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The term 'sovereign risk' is the kind of econobabble bullshit that is destroying public debate, and indeed democracy, in Australia. Like the words competitiveness and productivity the phrase sovereign risk has been stripped of any real meaning and is simply used to dress up the self-interest of powerful groups as being in the national interest. Take the Adani coal mine for example. In recent weeks the suggestion that a future Labor government might use Australia's environmental laws to revoke the approval for the world's largest export coal mine has been referred to creating 'sovereign risk' that will scare off foreign investment and destroy our economy. Really? By that logic the Australian Tax Office should presumably stop auditing companies like BHP, Chevron and Google for their tax minimisation strategies - lest enforcing our tax laws scares them off too. Modern corporations are apparently a timid lot. Indeed, this new idea that executives need complete certainty in order to invest is as new as it is bizarre. The whole point of capitalism is to reward investors for taking risks. Everyone knows that most small businesses go broke, and everyone knows that the big banks have lost billions of dollars on failed expansion plans in Asia. BHP lost more than $10 billion on its disastrous investment into US shale oil. Rio Tinto lost $3 billion of its shareholders money on its failed expansion into coal in Mozambique. And then of course there is Santos, which wiped out $2.9 billion of its shareholders wealth on its poorly thought through gas investments here in good old Queensland. To be clear, it wasn't 'sovereigns' that caused these risks. It was mining executives. And uncertainty about the prudence of their investments has never stopped them risking a lot of money on their gut feel. The reason that shareholders in mining companies expect double digit returns on their investments, while most of us settle for 2 per cent on our bank deposits, is that mining is risky. Indeed, if it wasn't risky there would be no need to pay BHP's CEO $7 million for a year's work. Mining projects face a multitude of risks ranging from uncertainty as to the quality of the ore that they are digging to the price they will sell it for. And then there is the risk that a tailings dam might burst and kill 19 people, destroy a river system and ruin the livelihoods of thousands of people the way BHP's Samarco mine did in Brazil. Or the risk that an oil well might burst into flames and pump oil into the ocean for months. Again, it wasn't 'sovereigns' that created these risks but, in the case of environmental catastrophes, it is usually the nation state that is left to pick up the tab. Under Australian law the federal government of the day can withdraw an approval for a project if the proponent fails to meet its obligations or relied on false, inaccurate or misleading information to gain that approval. There is no doubt that projects whose approvals are based on flawed information face a risk that their licences will be revoked but, again, that isn't sovereign risk, that is executive risk. Like the ATO chasing back taxes, Bill Shorten isn't threatening to change the law, he is simply threatening to enforce it. And if Adani is confident that all of the information it has provided is accurate then it won't have much to worry about. But rather than accept responsibility for the risk that it might have sought approval for the Carmichael mine on data that doesn't stand up to scrutiny, Adani and its friends in the Coalition are waving their arms around blaming governments for all of their commercial woes. Maybe that's because so many of Adani's claims have failed to stand up to scrutiny. When it first sought approval for the mine it told the public and the politicians it would create 10,000 jobs, but under oath in court ittold the judge it would create 1464 jobs. Apparently while corporations 'need certainty' the public should be understanding when the proponent of a mine cuts its forecast employment levels by 85 per cent. The hypocrisy of the fossil fuel industry is staggering. It's not that long ago that the fossil fuel industry celebrated as Tony Abbott ripped up the carbon price on which the business case for billions of dollars of energy infrastructure was repealed. Where were the conservative voices saying that no foreign investors would ever invest in Australia again? The same is of course true for the Renewable Energy Target. The RET was first introduced back in 2000 by John Howard to give the renewable energy industry certainty about the desired amount of renewable energy capacity needed in Australia. Peter Garret subsequently increased the ambition of the RET in 2009 in order to give the energy sector another clear target to aim for. But the Abbott government, cheered on by many of the same business groups whinging about sovereign risk for Adani, ripped up its certainty when it legislated a significant cut in the size of the target. But of course it is not just businesses that can be adversely affected by changes in government policy. Imagine a 50 year old who had based their life-long retirement savings pattern around the existence of a generous age pension, indexed to average weekly earnings and available at particular age. Now imagine Joe Hockey becomes treasurer and tries to delay the date at which you become eligible for the pension and significantly lower the rate at which it increases over time. I must have missed the calls from the mining industry and the Business Council of Australia to spare soon to be retirees the consequences of 'sovereign risk'. In the movie The Castle the Kerrigan family argue that 'the vibe' of the constitution should protect them from a government decision they don't like. Perhaps they should have argued 'sovereign risk'. As a country governed by the rule of law, Adani, or any multinational, is free to challenge the legality of a government decision in court. But like the 10,000 jobs claim, it is highly unlikely Adani would rely on the words 'sovereign risk' in front of a judge for the simple reason they have no legal meaning. It's simply econobabble for 'the vibe'. The idea that the business community would try to dissuade an Australian government from enforcing the law should send chills down the spines of foreign investors. An opposition political party promising to enforce the law is exactly what gives investors certainty. A government giving a wink and a nod suggestion to a company that ministerial decisions should be beyond scrutiny or review, on the other hand, is a sure sign to domestic and foreign investors that they should be very afraid. Richard Denniss is The Australia Institute's chief economist. Twitter: @RDNS_TAI

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