13 October 2021
Australia’s biggest companies are putting pressure on the Morrison government to commit to reaching net zero by 2050 ahead of the UN climate change conference in November.
In a plan released on Friday, the Business Council of Australia said that using new technology to achieve the net-zero benchmark could improve employment and economic growth over the next fifty years.
The BCA is responding to concerns that Australian companies may be caught out by growing demands from global markets and big investors for Australia to take more urgent action on climate change.
Meanwhile, on Sunday, Andrew Forrest’s Fortescue Future Industries announced it would build a hydrogen-equipment manufacturing plant in Queensland, part of a larger ambition to produce carbon-free steel in Australia.
The BCA also endorsed a 46–50 per cent reduction of 2005 emissions levels by 2030. This is a big shift for the group, which labelled similar targets proposed by Labor at the last election as “economy wrecking” and suffered a debilitating internal split on the issue of climate change in the early 2000s.
Scott Morrison has acknowledged the international pressure on Australia in his attempts to turn around climate sceptics within the government’s ranks.
But energy minister Angus Taylor has combatively characterised one of the BCA’s recommendations as “a carbon tax”, underlining how difficult it will be for the government to reach an agreement on its climate change goals.
Instead of scorning the significant change of heart of Australian business, the government should take advantage of it to prevent Australia facing even more scorn at the upcoming UN conference.
New global tax
More than 130 countries have signed a deal on the biggest change to international taxation rules in a century.
The agreement imposes a minimum 15 per cent tax rate on footloose multinationals and requires them to declare profits and pay more tax in the countries they actually operate in, rather than wherever they are registered.
Some estimates suggest Australia could gain up to A$3 billion of the US$150 billion in increased tax revenue that the new rules are forecasted to generate each year.
The agreement, which comes after years of complex negotiations by the Organisation for Economic Co-operation and Development, is a rare example of successful multilateral reform at a time when global institutions such as the World Trade Organization and the World Health Organization are losing support.
This week, the leadership of the International Monetary Fund and World Bank was also under pressure, as member countries clashed over allegations IMF managing director Kristalina Georgieva manipulated data to favour China while she was a top World Bank executive.
But the tax agreement contains many compromises that may undermine its effectiveness, and there is debate about how it will work in practice.
For instance, the Biden administration won a two-year moratorium on a digital services tax on tech giants while it tries to get the deal through Congress.
Developing countries have also complained that the agreement favours richer countries, though only Sri Lanka, Pakistan, Nigeria and Kenya refused to sign on.
As a result, developed countries could now be seen as more cashed up and able to fund programs to keep poorer countries engaged in the next big cooperative challenge for multinationals: the United Nations climate change conference in Glasgow next month.
Aid and health experts have called on the Morrison government to commit an extra A$250 million over the next year to supply COVID-19 vaccines to developing countries. They say that Australia must act swiftly to head off the emergence of new variants among the unvaccinated.
According to the Shot of Hope report, released Monday, if low vaccination rates continue, more than twenty low-income countries won’t achieve their 70 per cent vaccination targets until after 2030.
An international survey of epidemiologists found that a majority believe a mutant strain could emerge in less than a year “if we do not act fast enough”, making first-generation vaccines ineffective.
Vaccinating the world’s population by the end of 2022 would require an additional A$68–82 billion, but the report urges rich nations to understand this as “an investment not a cost”. By boosting vaccination rates in poorer countries now, rich countries will avoid paying much more in the future.
The report calls on Australia to play a leading role in the global vaccination effort. Australia is one of the world’s richest nations per capita, and the Asia-Pacific region is significantly undervaccinated.
Australia has so far committed more than A$750 million to support vaccine programs in poorer countries, of which about two-thirds is new aid money. But the report estimates Australia’s “fair share” of a global vaccination campaign to be approximately A$1.2 billion.
Managing the pandemic on a global level will be a key issue at the G20 leaders’ summit in Italy later this month. As Australia comes out of lockdown and considers booster shots, this would be a good time for the government to put this issue on the agenda of its national recovery plan.