17/04/2012 - 09:15

Analysis: the real cost of going green

17/04/2012 - 09:15

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If a country has one world-class industry in a sea of international trouble why would you want to hobble it or, at worst, close it? That, in a nutshell, is the question the new Greens leader, Senator Milne, must answer.

Mining is the industry that is keeping Australia’s head above the economic waters where other countries are drowning.

Without a vibrant and profitable mining sector Australia would be facing the same problems which last night sent Spain closer to the edge of financial collapse.

Unfortunately, Senator Milne probably cannot see the connection between the appalling mess that Europe finds itself in, and the pursuit of ideologies which defy economic logic.

The European project, as anyone on the outside can see, is a failed experiment in attempting to force a number of fiercely independent countries into a single entity.

It has not worked because some of the countries in the group have few internationally competitive industries and are now technically bankrupt, surviving by cash hand-outs from countries with strong economy. Germany, for example, is propping up Greece and Italy, and will soon be asked to extend more credit to Spain.

Australia has survived, and parts have prospered, over the past five years thanks to Chinese demand for our resources. Without China, Australia would be in a similar position to some of the failed European states – but without a Germany to prop us up.

Some people in the south-east corner of Australia do not like what has happened since the start of the global financial crisis of 2008. They resent the migration of wealth from their part of the country to the west and the north, and they see the rise of the resources sector as the cause of problems in the manufacturing sector.

They might be partially right in that belief, and can certainly point to the high value of the Australian dollar as proof of the problems which have hurt manufacturing.

But, to expand that opinion into a belief that killing sections of the resources sector, such as coalmining, would aid manufacturing is not just wrong, it is farcical.

What appears to be occurring in the mind of Senator Milne and other members of her Green Party is that they link all forms of resource development with environmental damage and carbon pollution which, in turn, leads to climate change.

Once that view is set in concrete it is a logical step to argue that shutting the resources sector will limit environmental damage to the countryside, cut production of carbon dioxide, and help prevent climate change.

There are two problems with that set of beliefs.

Firstly, the Australian economy is (and has always been) dependent on the success of its resources sector, whether goldmining in Victoria in the 19th century, or coal in Queensland in the 21st.

Secondly, very few Australian manufacturers can compete with their high-volume, low-cost, Asian competitors which means that even with a sharp fall in the value of the Australian dollar they would still struggle.

Logic, however, is not high on the Green agenda with mining damned by Senator Milne in her first day as leader of her party as “rapacious”. On her second day in the job, the Greens leader blamed the Leader of the Opposition, Tony Abbott, for difficulties associated with a push by the government to return its budget to surplus.

According to the Senator Milne it is the Opposition which is the problem because it expects the Prime Minister, Julia Gillard, to keep her promise of a budget surplus when it would be better to break that promise and expand the budget deficit.

Disregarding the issue of broken promises it is astonishing that in the same week that Spain joined the list of European failures, caused by over-spending and huge budget deficits, the same economic strategy is suggested for Australia.

In a nutshell, the Green agenda is to spend merrily, break promises, raise taxes, and exterminate the country’s most competitive industry.

It is such an appalling set of proposals that most Australians will not know whether to laugh or cry.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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