OPINION | Coalition allows ideology to dog budget

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Crispin Hull

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It used to be that Labor’s ideology was an impediment to innovation in the economy, but now the Coalition has allowed ideology to be an impediment, as was starkly illustrated by its troglodyte attitude to renewables and electric vehicles in this week’s Budget.


The developed world is on the cusp of huge changes in transport and energy yet all the Coalition can offer is more roads (in marginal seats) and a selfish self-centered obsession over tax cuts for people who don’t need them.

Governments should be ensuring the people get the best from technological change, not resist it. Why make it harder than necessary for entrepreneurs to bring the benefits of technology to the people? Why not help them, as the Coalition says it is committed to do? Well, you do not help if ideology gets in the way.

The Coalition’s dogged attachment to coal and its coal-producing donors has now spread to all forms of fossil-fuel replacement. It has no sensible, coherent plan for the inevitable conversion of virtually all the Australian vehicle fleet in the next decade or so.

There was a paltry $400,000 for a national electric-vehicle strategy in the Budget. (incidentally, this is against $11 million allocated to return the luxury car tax to tourism operators and primary producers).

Labor is a little better, but misunderstands the nature technological uptake. Labor has set a target of 50 per cent of new vehicles to be electric by 2030.

My guess is that by 2030 nearly 100 per cent of new vehicles will be electric. As soon as electric cars are obviously as cheap to buy, cheaper to run, more reliable and more durable no-one in their right mind will buy a fossil-fuel vehicle. Just as very few people now buy vinyl records, film cameras or lights their house with whale oil.

It is not a 50 per cent thing. Either electric vehicles are better, in which case everyone will buy them, or they are not, in which case people with stick with fossil-fuel cars.

Sure, a few people, on ideological grounds, will go electric or stay fossil even if it is more expensive. But the vast bulk of the population will go on value for money.

And this is where the Coalition’s ideological bent against renewables is so negligent and irresponsible.

It used to be the Coalition demanding, for example, wide shears, containerisation, efficiency on the waterfront through technological change while Labor and the unions resisted. Now the Coalition parties are the Luddites.

Eighty-five per cent of the oil refined in Australia is imported. By 2030 all of it will be.

Nearly all of our fuel (refined or unrefined) is imported at a cost of about $35 billion a year. It is our second-largest import. Nearly all of our fuel imports go through the South China Sea or the Straits of Hormuz. Yet we do not have the recommended 90-day stockpile.

The US is becoming less dependent on imported fuel so is less concerned about about fuel security. And the belligerent bully in the White House will not care less about the fuel security of its allies if he wants to confront Iran or China threatening the shipping lanes.

In that strategic and economic environment, surely a Government that says it is best at managing the economy would spend a tad more than $400,000 on a transport revolution that would make our economy less reliant on imported fuel and improve our balance of payments by up to $35 billion a year.

Even if our Prime Minister is a lumpen coaletariat, surely he must realise that electric cars are completely neutral as to how the electricity they run on is generated.

The only thing that scares Australians about electric cars is the range between charge stations. Surely the strategy would be to start subsidising the roll out of charge stations, if possible on existing service station sites.

A Government with foresight would realise that service-station businesses face existential threat unless they keep their trade in food, drinks and other supplies that people buy while they fuel up.

Similarly on transport and congestion, the Budget was mired in the past. Build more roads was its answer. And we all know what that does: attract a few votes in marginal seats but attract ever more cars and new congestion.

A good economic manager would see the future. How are you going to pay for more roads if the fuel tax dries up as more electric cars come on the road?

Low-income people who cannot afford new electric cars will be paying most of the fuel tax while they wait for cheap second-hand electric cars to come on to the market.

A good economic manager would move to smarter on-board computers (telematics) and charge people according to how far, when and where people travel, with big charges for city-centre business-hours travel. That revenue could be poured into public transport.

The Budget displayed dismal ignorance of how people behave. Giving high-income earners tax cuts will not make them work harder, produce more or spend more in the economy. They will just accrue more wealth.

While still on transport, the Budget commits $100 billion to infrastructure over 10 years, much of it on transport. There is a fair amount of lose cash in there for infrastructure “announceables” in the lead up to the election.

It will be worth watching how these compare to what a good economic manager would do. Australia has an independent infrastructure body which listens to all levels of government and industry and produces a Priority List each year setting out where Australia can get the most bang for its infrastructure buck using proper economic analysis, as distinct from political opportunism.

Last year it produced a set of Infrastructure Decision-making Principles.

In February, Infrastructure Australia Chair Julieanne Alroe noted the upcoming NSW and Federal elections and said: “Infrastructure Australia is urging decision-makers to commit to solving any emerging or growing problem by embarking on a feasibility study to identify potential options, rather than a pre-defined project [read, sod-turning announceable] that may not be the most effective solution.

“Communities rightly expect decisions on public infrastructure projects to be robust, transparent and accountable, and that projects are only committed to once planning and assessment has been done.”

 

 

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