A week ago, I was speaking at a Royal Society of NSW Forum on the topic “Getting climate policy back on track” when the news came through that Adani had announced a start to the Carmichael mine “before Christmas”, funded from the company’s own reserves. With Christmas now less than three weeks away, where do things stand?
It’s evident that, as with previous construction starts, this one won’t be on a large scale. Adani has just posted its first job opening for a year, on the portal it set up with great fanfare in mid-2017. It’s for a Senior Mine Planning Engineer a “newly changed and developed role reporting to the Head Mine Operations”. Given that Adani has announced a proposal that’s radically different from the one they were running last year, you might have expected that a Senior Mine Planning Engineer would have been on the job for some time, heading a substantial team. Still, it’s likely that some kind of activity will take place, even if it’s only symbolic.
The big question is how Labor will respond, since it’s highly likely to be in office by the time any serious mining activity starts. So far the signs have been mixed. Queensland Premier Palaszczuk has said, correctly, that this is effectively a new proposal, and will need new approvals. On the other hand, Penny Wong has suggested that, once contracts are signed, the dreaded spectre of “sovereign risk” will mean that the government cannot intervene. This is a bogus argument in the specific case of Adani, but the whole idea needs to be challenged. Governments routinely break their promises to voters, and corporations regularly renege on their commitments to governments, but, in the era of neoliberalism, promises made by governments to corporation have come to be held sacred.
John Quiggin 
“The big question is how Labor will respond… Queensland Premier Palaszczuk has said, correctly, that this is effectively a new proposal”
However, POQ didn’t revoke Adani’s North Galilee Water Scheme water licence for extraction of 12.5 gigalitres from the Suttor River for Adani’s Carmichael mine, and POQ backed approval of China Stone mine nearby in the Galilee Basin only days before. Words are cheap. This ALP at all levels will carry on a duplicitous game as usual.
If they show the same guts as they showed with encryption, it is a shoe-in.
I thought the concern about sovereign risk (supposing it to be sincere, for sake of argument) wasn’t a moral one, but a prudential one. To wit, that businesses spooked by sovereign risk will need to take future risk into account, and price their products accordingly, i.e. higher.
Such concerns might well be bogus, and maybe sovereign risk doesn’t actually have that effect, but prima facie that provides some reason to be concerned about sovereign risk, perhaps more than the other kinds of broken promises that JQ mentions.
So even if Australia’s “sovereign risk rating” fell because because why would it fall? Because it decides definitively that the Carmichael Coal Mine Proposal should not go ahead, what does that actually mean to the rest of us? Are people going to stop coming to Australia? They are less likely to come to Australia if they can’t see koalas anymore.
I may not really understand this concept of the sovereign risk properly. It’s yet another thing I have never heard of until now.
I’m not sure ‘sovereign risk’ is the right reason for Labor to be cautious about voiding Adani contracts. But I think they should be cautious, because it’s not good governance to shut down a project when noting illegal has been done. Sure, one should go through Adani with a fine tooth comb to check whether anything illegal has been done, and if it has, to crack down heavily. To shut it down legally one would have to pass a law which declared their activities illegal because of the damage being done to the environment. But that law would have to apply to other companies other than Adani, otherwise Adani would sue and probably be able to stop a law directed against Adani only.
I think the simplest and best solution is, in this case, to let the market sort it out. All of the data indicate that this will be a loss making project, so why not sit back and let Adani make a loss. Why does the Government need to intervene? Of course the Queensland Government should require a lot of money upfront as a bond to fund any required remediation if the mine goes ahead. But otherwise I don’t see a reason to act on Adani specifically.
Of course some economy wide actions like a defacto carbon tax would be useful, and give some incentives for the market to sort out the Adani situation more quickly, but Adani specific Government intervention doesn’t seem to me to be the best way to go.
But maybe I am misunderstanding John, exactly which actions you would propose if the Adani project actually started extracting coal.
Saul didnt mention this in the linked article:
“But under the 15-year grandfather clause, Adani could seek compensation for what it has claimed is the $3bn of investment made before March 2017 in preliminary costs including the Abbot Point port lease to export the coal.”
… and walk away without cisting it a cent.
And maybe Labor’s response will be like nz:
“Even the threat of an ISDS case can deter governments from taking action in the public interest. The New Zealand government deferred its plain packaging legislation for over four years until the Philip Morris ISDS case was over. Now it seems that Labor could be deterred from developing a policy against the Adani project because of the threat of ISDS.”
https://www.theguardian.com/commentisfree/2018/dec/17/the-legal-clause-which-could-allow-adani-to-sue-australia
How long before we could remive reneg isds provisions?