Miners need lender of last resort: Nats’ net zero demandPhillip CooreyPhillip CooreyPolitical editorOct 7, 2021 – 5.00am
The federal government should become a financier of last resort for the mining sector via the creation of a $250 billion loan facility, if it wanted the Nationals’ support for net zero emissions by 2050, Resources Minister and senior Nationals MP Keith Pitt says.In the most significant flexing of muscle so far by the junior Coalition partner, Mr Pitt also said the agriculture and resources sector should be excluded from any sacrifice in terms of reaching net zero.Keith Pitt has fired the first big shot in the internal wrangle over net zero emissions Alex EllinghausenHis demands came as renegade Nationals Senator Matt Canavan said the government should tell capital markets threatening higher interest rates if Australia does not adopt net zero to “bugger off”.“Our sovereign rights are a little bit more important than a few basis points on our interest rates,” he said.Prime Minister Scott Morrison, who is negotiating an agreement with Nationals leader Barnaby Joyce on net zero as well as an increased emissions reduction target for 2030, has already promised to exclude “regional Australia” from making any sacrifice but believes it can profit by making contributions such as soil carbon.AdvertisementWith the government wanting to announce a deal before the global climate change summit in Glasgow in November, Mr Pitt said the coal sector supported 300,000 jobs and still powered almost 70 per cent of Australian homes. The resources sector supported 1.2 million jobs.With banks and insurance companies increasingly withdrawing their support for the sector and applying secondary boycotts to associated businesses, Mr Pitt said if the government wanted the Nationals’ support, it would have to step in and help with the transition.“No matter what happens, we need to find a way to fund the resources sector and provide insurance,” he told The Australian Financial Review.“If we want to look after 300,000 jobs, provide power to 70 per cent of homes the Australian government will have to become the lender of last resort.“Why should we be dictated to by a bunch of financiers.”He suggested a $250 billion loan and insurance facility would be required. Mr Pitt said the problem was not just with big projects trying to secure finance, but family businesses as well.AdvertisementHe described a recent conversation with a mortgage broker who was unable to secure long-term finance for a business that provided vehicles to a company mining metallurgical coal used for steel production.“Just ridiculous,” he said.Mr Pitt noted the estimated transition costs for the European Union to reach net zero was €1 trillion ($1.6 trillion).“You could throw $100 billion at it here and it wouldn’t even touch the sides,” he said.In June, Alinta Energy managing director Jeff Dimery, who had just experienced an “exceedingly difficult” process to refinance the company’s Loy Yang B coal power generator in Victoria, called on the government to act as a lender of last resort to coal-fired power stations for the remainder of the lives of the assets.The government believes the onus must be on the institutions to stay engaged.AdvertisementLast month, in a speech advocating a shift towards net zero emissions by 2050, Treasurer Josh Frydenberg prevailed upon banks and insurers to show they were serious about net zero by helping the sector with the transition.“If you support the objective of net zero, do not walk away from the very sectors of our economy that will need investment to successfully transition,” Mr Frydenberg said.“The transition requires a broad-based approach, which sees investment in emissions reduction strategies across all sectors, be it agriculture, mining, manufacturing, and others.“For example, the resources industry, where the value of Australia’s nickel and copper and lithium exports are forecast to increase by $11.1 billion over the next five years, driven by demand for lower emission technologies like electric vehicles.”Mr Frydenberg’s key point was that unless Australia adapted to net zero, sanctions by capital markets will increase borrowing costs, affecting everything from home and business loans to major infrastructure investments.Senator Canavan, who flatly opposes net zero, told Sky News that being forced to change laws at the behest of foreign lenders was akin to the economic coercive practices of China.Advertisement“We should tell them to bugger off,” he said, “even if it was to mean we pay more”.“If we are forced to pay a little bit more on our mortgages, we should do that,” he said.Mr Morrison is increasingly unlikely to travel to Glasgow for the conference, even if he were to reach an agreement with Mr Joyce. With an election due in about five months, the Prime Minister believes he needs to be home campaigning, rather than going abroad again and spending another two weeks in quarantine.“Once we agree our plan for technology and the plan that will see us reduce emissions over the long term, my first responsibility is to explain that to Australians, not to people overseas, at overseas conferences,” he said on Tuesday this week.“It’s an important conference, but the people I need to talk to most about our plan to reduce emissions and transition our economy over the next 30 years is to Australians, people in the Hunter Valley, people up there in Queensland, people in Victoria, in the west.”“It’s about them, it’s about their jobs and their future, and they are the people who need to hear from me first,” Mr Morrison said.
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