Yesterday the Australian Bureau of Statistics reported that Australia had recorded its biggest trade surplus in August — more than $15 billion. As recently as 2016, Australia recorded a trade deficit; in 2017 the surplus was just $8.9 billion for the whole year.
And fossil fuels are responsible.
Despite expectations the slump in the iron ore price would materially reduce the surplus (to a mere $10 billion for the month), LNG and coal — both thermal and coking — came to the rescue, allowing Australia to record its biggest surplus on the back of high global energy prices driven by energy crises in China, Europe and the UK.
No wonder Prime Minister Scott Morrison is reluctant to attend Glasgow — he’ll do so as one of the world’s biggest beneficiaries of the stuff the rest of the world wants to get rid of as quickly as possible.
While ostensibly that means a dilemma for Australia on a heating planet where the rest of the world — bar some criminal regimes like Russia and Saudi Arabia — wants to end its addiction to fossil fuels, in fact it sets Australia up to transition smoothly from a fossil-fuel superpower to a renewables superpower, again exploiting our massive natural advantages.
For the moment, iron ore is in decline as China works hard to curb steel production. The September quarter Resources and Energy Quarterly from the Department of Industry, Science, Energy and Resources shows that, after peaking at $153 billion in 2020-21, iron ore export earnings are forecast to drop to $132 billion in the year to June 30, 2022. That’s based on a forecast average price of US$115 a tonne for the global benchmark. It’s about US$110 a tonne now, forecast to fall to US$85 a tonne in 2022-23, and the value of those exports will fall to $US99 billion in 2022-23.
But the value of LNG exports will rise from $30 billion last year to $56 billion this year; oil exports are expected to lift earnings to $11.2 billion in 2021–22, coking coal exports are forecast to jump from $23 billion to $33 billion in 2021-22, and thermal coal shipments are forecast to rise to US$24 billion from US$16 billion.
All up, the extra exports of carbon in this financial year is estimated at $48 billion.
There’s big growth in minerals for renewables as well: lithium is the biggest growth market but coming off a smaller base, with export earnings set to rise from US$1.1 billion last financial year to US$3.8 billion by 2022-23; earnings from copper, another boom renewables commodity, are forecast to rise from $11.4 billion in 2020-21 to $14.4 billion in 2022-23.
Even if the longer-term trajectory for fossil fuel exports is downward as decarbonisation kicks in globally, a last convulsion of fossil fuels will deliver a boost to the Australian economy and to government coffers (mainly via coal — the tax arrangements for offshore gas mean we won’t see much extra revenue from more LNG exports).
A government with a coherent economic and energy policy would see this as the ideal opportunity to transition Australia from a fossil-fuel energy superpower to a renewable energy one, focused on green hydrogen exports rather than the government’s preferred blue hydrogen –, favoured by its fossil-fuel donors — and embracing the jobs and investment that will flow from renewable energy infrastructure, rather than looking for a way to only do the bare minimum not to face carbon tariffs and international humiliation.
In doing so it would be able to compete for the first-mover advantage that Australia squandered with solar technology, where our natural role as world leader was transferred to China, Germany and the United States.
This shouldn’t be difficult, even for a carbon addict: look at the example of the global car giants — traditionally among the most recalcitrant of corporate culprits on climate issues. They’re using their revenues and profits from fossil fuel-reliant internal combustion engines to pay for an investment boom in batteries, new car plants, retraining and recycling, the size of which dwarfs most other spending.
Best estimates put the 2021 cost of the plans of Ford, GM, Toyota, Stellantis, Nissan, BMW, Mercedes, Renault and a host of others at more than US$250 billion. And that doesn’t include the spending of the Silicon Valley giants in transport.
Instead, Australia at a federal level is suffering a variant of Dutch disease: our great fortune to be a fossil fuel energy superpower prevents us from using that as an opportunity to move into what will eventually prove the far more rewarding world of renewables that will provide better long-term benefits in terms of economic growth, productivity, jobs and investment. That job has fallen to the states, but the absence of the Morrison government from energy policy — except to use it as a mechanism to reward its donors — continues to cruel investment and the jobs that will accompany them.
If Howard and Costello’s absolute squandering of the last mining boom is anything to go by, I fear the continuing mediocrity and timidity of our politicians will be the undoing of us (again). And now the Coalition, allergic to picking winners, has decided to focus on picking losers, what could possibly go wrong?
I always thought that picking winners was a much better strategy than picking losers. The entire theory of governments not wanting to ‘pick winners’ is bereft and full of holes in fact. You can pick winners without becoming a planned economy. All of these revenues mentioned here aren’t going to Australia, of course, they’re going to Woodside, Glendora and other non-tax paying multi-National Satans, so even the balance of trade doesn’t really go in our pockets. We need an overhaul of accounting to see how little wealth the average Australian gains out of this.
Glendora equals Glencore of course. My god spell check has some strange idiosyncrasies.
The thermal coal industry in NSW is >80% owned by foreign interests who pay little or no tax. In addition every litre of diesel is imported as is all the machinery. Royalties are around $1.5B annually, or approx 2% of NSW state revenue. Yes it is a substantial industry, but the $24B value to the economy is well wide of the mark.
Even the big iron ore miners have large overseas shareholdings – and as an extractive industry, that is about as low tech, low value added as you could possibly get. You read about recent high iron ore pricing and high export volumes to China – you might be tempted to think ker-ching for Australia. However, most of the profits go overseas in one way or another. The chinese who have been buying a lot of it have large shareholdings in Rio Tinto for example so the high prices they are paying need to be considered in the context of the dividends they receive as shareholders in the very companies they buy from.
Well – surely there is plenty to go round, huh? Western Australia where so much of this wealth is unearthed has several individuals who have acrued many tens of billions in personal wealth from mining but, as the state that funds all the infrastructure that supports this industry, WA must be rolling in it you might suppose. Actually, WA is a staggering 60 odd billion in debt. Poor fellow my country indeed.
Fortesque is almost all Chinese owned.
In fact, Australia does pick winners – just dumb ones. Pre COVID, it was Big Excavation, Hyper Immigration, Education “Exports”, and Real Estate. Post COVID, you guessed it, LibLab offers more of the same.
It must be Labor’s fault.
It always is
Even when it’s not.
And then it is because they didn’t do enough to rein in the right.
“A government with a coherent economic and energy policy…” That simply can’t be a reference to the present mediocre and corrupt bunch of conservative ideologues. They are so incompetent, their attempts to pretend they are acting in the nation’s interests when there are really only “looking after their mates” are so transparent as to border on farce. Promo Bargearse-McSmirky is so filled with hatred for anyone who doesn’t see the world in his pathetically neurotic way, he is pathologically compelled, because of and in spite of his faith, to punish his enemies and reward his friends. As for the absurd Costello who, when awash with money, refused to spend it on infrastructure, health, public housing etc. No, no, no. He spent it on rewarding and buying votes from the middle class and the nouveau riche (how is his 50% CGT discount, instead of an indexation of cost methodology, one of the most outrageous and unnecessary pieces of policy making and social engineering in this country’s history). He could have been a good treasurer – instead he set about moulding Australia into something he preferred – despite being advised against his pork-barrelling and he was a laughably bad treasurer, although Costello, like Promo, suffers from the most total self-delusion. Explain to me how the current LNP government is any better? If Promo had a plan (an actual plan, not merely a plan to pretend to have a plan) that, say, reduced household energy bills by $10, it would dominate the media and our screens would be filled with his repugnant smirk. Instead, he and his corrupt party thought it would be a great idea to pump a further $7.0 billion into subsidies for the fossil fuel industry – and unsurprisingly, there were no public announcements about that little boondoggle.
I cannot understand why people persist in a debate on the L/NP’s position on emissions. There is no reason at all, politically, why they should do anything.
They have been rewarded time after time for opposing any action, not even a fig leaf covering our inaction. All they have to do is assert that we do more than any other country, that we are better than all others, and voters will pat themselves on their backs and reelect the L/NP. That is all that we need do, because that is our view of ourselves.
We followed them into Vietnam on their lies, we followed them into Afghanistan, Iraq, Libya, and Syria on their lies. We believe we are the most generous country on the planet and reward their lies on refugees by reelecting them. We believe we are the greatest country on the planet with the best Health system and social policies because that is what the lies tell us, and we believe them and reward them, because to do anything else will force us to look at who and what we are.
Now, yet again, we believe that China is out to get us. Our actions and provocations are disregarded and China’s actions are magnified ten fold, because that suits our view of our exceptionalism. We disregard the fact that China has not invaded or bombed back to, virtually, the stone age any other country, we have. It is true they have issues with Tibet and India, those disputes go back hundreds of years, but Tibet has not been carpet bombed.
Our treatment of First Nation people is simply sickening, but we deny what is happening, we believe the lies because it suits us to.
Now we are blaming France for our breaking a contract and speak to them through the media in an outrageous condescending way, and we support the lies we are being fed. Why? Because it reinforces our view of our exceptionalism.
So will Australia deal with emissions in a way that is coherent with us sharing the responsibility for the health of the planet? No way, that would require us to act as a mature, intelligent, caring country, and we haven’t been that for many, many decades.
Unfortunately all that is so bloody true.We are so easily led by lies.
Agree, and my understanding is that polling has shown most voters agree that climate warming is an issue but that inverts when money and/or taxes are mentioned….. reflecting successful media based PR over decades focusing upon personal prosperity, costs and taxes; Australians have become GOP lite libertarians now, slice by slice….
Spot on Paul, so sad that our politics has sunk so low in a new millennium that offered so much. It is not just us of course, but hard to take any national pride at us being in the sewer with the worst of them….
A Trade Surplus! Wow! But what does that really mean to Australia?
Because of successful pressure and advertising by the mining industry a Resources Tax proposal was killed, so the Governments gets very little from Royalties and tax from these sales.
The money goes to the mining companies who, by and large, send their profits overseas and into the coffers of the Australian Billionaires who pay little tax.
So even if, as the article correctly advocates, we would do better out of exporting Renewables, the reality is we as a country have not much to lose if fossil fuel sales fell over, except for a trade surplus headline.
Well yes we COULD transition to renewables using all that money but, you know, wouldn’t it go well as a vote buyer? And surely half would go in consulting fees anyway and why kill the golden goose when every miner just wants another quarter of boom profits.
We live in a vision free nation – why? I don’t know but it seems to be a dominant national characteristic.
Rent seeking, rorting and worship of mediocrity – the Aussie way.
And masochistic, self-flagellation by a majority of Orstrayan voters. Long live the Queen!