A controversial proposal to create a $250bn loan facility for the resources sector in return for National party backing for a net zero emissions target has been met with scorn by metropolitan Liberals.
But Scott Morrison has left open support for a taxpayer-backed loans or insurance facility – or a jobs guarantee – as the prime minister chases support from the National party for a net zero commitment ahead of the Cop26 in Glasgow.
The resources minister and a senior Nationals MP, Keith Pitt, has proposed that taxpayers underwrite fossil fuel financing and insurance. The proposal was endorsed on Thursday by the current and former leaders of the National party – Barnaby Joyce and Michael McCormack.
Several Liberal MPs spoke out against the move but Morrison left Pitt’s proposal on the table when asked for his position on Thursday.
“We will work through this issue within the government and will settle the government’s position,” the prime minister said. “We’ll be advising that before we go to Cop26 and we will do that within the cabinet and the government process. That’s the appropriate way to run a country”.
The prime minister told reporters he was committed to achieving a “new energy economy” and a “new energy technology transformation” because “that’s what will change the world”.
Liberals had earlier blasted Pitt’s proposal.
The Sydney backbencher Jason Falinski told Guardian Australia: “This is the equivalent to the Pyramid Building Society which blew up the Australian economy and, by 1989, made Victorians some of the most indebted people in the world.”
Another Liberal, Andrew Bragg, echoed that sentiment, arguing that structural adjustment packages could well be necessary during any transition to net zero “but we don’t want Argentine-style policies”.
Trent Zimmerman said Liberals had faith in markets to assess risks and any suggestion that governments should intervene “doesn’t stack up if you support free enterprise – I mean, what next?”
“We’ll be nationalising the banks,” Zimmerman said.
With the global Cop26 conference approaching, and with Morrison trying to persuade the Nationals to adopt a net zero commitment, Pitt floated his proposal in an interview with the Australian Financial Review.
The Queensland National said “we need to find a way to fund the resources sector and provide insurance” during the transition.
Joyce told the ABC on Thursday that Pitt’s proposal was not the formal position of the National’s party room but was “very fair comment”. The deputy prime minister confirmed that the Nationals would also meet to determine the process for considering whatever formal policy request came from Morrison.
McCormack – who has argued that his party needs to consider adopting the net zero commitment to preserve Australia’s trade position into the future – told Guardian Australia on Thursday that Pitt’s proposal had merit.
“We have to preserve and protect our resources industry as much as we can,” he said. “I know a lot of people are anti-coal but for the next few decades at least we are going to require a thermal coal industry for exports which help pay for schools and hospitals.
“When we had the global financial crisis in 2008, the government became the lender of last resort of sorts for the banks. There has to be a backstop at some stage.
“If that has to be the government because the banks won’t do it, then I can see merit in it. I do understand where Keith is coming from. I don’t think this is such a bad thing.”
McCormack also argued that the resources portfolio needed to be elevated again to cabinet status. Pitt was demoted to the outer ministry after Joyce returned to the party leadership in the middle of the year, and Morrison did not return Pitt to the cabinet during a reshuffle.
While a number of Queensland Nationals are playing hardball with the net zero commitment, metropolitan Liberals do not want the government’s climate change policy to be determined by the junior Coalition partner.
Pitt has been blasting Australia’s banks for managing carbon risk for months, and established a parliamentary inquiry led by his Queensland colleague George Christensen to exert pressure on financial institutions over their lending practices.
That inquiry stalled after the joint standing committee – in a rare rebuke – initially deferred making a decision about whether to proceed with Pitt’s original ministerial referral because Liberals did not favour conducting what they saw as a witch-hunt against banks managing carbon risk.
Once the inquiry was constituted, the big banks have confirmed they need to actively manage climate risk because governments and regulators require it, and because the investor community is increasingly transitioning its focus towards a net zero economy.
With the government attempting to land a new climate policy position before the Cop26 in Glasgow, Morrison met last week with a deputation of Liberal MPs in a teleconference – including Falinski, Dave Sharma, Fiona Martin, Trent Zimmerman, Julian Leeser, John Alexander, Julian Simmons, Angie Bell, Paul Scarr, Andrew Bragg, Tim Wilson, Katie Allen, Dean Smith, Celia Hammond and Bridget Archer.
Metropolitan Liberals regard a net zero commitment at Glasgow as imperative, both substantively and politically.
Responding to the Pitt proposal, Falinski told Guardian Australia that Liberals “do not believe that government should intervene except in rare circumstances such as market failure”. The backbencher declared Pitt’s idea was “the opposite of market failure”.
“This is not a good use of taxpayers’ money,” he said.
Bragg, who is the chair of the Senate standing committee on environment and communications, said: “Miners and farmers support net zero because the opportunities for regional Australia are enormous.
“That doesn’t mean we can ignore the transition costs. These may be met with structural adjustment packages, but we don’t want Argentine-style policies.”
