Australia’s Luck Is Running Out

Donald Horne wrote in his cult classic 1964 book, “The Lucky Country,” that “Australia is a lucky country run mainly by second rate people who share its luck. It lives on other people's ideas, and, although its ordinary people are adaptable, most of its leaders (in all fields) so lack curiosity about the events that surround them that they are often taken by surprise.”

Horne argued that Australia had got to where it was by luck rather than merit. Written nearly six decades ago, it appears Horne’s words could not ring more true for Australia today. The only difference now is that the luck is running out.

Australian Prime Minister Scott Morrison has long answered for Australia’s dependence on coal by noting its importance to Australia’s economy, and he has a point. The mining boom of the 2000s launched Australia into extreme wealth and even helped it fend off the global financial crisis, which sunk many other major world economies. In 2018, the mining industry overall earned Australia a record quarter-trillion dollars in exports. In 2019, the export value of coal – Australia’s second biggest export – accounted for A$69.6 billion.

But at the same time, no single issue in the last decade has been more damaging to Australia’s standing in the world than its love affair with coal. No amount of pleading or even tears from Australia’s allies has led to meaningful resolution, but now, more than ever, Australia risks being ostracized on matters like climate change because of its coal obsession.

Following a call last October between British Prime Minister Boris Johnson and Morrison, in which Johnson asserted that “We need bold action to address climate change,” Australia was denied an invitation to speak at the U.N. global summit in Glasgow. Morrison had already planned to speak at the event. For anyone paying attention, it was an unprecedented blow from one of Australia’s closet allies.

There are now also calls for Johnson to blacklist Australia’s longest-serving finance minister, Mathias Cormann, in his bid to become secretary-general of the OECD. British Labor Party climate spokeswoman Emily Thornberry wrote to Johnson that Cormann’s climate record is “one of denial, inaction and deeply retrograde steps on issues like emissions trading, carbon pricing, and fossil fuel investment.”

Britain is far from alone in pushing Australia on its dependency on fossil fuels. Some of Australia’s other closest allies – New Zealand, South Korea, Japan, Canada, and much of Europe – have recently committed to net-zero emissions and have called on Australia to join them, while Australia’s South Pacific neighbors have become increasingly vocal on how Australia’s climate policies are having a devastating impact on their way of life.

The United States, under President Donald Trump, pulled out of the Paris Climate Agreement, temporarily shuffling Washington to the front of climate pariahs. But President-elect Joe Biden has assured the world he will be returning the U.S. to the agreement on the first day of his presidency.

The commitment to net zero made in October 2020 by Japan and South Korea – two of Australia’s biggest fossil fuel customers – hit Australia hard. But it was in mid-December that Australia received a fatal blow: China announced it had banned the import of Australian coal, which could cost Australia A$14 billion annually amid a recession and rendering Morrison’s defense of the coal industry all the more futile.

With China turning to other suppliers and Japan and South Korea scaling down on fossil-fuel usage, the industry’s days are numbered. But Australia’s abundance of coal and gas has plagued the country with two decades of political war over climate policy and even now, with the industry clearly on its way out, there are ongoing attempts to save it. An International Monetary Fund report in 2019 found that Australia subsidizes the energy sector to the tune of A$29 billion annually. (The Australian government disputes the IMF’s figures.)

While Australia looks to expand coal exports and build new mines, some of its allies have been tearing them down. Since 2016, Britain has closed 10 of 14 coal plants, with the remainder due to close by 2024. Johnson has also said he will invest 50 billion pounds (US$67.5 billion) into powering every home in the U.K. from offshore wind by 2030.

France’s Emmanuel Macron has said that the country’s last coal plants will close in 2021. Germany, with the largest fleet of coal plants in Europe, has also made headway, having closed eight plants last year. (Germany is behind other European nations in part because it spent much of the last decade tackling nuclear energy matters first.)

While the federal government remains in denial, Australia’s states and territories have all committed to net-zero emissions by 2050. In October, the state of South Australia became the world’s first big jurisdiction to run solely on solar power, albeit for just over an hour. Australia’s largest banks have also washed their hands of coal. Late last year, when the last of the four big banks pledged to no longer fund new coal ventures, Morrison’s government claimed they were simply “virtue signalling.” A few weeks later the Japanese part-owner of Australia’s newest coal plant acknowledged the facility was worthless, noting the value of the asset had dropped to zero.

The federal government’s reliance on fossil fuels will also be its own Achilles’ heel. Given that the government has spent so much time propping up the mining industry, there are now many more jobs at risk. The government has also wasted time that could have been spent diversifying Australia’s economy. Despite being one of the richest countries in the world, according to a 2018 Atlas of Economic Complexity report, which ranks countries on how diversified their economies are, Australia placed 87th. About 70 percent of the products Australia exports on a net basis are minerals and energy.

A report commissioned by the Climate Council in 2019 found that climate change could wipe A$571 billion from property values by 2030. Australia ranked atop the list of countries most at risk of climate change – as illustrated by the 2019/20 bushfire season, record high temperatures, record drought, bleaching of Great Barrier Reef, species on brink of extinction, and flooding.

Essentially, Australia has put all its eggs in one basket: Mining. Without it, the economy will be in a dire situation. Australia was already behind, and now with China suddenly halting the import of Australian coal, the time to transition has reduced significantly. But it’s not too late. Biden said last month he would convene leaders of major economies for a climate summit within his first 100 days in office. Australia should take that opportunity to stand with its close allies and other world leaders and commit to net-zero emissions.

It appears that Horne’s words from 1967 could not be more fitting for today. Australia has done well to receive its standing in the world despite putting in little effort. But unless Australia acts soon and quickly to address global warming for economic, political, and of course environmental gain, Australia’s standing in the world will be diminished and, along with it, any right to claim itself “The Lucky Country” will be lost.