Loyalty tax? Another worthless slogan
If Energy Minister Angus Taylor is remembered for nothing more, and he probably will be remembered for nothing more, he should go down as the man who invented the phrase “loyalty tax”, which is where people who can’t be bothered shopping around pay more for something.
Australian energy policy has come down to this: there is unprecedented retail electricity competition, to the point of doorknocking, nuisance calls and huge marketing budgets, but the government says it will protect those who choose to be “loyal” to AGL, Origin and Energy Australia from paying more than those who go to the trouble of shopping around.
Presumably the government will soon ensure that those who can’t be bothered reading price signs outside petrol stations, and just go to the same one all the time, are protected from paying higher prices than those who pay attention to the price boards, or perhaps Coles and Woolworths will be forced to lower their prices so they are the same as Aldi’s, to ensure their customers aren’t paying a supermarket “loyalty tax”.
It’s hard to imagine a sillier idea than this one. It’s true that electricity pricing is complicated, mainly because the suppliers charge by the kilowatt hour and we pay by the month, and we don’t actually know what a kilowatt hour is, and it’s also true the ACCC highlighted the fact that the big three retailers had a nasty habit of taking advantage of their loyal customers, but they are hardly alone in that.
But there are plenty of discount electricity providers that advertise lower prices than AGL,
Origin and Energy Australia, and in fact the smarties have moved beyond discounters and are putting solar panels on their roofs so they pay even less.
The point about electricity is that there is zero difference in the product between providers — the electrons are identical no matter where they come from. The only reason not to choose on price is inertia, or laziness.
So why is the energy minister beating up power companies at roundtables and chattering about a “loyalty tax”, while Scott Morrison keeps talking about “fair dinkum power” as if that phrase has any meaning either? Answer: to make it seem like they have an energy policy that would vaguely pass muster, which they don’t.
The evidence is absolutely clear that this country must transition away from its reliance on fossil fuels, both for generating energy and for export income.
It actually doesn’t matter what anyone thinks on either the right or the left: the scientific, evidencebased consensus is that net global CO2 emissions have to fall to zero within two or three decades to avoid the risk of catastrophic changes to the weather and sea levels, and that in the process coal will have to be phased out. Because of that scientific consensus, the world is moving — slowly, falteringly, it’s true — in that direction.
Yet Taylor and the Prime Minister, and the rest of the Coalition, are attempting to march this country in the other direction, towards increasing our reliance on coal on the vacuous grounds that it’s “fair dinkum” or something, and in the two mistaken beliefs that lower prices are all that matter to people and that the government can make them come down.
In his oped piece in this newspaper on Wednesday, Taylor wrote: “We are working towards a shortlist of electricity generation investment projects by early next year that deliver when customers need it (likely to include coal, gas and hydro), balancing the unprecedented investments in solar and wind.”
Is the government seriously proposing to support fossil fuel electricity generation with taxpayers’ money?
That would not only be a waste of money, it would be an act of shameful, wilful ignorance of both science and economics.
First, it’s AEMO’s job to balance the unprecedented investments in solar and wind, caused by businesses, investors and households making rational investment decisions, and there is no evidence that it is falling down on that job.
And these investments are good, not bad. A report from The Australia Institute this week showed clearly that wholesale spot prices are falling because of the huge amount of solar and wind- generating capacity coming into the national electricity market.
Second, and most important, the latest report from the Intergovernmental Panel on Climate Change says that limiting global warming to 1.5 degrees Celcius will require “rapid and far-reaching” transitions in land, energy, industry, buildings, transport, and cities. Global net human-caused emissions of CO2 will need to fall by about 45 per cent from 2010 levels by 2030, reaching “net zero” around 2050.
The risks of allowing even 2C of warming, the number that Australia and 194 other countries signed up to in Paris, are enormous, as the IPCC makes clear.
Future generations will regard even that as a crime, let alone even higher temperatures. The aspirational Paris target of 1.5C is what’s needed.
In any case, it’s clear that the Australian economy must undergo a difficult transition and will require some quality leadership to do it.
There hasn’t been the slightest sign of that from the Coalition for years, and Morrison and Taylor have now doubled down with their slogans “fair dinkum power” and “loyalty tax” — another futile attempt to persuade the electorate that climate change is not really happening, or that we shouldn’t join the global effort to do something about it. It would be as if Paul Keating ignored the evidence, and his own previous conviction, that Australia needed to move to a consumption tax and campaigned cynically against it in 1993 to win votes and beat John Hewson. Oh wait …
So yes, politicians often go for short-term populism over longterm policy needs, and so do the companies and media players who support them, and it’s also true that it often works — in the short term.
But this time the stakes are much higher.