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New South Wales

Mar 30, 2012

Murray doesn't think carbon's a problem, so why tax it?

The government's carbon pricing plan is far from perfect policy, but it's hard to take the criticism of Murray seriously given that he doesn't think there's any correlation between warming and carbon dioxide.


Everyone’s in a lather about outgoing chair of the Future Fund David Murray’s comments on the carbon tax on Radio National this morning.

Specifically, the  tax is “the worst piece of economic reform” he has every seen in his life.  And that “the consequence of introducing that tax at that level in Australia today is very, very bad for this economy, particularly in terms of international competitiveness”.

But are these sentiments at all surprising coming from a man who said this to The Australian Financial Review over lunch last year:

“‘[Carbon dioxide] has got nothing to do with pollution … carbon dioxide is not a pollutant, it is colourless and odourless. It is not a pollutant … It is a tiny proportion of greenhouse gases. There is no correlation between warming and carbon dioxide …’

“Asked what should be done about climate change, he replied: ‘Take measures to stop the effects of it.’ Asked about glaciers, Murray rejects any suggestion of glacial melt. ‘They’re not. The amount of ice in the world is slightly increasing. It is not decreasing. It is just staggering, staggering.'”

Channel Ten’s Paul Bongiorno tweeted this morning: “David Murray is on the record rejecting anthropogenic global warming. That makes his rejection of the CT logical but ill informed.”

The government’s carbon pricing plan is far from perfect policy, as we’ve outlined in our own pages. But it’s hard to take the criticism of Murray seriously given he doesn’t consider there is any correlation between warming and carbon dioxide. A price on carbon is inherently flawed if you don’t believe it’s a pollutant based on the, ahem, fact that it’s “colourless and odourless”.

The Future Fund board members have come under fire recently for sounding off about the government’s chair appointment process. But what about the appropriateness of the then-chair professing these kinds of sentiments?

As Bernard Keane pointed out last year: “Fairfax revealed via FOI documents … that the Fund’s Board of Guardians had not discussed climate change since 2007. But as a long-term investor with over $50 billion in assets under management, the Future Fund is even more exposed to the issues raised by climate change impacts, future carbon prices and the growth of renewables than most investors.”

The Future Fund is one of the world’s larger sovereign wealth funds and is a highly influential investor. The question was, and still is, whether Murray’s climate stance had a direct impact on the long-term returns of the Future Fund. All eyes on incoming chairman David Gonski to see if he’ll continue the legacy of apparent recalcitrance in an area that already commands well-established practices by most global investment funds.



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31 thoughts on “Murray doesn’t think carbon’s a problem, so why tax it?

  1. klewso

    When did he see the GFC coming?

    [Then there’s “Intelligent Design” – a dogma opposed to primate change?]

  2. negativegearmiddleclasswelfarenow.com

    Money changer becomes scientist and full-time tosser.

  3. David

    I want some of what Murray is on, wheeeeeeeeeeeeeee

  4. Arty

    Just another uppty bank-johnie in a small country town.

  5. New Cassandra

    Heretic – he must be burned to save us all !

  6. shanghai

    Whether or not he is correct in his view matters not and the jury is still out – some significant questions still to be answered re the relationship between CO2 and climate change.
    The fact is that any moves made here in Australia equates to a flea trying to drive an elephant – given the CO2 output from the rest of the world.
    The carbon credit model implemented here is really just another trading mechanism to make money.
    If we were really serious about the problem we would have invested in alternative energy technologies years ago. We haven’t and we probably won’t.

  7. Steve777

    For some reason Mr Murray believes that the 30% increase in a major greenhouse gas to date and greater increases in future will have no adverse impacts on humanity. We shouldn’t burn him, but given that he has has no apparent expertise in climate science or any science, his opinions on whether or not anthropogenic global warming is happening shouldn’t be given to much weight.

  8. rummel

    Quick some more money must be payed to the climate “green” gods or we shall or burn alive. Now how much will Gillards Tax change the temp of the world again. Oh thats right zip…. zilch…. zero and not one .0000000000000 EVER. But the Climate Gods will be happy with our sacrifices. The Greens and lime Labor will be warm and fuzzy with climate action and we can all happily vote Bob Brown for president of the one world government he wants to subject us all to.

  9. JamesH

    Shanghai – what “significant questions” would those be? There are no fundamental doubts left.

    And get your analogies right: Australia emits about 1.32% of world carbon emissions (which doesn’t include all the coal we export). An average elephant weighs about 6000 kg. 1.32% of that is about 80 kg. Your analogy should be “a full-grown man trying to drive an elephant”.

  10. heysoos

    It’s a job application – Liberal style!

  11. michael crook

    Cant believe that we still have climate sceptics, I was afraid of this, we now have to start all over again, it is getting very very late!

  12. Alexander Berkman

    @ Rummel, don’t forget your GP told you not to opinionate while medicated!

    Murray is certainly just another in the long line of economic ‘rationalists’ who worship the god of money and really couldn’t give two sh1ts about future generations to come, quite ironic given the high paying job he just left.
    Hi opinion on climate change is worth about as much as the respect the commonwealth bank has for it’s customers… bugger all…good riddance.

  13. Warren Joffe

    @ Michael Crook et al.

    Just because David Murray overstates his case in saying there is no correlation between warming and carbon dioxide (*if he really did say that and not correct it*) it doesn’t follow that he isn’t otherwise dead right.

    What possible good will Australia adding to its costs do when we export more than half of our coal, and, above all, nothing we can do will either affect future climate in any measurable way or, to advert to the most fantastic illusion, that we can influence the big emitters of CO2 by what we do or don’t do or what we say. Gee whiz, China might punish us by importing and burning even more of our coal!

    But I’m glad that Michael Crook is prepared to start all over again because this time the propagandists might bother about credibility. When the IPCC, said to be considering over 30 models for its fifth report, produces a single one that can stand empirical testing and when it can find a model which so effectively models the natural causes of climate change that it can retropredict, the Roman Warm Period, the Medieval Warm Period, the Little Ice Age, the drying up of the Great Lakes, the collapse of the first Indus Civilisation, the drying out of the Sahara and collapse of the Egyptian Old Kingdom then it might escape from the justified contempt that it is now widely held in by those who have digested the uncontradicted findings of Donna Laframboise’s investigative journalism embodied in her “The Delinquent Teenager Who was Mistaken for the World’s Top Climate Expert”.

  14. AR

    My only surprise is that anyone is surprised that a bean counter knows SFA about anything else.
    He wasn’t even much crack at that, the FF fund having performed very poorly, compared with such well tested methods as throwing darts or letting a monkey do the investment ‘decisions”.

  15. heysoos

    It’s a poll driven job application

    – Liberal style.

  16. Peter Ormonde

    Bankers – particularly Australian bankers – should be kept on a very short leash indeed. Their decisions should be subject to constant external scrutiny and regulation to ensure prudent management. And David Murray is the perfect illustration of why this is necessary. Playing around in all that money! money! money!!! gives them some extraordinary notions of omnipotence and omniscience. Magic Pudding economics.

  17. Arty

    I don’t expect that the average banker would have a strong science background. But I would expect some experience in risk management.

  18. Mike Flanagan

    Murray’s performance as a chairman of a super fund has been at best mediocre. His performance as a chairman of a Sovereign Wealth Fund has been below par on a comparative basis. I suspect a lot of Public Servants that he was supposed to be performing for, will be glad to see his departing rear.
    It has been interesting to note the Norwegian Sovereign Wealth fund is failing to have an impact on the increasing value of the Kroner that many economists have suggested would be a function of a similar fund established here with the proceeds of the MRRT.

  19. Peter Ormonde


    Risk? Australian bankers? Risk? Erk. Not on your life. They don’t get paid for taking risks. Good grief no. Houses, real estate, stuff we can dig up and flog … you bet. But risks? That’s why they never make a loss and the GFC – which had the international banking business flat on its back twitching like a sprayed bug – saw Australian bank profits drop by a mere 20%. Shocking!

    Here’s a handy paper … HaVu_Profit_Efficiency_of_Australian_banks (stick that into google and it should turn up. I’m trying to dodge the swooping wings of the moderation machinery. If it doesn’t work let me know and I’ll post the link.

    But if you can’t be bothered reading that, just go and ask any bank for a business loan. After they’ve picked themselves up and wiped the tears of laughter from their eyes, they’ll tell you to put your house on the line for collateral. Bricks and mortar, real estate….Risk? Not bloody likely.

    Australian banks manage risk by avoiding it completely.

  20. Warren Joffe

    @ Mike Flanagan

    I am not sure how you can rate Murray’s performance accurately after taking account of his being chairman of a board with senior executives under it and looking at the precise decisions made and the circumstances including the Fund’s precise legal mandate (e.g. why did it take the Telstra holding that it did and deal with it as it did?). I am sceptical of almost all investment managers’ claims as the stats over long periods show that outperformance is extremely rare, especially when investing largely in Australian shares since, unlike the big value investors in the US, they can’t do thorough research on dozens of corporations competing in any given industry and then make superior stock picks (while others make inferior stock picks!). In the case of the Future Fund it has to be remembered that it is aimed at a 2020 beginning of disbursements. Nonetheless……

    Murray can be more reliably be tagged as a lucky man with a very assertive personality (though I have never met him). He was aggressively angry with some writers of a thesis many years ago which promoted the idea that the Commonwealth Bank (of which he was already CEO) should be privatised. Then, after the worst of the shakeouts from the 1984-85 deregulations his bank was privatised and he sailed on to great applause for its performance which, to some extent at least, was based on the secure small depositor and home mortgage base which derived from its, and other state banks’, original business.

    Still, though he may (or may not) have said things which were plain wrong about CO2 and its tendency to warm the atmosphere, he is surely dead right on what a money man ought to be right about, namely the stupidity of the policy which Gillard disavowed and then enacted to keep office for “reforms” which give a bad name to reform.

  21. Warren Joffe

    @ Peter Ormonde

    My superannuation depends enough on the performance of banks to take notice of some of the matters you refer to. Unfortunately they have taken lots of risks over the years which have turned out badly. Even if you are too young to remember, and haven’t read about, the disasters of the late 80s and early 90s, you might remember NAB’s misbegotten UK investments, its even worse mortgage funding disaster in the US (under the sainted Don Argus but he didn’t stay round for it to fall on his watch), the foreign exchange trading losses etc. Then there were the ANZ’s well publicised problems with brokers promoting margin loans backed by the bank etc. The Commonwealth Bank is/was also being sued over some such problems. The ANZ also, going a fair way back, owned Grindlays Bank which had such problems in India that it got out.

    Obviously the banks do give a lot of business loans but if you don’t want to pay 13 or 14 per cent interest you need to give the bank adequate reason to suppose that it can recover the money you owe it without having to bill solvent customers for the losses it occurs in chasing you. If you give a guarantee because your private company is borrowing for business then, normally, your house will be on the line anyway and you would hardly expect a bank to allow you to effectually give priority to your financing customers of your business who were slow in paying you (for example).

    I know plenty of cases of bank customers getting unsecured overdraft limits of $50,000 and much more, fwiw.

    This is just in the interest of accuracy, not to justify multimillion dollar salaries (which, however, don’t worry me as long as my super fund continues to get reliable and rising dividends).

  22. Harry Rogers

    Warren Joffe

    You make some excellent points and are totally correct about the disatrous history of the Australian banks or should I say most banks. Take a look at those boring notes at the back of the accounts of all the banks worldwide which regularly have loss provisions of 1 billion or so. Most of the large losses suffered by Australian banks over the years have been “big ticket” loans of $100 mill. or so viz. Alan Bond , Adelaide Steamship, and a long long list of others.

    The ridiculous comments touted by the bank etc that they are some of the safest in the world relates principally to the fact that a large proportion of their loans is allocated to housing which is the backbone of consistent -read also safe- banking balance sheets. The amounts that they have written off through derivates, foreign exchange etc etc is many multiple times more than they have ever lost through housing and small business loans.Risks related to small business loans is an insulting furphy when compared to their historic losses.

    I dont think any rational person has an argumaent for banks wanting security for a loan however it is their “two faced” persona that has diminished their standing in the past 20 years. Personally I have a big problem with their salaries! Not because I’m jealous just because I think this avarice ,not only in the banks , is a slow burn on personal and societal morality. I think they are blinded by their own inexperience or perhaps greed that they fail to understand that they are realistically seen as pigs at a trough and appear to have slime around their mouths when appearing on television…or maybe its a bad picture.

  23. Warren Joffe

    Harry Rogers

    I’m surprised you say “in the last 20 years”. It was more than 20 years ago that I can remember vitriolic statements by people who, if not bankrupted, still felt they had been badly let down by the banks. My own family connections to banks at senior levels in the days before deregulation (as well as a desire to get cheap funding for some investments and acitivities) mean that I have paid quite a lot of attention to them. Now I come to think of it, however, I didn’t start to invest much in our big four banks and their predecessor banks until after deregulation although, at the time, I am on record (if I wasn’t using a pseudonym you could find it online) as having warned against the follies of the Victorian and South Australian governments wrt banking and associated financial services. You could say there was a Hawke-Keating push on banks to become more entrepreneurial (how about a Swiss franc loand Farmer Rogers?) and, as a consequence, given the size of the banks in relation to the whole Australian business world, and indeed absolutely, it was inevitable in an increasingly globalised world that large salaries would be paid. I can’t remember much about the salaries paid to some of the clowns who ran banks in the late 1980s but that hasn’t much bearing on today’s state of affairs.

    I am fairly confident that, apart from some follies within some banks (NAB’s foreign exchange trading e.g.) there wasn’t anything like the outrageous greed with the particular Wall Street twist of ripping people off with the help of the dumber people in the structured finance sections of the rating agencies and taking large rewards for e.g. schemes to allow Greek politicians to cheat on their Eurozone partners. Respectable brokers in the great old firm of JB Were got out of the misbegotten Goldman Sachs JB Were and formed their own firm before the remnant broke up and Goldman Sachs was left to run its course without preying on private clients (the “muppets” in Australia not being rich enough).

  24. linda domaschenz

    And to add to the banker, we now have Jeannie Pratt entering the debate. Damn obvious if you are in the packaging business that you’d oppose such a carbon price. The way many products are packaged these days is a blatant money making machine. For example- 3 layers for a couple of bars of soap, so no doubt you would be in denial or opposed. Companies such as those using finite resources willy nilly and with an irrational approach to CC are intended to be financially hurt by the CP and so they should!
    If this price is to work we must embrace products and a lifestyle that does not overtly pollute, we will be rewarded and with not just a warm fuzzy feeling. But change is hard for the average punter and the greedy who’d prefer to ignore the science and continue with business as usual.
    Makes you wonder why these “experts” are given the media oxygen they attract.
    David Murray’s comments are to be expected as are Pratt’s, where the business of money is their sole goal. A conga line of deniers and greed driven will ensue.

  25. Peter Ormonde


    Spot on.

  26. Mike Flanagan

    Warren Joffe;
    Thanks for your comments and thoughts. I too have considerble scepticism towards the screen jocks of the industry. Indeed my sceptism and cynicism is about the structure of the whole superannuation industry model, but that is another discussion.
    With regard to Murray’s position I think one has to reflect on the opportunities and responsibilities of a board member and their chairman in any organisation. Firstly it is a given that membership of a board have responsibilities to the ‘shareholders’ or members to not only review the managements skills and application to the organisations mission and application, but to set the standards of intellectual vigor, ethics and innovative thinking in addressing the corporate bodies challenges. It is my contention that the board and it’s chairman are the drivers of these parameters and the results of the Future Fund under Murray reflect on Murray’s leadership in these areas.
    It is interesting to note that Murray himself, in an interview on the ABC radio, used comaparatives to the other super funds to justify his personal perception of success and I doubt they stand up to an honest and critical comparison.

    Linda Domaschenz;
    You do have an important point that is rarely covered in our mainstream press. The Packaging Industry is the fourth largest industry in the developed world and is dominated by the ethics and standards of the PR and Advertising industry. And they are abysmal.

  27. Harry Rogers

    Warren Joffe

    I guess it’s a problem with age when the “20 years ago” rolls off our tongue so easily.

    Yes I remember the pre Campbell enquiry days and also the ES&A and the Commercial Bank of Australia. I remain cautious of the often easy rhetoric of “thing were better then “.

    Of course the superannuation funds private or public have taken full advantage of the franking of dividends that came in ..Ive forgotten when the franking word entered our languauge..was it Keating also? This is the main reason we all have these banking shares or to put it plainly what are the other practical choices. However this is another subject about super waiting to explode.

    Returning to Murray and various boards.

    I maintain that the boards of the banking sector have always run for cover in bad times viz. the forex scandal at NAB and taken praise and fed themselves from the trough during good times.

    I was recently in Finland where most of the board of Finnair was sacked for what the government considered corrupt practices. What were these corrupt practices ? Giving blackmail bonuses to senior manager who threatened to leave.

    Now the Finnish government is “shaking the rugs” of the Finnish corporate sector to see what else falls out. They are sick and tired of the “mates club” of boards in Finland which is called the “big brother” effect. They are finding it clearly filters down to their pension funds.

    Bear in mind this has only happened since the change in balance of power in the recent Finland elections. This is endemic in Australia and has been as long as I have been alive. When was the last time you looked at the interrelated board member list of Australian public companies and worse still their auditors who became board members.

    My question is why shouldn’t we all be angry and parading in the streets abouts this outbreak of “me,myself I” at the most senior levels.

  28. Warren Joffe

    Harry Rogers

    I am not disposed to disagree with your comparatively mild detection of imperfect altruism and disinterest at high corporate levels though I may be too inclined to give credit to those who are friends and to be optimistic despite having a wife who doesn’t indulge in distributing too much easy credit. But I don’t think we are yet afflicted by the personal greed which does seem to be prevalent on Wall Street. (Lack of opportunity perhaps, as well as being in a small pond where one is very visible and where one can’t afford, socially anyway, to make too many enemies).

    Still, I find it interesting to remember a senior mining executive turned chairman and himself a successful investor fulmiinating against the banks’ demand that they be allowed to set their required return on equity at 20 per cent (or 18 or whatever it was). I think he made the point that it was quite out of kilter with the risks they ran (or should run). But he may have been affected by noticing that the head of the Reserve Bank was paid about a tenth of what the CEOs of the big four were/are paid!

  29. Warren Joffe

    I meant to add also, Harry Rogers, in sentimental tune with your Finnish experience, that I have been intermittently intrigued by Finnland for its educational successes, its efficient industries and sturdy independence. But it is a bit weird. A brief visit to Helsinki afforded me the opportunity to learn in the Athenaeum Museum (I think that was the name of it) just how profoundly provincial Finnland was when Australia was already, despite the residual colonial cringe, a proud example to the world of many social and political innovations. For example, in the Grand Duchy of Finland, part of the Czar’s empire, it was possible for Moscow and St Petersburg art dealers to arrange exhibitions in July 1916 (!!! did the Somme keep things all quiet on the Eastern Front perhaps) of Kandinsky and Chagall. Not a single painting sold (though much later inspection of the dealers’ holdings suggested one or two had gone missing). I don’t suppose Picasso and Braque would have had great sales in Townsville come to think of it…. A point? Maybe. Perhaps Finnland still enjoys to pluses and minuses of small town life.

  30. Harry Rogers

    Warren Joffe

    Appreciate your comments and yes I think you probably are too inclined to give credit where its not due in the corporate sector. I had this failing when I was “up and coming” but one day turned around to look back and saw the hippocracy of it all. Im sure that discussion is meant for other pseudo intellectual sites.

    In humble defence of Finland (not sure why…no Im not a Finn ) but they have geographically been on the horns of a dilemna since the 12th century being situated between marauding Swedes in the west and Russians on the east.

    I once read an Alamanac of World War 2 which gave a day by day account of 2 years before the war and also of course the official period 39 to 45. Finland was mentioned a number of times and of their invasion by Russia and Hitlers persistent request to use Finland as a gateway for his Russian invasion. I came away from the book thinking what a difficult life Finland has had and always will because of their unfortunate location.

    Thats my history lesson for today and I will leave the column for others to meander in different directions.

  31. Johnfromplanetearth

    Murray is spot on, it is the worst economic decision ever made by any Government of Australia, it is unnecessary and pure evil. Gillard has had her arm twisted by Alien seeking nutjob Bob Brown and the Australian people will cop it where no alien probe has gone before!

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