty and predictability about the near-term future. She said the Reserve Bank had capacity to cut interest rates "quite aggressively" in coming years if the global economy were to deteriorate a lot. Photo shows Ken Henry #2 Australia's tax system is stacked so heavily against younger people that it's threatening the social compact, former Treasury secretary Ken Henry has warned. And on the topic of tax reform, she said Australia needed to talk seriously about ways to lift productivity and fix the structural problems with the federal budget. She said we needed to find ways to redistribute some of the tax burden away from taxing incomes so heavily, to taxing other parts of the economy. "We know we have to raise tax revenue, because that's how we fund many of the things that you know are important to Australian voters, whether it's the health system or, you know, tertiary education, or whatever it might be," she said. "We have to have a discussion about, like, what is not just the most efficient way to do that, but what is also an equitable way to do that. "We know from many years ago when Ken Henry did the White Paper on tax reform that there's a lot that … could have been done, but, you know, governments of both sides of politics have, up until now, not really decided to front up to the challenge," she said.
