The federal government’s ideological stance against the environment threatens investment and jobs.
Current unemployment figures demonstrate the Australian economy is struggling to create jobs. Unemployment has risen to 6.4% - the highest it has been since 2002. Alarmingly, youth unemployment is at its highest level since 1998.
This is occurring while renewable energy companies such as TrustPower, Infigen Energy and Pacific Hydro are suspending further investments in Australia because of the uncertainty around the RET.
According to the ABS, there were 3,800 job vacancies in the mining industry advertising in November 2014. This compares to 10,300 vacancies in November 2011 at the peak in the mining boom. It is clear that the capital phase of the mining boom is over.
The government is struggling to articulate any kind of economic plan for the Australian economy and is floundering to find a response to the softening job market. The Prime Minister’s promises of creating one million new jobs within five years and two millions new jobs over the next decade are looking increasingly unlikely.
The government can’t blame the Senate for this situation either. If the upper house had passed more of the government’s budget cuts, the economy would probably be in an even worse situation. But if the government were able to look beyond their own ideological echo-chamber, part of the solution might become clearer.
At a time when the economy is slowing down, it’s hard to fathom why the government has spent so much time and effort undermining an industry that could provide jobs growth - the renewable energy sector. According to the Clean Energy Council (CEC), the renewable energy industry employed more than 24,000 people in 2012. The CEC estimates that the RET will create a further 18,400 jobs by 2020 if retained in its current form.
Yet the RET is once again under threat, with reports suggesting that the Coalition and the Labor party are close to negotiating a deal for a reduced RET target, even though the government’s review undertaken by the Climate Change Authority recommended keeping the target but extending the date out by three years.
Since 2013, the government has completely undermined policy certainty for the renewable energy industry. The industry has faced two major inquiries – one from the Climate Change Authority which was mandated by legislation, and one from the Prime Minister’s hand-picked panel, which was largely seen to be mandated ideology rather than scientific rigour. The wind industry is also facing a hostile and long-running Senate inquiry, which will linger through much of this year.
According to the Energy Supply Association of Australia (ESAA), Australia has nearly 26GW of proposed new renewable energy power stations at various stages of planning and development. To put this into perspective, Australia’s coal-fired capacity is 27GW. In terms of gigawatt hours of electricity produced, 26GW of renewables will not produce as much as 27GW of coal, but it would go a long way towards reducing emissions in the stationary electricity sector.
Unfortunately, many of these proposed projects are now unable to proceed. Investment in renewable energy in Australia has all but dried up, down by 70% over the past year due to uncertainty around the RET created by the Abbott government. Australia dropped from 11th to 39th spot in large scale renewable investment on the global ladder for renewable investment, and we are now below developing countries such as Myanmar.
Right now, Australia needs to do all it can to attract and stimulate new business investment. One simple way the government and crossbenchers can attract investment again is to support the 41,000GWh RET target and reduce regulatory uncertainty surrounding renewable energy in Australia.
By leaving the current target in place and providing an assurance that they support renewable investment the government could make a tangible and significant step to help restart an industry that will stimulate employment.
Renewable energy is popular, and job growth is essential. Committing to the existing Renewable Energy Target would be a good first step for policy makers on all sides to show they are serious about creating Australia jobs rather than fighting ideological battles.
Matthew Rose is an economist for the Australian Conservation Foundation.