Renowned Australian economist Professor Ross Garnaut believes that while the Australian economy may be coming out of some of its darkest days, we shouldn’t be happy to return to the status quo.
“We can do better, we have to do better, and I think we can do better if we use the pause that’s been created in business as usual by COVID to reset our directions,” he said.
Speaking to On the Job with Francis Leach and Sally Rugg, Garnaut said that Australians have been led to believe that an unemployment rate hovering around five percent was acceptable, where some countries overseas including the United States can get closer to three percent.
“Even some of the Australian states New South Wales and Victoria hit 4% for a while (before the pandemic).
“The country as a whole was 4% before the GFC. But we came just to accept that miserably high unemployment and underemployment increased enormously.”
Garnaut highlighted underemployment, stagnant wages and minimal increases in real household income as areas of economic concern that were on the rise over the past seven years leading up to the pandemic.
On the short-term horizon, Garnaut foresees problems with the Morrison Government’s climate stance when it comes to our trading partners.
“One headwind (for our export industry) is that in the rest of the world what every other developed country except Australia, is committed now to zero emissions by 2050.
“And China has committed back to zero emissions by 2060. Now, our big coal markets are three of the big four, China, Japan & Korea, they are all committed to zero emission, . . . I don’t think India will be very far behind.”
With our major trading partners moving away from natural resources in their efforts to reduce emissions, that will have a major impact on Australia’s economy.
“That’s 22% of exports,” Garnaut says. “Coal and LNG and yes over the horizon it won’t happen overnight, there will be decline over 30 years, and won’t be much left of those exports in 30 years.”
Garnaut sees one major opportunity to return Australia to the glory days of the economy, however – low carbon.
“We won’t have full employment, rising incomes without grasping the low carbon opportunity.
“In the zero-emissions world economy, the world will need to produce aluminium, iron, copper, lead, zinc, and a new industries for the low carbon economy like lithium, a lot more tantalum, a lot more silicon needed to produce this with zero emissions.
“And that requires huge amounts of energy. And it’s going to be much cheaper to do that in Australia than in other countries.”