The Absolute Failure of Fiduciary Responsibility by Our Politicians and Bureaucrats

Fri, 2018-04-27 13:19 -- David

Ian Dunlop doesn't hold back.

This clear and forthright article by Ian is a frightening catalogue of the absolute failure of our politicians in their fiduciary responsibility to the people of Australia.    Their denial of climate reality is sending us to near term extinction, but do they care?    No!   They continue to wallow in their "entitlements", awash with political donations and insidious kickbacks.

We must rescue democracy urgently, or do we just party into oblivion?

We have an emergency.    We must all be loud and proud engineers in calling for urgent action.    David.


Climate Change:   The fiduciary responsibility of politicians & bureaucrats

Ian Dunlop - 26 April 2018

   “Fiduciary:  a person to whom power is entrusted for the benefit of another”

   “Power is reposed in members of Parliament by the public for exercise in the interests of the public and not primarily for the interests of members or the parties to which they belong.  The cry ‘whatever it takes’ is not consistent with the performance of fiduciary duty”

Sir Gerard Brennan AC, KBE, QC

Part 1.

After three decades of global inaction, none more so than in Australia, human-induced climate change is now an existential risk to humanity.

That is, a risk posing large negative consequences which will be irreversible, resulting inter alia in major reductions in global and national population, species extinction, disruption of economies and social chaos, unless carbon emissions are reduced on an emergency basis.

The risk is immediate in that it is being locked in today by our insistence on expanding the use of fossil fuels when the carbon budget to stay below sensible temperature increase limits is already exhausted.

As one of the countries most exposed to climate impact, and in the top half dozen carbon polluters worldwide when exports are included, as they must be, this should be of major concern to Australia.

Instead, politicians and bureaucrats urge massive fossil fuel expansion to supply domestic and Asian markets, the latter justified on the grounds of poverty alleviation and the drug peddlers argument that: “if we don’t supply it, others will”.    Blind to the fact that fossil fuels are now creating far more poverty than they are alleviating.

In so doing Australia would be complicit in destroying the conditions which make human life possible.   There is no greater crime against humanity.

Regulators now recognise that climate risk far outweighs the financial risks which triggered the 2008 Global Financial Crisis, and demand action.  Company directors have a fiduciary responsibility to understand, assess and act upon climate risk.

Overseas, directors are already facing legal action, and personal liability, for having refused to do so, or for misrepresenting that risk.  Compensation is being sought from carbon polluters for damage incurred from climate impact.   Similar action will be taken here.

But what of our politicians and bureacrats and their contribution to this crime?

The last few years have seen an unprecendented stream of lies and disinformation emanating from our official bodies around climate and energy policy, in blatant disregard of the facts, with seemingly no end to distortions designed to achieve short-term political advantage.

What fiduciary responsibility do they have to the community they are supposed to serve?

Ministers repeatedly remind us that the first responsibility of government is the security of the people.   On any balanced assessment of the science and evidence, climate change is now the greatest threat to that security and to our future prosperity.

Australia signed and ratified the 2015 Paris Climate Agreement, presumably with the intent of meeting its objectives to limit global average temperature increase to

   “well below 2 C above pre-industrial levels and to pursue efforts to limit the increase to 1.5 C”,


   “to reach global peaking of greenhouse gas emissions as soon as possible —– in accordance with best available science”, recognising  that climate change represents an urgent and potentially irreversible threat to human societies and the planet”.

The voluntary Intended Nationally Determined Contributions (INDCs) made by Paris participants, if implemented, would not meet the objectives, leading to a global temperature increase in the 3-4 C range, a world incompatible with an organised global community.

The Australian commitment, of a 26-28% emission reduction by 2030 on 2005 levels is derisory on any fair international comparison.

Regional temperature variations would be far greater than these global averages, rendering many parts of the world uninhabitable even at 20C, beyond the capacity of human physiology to function effectively.   This may well be the case across much of Australia.

Since Paris, our Federal Government has ignored the Agreement, brushing off the increasingly urgent warnings of “the best available science” and ramping up fossil fuel expansion, whilst placing every possible obstacle in the way of low-carbon energy alternatives.

The fact that many Ministers and parliamentarians are climate deniers for ideological or party political reasons, does not absolve them of the fiduciary responsibility to set aside their personal prejudices, and to act in the public interest with integrity, fairness, and accountability.

This requires them to understand the latest climate science and to act accordingly.   It is not acceptable for those in positions of public trust to dismiss these warnings in the cavalier manner which has typified the last few years.   Particularly when the risk is existential.

The Prime Minister failed this test recently by implying the disastrous Tathra bushfires had nothing to do with climate change.   Every extreme weather event today has some element of climate change involved;  it is irresponsible to imply otherwise.

Ministers justify their approach by misrepresenting international studies to support their fossil fuel expansion ambitions.   Notably by citing the work of the International Energy Agency (IEA).

The IEA sets out its perspective on the energy sector over the next 25 years in its annual World Energy Outlook (WEO), exploring the implications of alternative climate and energy scenarios.

Key scenarios are: current policies (CP) which assumes business-as-usual (4-50C temperature increase), new policies (NP) which extends CP with policy committed to but not yet implemented (3.5-40C temperature increase), and sustainable development (SDS) which is the pathway to meet various sustainable development goals.

SDS claims to keep global average temperature increase below 2 C, but only with a 50% chance of success by relying on massive investment in sequestration technologies which have yet to be invented.

In reality, SDS would result in temperature increase substantially above 2 C.   There is no scenario which realistically achieves the Paris objectives.

The IEA is no paragon of virtue regarding climate change.

It downplays both climate impact, and the potential of alternative energy sources, as a result of strong pressure politically from its developed country membership, and from vested interests who make up its advisory bodies such as the IEA Energy Business Council and the Coal Industry Advisory Board.

Consequently their scenarios are seized upon to justify further fossil fuel investment.   For Australia, Asia Pacific coal demand is a key factor, this being our major export market.

In the November 2017 WEO, under NP assumptions annual coal demand increases by 12% or 480 million tonnes by 2040, but under SDS assumptions it declines by 47% or 1880 million tonnes.

The IEA takes NP as their central scenario as this is where we are headed if governments implement their current commitments.

However, in the fine print the IEA make it clear that NP is not a sustainable future.   In the 2017 WEO, Executive Director Fatih Birol says: “Decision-makers also need to know where they would like to get to. — This is the point of the SDS scenario”   even though SDS does not meet the Paris objectives.

Having ratified Paris, presumably this is at least where Australia wants to get to.    Not so our Ministers.

At his National Press Club address on 28thMarch 2018, Resource Minister Canavan insisted on using the IEA NP Asia Pacific 480 million tonnes annual demand increase by 2040 to justify expansion of our coal industry, ignoring the SDS 1880 million tonnes decline.

The latter is the minimum transition to approach a sustainable future; many existing operations become stranded assets before the end of their working life, and certainly no new coal investment.   Ministers Frydenberg and Ciobo similarily insist on using NP estimates and ignore the SDS.

Canavan then assured the Press Club that in the first 40 years of this century, the world will use more coal than in the entire previous history of the coal industry.

The IEA repeatedly emphasise that their scenarios are not forecasts.   They are designed to give decision-makers an understanding of the implications of their actions, and they only cover part of the story.

If the NP pathway is followed, there will be no market for export coal as Asia Pacific economies will shrink rapidly under the weight of climate impact.    If more coal is used by 2040 than in previous history, humanity will become extinct.   These are consequences the IEA does not discuss.

Such ministerial naivety is laughable, but it highlights a serious governance failure.   As with company directors, it is incumbent upon ministers to understand these issues, in particular the risks to which the Australian community is exposed by their decisions.

The only possible justification for Minister Canavan’s view is that he does not believe climate change is even a problem, let alone accept the need to rapidly reduce emissions.   Further, he has no understanding of the implications of his proposed action.

Whatever the Minister’s personal position, or the views of those who voted for him, given the overwhelming science and evidence confirming the urgency to address climate change, such ignorance is unacceptable and a fundamental breach of his fiduciary responsibility to the nation.

Part 2.

At the National Press Club, Matt Canavan reacted angrily to a suggestion that the coal industry will phase out, objecting strongly to any thought of planning a transition.   The mining industry will undoubtedly remain an essential part of the Australian economy, but markets for commodities come and go.

Irrespective of political preferences, absent some unlikely technological breakthrough to sequester its emissions, coal will phase out, not instantaneously but relatively rapidly.   Coal has been through many transitions in the past.

The lesson from these disruptions is the need for thorough planning, retraining and support to avoid many people being badly hurt.   Even more will be hurt, with massive climate impact, social and economic chaos, if the coal industry is expanded.   It is irresponsible for the Minister to leave communities unprepared for these realities.

Minister Canavan then turned on “well funded” environmental groups “abusing” our “robust environmental laws” to prevent or slow down major projects, such as the Adani coal mine in Queensland’s Galilee Basin.

Australia’s environmental laws were developed when human impact on the environment was far less than today.    As that impact has grown, far from being robust, these laws are no longer “fit for purpose”.

In particular, being domestically focused, they do not take account of the greatest environmental risk of all, which is climate change.   Under current UNFCCC rules, emissions from fossil fuel exports such as coal or gas are accounted for in the consuming country and are ignored by Australian courts and institutions in granting approvals for projects such as Adani.

However carbon emissions have global impact; coal exports from the Galilee Basin, would have major climate and environmental implications in Australia, as well as in consuming countries such as India.   Our laws must be reframed accordingly if they are to be meaningful.

As for “well funded”?    Vested interests pour vastly more money into supporting fossil fuel expansion than has ever been available to environmental groups.

Parliamentarians, particularly ministers seem to have lost sight of the fact that they have a fiduciary responsibility to the public, which imposes upon them a public duty and a public trust.

Sir Gerard Brennan again: “all decisions and exercises of power should be taken in the interests of the public, and that duty cannot be subordinated to, or qualified by, the interests of the (parliamentarian/minister)”.

It is entirely appropriate, when the legal system fails, for affected parties to take action to correct such failure, as with Adani, and with CSG projects in many parts of the country.    In fact these are the only groups who are genuinely acting in the public interest.

That the Federal government is now trying to muzzle them indirectly via the proposed Foreign Donations Bill is a further breach of its fiduciary responsibility.

The public has the right to expect that Minister Canavan take an holistic view of the Adani project and the many other fossil fuel developments he is promoting, including an honest appraisal of their climate implications for the community.   That is not happening.

Similarily with Environment and Energy Minister Frydenberg, who should be proactive in changing environmental laws to include the climate impact of fossil fuel exports on Australia, rather than advocating that Adani proceed on the grounds it has met current inadequate environmental approvals.

Minister Frydenberg, and the government generally, breach their fiduciary duty by promoting poor climate and energy policy as represented by the National Energy Guarantee, whatever that ultimately means.

This lowest common denominator solution is only being considered because of the fiduciary irresponsibility of a minority group of right wing parliamentarians, inappropriately identified as the Monash Forum, who put their own self-serving ideological agenda ahead of the public interest.

To claim, as the Minister did in his National Press Club speech on 11thApril 2018, that:

  “the future of energy policy must be determined by the proper consideration of the public’s best interest not ideologically-driven predisposition”

just adds insult to injury given that the Coalition is, and has been for two decades, in total ideological denial on climate which largely explains our current policy shambles.

The cost to Australia of this self-indulgence is enormous.

The Minister also misrepresents IEA analysis of Australia’s energy policies.   The IEA conducts a periodic review of individual member countries policies.

The latest IEA Australian review in February 2018 was presented by Minister Frydenberg as “backing the government’s energy policies —  commending Australia’s commitment to affordable, secure and clean energy”.

The report itself did no such thing, being highly critical in many areas, including Australia’s continuing failure to comply with IEA membership oil stockholding obligations of 90 days net imports.

We hold less than half that, thus rendering Australia incapable of contributing to IEA collective action in the event of an international oil crisis; a further major security threat to the Australia community which has not been addressed despite repeated representations over many years.

In the light of these ingrained fiduciary failings, what of the bureaucracy, historically reverred for providing “frank and fearless advice” to the political class?   It seems that analogy no longer applies.   In recent policy reviews, the refusal to accept and articulate the implications of climate change on Australia shines through.

The December 2017 Review of Climate Change Policy was one of the most dishonest reports ever published by government in the climate arena.

What purported to be a comprehensive review of the climate change challenge, and responses to it, is nothing more than a re-iteration of Australia’s wholly inadequate and inconsistent policies.

No discussion of the latest climate science and its implications, no preparedness to face up to the real action required.   In short little more than political whitewash for public consumption, pretending to do something whilst doing little.

The 2017 Foreign Policy White Paper acknowledged that climate change will be an important influence on international affairs, particularly in our region.

It then anticipated: “buoyant demand for our exports of high-quality coal and LNG —”  based on the IEA NP scenario referred to above, around which policy is presumably centred, despite the fact that demand under this scenario would be decimated by climate impact.

This should be unacceptable to DFAT as our lead Paris negotiator, as it is totally inconsistent with meeting Paris objectives.

The 2016 Defence White Paper for the first time did mention climate change in passing in one of its six key strategic drivers of Australia’s security environment to 2035 and it is understood the Department of Defence have since extended their planning to prepare for its impacts as a “threat multiplier”.

This is encouraging, but far behind action being taken by the military overseas.

The overriding impression is that the Federal bureaucracy, with some notable exceptions, are not treating climate change with anywhere near the urgency it demands; whether because of political pressure to downplay the issue, or because of personal convictions, is not clear.    Either way, fiduciary responsibility arises again.

The Australian Public Service Impartiality Value requires advice given to government to be: “apolitical, frank, honest, timely and based on the best available evidence”.

Further, it must be:

  “objective and non-partisan; relevant comprehensive and unaffected by fear of consquences, not withholding important facts or bad news; mindful of the context in which policy is to be implemented, the broader policy direction set by government and its implications for the longer term”.

Henceforth, climate change will determine policy across the spectrum, encompassing national security, defence, energy, health, migration, water, agriculture, transport, urban design and much more.

Given continued urgent warnings from scientists, including the government’s own experts, on the need for far more rapid action, the parlous state of our climate and energy debate and the shortcomings in policy formulation, the Federal bureaucracy is hardly meeting its own standards of fiduciary responsibility to the community.

So what can be done?

Many argue that current failures are the nature of politics and we should expect little else.    But when the key issues are existential, that is to consign democracy to the dustbin of history and to accept increasing social chaos.

In contrast to earlier eras, the concepts of fiduciary responsibility, public interest and public trust, are clearly not understood by the incumbency, from the Prime Minister down.    This has to be corrected.

A Federal Parliament with any degree of such responsibility, would recognise that climate change poses an unprecedented threat to Australia’s future prosperity, requiring emergency action.

To those prepared to honour this obligation, there is ample information before parliament to warrant that conclusion.

In the public interest, parliamentarians would set aside party political differences, adopting a bipartisan approach to structuring such action, with the bureaucracy in full support.

That is highly unlikely, so there remains legal action.   Around the world the seriousness of the climate threat, and the inaction of governments, is prompting communities to take this step, with increasing success.   The same will happen in Australia, absent an outburst of commonsense within the political class.

Ian Dunlop was formerly an international oil, gas and coal industry executive, chair of the Australian Coal Association and CEO of the Australian Institute of Company Directors.   He is a Member of the Club of Rome