The Californian Experience

Having watched Julia Gillard on Lateline earlier this week endorsing the climate policies of California Governor Arnold Schwarzenegger, I dug out a recent research report about the impact of these policies on the Californian economy.

Before I share them with you I need to make one thing quite clear: California is as close to broke as any state can be without actually going bankrupt.

The state is unable to pay its bills and is issuing I-O-Us. Unemployment is heading towards 15 per cent. Extreme environmental regulations have stymied investment and development with the result that companies are closing up or relocating elsewhere.

Unfortunately for Californians, things are going to get worse.

Following Ms Gillard’s endorsement of the Californian approach, I re-read the research report that deals with the impact of California’s greenhouse gas bill known as Assembly Bill 32 (AB32).

The report concludes that when finally implemented, AB32 will result in an approximate 10 per cent loss in gross state output (a reduction of some $182 billion), translating to a loss of nearly 1.1 million jobs.

The study was led by two university professors and concluded that the implementation of AB32 would hit every family with an additional annual cost of US$3,857. To compensate for this, consumer discretionary spending would need to be cut by nearly 26 per cent.

All in all, it is not a positive outlook for Californian business or families.

Yet this is precisely the result that Ms Gillard was advocating as an example of the benefits of pursuing Labor’s ETS.

Sure, she dressed it up by talking about ‘green’ plumbers and electricians but are they really additional jobs or just existing tradies going where the bucks are biggest?

During Lateline, Ms Gillard talked a lot about the future benefits, not that she could identify any specifically. Perhaps that is because she was unable to articulate any immediate benefits and simply hopes that we’ll all accept her comments at face value.

The inconvenient truth for our deputy Prime Minister is that the evidence and credible university research doesn’t support her claims.

Australia should be very careful before we endorse Labor policies that will take us down the Californian path.

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