Power Failure: The Inside Story of Climate Politics Under Rudd and Gillard

By Philip Chubb

The inside story of a wicked problem …

What should Australia do about climate change? A succession of leaders has tried to answer this question – and come unstuck. Politicians and public servants call it a “wicked” problem – one highly resistant to solution – and many approaches have been developed and discarded by the major parties. Some believe Australia’s dependence on coal makes effective action impossible.

In this book, award-winning journalist Philip Chubb examines the tenacity of fossil-fuel interests and their allies in business, politics and the media when their power is challenged. He reveals and analyses the political strategies of prime ministers Kevin Rudd and Julia Gillard as they tried to overcome the obstacles created by Australia’s carbon-intensive economy.

This is a dramatic study of leadership replete with new revelations. Using more than 75 interviews with key figures (including Julia Gillard, Kevin Rudd, Wayne Swan, Greg Combet and Penny Wong), freedom-of-information requests and good old-fashioned leaks, Chubb gives a persuasive account of success and failure in climate policy, and of the strategies that leaders must use in future.

‘[Philip Chubb’s] reading of the power struggles at the centre of Labor’s climate politics is detailed and revelatory’ —The Conversation

‘Power Failure … reads like a Greek tragedy. It is, mainly, the story of how hubris, madness, malice, political misjudgement and misunderstanding bring down an enterprise forged in common sense and goodwill.’ —the Monthly

‘This is an important book because it methodically chronicles Labor’s failures and, in the process, serves as a how-not-to manual for anyone interested in social reform.’ —Canberra Times

Philip Chubb was the creator of the renowned documentary Labor in Power, which told the inside story of the Hawke and Keating governments and won a Gold Walkley Award and a Logie. He has worked as National Editor of The 7.30 Report and held senior editorial positions at the Age and Time Australia. He is currently Head of Journalism at Monash University.

• Language: English
• Publisher: Black Inc. Books
• Release date: May 12, 2014
• ISBN: 9781922231512

Philip Chubb

Philip Chubb was the creator of the renowned documentary Labor in Power, which told the inside story of the Hawke and Keating governments and won a Gold Walkley Award and a Logie. He has worked as National Editor of The 7.30 Report and held senior editorial positions at the Age and Time Australia. He is currently Head of Journalism at Monash University.

Book preview

Published by Black Inc. Agenda

Series Editor: Robert Manne

Other books in the Black Inc. Agenda series:

Whitewash: On Keith Windschuttle’s Fabrication of Aboriginal History

ed. Robert Manne

The Howard Years ed. Robert Manne

Axis of Deceit Andrew Wilkie

Following Them Home: The Fate of the Returned Asylum Seekers

David Corlett

Civil Passions: Selected Writings Martin Krygier

Do Not Disturb: Is the Media Failing Australia? ed. Robert Manne

Sense & Nonsense in Australian History John Hirst

The Weapons Detective Rod Barton

Scorcher Clive Hamilton

Dear Mr Rudd ed. Robert Manne

W.E.H. Stanner: The Dreaming and Other Essays ed. Robert Manne

Goodbye to All That? On the Failure of Neo-Liberalism and the Urgency

of Change eds. Robert Manne and David McKnight

Making Trouble: Essays Against the New Australian Complacency

Robert Manne

The Words that Made Australia: How a Nation Came to Know Itself

eds. Robert Manne and Chris Feik

Published by Black Inc. Agenda,

an imprint of Schwartz Publishing Pty Ltd

37–39 Langridge Street

Collingwood VIC 3066 Australia

email: [e-mail]

www.blackincbooks.com

Copyright © Philip Chubb 2014

Philip Chubb asserts his right to be known as the author of this work.

All Rights Reserved.

No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form by any means electronic, mechanical, photocopying, recording or otherwise without the prior consent of the publishers.

The National Library of Australia Cataloguing-in-Publication entry:

Chubb, Philip

Power failure / Philip Chubb.

9781863956604 (pbk)

9781922231512 (ebook)

Climatic changes – Government policy – Australia. Fossil fuels – Government policy – Australia. Coal trade – Environmental aspects – Australia. Australia – Politics and government.

363.70994

CONTENTS

Note on sources

List of abbreviations

Timeline

Introduction

PART ONE: THE DEATH OF INNOCENCE

1. Darkness at the heart of government

2. The rush for the golden doors

3. Squandering consensus

4. Absolute political cowardice

5. Two leaders

PART TWO: THE END OF CLIMATE CHANGE

6. The seeds of destruction

7. Really fundamentally wrong

8. Dead silence

9. Storms inside

10. Cashy, cashy, cashy

11. The lived experience

Conclusion

Acknowledgments

Endnotes

Index

NOTE ON SOURCES

This book came together as a result of 107 interviews with 74 people who, in most cases, were central to government climate change policy in the years 2007–13. Very few of those approached preferred to remain silent and a number agreed to be interviewed more than once. One of these was former prime minister Julia Gillard. The other former prime minister, Kevin Rudd, made himself available for a single interview.

Federal ministers who gave their time generously included both ministers for climate change (Penny Wong and Greg Combet), treasurer Wayne Swan (also deputy prime minister in the Gillard government), Craig Emerson, Nicola Roxon, Mark Dreyfus and Simon Crean. Combet was also Wong’s parliamentary secretary for climate change and Dreyfus was Combet’s. Other political figures interviewed who were important to this story included Greens leader Christine Milne and NSW rural independent Rob Oakeshott. Victorian premier John Brumby provided valuable insights. I interviewed twelve people from the Latrobe Valley whose lives would be hit hard by carbon pricing. Others who participated in interviews included senior public servants, ministerial advisers and consultants working on policy or political strategy.

The interviews were structured to gain insight into and in-depth information about the central research themes. Interviews as a research technique always require careful evaluation. A major issue is that memories of specific events can be distorted by later experience.¹ The process of maximum triangulation with other sources, both oral and written, was used to establish general reliability. Constant comparison was made between the information from each interview and the other sources, including documents, to search for similar and contrasting facts and themes that could then be examined.

In this process, the book has also made use of a large range of independent, private, government and Labor Party reports, research papers, academic articles and books. Most of the documents were publicly available, while some surfaced through Freedom of Information requests and some from old-fashioned leaks.

All of the politicians interviewed spoke on the record, with one exception. The exception was Kevin Rudd. Leaving Rudd aside, all final and follow-up interviews with government ministers central to the story were concluded by October 2013. Gillard was interviewed in December 2012 at the Lodge, and again by phone from Melbourne on 20 September 2013, just after the election that saw Labor ejected from office by disillusioned voters.

Rudd was unable to meet until 7 February 2014. He made many points in the course of the conversation and sent me additional information afterwards. His views were injected into the book. But readers will find no direct quotes from him. This is because the former prime minister spoke on a background basis only, meaning that he wanted me to use what he said but not attribute it to him directly.

The perspectives Rudd provided were useful, but it also should be pointed out that his general position has long been well known on all of the key issues. While Gillard has not been prepared to make her views clear until the interviews conducted for this book, Rudd and his core supporters dominated discussion and analysis of the climate policy narrative, almost always through the device of backgrounding journalists. On some important issues, his views have thus become, to this point, received wisdom. The most aggressive formulation of Rudd’s position was in the account Tales from the Political Trenches.² The author, Maxine McKew, is a former ABC presenter, was the victor over John Howard in his seat of Bennelong in 2007, became the parliamentary secretary for early childhood development, and is a passionate Rudd supporter. McKew’s arguments about some central issues are the same as Rudd’s arguments. They are dealt with in Chapter 4.

An interview I did with Rudd’s climate change minister, Penny Wong, also helps us understand why Rudd acted as he did during the period in question. In defending some of her own positions, Wong sometimes inevitably defended Rudd’s; the interview with her played an important balancing role in the book, even though the experience of 2007–10 converted her to being an opponent of the former prime minister’s leadership. (Wong shifted her position on the leadership back again in June 2013 to support Rudd in the final showdown with Gillard, and was rewarded with the job of government leader in the Senate.)

Another issue to consider when reflecting on the use of sources is anonymity. Many senior public servants and ministerial advisers agreed to be interviewed on condition that their names be withheld. These people were constrained by the confidentiality of Cabinet and other deliberations, discussions and decisions. They also required anonymity because their professional reputations and futures require them to be dependably discreet. Those interviewed for this book generally did not have permission to speak. Certainly they did not have permission to speak freely, which was what was being asked of them.

The widespread use of anonymous sources raises important issues and is, as the New York Times stylebook puts it, a last resort.³ But it also was a necessity. Public servants and ministerial advisers are vital participants in events and often clear-eyed witnesses to history. Some of the most important journalism in the public interest has required confidential sources. There are many such examples that have changed the world for the better.

That said, the very fact of anonymity means that sources’ answers to questions must be treated cautiously for more than the usual reasons of faulty memory or impure motives. This understanding led me to establish a set of rules for how to deal with them while writing the book. The first concerns anonymous direct quotes containing strong or colourful criticism of the behaviour of others, especially either prime minister. These were excluded. Quotes of this type must be clearly and openly sourced. The second concerns anonymous opinions. These were only included in the book when it was clear to me that they were reasonably representative of a legitimate point of view. The decision whether to include them was assisted if there were others saying something similar on the record. The third concerns facts put forward by anonymous sources. These were only ever included if they were corroborated by others to the point where I was convinced of their accuracy. That meant that facts had to be provided by more than one source and the sources had to be independent of each other. Where I was convinced of the accuracy of a fact, but where others disagreed, I did my best to note this clearly.

All of this raises the question of the motivation of anonymous sources. The answer is that their motivation is the same as that of most of the politicians who are in a position to speak on the record. I am convinced that in the vast majority of cases their interest was in trying to ensure that history be written according to the truth as they genuinely saw it. They were often willing to argue hard for their version of events.

In the final analysis, I am presenting this book as my considered view of a very important part of Australia’s story. I have done my best to form that view on the basis of all the verbal and documentary evidence I have been able to gather and evaluate. In the course of this effort I may have made some mistakes. If that is so, then those mistakes were mine, and not those of the generous and public-spirited people who gave up their time to try to guide me.

LIST OF ABBREVIATIONS

ACF: Australian Conservation Foundation

ACOSS: Australian Council of Social Service

ACTU: Australian Council of Trade Unions

AEMC: Australian Energy Market Commission

AIGN: Australian Industry Greenhouse Network

ARENA: Australian Renewable Energy Agency

CCA: Climate Change Authority

CEF: Clean Energy Future

CEFC: Clean Energy Finance Corporation

CFMEU: Construction, Forestry, Mining and Energy Union

CPRS: Carbon Pollution Reduction Scheme

DCC: Department of Climate Change

DPMC: Department of Prime Minister and Cabinet

DRET: Department of Resources, Energy and Tourism

EITE: Emissions-Intensive, Trade-Exposed industries

ESAA: Energy Supply Association of Australia

ETS: Emissions Trading Scheme

FAHCSIA: Department of Families, Housing, Community Services and Indigenous Affairs

GFC: Global Financial Crisis

GTLC: Gippsland Trades and Labour Council

IPCC: Intergovernmental Panel on Climate Change

MPCCC: Multi-Party Climate Change Committee

NEM: National Electricity Market

NETT: National Emissions Trading Taskforce

OPEC: Organization of Petroleum Exporting Countries

PMO: Prime Minister's Office

RET: Renewable Energy Target

RSAF: Regional Structural Adjustment Fund

SCCC: Southern Cross Climate Coalition

SEC: State Electricity Commission

SPBC: Strategic Priorities and Budget Committee

WWF: World Wide Fund for Nature

TIMELINE

INTRODUCTION

In the years leading up to the deadly fires on the edge of Melbourne in February 2009, I had the same level of interest in climate change as most Australians. Like many others, I believed I had seen and felt its impacts. The worst droughts on record gripped some of the most crowded parts of the country. In southern regions from Western Australia to Tasmania there had been little rain for a dozen years. The great dry spell was made worse by scorching temperatures. The parched, baked, rock-hard rural paddocks and dying suburban gardens were alarming to country folk and urban dwellers alike. I understood the need for action without being passionately committed to it.

Back in 1998 I had moved with my family into a rural haven at Cottles Bridge, on the outskirts of Melbourne. By then the clock had already started ticking down to Australia’s most destructive bushfires. The summers seemed to become hotter and hotter. By Christmas 2008, day after day of intense heat left the landscape orange-brown, as if it had been in the oven too long. The leaves on the trees we had been planting for ten years were burnt by the sun and shrivelled while I heaved buckets of water around the hills. I was trying to resist the inevitable, trying to keep hope alive as the environmental conditions seemed to change drastically before our eyes.

The fire that dropped from the sky on Saturday 7 February 2009 plunged Australians into a new reality. Had the fireballs come as far as our place, our special hoses and pumps and cotton clothes, let alone the wet mops and buckets and the bath full of water, would have counted for nothing. Amid record-breaking heat, I was standing out the back of the house on the Saturday, spraying water into the gutters. I had just heard about the first few deaths down the road and I suffered a moment of blinding clarity. There I was, hose in hand, equipment gleaming, fire plan laminated, just as I had been advised. But if the fire came barrelling over the hill behind me, I knew we’d be dead.

It seemed obvious to me that changes to the climate had created the conditions that fuelled the fires to the intensity that killed our closest friends as they hid under the kitchen table in their mud brick home. Warnings about the threat of climate change had been bombarding us from every direction. In May 2006 former US vice president Al Gore’s film An Inconvenient Truth commenced its mission to help create a crusade of climate activists. In October that year Nicholas Stern’s grim UK study of the impact of climate change on the world economy was released. A few months later, in February 2007, the Intergovernmental Panel on Climate Change (IPCC) delivered its fourth report, with its most unequivocal findings on the connection between climate change and human activity. Climate change became the subject of popular television shows.

*

My name is Kevin, I’m from Queensland and I’m here to help. It was a signature, gently self-mocking Kevin Rudd adage. He loved saying it, and although you could almost hear voters groan, they seemed to love it too. Most Australians heard it for the first time in April 2007, at Labor’s national conference. Rudd had taken over as leader five months before, ousting one of the party’s old favourites, Kim Beazley. Rudd’s victory became possible only after Julia Gillard added her much greater support among MPs to his.¹

At the conference in the Sydney Convention Centre, Rudd was conveyed to the stage on the wings of what was apparently a climate change song, A Change in the Weather.

Now do you remember

I promised in winter

That our hearts would be lighter one day?

And sooner than later

the sky would be brighter

And everything would be okay?

The leader was beaming. The election campaign was building and it was all about him. Here he was, full of energy and promise, history at his feet, able to play himself as a nerdy intellectual and still be a popular candidate – an energetic, modern leader, in contrast to Liberal prime minister John Howard’s weary caution. Rudd would flood the country with exciting ideas and projects.

Above all he would fix climate change, which was the great moral challenge of our generation. The aim was to forge a national consensus and examine how we best reorganise as a nation to deal with this.² He made it sound like a national emergency. There were pledges to restructure Australia’s economy, remake its energy industries and create a new environmental diplomacy. Rudd was crafting a modern rallying point for Labor that reminded observers of Ben Chifley’s Light on the Hill.³

In the November 2007 election Rudd was Kevin 07. It was the most personalised campaign slogan in Australian history.⁴ It was also effective, creating a sense of excitement that a new era was dawning. The poll was described by some observers as the world’s first climate change election.⁵ A postal survey showed that almost all voters supported the Rudd position of ratifying the Kyoto Protocol, an international agreement to reduce emissions by setting binding targets for industrialised countries.⁶ More than seven out of ten Australians believed climate change would have a big influence on their vote. Howard was humiliated, losing his own seat as well as government, only the second time in Australian history that a prime minister had suffered this indignity.

Initially the new prime minister maintained the momentum for action. Climate policy was a reform full of promise and excitement. The government’s policy, the cornerstone of which was an emissions trading scheme (ETS), represented a major transformation. The ETS, which would use the market to limit emissions by providing a cost disincentive for the use of fossil fuels – putting a price on carbon – was known by the unfriendly name of the Carbon Pollution Reduction Scheme (CPRS). Judging by how they emphasised the historical significance of what they were doing, Rudd and the new climate change minister, Penny Wong, relished the sheer ambition they were showing in pursuing action on climate change.

Everybody in the country, it seemed, wanted the same thing.⁷ Reform had captured the public imagination of Australians. Rudd had appointed eminent economist Ross Garnaut to examine the impacts of climate change on the Australian economy and recommend frameworks to ensure sustainable prosperity.⁸ Garnaut was a media favourite because of his influential role with the Hawke-Keating Labor governments in the 1980s and 1990s, when he advised on trailblazing policies which involved visionary and politically courageous decisions, including the virtual elimination of tariffs.

His interim report in February 2008 received saturation coverage. The head of his secretariat, Ron Ben-David, recalled sitting at Adelaide Airport on the day of its release and being struck by something quite unprecedented taking place all over Australia … In all fairness, while it was a good report, it was still only very preliminary … So what was going on? Why was the level of interest so intense?⁹ It was as though intelligent and non-partisan debate about climate change had become the norm.

*

By the time of the fires, Kevin Rudd had been prime minister for just over a year. While the 173 people who died on 7 February 2009 seemed to confirm the obvious – that we needed to act on climate change – they established something else as well, something that had been all but hidden by the enthusiasm of the previous years. There was a strand of aggressive climate change denial in Australia which had receptive allies in the media. Knowing this became important to understanding the future.

The fires provoked a storm of challenge to the view that there was a link between climate change and extreme weather. Opponents argued that, on the contrary, environmentalists had caused the bushfires by focusing on habitat protection: inadequate burning off was the real cause of the fires’ intensity. Greenies should be hanging from lamp-posts, said one columnist. This was a case of the power of green ideology over government … which prevents landowners from clearing vegetation to protect themselves.¹⁰ In the areas directly affected, local environmentalists, often mourning dead friends, were accused of being murderers by enraged climate change sceptics whose interest in land clearance seemed to be about development as much as bushfires. As the aftermath of Black Saturday showed, the sense of a grand national climate change project masked divisions and fears that had never been overcome, even as the momentum for action gathered pace.

Getting legislation to act on climate change through the parliament was always going to be difficult, no matter that for a time under Rudd it seemed inevitable. Ross Garnaut pronounced climate change mitigation a diabolical policy problem. He said it was harder than any other issue of high importance that has come before our polity in living memory, and not amenable to a national, let alone a local, solution.¹¹ The Australian Public Service Commission characterised climate change as a wicked problem, a pressing and highly complex issue involving many causes and high levels of disagreement about the nature of the problem and the best way to tackle it.¹²

In Australia, the wicked or diabolical nature of the problem is exacerbated by our reliance on fossil fuel. Eighty per cent of our electricity is obtained from coal-fired power stations.¹³ Australia is one of the world’s largest emitters of greenhouse gases and the biggest per capita emitter among developed nations.¹⁴ Dealing with the problem involves an economy-wide reform that affects people’s lives through an increased cost of living. It undermines established ways of doing business by neutralising national competitive advantages in cheap electricity and resources, with coal being the nation’s biggest export earner.¹⁵ Private corporations, whose profits have grown on the basis of being able to externalise the costs of their pollution, dominate national and regional economies.¹⁶ There has been a view that fossil fuel dependency makes climate policy failure inevitable because of the power of the interests lined up to fight it.¹⁷

Climate change has been an unresolved political issue for more than twenty-five years, having first emerged in 1985.¹⁸ Plans were put to the Labor Cabinet in 1989 and 1990, which finally but fruitlessly agreed that emissions should be stabilised at 1988 levels by 2000 and then reduced by 20 per cent by 2005. The major proviso was that reductions in emissions would not be at the expense of the economy. In 1992 Australia signed the United Nations Framework Convention on Climate Change.

Government interest then waned. In 1996 John Howard, who harboured significant scepticism about the science of climate change, was elected prime minister, ousting the Labor government after thirteen years.¹⁹ The following year the United States and Australia refused to ratify the Kyoto Protocol. Howard’s resistance gradually became controversial in Australia and eventually deeply unpopular, as the result of the 2007 election showed.²⁰

In 1999 the Australian Greenhouse Office released discussion papers on emissions trading. This became for a decade the favoured approach of both sides of politics, assuming there was to be any action at all.²¹ In 2003 Howard ruled out a proposal for a national ETS, apparently on advice from industry.²² But he was soon to be caught in a trap that contributed to his ultimate defeat in 2007. The Labor Party was in power in all the states and territories, a rare event that provided political opportunities for it to embarrass the prime minister. Premiers and chief ministers saw climate change as a suitable battlefield and established the National Emissions Trading Taskforce in January 2004, appointing Garnaut to advise in 2007.

Labor’s mind games cracked Howard’s resolve. He commissioned a group headed by Peter Shergold, the secretary of the Department of Prime Minister and Cabinet (DPMC), to reconsider the possibility of an ETS. The Shergold report, released in May 2007, came to the same conclusion as the National Emissions Trading Taskforce before it and Garnaut afterwards. This was that an ETS was the lowest-cost and most effective mechanism to deal with climate change. Along with environment minister Malcolm Turnbull, a tormented but genuine advocate of action, Howard declared that the government would introduce an ETS in 2011. Even Tony Abbott, a fierce opponent of emissions trading after he became Opposition leader in December 2009, supported Howard at the time: this seemed the best way to obtain the highest emission reduction at the lowest cost.²³ The two main parties now had similar plans to act against climate change. But by the November 2007 election, the voting public’s trust in Howard, who had been in power for eleven years, was spent, and Rudd had his chance to tackle the wicked problem of climate change.

Rudd had achieved his goal of the Labor leadership after methodically courting media attention and developing a personal relationship with voters. He believed he was his own creation, owing nothing to factional heavies or grubby deals. He was a particular type of leader: dominant, a centraliser of power, an autonomous decision-maker, the personification of the party platform.²⁴ These tendencies are far from unique. They are part of a broader leadership trend on both sides of politics that goes back at least three decades and applied to John Howard as well.²⁵ While Labor had traditionally been more egalitarian, more suspicious of its leaders, recently it had grown willing to tolerate, even embrace, the centralisation of authority. Rudd’s dominance was made clear by the party’s acceptance that he could select his own Cabinet, overturning the practice that ministers were elected by the Labor caucus. While there was some nervousness that Rudd may become bigger than the party, his deputy, Gillard, seemed to be a good foil.

*

As the fires bore down on us on Black Saturday, the heat and noise were overwhelming as the blazing wind whipped around the house. Fire fighters’ fearful voices crackled from the scanner. The local radio sounded like it couldn’t believe what it was saying, but was agonisingly behind on the real story of the mounting death toll. When later I came to reflect on that day, what was happening appeared so obvious. Climate change had put us on the path to a terrible future.

Rudd seemed to be making hard work of a policy that had such broad support. Were his efforts going to be enough? The question was overlaid by a scare campaign from opponents about the impact of climate action on industry, jobs and the country’s future. The fear that some Australians felt for their livelihoods was most acute in cities and towns dependent on industries that had provided jobs and other financial benefits on the back of a freedom to pollute the skies.²⁶ The regional panic shone a powerful light back on national events. This became a particular interest of mine after the bushfires, having seen how the branding of local environmentalists as murderers illuminated the national story of climate change action and denial.

I had many questions about what really happened inside the government as it grappled with climate change. I trusted that the answers would help me to identify the policies and political strategies that might result in successful climate change action, and those doomed to failure.²⁷ Such knowledge might be useful when the next attempt