Climate change:It’s arrived

Climate change is already with us.

And the news is not good.

Some of Australia’s top scientists have reported, for example, that we can now expect droughts much more often, than they have occurred in the past.
The old assumption, based on the experience of previous generations, was that the nation could expect a drought about every 20 years.

A report, just produced jointly by the Bureau of Meteorology and the CSIRO changes that.

It says we can now expect serious drought like conditions, somewhere in Australia, every one or two years.

Kevin Rudd is alarmed.

“Now this is a serious revision of the impact of climate change on drought,” the prime minister said, in a television interview yesterday.

He said, too, that the issue cannot be avoided.

“The easiest thing to do is stick your head in the sand and say ‘not my problem.’”

But he said most Australians expect the government to take a responsible stand, on climate change, for the sake of their children.

“We need to do it for the economy.” Rudd said.

“But we need to do it for the environment, so that the people who come after use have some place where they can live, and live as we have lived,” he added.

Related stories:

1. Climate change:the big choices
2. Climate change:the new test

Wall Street rises, defying oil price record

Wall Street traders recovered some of their courage overnight, even though oil prices briefly hit a new record of $US146 a barrel.

The Dow Jones industrial index rose 73.03 points on the day to close at 11,288.54.

But the S&P 500 was flat, rising just 1.38 points to 1,262.90.

And the tech heavy NASDAQ composite index fell 6.08 points to 2,245.38.

Oil futures ended $US1.70 up at $US145.27.

These results followed sharp falls on Wall Street the previous day.

A new report showed that the US economy had lost 62,000 jobs in June.

The US unemployment rate stuck at 5.5 per cent

But that was not much more than the market had expected.

Twenty two of the Dow’s 30 components ended in positive territory.

It was a short trading day on Wall Street, before the July 4 holiday

Related stories:

1. Wall Street – finally – rises
2. Wall Street rises, but oil prices shock

Climate change:the big choices

The biggest changes ever made in the Australian economy start today.

That will happen when Professor Ross Garnaut releases his interim report on cilimate change.

The report will have implications that will strike at the heart of the Australian economy, including its booming coal and iron ore industries.

They will be major participants in the carbon trading emmissions scheme, that will emerge from this overhaul.

Business leaders are cautiously supportive.

The Australian Chamber of Commerce and Industry, for example, says it will support “a workable emmissions trading scheme.”

Professor Garnaut, himself, is urging swift action.

He says that will, at least, be less expensive than the corrective measures that would be necessary, if action is delayed.

Some will certainly see that as cold comfort.

And support for the Garnaut plan in the Federal parliament is not guaranteed.

The government is, certainly, committed to emmissions trading.

The oppostiion is not, at least not on key points.

Its leader, Brendan Nelson, says he is holding fire on the question of whether transport should be included.

There is no doubt that petrol prices would rise, under a comprehensive emmissions trading scheme.

And Dr Nelson has already scored some political points, on fuel prices.

The opposition, though, has now lost control of the Senate.

That has passed to independents and others.

The government is planning to issue a discussion paper, soon, on climate change.

Professor Garnaut will deliver his final report in September.

Theh, the hard decisions will have to be made.

Related stories:

1. Climate change:the new test
2. Climate change:the realities

PM blows whistle on “blame game”

Business is welcoming Australia’s commitment to a new “seamless” economy.

The agreement on that was reached at a meeting of Federal and State leaders in Sydney yesterday.

The Prime Minister, Kevin Rudd, hailed it as the end of the “blame game” between the Commonwealth and the States.

And the nation’s biggest business group, the Australian Chamber of Commerce and Industry, was almost as enthusiastic.

“Today’s progress on business regulatory reform, water and health should enhance productivity and efficiency,” its Chief Executive, Peter Anderson said.

“Business welcomes progress on the Murray-Darling Basin, which is an important part of the water reform debate, but also looks forward to the continued development of more efficient urban water markets,” Mr Anderson added.

Hopes had not been high for an agreement on the Murray Darling, before yesterday’s meeting of the Federal and State leaders.

Indeed, one newspaper had predicted that the Victorian Premier, John Brumby, would block any such plan.

That turned out to be wrong.

Mr Brumby declared himself delighted with the outcome.The agreement will involve $3.7 billion worth of water saving projects, in the Murrray Darling Basin.

And nothing pleases premiers more than money.

A word of caution, though.
Mr Rudd is not the first Prime Minister to declare that the “blame game,” which sometimes seems to lay at the heart of the Australia, is over.

Related stories:

1. “Complete charade” a strange game
2. Wall Street recovers from early blows

Climate change:the new test

The Rudd Labor government will face its toughest test tomorrow.

That’s when Professor Ross Garnaut will present his draft report on climate change.

The government will follow that with a discussion paper, setting out the options.

That is, in bureaucratic talk, a green paper.

Professor Garnaut is to produce his final report in September.

That, in turn, will be followed by a white paper, in which the government will spell out its climate change policies.

Although the debate is still at an early stage, Professor Garnaut has already made central points clear.

The most basic is that while tackling climate change seriously now will be expensive, it will still be much cheaper than taking the apparently easier path, and doing little or nothing.

Rudd built, cleverly, on the early euphoria, with which accompanied his government’s early days.

His apology to Australia’s Aborigines, for their treatment at the hands of white Australians – and the 2020 Summit – were both brilliant moves.

Policies that tackle climate change, though, will -necessarily – involve all the expense and the discomfort, that can come with adopting new, tighter ways of living.

Rudd will have just one chance to make those changes.

That will be this year.

A combination of soaring fuel prices, higher food bills, steep falls in share prices and high interest rates will, certainly, erode public confidence, after that. This is happening already.

A strong , efficient carbon trading scheme will be central to the Rudd government’s climate change policies.

And they must include private cars, if those policies are to have a serious chance of success.

Brendan Nelson has already signalled, though, that the opposition will be looking for all the votes it can get, as all this proceeds.

He has already said that it is “not yet certain” that the opposition will support the government, in this area.

That would be a tragedy, of the first order, for future generations.

Related stories:

1. Climate change:the realities
2. Brendan Nelson’s big test

That tipping point:PM’s response

Kevin Rudd says global economic turmoil has made him more determined than ever to pursue responsible economic management in Australia.

His declaration follows warnings, by both the Bank of International Settlements and the International Monetary Fund, that the world economy could be close to a tipping point.

A reporter asked the Prime Minister yesterday for his response.

“The response is an absolute determination to pursue responsible economic management,” Rudd said.

“Which is why we brought down a $22 billion surplus.

“Because on the inflation front and the interest rate front the irresponsible course of action is to add fuel to the fire.” the Prime Minister declared.

With petrol and food prices soaring,inflation won’t be easy to curb.

Especially with an opposition that is determined to extract all the political mileage it can from the situation.

Rudd recognised the challenge.

“Across all OECD countries at the moment consumer confidence is at the lowest level in nearly a decade. In the United States it is the lowest in more than 16 years,” he said.

And he noted that, on one measure, consumer confidence in the United States is at its lowest level for 28 years.

Low consumer confidence in Australia won’t help, either.

A Newspoll, published yesterday, showed consumer confidence at its lowest level since the 1991 recession.

Related stories:

1. Americans blue:will it happen here, too?
2. Consumers blue, too

Wall Street shrugs off catastrophic predictions

Trade on Wall Street recovered some lost ground overnight, after falling earlier in the day.

The Dow Jones industrial index finished just 32.25 points higher at 11,382.26.

But it had twice been below 11,200 points in mid-day trading, US time.

The S&P500 closed 4.91 points up at 1,284.91.

And the tech-heavy NASDAQ composite index closed 11.99 points up at 2,304.97

Oil futures remained high, rising $US1.41 on the day to finish at $US141.41.

The market, so far, seems to have largely ignored the potentially catastrophic predictions of the Bank of International Settlements.

The BIS, effectively, warned that the downturns, seen so far, might be no more than a prelude to the adverse conditions that are still to come.

Three auto makers, GM, Ford and Toyota all reported falling sales, with trucks leading the way down.

The coffee house, Starbucks, also had bad news, announcing plans to close 600 stores in the United States.

Even the ratings agency, Moodys, has been caught up, itself, in the market’s present woes. It sacked a senior executive, after admitting that some employees broke ratings rules.

Related stories:

1. Wall Street plunges
2. Mixed trading on Wall Street

Australia’s economic dilemma

The Reserve bank – and the Federal government – are still wrestling with a very big question.

How should a dual speed economy be managed?

The truth is that there are no clear answers.

But the Reserve Bank governor, Glenn Stevens, did acknowledge the problem yesterday, in a statement explaining why his board decided to keep Australia’s interest rates on hold this month.

“The evidence,” he said, “is that the tightening in financial conditions, in conjunction with other factors, including rising fuel costs, is working to restrain demand.”

But he added a warning.

“The rise in Australia’s terms of trade that is occurring, will work in the opposite direction.”

In ordinary times, this would not be a problem.

After all, getting more money for our exports is, ultimately, a good thing for the nation.

The trouble is that, inflation, at 4.2 per cent, is already high.

And – with fuel and food prices soaring – inflation is not likely to fall in the immediate future.

The dilemma is clear enough.

If the Reserve bank raises rates, many people could be thrown out of work, in an already slowing economy.

But if it eases them, inflation is likely to take off, when all that money from our booming exports, starts sloshing around in the economy.

The old definition of inflation – “Too much money chasing too few goods” – still applies.

As we know, the bank decided to keep rates on hold yesterday.

It is not breathing easily yet, though.

Related stories:

1. Economic catastrophe:where does Australia stand?
2. Stevens raises the spectre of inflation