Extract from ABC News
A week before the 1983 election, Bob Hawke rang economist Ross Garnaut to talk about whether Garnaut would work for the likely next prime minister of Australia as his economic adviser.
"I know it wasn't in our policy to get rid of protection," Garnaut this week recounted Hawke saying to him, "but one of the reasons I want you to work for me is what you have been writing about that for the last 10 years".
And he said: "We can't do it tomorrow. We'll start educating people tomorrow. I'll be making speeches explaining the advantages of it, how we won't drop it on them without them understanding what is going on."
"He said basically, this is what we should do but it is impossible."
It turned out getting rid of protection wasn't impossible — though it would take around a decade to get rid of most of it and would challenge the government of the day to find new ways to persuade the electorate, and new ways to try to ease the transition for the communities inevitably affected by the decline of the steel, car, textile, clothing and footwear industries, among others.
The trick to getting political acceptance of a major change proved to be combining the economic problems of the time, the economic pressures being felt by voters, and the power of government to help fund and drive that change.
There would be winners and losers. There would be a clear bargain — which of course is what lies at the heart of all real politics. Not just the delusion that everyone will always be better off.
There can't only be winners
It's been a while since we have had many successful political debates that conceded there might be losers as well as winners, or that the issue at hand was about more than the immediate transaction.
For example, remember all those tax cuts John Howard and Peter Costello handed out early this century thanks to the revenue delivered by the resources boom, with no apparent cost to anyone?
Compare them even with Howard's somersault on the GST.
Howard is now lauded for his courage in introducing a goods and services tax.
This was a good policy call but what is forgotten are the political and policy mechanics which made it acceptable to voters at the time: the fact the GST was sold as replacing a whole series of federal and state taxes, excises and duties, and that there were massive compensation arrangements for home owners.
In the past couple of weeks, the Albanese government has recognised — and used — the cost of living crisis to facilitate a reworking of the Stage 3 tax cuts.
The economics and politics lined up and, perhaps for the first time, the current generation of Labor politicians saw that this could be a successful strategy.
And now it feels like there is the scope for other debates to take off. (Probably not negative gearing anytime soon.)
But there were signs in both a speech the prime minister delivered in Newcastle on Friday and new policy proposals unveiled this week at the National Press Club by Garnaut — 41 years after that conversation with Bob Hawke — and his fellow economic veteran Rod Sims.
Garnaut and Sims are back
Sixteen years ago, Garnaut was the chief architect of what became known as the Carbon Pollution Reduction Scheme (CPRS). A significantly modified version of this scheme was promoted and eventually introduced by the Rudd and Gillard Governments.
As Garnaut says now, the policy rationale then was to stop human-induced climate change. The policy debate back then was also set against the backdrop of attempts to have a global carbon trading scheme.
The debate obviously fractured spectacularly in the intervening years — most notably the economics and climate science bits of it — even as the apparent impacts of global warming seemed to accelerate.
Garnaut and Sims are now back.
But this time they are arguing that beyond dealing with climate change, there is a clear economic advantage to be had for Australia — indeed one that is already at least in part underway — from the global transition to net zero emissions.
The argument at its most basic is that it is not just that Australia has easy access to the things needed for large-scale renewable energy production for use at home, but that the very economics of changing technology means that we will have a natural advantage in producing things for export that we haven't really considered on a large scale for decades.
Garnaut cites modelling from a team at the Oxford School of Engineering Science, which studies the cost of producing iron and steel in different locations in a zero-carbon world: "Australia emerges as by far the world's largest producer of iron, metal and steel, more than twice as large as any other country."
The argument, as a recent article in Bloomberg NEF noted, is that the "prohibitive cost of long-distance imports means energy-intensive industries will inevitably migrate to regions with cheap, clean energy".
"It is inconceivable for any country to import iron ore from Australia or Brazil, hydrogen from Australia, the Gulf, Canada or Africa, and make steel at a globally competitive price," the report said.
That is, the price advantage will be with Australia making stuff here, rather than simply exporting the energy as well as the raw materials for it to be made somewhere else.
What is also changing the equation is that in two years the European Union will commence applying a "carbon border adjustment" — essentially a tariff on the carbon content of imports (a move likely to be matched by others).
If Australian goods are made using fossil fuels rather than green fuels like hydrogen, they will be subject to the tariff.
An opportunity for Australia
The two economists say we could neutralise that with a fossil fuel levy of our own set at the same rate as the Europeans, though they quickly concede this "carbon solution levy" (CSL) is unlikely to be taken up by the major political parties in the bruising aftermath of the "carbon tax" debate.
Yet they argue this CSL could raise $100 billion. It would apply to fossil fuels used in Australia and in exports. It could replace all the current levies on fuel and transport like fuel excise. It would help accelerate a push by Australian industry to exploit our renewable energy advantage. And the impact of it would be an immediate drop in the consumer price index and, therefore, the cost of living.
The prime minister reflected on the wasted years of the Coalition climate wars to his audience in Newcastle, saying: "If all you ever do is get angry about change, or try and make people afraid of it, you render yourself incapable of shaping it."
"This is the time when we have to get [it] right, the moment that matters," he said. "Yes, there are big challenges [but] this is the biggest and best chance our country will get, to harness the power of global economic change — and put it to work for our people.
"Converting our natural resources into national strengths, and ensuring that, here on the doorstep of the fastest-growing region in the world in human history, we are not just on the outside looking in [but] we are engaged and involved."
The building blocks for a reconstruction of the political debate would seem to be there, if there are willing takers who want to flesh out and examine these ideas.
Laura Tingle is 7.30's chief political correspondent.
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