Morrison government will avoid ‘handouts’ to Nationals to clinch climate deal, Birmingham suggests

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Morrison government will avoid ‘handouts’ to Nationals to clinch climate deal, Birmingham suggests

Finance minister backs Josh Frydenberg’s economic case for net zero but is asked what Barnaby Joyce’s support will cost

Simon Birmingham and Josh Frydenberg

Last modified on Fri 24 Sep 2021 02.31 EDT

Liberal frontbencher Simon Birmingham has signalled his opposition to offering the National party “handouts” to clinch a deal on climate policy, as the Morrison government wrestles with internal divisions in the lead-up to a crucial UN summit.

With metropolitan Liberals increasingly concerned the National party is dictating the terms of the government’s climate policy, the treasurer Josh Frydenberg made a significant public intervention on Friday, articulating the economic case for Australia to commit to net zero emissions by 2050.

Government sources have told Guardian Australia the energy and emissions reduction minister, Angus Taylor, is telling colleagues privately that the government could try to appease Nationals trenchantly opposed to the 2050 target with a halfway house ahead of the Cop26 in Glasgow.

The government could decline to explicitly endorse the specific mid-century commitment, while announcing a roadmap of actions that would set Australia on the net zero path.

But this landing point would be unacceptable to Liberals who believe Australia needs to make this transition, rather than pretend to make the transition. Tensions have escalated within the government over the past couple of weeks.

As some Nationals reacted with derision to the intervention by Frydenberg, Scott Morrison said the government must prepare industries for “a new energy economy”.

Speaking from Washington DC on Friday, the prime minister said the government would work further on its long-term emissions strategy upon his return to Australia.

But amid growing international pressure on Australia to strengthen its climate policy, including deeper 2030 emission cuts, Morrison said the government’s plan would recognise “the global reality” that climate change was driving an economic transition.

Birmingham used a round of television interviews on Friday to back Frydenberg’s position. The finance minister said Frydenberg was right to observe that net zero was important “not just for environmental reasons, but also for economic reasons”.

Birmingham expressed confidence that the government could meet a request from the Nationals leader, Barnaby Joyce, to settle on a climate policy “in ways that protect jobs across Australia, especially in regional areas”.

When asked what the government would be prepared to pay to secure Joyce’s support, Birmingham indicated the government would avoid direct handouts.

“We always work through these issues carefully, and it’s important that Barnaby, I have every confidence he’s not, you know, seeking handouts in other ways,” Birmingham told Sky News.

The Nationals leader Barnaby Joyce says he has 'no problems with any plan' as long as regional areas aren't hurt.

Joyce told ABC Radio National on Friday: “I’ve got no problems with any plan that does not leave regional areas hurt. I have to explain … that we make sure we have net zero losses in regional areas … and that we don’t put our economy at threat.”

The government is working towards unveiling Australia’s updated climate policy position in the middle of October before the Cop26 summit in Glasgow in November. Climate policy remains a fraught issue within the Coalition, and recent history shows internal debate can escalate into full blown leadership crises.

Frydenberg explains costs of falling behind

Frydenberg told an Australian Industry Group webinar there was “no hiding the fact” there were different views among his colleagues – but insisted they all shared “an appreciation of markets”.

“What I’ve sought to highlight today is the economic cost that can be incurred if there is a false assumption that develops in financial markets that we haven’t been part of that transition,” he said when asked how he could win over his colleagues.

Frydenberg said there had not been any “formal decision” taken within government to commit to net zero by 2050, “although there are extensive discussions that are taking place within government and good progress has been made on those discussions to date”.

He said if markets falsely assumed Australia was not transitioning in line with the rest of the world, the cost of capital could increase.

The former resources minister Matt Canavan – a close ally of Joyce – derided that argument. Canavan, a Queensland Nationals senator, asked on Twitter: “Would we get lower interest rates if we signed up to the Belt and Road Initiative and attract lots of capital from the Chinese Communist Party?”

Canavan also said higher interest rates may be worth paying to “protect our independece [sic]”.

After Joyce returned to the Nationals leadership in June, he signalled initially that his party would be unlikely to sign on to a net zero commitment before Glasgow. But the deputy prime minister subsequently softened his position after several colleagues told him that decision was one for the Nationals party room – not a captain’s call.

Some of Joyce’s strongest internal supporters adamantly oppose a net zero commitment, but the party’s former leader Michael McCormack and the former frontbencher Darren Chester have this week argued the case for the government to either make the pledge or give it serious consideration.

Liberal moderates Jason Falinski and Andrew Bragg applauded Frydenberg’s intervention. Falinski described the treasurer’s speech as a “very important thought piece” that underlined the “major ramifications for the economy if we fail to get this transition right”.

“Josh Frydenberg has done exactly the right thing by setting out the economic imperative of net zero. Unless we achieve net zero, Australia itself could be a stranded asset,” Bragg said.

But Labor’s climate and energy spokesperson, Chris Bowen, blasted Frydenberg’s intervention as “pathetic”, arguing it was “just a last minute attempt to try and position himself in internal Liberal party politics as being some sort of modern, forward-looking Liberal”. Bowen said the government was “addicted to failure on climate change” and had allowed Australia to become an “outlier” among its allies and close partners.

While the public debate in Australia has largely focused on the net zero target, diplomats and officials from the US, the UK, Germany and the European Union have all encouraged Australia to upgrade its 2030 promise, which has remained unaltered since the Abbott government pledged a 26% to 28% cut in emissions on 2005 levels.

On Friday the Italian ambassador to Australia, Francesca Tardioli, added her voice to calls for a stronger 2030 commitment, telling Guardian Australia: “Circumstances have changed over the last five years and it is only wise to take notice of this and act accordingly, raising our ambition.”

Morrison met with India’s prime minister, Narendra Modi, on Thursday and unveiled plans for a “low emissions technology partnership”, focused on hydrogen development and low-cost solar.

Morrison told the US president Joe Biden, in a face-to-face meeting earlier this week, that the Australian government would “continue to work on our plan as to how we can continue to reduce emissions to zero well into the future”.

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