Has business learnt its lesson from climate wars? – Sydney Morning Herald

Anthony Albanese has, of late, been deploying a useful shorthand phrase for what was a horrible period in Australian policy development. We have all just lived through “a decade of denial and delay” on climate change.

Sometimes Albanese adds a word. “A decade almost,” he says – quite rightly. Arguably, the decade started well. Ten years ago this Friday, Australia’s carbon price kicked into action. We know, too, that it worked – until Tony Abbott’s government repealed it. Within the past decade, we had, in fact, two excellent years. It was only the next eight that were wasted.

This might sound pedantic – but it is important in order to understand the scale of the blunder. A lot of attention still goes to the defeat of Kevin Rudd’s emissions trading scheme in 2009, and the battles between Labor and the Greens, but arguably what happened next should be more striking. A policy was legislated. For two years, it did its job. Then, despite clear evidence it was working, it was dismantled. If that had not occurred, then Australia would be eight years further down the path towards a sustainable energy situation.

What if we are about to repeat that mistake, only in another area of policy?

From that terrible period three different groups took different lessons. For Labor, it is why the Prime Minister and his cabinet are so determined to lead a long-term government, progressing steadily, remaining unified: they want reforms to last. The Liberal Party learnt just one lesson – and judging by Peter Dutton’s recent decision to continue opposing everything, most are clinging to it still. For them, the sole use of climate policy remains the destruction of Labor.

And then there is big business. Not all of big business, but enough. It gets less attention these days in analyses of that era (I worked for Gillard), but it was a big player at the time and should not be forgotten. Comments from business leaders lent legitimacy to Abbott’s campaign against the carbon price and helped him win the next election. As a group, business was already energised by its recent success in destroying the mining tax. Having won one relentless, dishonest campaign against good policy, why not run another? And so one of the most remarkable periods of corporate aggression in Australian public life continued.

Obviously, those businesses got it wrong. The result is that Australia is worse off – along with many Australian companies, left behind in the global climate race. It would be easy to make the mistake of comparing big business’s approach on climate then with its more sensible approach on climate now and concluding it has learnt its lesson. In fact, all that happened was that the rest of the world moved on. The business lobby didn’t suddenly wake up determined to act in the national interest. It was left with no choice. And so the more important comparison is with policy areas that are still in flux, in which the politics are still developing, and in which reaching a sensible solution involves considered thought, not just copying what your counterparts are doing overseas.

Which brings us to wages and inflation. These seem like old problems, but in many respects they’re not. The behaviour of wages has surprised economists over the past decade. Inflation is clearly a problem – but the truth is we do not yet know how long-lasting a problem. The Reserve Bank has made some concerning predictions, but then the Reserve Bank made a dramatically different set of predictions late last year.