by Richard Denniss
[Originally published in the Australian Financial Review, 07 Jan 2020]

If Australia and other countries meet their current emission reduction targets bushfires are still going to get much, much worse. Over the past century, humans have caused the world to warm by one degree, but if Australia and the rest of the world stay their current course, we’ll heat the world by three degrees. This year’s record-breaking fires in the Amazon, Russia and Australia barely provide a glimpse of what a world three degrees warmer looks like.

Last April, Bill Shorten was pilloried by conservatives for not providing precise estimates of the economic cost of climate policies. Presumably those same voices will now ask that the Prime Minister precisely estimate the costs of these bushfires, including the ‘cost’ of the 24 lives and over 1,500 homes lost, the ‘cost’ of tens of thousands of people evacuating their homes, the cost of millions of people enduring hazardous levels of smoke and the cost of half a billion native animals burned to death.

Every Australian’s home and business insurance is about to get a lot more expensive. The federal government is about to spend billions extra on income support and reconstruction. Spending on emergency services will surge. Tourism numbers will decline. Smoke has made many workplaces unworkable, imposing costs on workers, businesses and, via lower tax collections, on the Commonwealth budget. Farmers have lost livestock, crops and infrastructure. An enormous number of people—from firefighters and farmers, to the families of those who have lost everything—will need long-term mental health support.

If economics teaches us anything it is that choices have consequences. People, like myself, have failed spectacularly to convince the Coalition that prevention is cheaper than cure. But economics also teaches us to ignore ‘sunk costs’ which is just a fancy way of saying it’s a waste of time to cry over spilt milk. I take both those lessons seriously, so let’s move on.

Adapting to one degree of climate change is going to be expensive. Adapting to three degrees will cost far, far more. As responsible managers of the nation’s finances, the Coalition must now put as much effort into estimating the costs of adapting to a warmer world as they put into costing the policies designed to prevent that warming.

Because the budget forecasts ignored the multiple warnings of 24 emergency services chiefs (who the Prime Minister wouldn’t, and still hasn’t met with) the budget papers are wrong. This year the government will spend more money and collect less revenue than it predicted. There will be no surplus.

The quicker Scott Morrison abandons his surplus fetish the better it’ll be for everyone, including him. But if this crisis has taught us one thing it’s that while the Prime Minister is remarkably capable of staying on message, he is woefully bad at adapting to changes in circumstance. The discipline required to repeat asinine statements about the economy seems to act as a barrier to absorbing new information.

So, what can we do? The emission targets that the PM keeps telling everyone Australia will meet “in a canter” have the world on a trajectory that will see global warming three times worse than we have currently experienced. If the Australian people don’t want things to get worse, then Australia will need to join our Pacific Island neighbours in calling for much more ambitious global emission reduction targets. To do that Australia will need to stop wasting its diplomatic capital arguing for accounting loopholes, deliver more ambition at home and demand more ambition abroad.

Rather than go to India to sell more coal, Australia should join with New Zealand, Switzerland, Sweden and the other five countries in the Friends of Fossil Fuel Reform group, who are leading the call for an end to fossil fuel subsidies. And rather than skimping on reconstruction the Prime Minister should impose a permanent levy on fossil fuel production to fund the rebuilding of our broken communities.

The climate has changed, and we can’t change it back. The big question now is how much more change do we want? Scott Morrison says we are on track to “meet and beat our targets” — but being on that track delivers bigger bushfires, droughts and storms than we have ever seen. We can work with other countries to change course or we can export more coal. We can’t do both. But when you make a choice, you choose a consequence.

Richard Denniss is chief economist at independent think tank The Australia Institute @RDNS_TAI