Financial crisis strengthens case for delaying ETS
letter published in The Australian, 2 Oct 2008
It's astonishing that Ross Garnaut, former economic adviser to the Hawke-Keating Government, is reported as confidently predicting that by this time next year the US financial crisis will be history and businesses will be ready to expand investment. Did Professor Garnaut predict the Keating recession "we had to have" of the early 1990s (from which Australia took 3 years to recover) and if so what advice did he then provide to try to stop the disastrous monetary policies then being endorsed by Labor?
The reality Australia now faces is that there will be adverse effects of the US financial crisis extending well beyond October next year. A recession in 2009, which Garnaut (rightly) seemingly thinks very likely, will create considerable uncertainty both here and overseas, particularly for businesses trying to decide what level of investment they should undertake for the future.
True, a policy of emissions reduction by Australia alone in 2010 would offer opportunities for certain limited types of investment. But Garnaut's unbelievably optimistic attitude to the overall outlook in an emission-reduction situation, let alone in the context of uncertainties about the general economic future, suggests an inexperience in assessing situations such as existed here in the 1980s.
There is now an unarguable case for postponing the introduction of any emissions reduction policy until well after 2010.
Des Moore
South Yarra Vic