Ever since they were released, I have wanted a Ford Mustang. It has been a hard sell to my wife because it is not the most practical car for a family with 5 children.
But after reading the Federal Government’s modelling on net zero, I have a new strategy. All I need to do is present my wife with three options. Option 1 we buy the Ford Mustang with cash, option 2 we lease the Mustang and option 3 we take out a personal loan on the Mustang. One of the options will be better than the others, and abracadabra, getting the Ford Mustang will be the best option.
It might be hard to believe but this is precisely the analysis that our once esteemed Federal Treasury has done on the Government’s net zero plans. They modelled three options to assess the Government’s emissions targets. One option had us getting to net zero in the planned way, another option had us getting to net zero while exporting lots of green hydrogen and the final option had us reach net zero but by not making many emissions cuts in the short term (what they called the disorderly option).
Of course, the magical conclusion of this assessment is that we should do net zero because we have not assessed any other option. As hard as it may be to believe, I am not making this up. The Treasury say in their report, “A scenario where Australia does not pursue net zero has not been modelled in this report.”
So, it is completely useless in assessing whether Australia should do net zero. How much do we pay these people?
Instead of doing the work, they claim that not pursuing net zero would be more costly because some work was done in 2021 showing that not doing net zero would lower our national income by $625 per person in 2050. Even though this is a minuscule change over 25 years, this result is only achieved because it was assumed that not doing net zero would lift our interest rates by a full percentage point.
The problem is that this assumption does not match the real-world data. Donald Trump has pulled the US out of the Paris agreement. Interest rates on US bonds have fallen by half a percentage point since.
A much bigger issue for Australian businesses and investment is our shocking electricity price situation. In the foreword of the report, the Treasurer, Jim Chalmers, promises that pursuing net zero will deliver “cheaper energy”.
However, the report provides no such guarantee. There is no detail provided about what precisely will happen to electricity prices. However, there is a cryptic statement that wholesale electricity prices “are projected to be around 10 per cent below the 10 year real historical average wholesale electricity price.”
That has to be one of the most obscure sentences written in a government report, and that is saying something! Why not just tell us what the price is.
I intend to ask Treasury for this detail. But some calculations estimate that Treasury expects the wholesale price after net zero to “fall” to around $81 per megawatt hour in Queensland. However, that is higher than what electricity prices were before we signed up to net zero! And it is much higher than the prices which prevailed before we started installing lots of wind and solar energy.
These high energy prices will hit regional parts of Australia harder than the cities because so many of our jobs (like in manufacturing) rely on having access to cheap energy.
The report outlines how this will impact Central Queensland, with coal mining jobs due to fall by 70 per cent. Such a change would devastate our region and any politician in Central Queensland that signs up to net zero is signing us up for economic ruin.
We have been promised lots of jobs in hydrogen but all of the major promised hydrogen projects in Central Queensland have fallen over.
We have about as much hope of benefiting from net zero as I have of getting a Ford Mustang anytime soon.
