The curse of interesting times

Brisbane (Barlow Jonker) - There’s an ancient Chinese curse: May you live in interesting times. Following the weekend’s national elections in Australia, the resources sector across the country is, by now, probably feeling cursed. Coal in Australia, in particular, is facing probably its most interesting times, ever.

Prime Minister-elect, Kevin Rudd, is no friend to fossil fuel exploitation. An early move will be to legislate Labor policy for a 20% mandatory renewable energy target. Also Mr Rudd has vowed on his first trip out of the country as PM – to next week’s ASEAN meeting in Bali – he’ll be signing Australia up to the controversial Kyoto Protocol.

While there’s still no clarity about the definitive impact of fossil fuel on global climate change, there’s no room for debate on one issue: Kyoto will disadvantage some economies and discriminate in favour of others. Mr. Rudd’s signature to Kyoto will commit Australia to a 60% GHG emissions reduction.

The Australian resources boom of the past 25 years (beefing up dramatically in the past decade) has become a crucial pillar of the national economy. Coal exports are embedded as a permanent, profitable feature, almost as ubiquitous as wool and beef and only more recently challenged for value by iron ore extraction in northern Western Australia.

Yet reducing coal burning – for everything from village cooking fires to steelmaking and electricity generation – is a key target of Kyoto. Boiled down to its basics, it aims to restrain some of the world’s best-performing – almost invariably, resources-based – economies, to facilitate development of resources-based economies in a raft of so-called developing nations.

The rampantly growing economies China and India are to be particularly favoured by being excused adherence to Kyoto restraints, at least for several decades. One globalist point of view is that this discrimination is honourable, supposed to enable less industrially-sophisticated communities to fulfill aspirations to emulate the broadly-enjoyed wealth of nations such as Australia.

Other than outlining renewable targets most analysts believe are unreachable, Mr. Rudd’s only obvious climate change plan so far is to attack coal – inherent in any decision to sign for a deliberately discriminatory Kyoto Protocol.

Then there’s Mr. Rudd’s plan to dismantle the controversial WorkChoices industrial relations system established by the outgoing Howard government. Through the campaign for last Saturday’s elections, Mr. Rudd sought to allay fears of a new outbreak of trade union power under a Labor Party government. But whether he likes it or not, he will be obliged to repay the big unions for an enormously expensive, remarkably dogged campaign for Labor – including planting union-paid political campaigners across a range of federal electorates for, in some cases, up to two years ahead of last weekend’s polls.

It is disingenuous for any Labor leader to suggest, as Mr. Rudd has done, that in government, he will control union IR power and union social and commercial aspirations. The question is what will happen to the huge productivity, and other, gains made by mining companies in recent years on the IR front? And what the impact will be on the national economy.

Some believe the nation’s resources industries, coal in particular, along with their muted business representative organizations, have failed to protect themselves from being hung out to dry as global environmental pillagers.

With more coal price improvements on the near-horizon and with an unabating global demand for energy, Australia’s coal industry has reason for confidence – except when Mr. Rudd signs the Kyoto Protocol next week, everything changes. – Peter MacDonald.