Council’s decision sends odd messages - The Centre for Independent Studies
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Council’s decision sends odd messages

Newcastle Council intends to divest itself of interest in coal.
Newcastle Council intends to divest itself of interest in coal.

Have we entered an alternate universe? You’d think so, on the news that the Newcastle Council is planning to withdraw its investments from institutions that fund coal.

How did this happen? Have we been teleported to a world where ‘‘biting the hand that feeds you’’ is accepted … even welcomed? Or is it the council that is losing touch with reality? This decision can play out in only two possible ways: the council’s decision will either impact on the coal industry, or it won’t. If it does affect coal, then the council is actively harming the Newcastle economy. This should clearly be against the core responsibilities of the council. However, if the decision doesn’t affect coal, then what was the point of doing it?

And in fact, it seems more likely that the decision will place negligible pressure on the coal industry.

The council’s investment funds of $270million are 0.01per cent of the deposits at Australian financial institutions (of $3810billion in June). So the movement of these funds between financial institutions will have a tiny impact – hence, the impact on coal companies will also be minimal. Even if one bank reduces its lending to a coal company, there are plenty of other financial institutions here and overseas that can step in to lend to the industry. And if Australian coal exports go down, there are plenty of other countries around the world that will replace our coal exports.

Yes, the mining of coal does have an environmental impact. But decreasing the environmental impact of coal in Australia, only to have the impact increase in other countries, doesn’t seem sensible. In fact, switching coal production to overseas could actually worsen environmental outcomes, because production could switch to countries with lower environmental standards than Australia.

And yes, the use of coal has environmental impacts too. But it shouldn’t be the role of a local government body to dictate to other countries which fuels they should and should not use. This is incredibly patronising and smacks of environmental imperialism. The global use of coal is best dealt with in international forums where outcomes are negotiated, not imposed by developed countries on developing countries.

The council’s announcement also sends particularly odd messages about the city’s economy. Coal is a vital industry to Newcastle. Decrying this industry is bizarre. It is one thing to argue for diversifying the city’s economy, helping new and innovative industries to become established. It is entirely another to  [attempt to]  suppress a core industry.

Businesses in the city should rightly be concerned about the reality the council is inhabiting. And businesses considering setting up or expanding in the city might think twice.

The council should focus on its core roles. It should be encouraging economic development, not entering an alternate reality where discouraging development in the city is a good idea.

Michael Potter is a research fellow at the Centre for Independent Studies