15/02/2021

(AU) The Government Is Stuck In The Fallacy Of Debt And Deficit While Ignoring The Climate Crisis

The Guardian - 

Do we really want to say in a decade’s time that we couldn’t spend money on lowering emissions because we were worried about interest rates?

‘We are ... at a crucial moment, which requires massive investment in order to lower emissions.’ Photograph: David Crosling/AAP

Despite a year in which there was a massive increase in government debt that had no discernible impact on interest rates or inflation, our politics remains stuck in the fallacy of debt and deficit, even in the face of the great crisis of climate change.

One of economist John Maynard Keynes’ most repeated aphorisms is “when the facts change, I change my mind. What do you do, sir?” There is no evidence he ever said such a thing, which is just as well because while many utter the line, few follow through.

Usually, the change of mind is brief, until the facts can once again be dismissed.

For all of my lifetime, the Liberal party has sowed fear of government debt and budget deficits because they said it would increase inflation and interest rates.

In 2010 Mathias Cormann told parliament that GFC stimulus “has delivered record levels of debt and record levels of deficit and which has been putting upward pressure on interest rates and inflation”.

At that time the cash rate was 4.75%. Since then government net debt has gone from 3.7% of GDP to 34% and yet the cash rate is now 0.1%.

But hey, “facts”.

Then when the pandemic hit, the facts changed and so did their minds.

Last year, Cormann responded to questions about the massive increase in the budget deficit by saying “what is the alternative? Are you suggesting that we should not have provided the support we did to boost our health system, to protect jobs, to protect livelihoods? I mean, in the circumstances what was the alternative.”

It was a good answer and remains so even though this week the parliamentary budget office revealed government net debt has increased by 42% in one year from $430bn to $611bn.

And yet there has been no increase in the amount the government needs repaying because interest rates have actually fallen.



The PBO estimated that in the December quarter last year debt interest repayments were $4.1bn – the same amount it was in December 2016 when total debt was half the current level.

Imagine doubling your mortgage, but not your fortnightly repayments.

In December 2016 the government paid around 2.8% interest on a 10-year bond; right now it is paying around 1.2%.

And yet despite this, the fear of debt and deficit has returned.

On Friday the man who took over Cormann’s role as finance minister, Simon Birmingham, said in a speech to the Australia-Israel Chamber of Commerce that if interest rates converge to their long-run level the “increase in interest payments alone would add a further $44.5bn to gross debt in a decade’s time”.

He further suggested that “you don’t run an Australian economy on crisis settings when you’ve got through the crisis”.

Except, of course, we currently are in the greatest crisis to face the world’s economy – climate change.

We are also at a crucial moment, which requires massive investment in order to lower emissions.

The EU are moving towards imposing a carbon import levy, and Australia now finds itself utterly struggling to make the cuts required to keep temperatures from rising 2C above pre-industrial levels.

The Coalition only sees a crisis when it wants to. It refused to admit the GFC was one, and has never treated climate change as anything other than something to be mostly ignored.

But despite all contrary evidence, they keep saying rising debt is a crisis.

Do we really want to be telling people in a decade’s time that we couldn’t spend money needed to lower our emissions because interest rates were 1.2% and we were worried they might rise?

The Coalition reacted to the economic impact of Covid-19 by dismissing concerns about debt. And yet when faced with a much greater impact of climate change they remain wedded to old canards that have been shown not to hold.

But, to paraphrase Cormann, what is the alternative? Are you suggesting that we should not provide the support we need to get to net zero emissions to protect jobs, to protect livelihoods?

Unless you deny climate change, there is no alternative.

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(AU) Climate Change Inaction Spurs Berowra Residents To Take Some Action Themselves With Local Ideas

ABC Radio - Amanda Hoh

Kate Friend installed solar panels last year and hopes other Berowra residents will follow her lead. (ABC Sydney: Amanda Hoh)

Key points
  • The Berowra Climate Change Action Group was established after the 2019/2020 bushfires
  • Founder Kate Friend hopes to introduce a solar hub to reduce the suburb's carbon footprint
  • The local council is looking to set up similar infrastructure in other local villages
In late 2019 when Australia's first "mega-blaze" tore through Gospers Mountain in northern Sydney, all Kate Friend felt was hopelessness.

If the fire had managed to cross the valley into the bushland shire at Berowra Heights it would have been at her doorstep.

Smoke wafted over her home for weeks, the sky was tinged orange for days, and Ms Friend's husband was on standby with the Rural Fire Service.

But rather than cower from the experience it sparked Ms Friend, a scientist who works as a business development consultant, to make a change.

"I was really frustrated about the lack of [government] action and the hopelessness that we all felt [during the bushfires]," she said.

"The problem of climate change is so huge that it's almost unattainable.
"However, I do think there are steps we can do as a community and as individuals that can make an impact and a change."
Anatomy of a 'mega-blaze'
As the first Black Summer inquiry prepares to report, we reveal the inside story of Australia's biggest bushfire. Read more...
With the drive to make that impact "from home", Ms Friend launched the Berowra Climate Change Action Group.

The first meeting at the local pub last year saw 30 residents show up to lend their support.

The pandemic stalled any further activities for the group, however Ms Friend relaunched it last week with the backing of Hornsby Shire councillor Nathan Tilbury and NSW Energy and Environment Minister Matt Kean who attended the meeting.

There are now at least 60 local residents that have signed up to the group.

Kate and her family have lived in Berowra for about eight years. (ABC Sydney: Amanda Hoh)
"The community has my back," Ms Friend said.

"I'm surprised there are more people interested in actual action on climate change.

"Like me, they are all frustrated, wondering what we can do, so they are all on-board with being a part of the change that's happening."

What do they hope to achieve?

Ms Friend is focused on setting up a solar hub for the suburb.

That would involve putting solar panels on council owned buildings, schools, sporting precincts, churches, and residential houses, and harvesting excess electricity to feed into the grid and back into the suburb.

She also wants incentives to encourage residents to install a water tank in their home and believes this could be established within three months.

The Berowra Climate Change Action Group has council backing to establish local sustainability projects. (ABC Sydney: Amanda Hoh)

Both ideas are backed by Hornsby Shire Council.
"It is on the agenda already and we know at council that if we have the community behind us it gives us a lot better chance at being successful," Cr Tilbury said.
"I believe state and federal [governments] have grants for that sort of thing.

"We have a couple of isolated communities like Brooklyn and Cowan who are also looking to do something similar."

Is there a precedent?

 Berowra is not the first suburb to take the battle against climate change into their own hands.

The NSW town of Tyalgum has been working for the past few years to take themselves off the grid entirely.

Since the devastating bushfires in 2019 and 2020, electricity companies have trialled standalone solar systems in rural and regional towns.

NSW Energy and Environment Minister Matt Kean was a guest speaker at the launch of the group. (ABC Sydney: Amanda Hoh)
Mr Kean said everyone had a role to play — from government down to grassroots community action groups.

"It starts with government, it starts with government leadership putting strong policy settings in place, and that's what I've done in NSW," he said.

"Working with people who care about their community, people who care about the planet, is exactly how we're going to solve this problem."

While setting up the infrastructure for a solar hub in Berowra could still be some time away, Ms Friend is determined to see it through.

"In terms of a timeline it might take us a while, but I have no doubt we can achieve this," she said.

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