green vote = economic vandalism

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    A Green Vote is a Vote for Economic Vandalism

    Jim Hoggett, Alan Moran and Mike Nahan, Australian Financial Review, 21 September 2004


    John Quiggan claims that the Greens are not 'irrational kooks' but 'are defending rational, evidence-based policies against populism and pork-barrelling'.

    We beg to differ. Wherever you look with the Greens economic policies you see school kid posturing and trendy, wealth-sapping strategies.

    The Greens are concerned about our high current account deficit. Fair enough. The obvious answer to solving it is to export more. But the Greens actually plan to shut down coal, our biggest export industry. In addition, their policies would devastate the export potential of our other energy intensive industries, like alumina/aluminium and steel. As they seek to eliminate non-renewable energy sources, they also appear to rule out new natural gas developments. Import replacement, an alternative approach to filling the payments gap, is not even mentioned other than promoting local production of windmills.

    The Greens build on their illogical current account policies with capital account policies that would stop foreign investment inflows. This would require a plummeting exchange rate. The Greens autarkical policies would thereby amount to economic disruption worse than that faced by Indonesia and Philippines in the aftermath of the 1999 Asian Crisis, and establish us on a downward economic path that would hurtle us towards those countries' living standards.

    Proposals to gut our major export industries, while expressing concern for the current account deficit and ruling out capital inflows, surely, are not examples of 'evidence based policies'.

    But export and other balance of payments policies are only the start of the Greens' economic vandalism. As well as shutting down coal exports, they also plan to stop its use for domestic electricity generation. Given that it provides 88 per cent of our electricity, this would be catastrophic. The Greens' energy policies would require increases in the share of renewables from the planned 5 per cent of electricity in 2010 to 12 per cent, rising to 25 per cent by 2020. This would double the cost of electricity, with all that this implies for industrial disruption and family hardship.

    Moreover, their favoured substitutes for fossil fuels, wind, solar and other renewables have reliability problems---they only work when the sun shines and the wind blows. Hence they need massive back-up, comprising 90 per cent of their capacity.

    One thing the Greens are fond of is more and higher taxes. They have a spider's web of 41 new taxes or tax increases. These include taxes or higher taxes on superannuation, savings, and even the family home---so much for addressing the aging population and national saving problems. The new taxes combine the predictable---like a plastic bag levy---with the absurd---taxing the electromagnetic spectrum assets.

    The only major tax cut is the elimination of the GST but this will be replaced with a consumption tax---a proven recipe for subjecting the tax system to populist pork barrelling.

    Even without accounting for their disincentive effects on economic activity, these taxes will be insufficient to pay for the one thousand plus new spending measures across every major social program. The Green budget deficit would plumb new depths.

    The Greens have specially targeted the farming community. They propose to flush an additional 3000 gigalitres of water down the Murray Darling system. This would take over 40 per cent of the water now allocated to irrigated farming. It would devastate rural communities throughout the interior. They are persevering with their policy in this matter in spite of a recent a major study on the impact environmental flows which has indicating that it would cost the economy $800 million a year.

    The Green's assault on the rural economy does not stop with water. Under their policies, control of farming land will pass out of the hands of farmers into Green accredited 'environmental management systems' and third party consultative processes. As farmers' costs and taxes are forced up by other Green policies, their production options will narrow. Native forestry, live animal exports and GM crops all fall foul of Green ideology.

    The Green's infrastructure policy calls for the stock of transport infrastructure to be cut back to 1995 levels. As with so many of their proposals, this would play havoc with productivity growth. The one ameliorating strategy that gets an honourable mention is a plan to increase bicycle trips by 20 per cent!

    The Greens' policies are as loopy as they have always been. The difference now is that they stand to gain the balance of power in the Senate. Their stated policies provide a good indication of the direction they will be pushing an ALP or Coalition Government. That direction is totally wrong.

    The Greens, having already decided to offer preferences in most seats to the ALP, are now auctioning forestry electorates. This puts the Australian timber industry on the Green Line. Voters who favour the Greens out of a social conscience need to be aware of the widespread damage that their policies will do.


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