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ABARE ignores inconvenient truths

Last week’s Estimates hearings brought out again the tendency of the Australian Bureau of Agricultural and Resource Economics to base its modelling on implausibly optimistic scenarios reflecting a business-as-usual approach that ignores such inconveniences as climate change, peak oil and resistance to GM crops.

ABARE’s rigid adherence to this approach emerged strongly during the long reign of Dr Brian Fisher. Fisher headed ABARE for 18 years until he departed for the private sector in 2006. A former head of the Department of Agricultural Economics at the University of Sydney, Fisher is said to be a hardline free marketeer with a strong objection to market intervention or attempts to remedy market failure. While Fisher had been undertaking climate change modelling in the last days of the Keating Government, it was under John Howard that he found his public service calling as a willing assistant in that Government’s campaign to resist and delay carbon abatement measures.

Outright greenhouse denialism was never ABARE’s method – although, as late as October 2006, ABARE staff appearing before Estimates were declining to accept that climate change was real. Instead, under Fisher, ABARE’s primary method was to systematically produce modelling demonstrating the massive costs to Australia of any action to mitigate carbon emissions.

Research was initially done using the infamous MEGABARE and GIGABARE climate change models, which were overseen by a “steering committee” dominated by resource companies. The Keating Government had imposed a 30% external funding requirement on ABARE and other research agencies; this had been increased to 40% by the new Howard Government in 1996, ensuring ABARE was required to work closely with industry in order to pursue its work program.

When ABARE used a requirement for a $50,000 steering committee membership fee to block the Australian Conservation Foundation from participating in the MEGABARE/GIGABARE steering committee, the ACF complained to the Ombudsman, who issued a savage criticism of the Bureau in 1998.

But ABARE’s real trick was to overstate even the costs yielded by its modelling. Its favourite method was to calculate either the cumulative total reduction in GDP over the course of several decades if action was taken to ameliorate carbon emissions, or calculate the present value of reductions in per capita GDP if such actions were taken. These entirely meaningless figures could then be dressed up as a sort of massive impost on Australians for addressing climate change. John Quiggin nailed ABARE for this trick in 1996 but it didn’t stop them repeating it again, and again and again.

When criticised for this, ABARE resorted to another favoured tactic, of pleading that it is just producing research and it is not its fault if it is misinterpreted. ABARE joined the Howard Government’s campaign against state government land clearing restrictions via a report estimating the cost of native vegetation protection at nearly half a billion dollars.

When questioned about why ABARE had not estimated any of the biodiversity or hydrological benefits of native vegetation in its report, Fisher described land clearing restrictions as “frankly irrational” but insisted that “our business is about collecting the information and starting a discussion” only.

Phil Glyde, the former senior PM&C SES officer in charge of resources policy for Howard, who was sent to ABARE to replace Fisher, takes exactly the same approach. “All we can do is publish, on the record, what our models results say and be as careful as we can be about what they mean,” Glyde told Estimates last year when put on the spot about ABARE’s inflating of carbon abatement costs.

It’s the same story as its insistence that oil will remain cheap, and its forecasts of a GM bonanza, which Crikey discussed last week. It’s not ABARE’s fault if its flawed work is used to protect and advance vested interests. It’s merely “starting a discussion”.

The impacts of ABARE’s approach were felt well outside the climate change debate. For example, in 2005, ABARE advised Auslink analysts in the Department of Transport to assess Australia’s transport needs on the basis of a $30-40 oil price, even as it was spiking over $50. And its flawed crop forecasts encouraged a complacent attitude toward agricultural sustainability. The consequences of ABARE’s profoundly flawed modelling will continue to influence our infrastructure, rural sector and climate change policies for generations to come.

ABARE declined Crikey’s invitation to respond on these issues. We have asked them to reconsider. Tomorrow: how to repair ABARE.

3
  • 1
    Connor Moran
    Posted Thursday, 5 June 2008 at 9:51 am | Permalink

    Bernard, “repair” ABARE? Are you mad? Exterminate it.

  • 2
    Tony Papafilis
    Posted Friday, 6 June 2008 at 2:18 pm | Permalink

    More evidence why the left should be sidelined from any serious influence in society - leftys are capable of nitpicking modelling work of any kind if it gets in their political way yet refuse to acknowledge the massive flaws in modelling that they use in suport of their positon. Hence the exposed garbage that is climate change modelling is held up as irrefutable evidence of a left wing political position while those exposing its flaws are denounced. Thsi shows the left do not operate for benefit of humaty at large but for a small segment - hence it’s predisposition towards dictatorial tendencies.

  • 3
    Roger
    Posted Monday, 21 July 2008 at 11:29 pm | Permalink

    Even though ABARE with its ‘steering committee’ (or sponsor committee, that the ombudsman suggested was a more appropriate name) used a variety of assumptions that tend to make carbon taxes be less than efficient; they still found that a carbon tax of A$200 a tonne (1996 dollars) essentially had no overall impact on the economy - though causing lots of changes, naturally.

    Why is there now such concern about proposed very modest changes to our taxation regime, away from taxation of value adding, personal incomes and general consumption and towards taxing resource consumption?

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