Prime Minister Scott Morrison and Energy Minister Angus Taylor (Image: AAP/Mick Tsikas)

Scott Morrison announced on Tuesday that Australia will do nothing, precisely nothing we’re not already doing to get to net zero carbon emissions by 2050.

There’s no polite way to say this: business as usual won’t get us net zero. It’s a lie. And the lying liars who are telling the lie know it’s a lie.

The Morrison-Angus Taylor slide deck was the intellectual equivalent of a smash and grab — a brazen attempt to pilfer the judgment, good sense and dignity of the electorate right in front of us. They told us climate change was simply no big deal. It’s all under control. We can deal with the biggest economic challenge in human history by doing nothing. Black is white; up is down; right is wrong. To call it gaslighting (pun kind of intended) would be to undersell the chutzpah. It was, simply put, the ultimate Trumpian performance.

This raises a number of questions, given that when asked about net zero on February 18, 2020, Morrison told us: “Currently no one can tell me that going down that path won’t cost jobs, won’t put up your electricity prices, and won’t impact negatively on jobs in the economies of rural and regional Australia.”

So when was the government informed that net zero was actually free, rather than so phenomenally expensive it wasn’t even worth discussing? Was it in the recent McKinsey report? Was it earlier? Why weren’t we told of this remarkable turn of events sooner?

And the most important question of all is this: given that it will be free for Australia to get to net zero, and since Australia always meets its commitments, why not put in place a cap on the total amount of emissions in a given year?

This could be done through an enhanced version of the safeguard mechanism already in place. The safeguard mechanism requires Australia’s largest emitters to keep their net emissions below a certain cap (or “baseline”). In fact, the Business Council of Australia’s climate plan calls for precisely this, stating we should “change the safeguard mechanism to deliver a strong carbon investment signal” by reducing “the eligibility threshold for entities covered by the safeguard mechanism from 100,000 tCO2 per year, down to 25,000 tCO2”.

If we really are on the glide path to net zero, the government should have no issue agreeing to the BCA proposal. It would just be imposing a cap that would never be in doubt — a constraint that will never bind.

The only reason not to agree is because, in fact, it will be binding. The government knows this, which is why it is ducking it, and why Taylor’s response to the BCA plan was to say on October 8: “The BCA’s recommendation to expand the safeguard mechanism and bring down [emissions] would force companies to reduce their emissions, regardless of whether economically viable technologies are available, risking competitiveness and jobs.”

But McKinsey, the prime minister, and Taylor as energy minister just told us there is no risk, and economically viable technologies will be available. I suppose we should thank Taylor for acting as his own pre-emptive BS detector.

Now to the McKinsey report. Like all good consulting, once one strips back the robotic language and TLAs (that’s consultant for “three-letter acronyms”), it can all be captured in one content-free chart. Here it is:

This primary-school-level arithmetic masquerading as analysis is brought to you by the same management consulting firm that agreed to pay roughly US$600 million to “settle investigations into its role in helping ‘turbocharge’ opioid sales”. Of course, the local branch of McKinsey advised the government on our train wreck of a vaccine strategy, so it has recent experience in providing advice destroying billions of dollars of social and economic value.

Unpacking the waterfall chart

The first light-blue bar points out that 20% of our way to net zero has happened due to reductions already made. This is true, although most of that came when Australia had a carbon tax — which the Coalition promptly removed upon coming to office.

So the one tangible thing on that chart stemmed for a policy explicitly ruled out by this government’s “technology not taxes” slogan. The “technology investment roadmap” — a policy already announced — accounts for a further 40%. Nothing new here. “Global technology trends” is stuff invented overseas that we will buy. Nothing new here — and nothing we will be doing. “Further technology trends” is stuff nobody has thought of yet and may or may not happen. But if it does happen it will happen overseas. And “international and domestic offsets” are credits we’ll need to generate to make up for the stuff we don’t decarbonise. Kind of like the fee paid to a cheating service for doing our exams.

Technology not taxes

So in line with the government’s favourite fortune cookie, we will get to net zero with “technology not taxes”. Better still, we can apparently free-ride on other people’s technology investments.

There are two problems here: one a matter of logic, the other a matter of practicalities.

The logical issue is that there are only two ways to allocate economic resources: the market, or command-and-control. Technology determines what economic resources are available to allocate — it doesn’t allocate them. This is why every mainstream economist is in favour of a price on carbon. We think the market is better at allocating resources than command-and-control. To say that technology is an allocation mechanism is like saying elephants are excellent ice-skaters. It’s gibberish.

Now this is all good common sense. But if one wants to be formal it can be made into a theorem and proved using some maths involving separating hyperplanes. It’s known as the “Second Fundamental Theorem of Welfare Economics“. Taylor presumably studied that back in the day.

The second problem with relying on technology alone is a practical one. Absent a price on carbon, old high-emission technologies will be replaced only when they are near the end of their useful life. And for many industrial and commercial assets this life can be several decades long. So if fabulous new green tech appears in 2045, assets bought in 2044 with a 30-year life will keep on pumping out emissions until 2074.

The only way to make net zero 2050 compatible with that is to either ban those assets through command-and-control, or incentivise adoption through a carbon price. Technology alone won’t do the trick, even if extraordinary technology magically appears before 2050.

For vehicles, whose average life is more like 15 years, this might not present a huge problem because the nation’s entire vehicle fleet can be turned over in 15 years, and because the technology is already well advanced. But for longer-lived assets in sectors where technology consistent with net zero is nascent at best, this is a major problem. Think steel, or cement.

All of this points to using a carbon price to help drive technological innovation and adoption, and setting more aggressive interim targets — like a 50% reduction on 2005 levels by 2030. These are economic realities, not moral absolutes. Although the moral absolutes are pretty compelling, too.

Rather than accept economic reality, this government has decided to believe in magic pudding economics where the biggest economic transition in the history of the world can and will happen costlessly for Australia.

Morrison is the Wilkins Micawber of climate economics — hoping “something will turn up”.

This government has made its official policy that but for the passage of time we’re already at net zero. Nobody will pay a cent. Nobody will lose. We can sit back and watch the magic unfold.

We should be clear-eyed about what is going on here. Morrison and Taylor are trying to perpetrate a fraud on the Australian public. A fraud of massive proportions. And we, the people, should not fall for it.