The Climate Crisis Is a Budget Choice

18 Comments

1. Another great article Denis.

   Your comment from your previous article caught my eye– “We already operate on MMT principles, but we don’t use them to strengthen health, housing, or education.”

   That’s the best argument for MMT that I’ve seen, and this article shows how much we are losing by not biting the bullet.

2. Thanks Steve. I think that’s the key point many miss, the government already spends using MMT principles, but they choose to direct that power toward corporate subsidies and defence deals instead of health, housing, and education. If we shifted the focus to public good, we’d all benefit.

3. Denis
   Just a query on MMT first.
   I’ve read we look at tax the wrong way – that tax just takes money out of the system. I can see that in the income taxing of a PAYG earner for example, but if that’s how we should be looking at tax, does it still apply to Labor giving our gas away for free, foregoing royalties from foreign-owned companies and the PRRT not working as it should, as their profits go overseas (ignoring any Australian shareholders for sake of argument.)

4. Gonggongche, that’s spot on to raise. From an MMT perspective, the government doesn’t need royalties or tax revenue to spend on services. But when it gives our gas away on weak terms, the real loss is in public control and fairness.

   If companies export gas cheaply and send profits offshore, Australians end up paying higher domestic prices, facing energy insecurity, and carrying environmental damage, while getting little in return. The government could use its currency power to invest in health, housing, and renewables regardless, but instead it chooses to favour corporations and leave ordinary citizens exposed.

   So the issue isn’t “affordability.” It’s that our resources are being managed for private gain instead of public purpose, and that hurts everyday Australians directly.

5. Thanks Denis.

   Where I’m going with this is that I slam Labor at every opportunity I get for giving away our resources, our gas for free. I’d rather see it left in the ground, but that is not the reality. I want to make sure that I’m being fair in my criticism.

   If taken from an MMT perspective, am I right in saying that Australia might not need the royalties, or a return from the PRRT, in order to spend on job guarantees, raising people out of poverty, etc., but it could still spend any revenue raised from those sources (royalties, PRRT) on those areas of need.

   Raising this revenue and spending it for the benefit of Australians is important to me as it is Australian resources that are being depleted, yet the revenue from the sale of the gas circulates outside Australia and does Australians no good whatsoever (other than a miniscule number of jobs).If I’m right in thinking that, then that is atrocious, scandalous governance on behalf of Australians, and I should continue to slam Labor.

   Giving away our resources for free then amounts to intergenerational theft. Labor is robbing our kids.

6. You’ve understood it perfectly. From an MMT standpoint, Australia doesn’t need royalties or PRRT revenue to fund public spending, as the currency issuer, the government can always pay for job guarantees, healthcare, and poverty reduction.

   But you’re absolutely right that giving away our gas is still a massive loss. It’s not about funding; it’s about justice and stewardship. Those resources belong to all Australians, present and future. When Labor allows foreign companies to extract and export them for next to nothing, we lose control over pricing, create energy insecurity, and let profits flow overseas.

   That’s not sound management, it’s intergenerational theft, as you said. Even though the government can always spend, it should still ensure our shared resources serve the public good, not private enrichment. Your criticism is entirely fair.

7. Wonderful discussions and leaves me learning a lot! It’s such a convoluted discussion with a lot of complex tension points.

   However, in simple terms, anything that is mooted as good for the public in terms of health, education, and energy security was bastardised by none other than John Howard and the Timor Sea theft of resources from a country attempting to be responsible and help its citizenry.

   Having said that our own subsequent Governments are both guilty of the same thing in terms of our indigenous populations in allowing resources companies a free hand to do more environmental damage than was necessary.

   Bigotry rules.

8. In support of Gonggongche’s argument regarding PRRT:

   https://michaelwest.com.au/prrt-the-tax-oil-and-gas-industry-continue-to-avoid-whats-the-scam/

9. Heather
   The impact on our indigenous population is a great point, one that I all too often forget. I understand, I hope correctly, that the land is an enormously important part of their culture – their mother – and if by extracting resources from the land we lay waste to it then we are not just desecrating but destroying their culture. The genocide goes on.

10. Denis

    In regard to companies syphoning profits off overseas. I slam News Corp at every opportunity (what person who cares about the truth doesn’t) for using dodgy loan structures with its parent company to dodge paying tax here.

    But, News Corp isn’t using up resources ( I refuse to say provides a service, unless you consider cheerleading a depraved genocide a service) we could consider one of those other genocide exploiters such as Google, Microsoft or Amazon as well.

    From an MMT perspective would it be right to say that although raising tax revenue from the likes of News Corp isn’t necessary for spending on public services (health, education, etc.) tax is a tool for taking money out of the system when that is useful, such as controlling demand inflation where there is too much money in the system chasing the available goods. And by dodging tax News Corps actions disincentive others paying theirs as it makes them less competitive, and incentives them to dodge tax as well.

    But does this tax dodging have some other impact as well, in on the provision of public services?

11. I’m sure this is topic related!

    I was speaking with a friend yesterday who had gone almost completely off grid at home as so many folk seem to be doing.
    He has a full array of rooftop solar panels with a battery with 10kwh storage capacity and whilst still connected to the grid he pays virtually nothing for electricity : next year he will be buying an EV that will be able to supplement home electricity consumption from its batteries when required and considers that, with judicious use, he should have eight to ten days stored electricity capacity should the grid go down (cyclone being the most immediate risk in our area ).
    His household consists of he and his partner and one child with average daily consumption but, being in tropical North Qld, there is no need for home heating and they have overhead fans rather than aircon. For cooking they have a gas (bottled)cooktop and a Breville electric countertop oven.
    As climate change and weather extremes become more frequent it seems that householders are turning more to their own domestic sources of electricity production (i.e. principally solar) away from the national grid. Personally, I would be interested to hear of other similar experiences among AIMN readers as we enter a period of closing coal power stations, increased electricity costs and an uncertain transition to renewables with or without nuclear.

12. No need to worry, Abalone has everything under control…so he keeps telling us…when he’s not too busy hiding things from public view.

13. Gonggongche
    You’ve got it exactly right. From an MMT perspective, the federal government doesn’t need News Corp’s tax dollars to fund services like health or education, it creates money when it spends and deletes it when it taxes.

    But tax dodging still matters for several reasons:

    It undermines fairness. When big corporations avoid tax, ordinary citizens and smaller businesses lose trust in the system.

    It drives inequality. The wealthy keep more financial power, which they often use to influence policy and media.

    It weakens democracy. Companies like News Corp can use that power to shape political outcomes and protect their own interests.

    For state governments, it’s a different story. They’re currency users, not issuers, so they rely on revenue from taxes, royalties, and federal transfers to fund essential services. When fossil fuel companies avoid paying royalties or when federal governments give away resources too cheaply, states lose real income that could have supported schools, hospitals, and public infrastructure.

    So even though the federal government can’t run out of money, poor resource management and tax avoidance still hurt Australians by widening inequality and starving states of funds they genuinely need.

14. Thanks, Heather, for your thoughtful comment. You’re right, it’s a complex discussion, and you’ve highlighted something vital: governments often claim to act in the public interest but then make decisions that serve powerful interests instead.

    The Timor Sea case was a shameful example, taking resources from a struggling neighbour under the guise of “national interest.” And, as you say, the same pattern continues here at home when Indigenous communities are ignored, and environmental damage is justified as “economic progress.”

    It all comes back to political will. A government with Australia’s dollar sovereignty could always choose to fund health, education, and clean energy, instead of enabling corporate exploitation. Until that changes, we will continue to see inequality and environmental harm disguised as “growth.”

15. Thanks Denis.
    “..it[Federal govt.] creates money when it spends and deletes it when it taxes.” that paints a picture I can hang on to – much appreciated – as does your description of state govt.s as currency users not currency issuers.

    Where I was going to go next was resources. I immediately think of iron ore and the like, but as you point out should be thinking of our roads, hospitals, education systems and of course our people. Interestingly for me, this I’ve always understood – describing people as ‘self-made millionaires’ triggers an argument from me that without our schools, roads, health system, financial system and if they employ people or produce a product/service for consumption then our people as well, then they’d just be sheltering under a lean-to on the beach trying to barter seashells with passing manatee. Yet I’ve been brainwashed into falling into the trap of thinking of resources as iron ore, etc. and schools, hospitals and roads as costs – I wonder who would like us to think that?

    Is it possible to go too far with MMT? to spend in excess of the capacity of your resources (systems, institutions, infrastructure, people and minerals – see I’m getting better) and if so how does that work?

    By the way, or should I say back on the way, I did say “Just a query on MMT first” I was going to toss my penny’s worth in on fossil fuel subsidies in that they incentivize continued polluting, continued cooking of our kids future and disincentivize transitioning to renewable technology (kudos to Andrew Forrest for doing so anyway).

16. You’re correct, Gonggongche, that’s one of the best descriptions I’ve read of what “resources” really mean. Roads, schools, hospitals, and skilled people are our true national assets.

    And yes, you’re exactly right to ask whether MMT could “go too far.” The short answer is yes, but not because of money. The limit to government spending isn’t financial, it’s real resources. If the government spends more than the economy can absorb, for example, by employing more workers, purchasing more materials, or acquiring more equipment than is available, that excess demand can push up prices and create inflation.

    Under MMT, the goal is always to use spending to fully employ available resources without exceeding what the economy can actually produce. It’s about smart management, not restraint for its own sake.

    And I couldn’t agree more on fossil fuel subsidies; they do exactly what you said: reward pollution and delay the renewable transition. Public money should be directed toward clean energy, efficiency, and resilience, investments that protect our kids’ future, not cook it.

17. Terry, you asked to hear of the solar power experiences of others.

    My situation is almost identical to that of your friend.
    I have rooftop solar, battery, am connected to the grid but have not had to pay for about a decade.
    Have received a few thousand from Ergon, so the investment is worth it.
    Have a plug-in hybrid car powered mostly by solar, but I spend about $100 a year on petrol to keep the IC engine in good nick, and stop the petrol going off.
    Have a gas cook-top and electric oven, electric hot water.

    Have not kept detailed records of outlays and income, but I worked out a few years ago that I was getting about 15% return.

18. Terry Mills. If it was possible to go completely off-grid, I am sure many would do so. However, it is not possible for everyone. High rise units, small flats, houses overshadowed by other structures or trees (and no one should argue for tree removal for solar access).
    Then there is what is called Grid Stability – it works both ways, for the utility and for the consumer. The problem is capacity. The grid acts as a huge battery, allowing more to be drawn than may be able to be provided by one’s own source of energy at times.
    Then we come up against the Subsidies and RECs. Not payable for off-grid applications, so the cost of installing renewables at home in those circumstances is around 20% higher. But, without the access to a “Grid Battery”. This means you must factor in the highest consumption you may need for that – pushing the system price higher, or accept you may not be able to do certain things.

    But there are big benefits to distributed generation:
    Reduces the voltage slump and wastage as you get further from the generation source along the transmission line system. It reduces the need to build higher voltage and current lines and higher power transformers because not all the power is pushed hundreds of kms.
    It provides some resilience if the feed is interrupted, as long as the break is within the “ring” of dual feeds, as well as backup power (with batteries) when the area is isolated from the grid. This reduces transmission costs and increases reliability.

    As for closing coal power stations, Germany got the process sorted. Planning with action! The coal plant is due to close in 5 years? Will the owner be exiting the power industry? (not usually). So plan. Replace the coal stations with renewables on the same or multiple sites. Offer existing power workers retraining to transition to the new power industry. An electrician can do both and what is not to like about connecting wires in a clean, quiet environment compared to inside a dirty and noisy coal fired generator. Offer early retirement and pension packages to those over a certain age who don’t wish to, or cannot shift to the new paradigm. Make sure generation is not interrupted by ensuring the generator commences the replacement build before shut down of the old one.

    A planned transition is much better and definitely cheaper for all concerned.