Loy­alty tax? An­other worth­less slo­gan

The Weekend Australian - - BUSINESS REVIEW - ALAN KOHLER

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.

An­gus Tay­lor

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