How will net zero shape the future?
Which occupations will go the way of the saddler and blacksmith, and what type of industries will emerge and thrive?
We can think about this story by revisiting the history of a famous Australian company, as the COP26 climate summit wraps up in Glasgow.
The price of progress?
In Australia this century, certain politicians have relentlessly opposed attempts to decarbonise our energy system.
For moral authority, they’ve repeatedly warned of the job losses it would cause.
We’ve had years of it.
But recently, the federal government has started to talk more about all of the jobs that will be created if we transition to a low-carbon economy.
It’s a welcome development.
It means the national discussion about economic “progress” may finally be based in reality again.
How so?
Because the history of capitalism is one of constant job losses and job gains, as new technologies replace old technologies.
If we only talk about job losses we’re ignoring half the story.
Consider the word “productivity”.
Politicians love it. They say productivity improvements are vital for economic growth and they feel very comfortable pushing for them.
But what they don’t say is productivity improvements often lead to job losses.
They constantly say we need to boost productivity but what they’re actually saying is we need to produce more goods and services as the years roll on, with the same number of workers or fewer.
They’re calling for constant job losses over time.
Where will all those surplus workers go after they’re replaced by the latest technology?
Politicians rarely talk about that bit.
But think about where we are today, as a society.
We have our ancestors to thank for our standard of living. It’s built on the wreckage of past job losses as policymakers and employers have chased productivity improvements through the centuries.
An Australian icon: Holden
Which brings us to the thing I wanted to talk about.
Holden.
The famous car company.
There have already been a couple of hundred thousand babies born in Australia since the Holden brand was axed on the last day of 2020, so the post-Holden Australia is already creating itself.
But even for adults, Holden’s origin story may surprise some people.
The company was established in 1856 in Adelaide, South Australia, as JA Holden and Co (it was founded by James Holden, who was born in England).
It started out as a saddlery, making harnesses, bridles and whips for horsemen.
But it experienced periods of expansion and adaptation as technological advances were made in the economy, and as geopolitics unfolded.
Think of the electric telegraph line.
In the early 1870s, the “Overland Telegraph” line was built stretching from South Australia up to the settlement in Darwin.
Considered one of the greatest engineering feats carried out in 19th century Australia, when it was connected to the Java-to-Darwin submarine telegraph cable, it reduced Australia’s communication time with Europe from months to hours.
It was revolutionary.
And JA Holden and Co was a direct beneficiary.
It won a major contract to supply carts and other equipment for the horses and bullocks used on the project, which saw the company expand and flourish.
In 1899, the company (now called Holden & Frost) won a lucrative government contract to supply Australian troops with harnesses, horse collars, Sam Browne belts, stock whips and other military equipment for the so-called Boer War.
Within a couple of years, the company had become Australia’s largest supplier of military harnesses and it was flourishing.
In 1905, James Holden’s grandson Edward joined the company and Edward was convinced horse transport would be replaced by automobiles, so he began making carriage hoods.
The break-out of war in 1914 was another boon for Holden, with more lucrative contracts for the supply of leather goods for Australia’s troops.
During the war, Australia’s government also put an embargo on the importation of motor vehicles, but it still allowed motor chassis to be imported.
That created a business opportunity.
Holden & Frost began building motor bodies for the imported chassis and Holden’s Motor Body Builders was eventually created.
You could go on and on.
In 1948, Holden began mass-producing all-Australian made vehicles.
It enjoyed great support from Prime Minister Ben Chifley who wanted manufacturing to account for a much larger share of Australia’s economic growth in the post-war period.
The car brand ended up becoming an icon of Australian post-war culture.
It produced the most popular car models for decades. It employed thousands of workers through the years, often from generations of the same families.
Fast forward to today and the company has endured a painful demise in recent times.
It finally lost government support. Its factories have closed.
There were plenty of economists and commentators who welcomed the development, saying Australia never had the population size to sustain a local car manufacturing industry anyway and the government protection and assistance was never worth it.
They said Australian consumers would just have to take what they’re given by more efficient car manufacturers from overseas.
That second part was true — in negative and positive ways.
Matt Kean, the New South Wales Treasurer and Environment Minister, told the ABC last week that Australia was now becoming a dumping ground, by foreign car manufacturers, for the world’s dirtiest vehicles.
He said the federal government should be doing more to stop that happening by encouraging the electric vehicle revolution.
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“The biggest thing the federal government can do is deal with the issue of fuel standards,” Mr Kean said.
“Australia has some of the worst fuel standards anywhere in the world. Our fuel standards are worse than China and they’re worse than India.
“And what that means is that Australia is becoming the dumping ground for the vehicles that the rest of the world doesn’t want.
“That’s not only bad for the environment, but it means that consumers are getting less choice and they’re paying more at the bowser. That’s not acceptable.”
Mr Kean, who is a high-ranking member of the NSW Liberal Party, said the federal government should be investing far more heavily in electric vehicle charging infrastructure around the country.
He said it could use tax incentives and waivers to make electric vehicles more affordable for families and businesses.
“There are huge advantages to moving towards electric vehicles,” he said.
“They’re fun to drive, they’re cheaper to run and they’re great for the environment. So we should be embracing this new technology and ensuring that everyone who wants one is able to access them at an affordable rate.”
And he said what most people know.
“This new technology is coming whether people like it or not and we need to be ready for the future,” he said.
“You can’t sit by and hope for the best. You’ve got to put in place the policies and show the leadership required to roll that technology out at scale.
“That’s what we’re doing here in New South Wales.
“We welcome the opportunity to work with the Commonwealth to ensure that Australians get the best deal and the best technology available,” he said.
Old technologies replaced
Back in 2013, during an infamous question time in federal parliament, then-treasurer Joe Hockey dared Holden’s American owners to leave Australia.
“Either you’re here, or you’re not!” he shouted.
He’d been goaded to make that outburst by coy questioning from the Labor’s opposition frontbenchers.
Labor had wanted to know, on one hand, if Mr Hockey felt his government’s subsidies to car-makers were worth it, but on the other hand, if he felt his government was doing enough to support Australian workers in the local car manufacturing industry.
Mr Hockey became exasperated by the contradictory questions and the rest is history.
But the truth is, there were people in both major parties who were tired of the car industry’s reliance on government assistance.
Some job losses were inevitable, they said.
They said Australia’s consumer market was too small to sustain a local car manufacturing industry and we needed to accept the reality that Australia would have to take what the rest of the world sent our way.
As it happens, the rest of the world is now moving towards electric vehicles.
And local industries in Australia will learn to service the new technology. Some will thrive after winning lucrative contracts. Jobs will be created, some of which we can’t even imagine now.
It’s ever been thus.
New technologies always replace old ones.
Just as in March this year, when CEP.Energy announced plans to build a large grid-scale battery on the site of Holden’s old manufacturing plant in the Adelaide suburb of Elizabeth.
The world’s energy system is ever-so-slowly being decarbonised. It will see many jobs lost — but many jobs created.
It’s what capitalism does.
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