MALCOLM Turnbull has neatly summed up a problem which could shred the political and economic underpinnings of the Federal Government’s climate change legislation.
``We will mine and export less coal in Australia; they will mine and export more coal in Indonesia,’’ he said last week.
That is a lean but fair summation of what some of Australia’s biggest mining companies have been telling the Government, independently and through the Minerals Council.
They have been warning that billions of dollars in national income and thousands of jobs in the coal industry could disappear.
``Rio Tinto’s analysis also shows some coal mines that were considered `long life’ would close around 2020,’’ said a previously unreported submission to a Senate inquiry.
The Rio Tinto document also says: ``The package does not recognise the vital role coal plays in maintaining secure power supply globally or as Australia’s leading export earner.’’
These warnings have come to the fore after the Government’s adviser Ross Garnaut last week said the proposed laws would be too costly, and ineffective in fighting climate change.
So what’s the point of restricting one of the nation’s biggest industries if no climate change good comes from it?
A further point is: Why give a greater market share to coal miners overseas who have less interest in climate change and have worse emission records?
Beyond the economics of the issue, the Government will have to face unrest in the coal states of NSW and Queensland in particular, as well as Victoria.
NSW already will be a difficult state for Labor to grow, given the unpopularity of the State Government and the personal controversy around federal MPs Belinda Neal in Robertson, and Craig Thomson in Dobell.
In Queensland, the Nationals senators Barnaby Joyce and Ron Boswell, and party federal leader Warren Truss, have been campaigning non-stop in favour of the local coal producers.
And they will be having a significant regional effect.
Malcolm Turnbull’s city neighbours in Wentworth might be climate change activists, but in the areas in which he will need votes to take government they are wary of the whole issue.
Particularly if their or their children’s jobs are at stake.
Job losses could quickly follow the start of its climate change legislation in mid-2010, just before a federal election is expected.
The Government has been fighting its most prominent climate change battles with those who believe it has not gone far enough with its legislation. However, the most important political debate will be with the many who will think it has gone too far.
The legislation contains an Emission Trading Scheme which will oblige polluting industries to buy permits to cover their carbon output. The Carbon Pollution Reduction Scheme legislation proposes free permits for industries which are energy intensive and trade exposed (EITE). This would be to compensate for their bigger power consumption and for the fact that overseas rivals won’t have the same anti-pollution costs.
The coal industry fits the qualifications for the free permits, but instead will get a $750million adjustment package over five years.
The result, says the coal mining industry, will be closed mines, reduced investment, and retrenchments.
And the adjustment package won’t mean much, according to Rio Tinto in its submission to a Senate inquiry.
``Investment timelines for the coal industry are measured in decades so a five year package does not mitigate the disincentive to invest in the Australian coal industry,’’ said the submission dated April 7.
It said: ``According to our analysis, some Rio Tinto coal mines that are `long life’ would close around 2020 under the scheme due to the treatment and the delays on coal seam methane measurement matters. Any reduction in Australian coal exports will be taken up by competitors in countries without comparable climate policy, negating environmental benefits.’’
Xstrata chairman Peter Coates has also identified coal as a victim of the proposed climate change laws, and joined the industry claims that there was ``political’’ motivation behind this.
In confidential briefings to MPs of all parties Coates has pointed out that the coal industry provided $15 billion a year in salaries, wages and foods and services; $4 billion in state royalties; and $2.5 billion in indirect taxes.
He has forecast ``over 2000 redundancies in coal mining with more to come.’’