Coali­tion in the dark on en­ergy

The West Australian - - OPINION - MICHELLE GRATTAN Michelle Grattan is a pro­fes­so­rial fel­low at the Uni­ver­sity of Can­berra. This ar­ti­cle first ap­peared on the­con­ver­sa­tion.com.

In a Thurs­day video for the Went­worth by-elec­tion, Mal­colm Turn­bull’s son Alex has de­nounced “ex­trem­ists on the hard Right” who, he says, have taken over the Lib­eral Party.

The younger Turn­bull called on vot­ers in his dad’s old seat to reg­is­ter a protest about the party’s di­rec­tion, and de­liver a mes­sage on cli­mate change. Don’t vote Lib­eral, he said.

By the way — for the con­spir­acy the­o­rists — Alex Turn­bull didn’t give prior no­tice to his fa­ther, who is a strong sup­porter of Lib­eral can­di­date Dave Sharma.

Apart from the lead­er­ship coup, Alex Turn­bull, a Sin­ga­pore-based in­vest­ment man­ager, high­lighted in his video en­ergy pol­icy to make his point about the hard Right’s “crazy agenda”.

“As an in­vestor in en­ergy, I’ve seen that in par­tic­u­lar there’s no way coal can com­pete any more. Re­new­ables have got­ten too cheap, firm­ing costs are rea­son­able, and re­ally there’s no trade-off any more be­tween low­er­ing your power bills and re­duc­ing emis­sions. And yet still some would like to pros­e­cute a cul­ture war over this is­sue,” he said.

Kerry Schott, head of the En­ergy Se­cu­rity Board, is com­ing from a rather dif­fer­ent place but this week she de­liv­ered an equally blunt mes­sage about the pol­i­tics of en­ergy, de­scrib­ing “the gen­eral state of af­fairs right now as an­ar­chy”.

Any­one with an eye for de­cent pol­icy, for get­ting some or­der into an area that’s long been the play­thing of chaotic hy­per-par­ti­san­ship, would be there with Schott. As for in­vestors in the sec­tor, they’re in de­spair. Scott Mor­ri­son stepped into the prime min­is­ter­ship amid the smoul­der­ing ru­ins of the Na­tional En­ergy Guar­an­tee — which he quickly de­clared dead — and the Lib­eral right wingers’ scep­ti­cism about emis­sions re­duc­tion tar­gets and hos­til­ity to the Paris cli­mate agree­ment.

His ap­proach has been to load all the em­pha­sis on to price, with An­gus Tay­lor “the min­is­ter for get­ting elec­tric­ity prices down”. As for emis­sions, the 26 per cent to 28 per cent re­duc­tion tar­get has stayed, but it is played down, with Mor­ri­son’s line be­ing that it will be reached “in a can­ter”.

Mor­ri­son has, how­ever, fended off the Right’s per­sis­tent calls for Aus­tralia to exit the Paris cli­mate agree­ment, ar­gu­ing firstly that Aus­tralia should stick to its com­mit­ments and sec­ondly that cli­mate is an im­por­tant is­sue for Pa­cific na­tions, which are in turn im­por­tant to us strate­gi­cally.

More broadly though, Mor­ri­son avoids dwelling on the sig­nif­i­cance of cli­mate change. To deal with en­ergy in all its as­pects — pol­icy and pol­i­tics — a govern­ment re­quires a linked, multi-pronged ap­proach that man­ages, at the most ef­fi­cient price, the in­evitable tran­si­tion to cleaner en­ergy.

For busi­ness, the pol­icy needs to set an in­vest­ment frame­work pro­vid­ing pre­dictabil­ity; for con­sumers it has to con­strain prices; for the gen­eral cit­i­zenry, it should pay re­gard to their con­cerns about global warm­ing. The Mor­ri­son Govern­ment isn’t do­ing much on the first or the third re­quire­ment, and is likely, when the elec­tion comes around, to have fallen short of sig­nif­i­cant progress on the sec­ond.

Af­ter the col­lapse of the NEG there is no cer­tainty for in­vestors. Ac­cord­ing to one in­de­pen­dent source close to the in­dus­try, busi­ness has given up on this govern­ment. An­other source says busi­ness is try­ing to work out its own way ahead.

Mor­ri­son re­acted with dis­dain yes­ter­day. “If the big busi­nesses want to go out there and play foot­sie with the La­bor Party, well, that’s of­ten what they do.”

Busi­ness is more tuned into, and will­ing to talk about, the emis­sions chal­lenge and cli­mate change than the Govern­ment is. For the Govern­ment, go­ing there takes it down the al­ley of in­ter­nal ide­o­log­i­cal con­flict.

When the In­ter­gov­ern­men­tal Panel on Cli­mate Change’s re­port came out this week, the coali­tion was unim­pressed by its call for the in­ter­na­tional com­mu­nity to phase out coal by mid-cen­tury in or­der to con­tain the tem­per­a­ture rise.

Af­ter all, the Govern­ment is still un­der in­ter­nal pres­sure to un­der­pin in­vest­ment in new coal-fired power, if in­vestors can be found.

In con­trast, Alex Turn­bull said the IPCC re­port “frankly was ter­ri­fy­ing”.

Ob­vi­ously the Govern­ment is cor­rect when it judges vot­ers are fo­cused on power prices.

But it errs in its ap­par­ent be­lief that the pub­lic don’t care much about emis­sions, and it un­der-es­ti­mates peo­ple’s com­mit­ment to re­new­ables. Its views are out of kil­ter with the polling ev­i­dence. The Govern­ment’s near-to­tal fo­cus on price trans­lates into what it char­ac­terises as a “big stick” ap­proach to­wards com­pa­nies.

But the big­gest stick can only do so much, and prices will still be high when peo­ple vote.

While mea­sures at the con­sumer end have an es­sen­tial place, the core of the is­sue is fur­ther back in the chain — get­ting the proper set­tings to en­cour­age in­vest­ment. That is what the Govern­ment can’t achieve, be­cause of its own di­vi­sions. As on other fronts, the coali­tion has handed an ad­van­tage to La­bor on en­ergy and cli­mate pol­icy.

The ALP has a con­tro­ver­sially am­bi­tious tar­get for emis­sions re­duc­tions (45 per cent re­duc­tion on 2005 lev­els by 2030), but the Govern­ment’s abil­ity to run a scare cam­paign about the im­pli­ca­tions for price and re­li­a­bil­ity is di­min­ished by its own gap­ing pol­icy hole.

La­bor is look­ing to pick up the dis­carded NEG. It is cur­rently grap­pling with the ques­tion of how, if it brought in a NEG, it could max­imise cer­tainly for in­vestors in a po­lit­i­cal sit­u­a­tion where a coali­tion op­po­si­tion could play “the pol­i­tics of re­peal” — as Tony Ab­bott did when the then ALP govern­ment in­tro­duced its car­bon pol­icy. Af­ter the Govern­ment’s sham­bles, La­bor has a rea­son­able story to tell in­vestors. But the story those in­vestors re­ally wanted to hear was a bi­par­ti­san one, and that won’t be de­liv­ered.

Il­lus­tra­tion: Don Lind­say

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