Too many Chi­fleys, not enough on emis­sions

The Saturday Paper - - Comment - Paul Bon­giorno

IT IS GOBSMACKIN­G THAT THE SIDE OF POL­I­TICS RE­SPON­SI­BLE FOR FOISTING ON THE NA­TION A FLAWED EAST COAST MAR­KET IS NOW AT­TACK­ING PRI­VATE COM­PA­NIES FOR LOOK­ING AF­TER THEIR SHARE­HOLD­ERS.

In a sure sign the Turnbull govern­ment is thrash­ing about in its death throes, this week it re­sem­bled the La­bor Party of Ben Chi­fley in 1949 more than any­thing else. The late La­bor icon was a cham­pion of big govern­ment. He favoured in­ter­ven­tion and us­ing tax­pay­ers’ money to na­tion build. Now, we are see­ing Lib­eral Party holy writ go­ing out the win­dow about the sanc­tity of the mar­ket to de­liver best out­comes.

Chi­fley’s pro­posal to na­tion­alise the banks led to his de­feat in 1949 at the hands of Robert Men­zies, who railed against the so­cial­ism and “closet com­mu­nism” of the La­bor agenda. Men­zies’ suc­ces­sor, Mal­colm Turnbull, shares no such qualms. Turnbull is proudly pro­claim­ing the man­tle of Chi­fley – the fa­ther of the gi­ant Snowy Hy­dro scheme – by propos­ing Snowy 2.0.

If it is ever built, it will fol­low the same tem­plate: to­tally govern­ment owned and funded.

Per­haps us­ing the ex­am­ple of Chi­fley to de­scribe what is hap­pen­ing is not stark enough. Turnbull and his min­is­ters are more into the com­mand econ­omy model of the old Soviet Union.

Imag­ine if Bill Shorten, in govern­ment, bagged pri­vate com­pa­nies for want­ing to make a profit. Or if a La­bor prime min­is­ter had the ef­fron­tery to tell a com­pany how to run its busi­ness into the ground.

But that’s what Turnbull, in full bully mode, is do­ing. He has launched a frontal at­tack on AGL’s man­ag­ing di­rec­tor, Andy Ve­sey, for dar­ing to shut down the na­tion’s old­est power sta­tion, Lid­dell, in New South Wales. The com­pany in­formed the mar­ket of its plans two years ago – pro­vid­ing about seven years’ no­tice.

Turnbull sum­moned Ve­sey twice to Can­berra and, be­hind closed doors, de­manded AGL keep the plant op­er­at­ing for another 10 years or sell it to some­one else. This is a plant so de­crepit that, last Fe­bru­ary, in the mid­dle of a heat­wave, two units were shut down “due to un­fore­see­able boiler tube leaks”. The op­er­a­tor ex­plained that, as a re­sult, “there was not enough en­ergy in the sys­tem and NSW ex­pe­ri­enced black­outs in parts of the state”.

And that was de­spite the com­pany hav­ing al­ready spent $123 mil­lion in re­pairs. Ve­sey says the com­pany will have to spend about $160 mil­lion to im­prove Lid­dell’s re­li­a­bil­ity so it can limp to the flagged 2022 clo­sure.

It now emerges that the two “con­struc­tive” meet­ings were held in par­al­lel uni­verses. Turnbull in­sisted the only way a 1000-megawatt short­fall could be met in five years’ time would be if Lid­dell stayed open. Never mind that its abil­ity to gen­er­ate that much power in be­tween times is highly prob­lem­atic. And that not even the Aus­tralian En­ergy Mar­ket Op­er­a­tor rec­om­mended it in its re­port on en­ergy sup­ply. There were no ears for Ve­sey say­ing the long no­tice is al­low­ing the com­pany to plan re­place­ment ca­pac­ity, which will likely come from “a mix of load shap­ing and firm­ing from gas peak­ing plant, de­mand re­sponse, pumped hy­dro and bat­ter­ies”.

By any mea­sure, Mal­colm Turnbull the busi­ness­man must un­der­stand the chang­ing eco­nomics that are mo­ti­vat­ing AGL. The only way coal is vi­able for pri­vate in­vestors is if the govern­ment uses bil­lions of dol­lars of tax­pay­ers’ funds to ei­ther pro­vide gen­er­ous in­cen­tives or to build new coal-fired gen­er­a­tors it­self. Tony Ab­bott, who for­mer trea­surer Peter Costello sus­pected had never left his spir­i­tual home in the Demo­cratic La­bor Party, sounded like another blast from the Chi­fley govern­ment when he urged Turnbull in the party room to do just that. And for good mea­sure, he warned the prime min­is­ter against chief sci­en­tist

Alan Finkel’s clean en­ergy tar­get be­ing tacked on to the re­new­able en­ergy tar­get.

As busi­ness writer John Durie pointed out in

The Aus­tralian, “the sim­ple facts ... are that wind power is now at least 38 per cent cheaper than coal, so­lar is 16 per cent cheaper and the gaps are get­ting wider by the day

... A coal-fired plant costs $110 a megawatt hour to run. This com­pares to wind at $55 an hour plus another $25 an hour of so-called firm­ing power.” How does the party of bet­ter eco­nomic man­age­ment and fis­cal rec­ti­tude stand in the way of these num­bers? And worse, how does it hint at heavy-handed in­ter­ven­tion, if not costly re­na­tion­al­i­sa­tion, to get in their way?

The chutz­pah of Turnbull stron­garm­ing Ve­sey can only be ex­plained as des­per­a­tion borne of di­a­bol­i­cal pol­i­tics within the govern­ment spilling over into the public’s per­cep­tions of di­vi­sion and in­er­tia. So, un­able to en­act the sort of en­ergy pol­icy rec­om­mended by his own Finkel re­port, the prime min­is­ter has be­gun a pan­tomime, hop­ing his fin­ger-point­ing and name-call­ing will fool the au­di­ence into think­ing he’s do­ing some­thing.

It is work­ing to the ex­tent three opin­ion polls in the past 10 days have shown an im­prove­ment in the pre­ferred prime min­is­ter mea­sure. But his per­for­mance is still in neg­a­tive ter­ri­tory and, lethally, the av­er­age of the polls has La­bor locked in to a seven-point lead that would see 16 Coali­tion seats fall at an election and govern­ment swept away.

The Ip­sos Fairfax poll and the Es­sen­tial poll this week sug­gest the elec­torate didn’t no­tice the govern­ment throw­ing the switch to en­ergy the week be­fore in par­lia­ment. If they did no­tice, they were not con­vinced.

Call­ing Shorten “Black­out Bill” or Joel Fitzgib­bon, whose seat takes in Lid­dell, “No-Coal Joel” is a long way short of ex­plain­ing why un­der the Lib­er­als power prices have risen not fallen as promised. Shorten’s first ques­tion for the week hit the bull’s eye: “This govern­ment is now in its fifth year in of­fice … Can the prime min­is­ter con­firm that the av­er­age Syd­ney house­hold is pay­ing al­most $1000 more in power bills since this govern­ment was elected to of­fice?” Turnbull nei­ther con­firmed nor de­nied it; he just blamed La­bor for prices dou­bling on its watch. None of which is a con­so­la­tion for strug­gling con­sumers who need no one to tell them that de­spite the fin­ger-point­ing in Can­berra their bills are ris­ing.

If you can be­lieve Turnbull and Deputy Prime Min­is­ter Barn­aby Joyce, it’s all the fault of the pri­vate util­i­ties “short­ing the mar­ket” to gouge con­sumers. It is just three years since the NSW Lib­eral govern­ment flogged its power sta­tions on the prom­ise of com­pe­ti­tion lead­ing to cheaper bills. The same prom­ise was made by other state Lib­eral govern­ments, led by

Jeff Ken­nett in Vic­to­ria. It is gobsmackin­g that the side of pol­i­tics re­spon­si­ble for foisting on the na­tion a flawed east coast mar­ket is now at­tack­ing pri­vate com­pa­nies for look­ing af­ter the in­ter­ests of their share­hold­ers.

It prob­a­bly ex­plains why the Es­sen­tial poll found vot­ers be­lieve La­bor is more cred­i­ble in be­ing able to de­liver cheaper elec­tric­ity than the Coali­tion, al­though a big whack (35 per cent) don’t trust ei­ther side.

Mid­week, the ten­sions in the govern­ment over en­ergy pol­icy be­came clear. They be­gan to sur­face at last weekend’s fed­eral Na­tion­als con­fer­ence. In a dou­ble whammy, it voted for an end to sub­si­dies for re­new­able en­ergy and a scrap­ping of the clean en­ergy tar­get. Two MPs – Ge­orge Chris­tensen and Keith Pitt – both threat­ened to cross the floor if the Finkel tar­get was adopted by the govern­ment. They are not alone. De­pend­ing on who you talk to, up to 10 oth­ers are of a sim­i­lar mind.

No won­der Turnbull and his en­ergy min­is­ter, Josh Fry­den­berg, are paral­ysed. The in­cum­bent prime min­is­ter had the gall to say in par­lia­ment that La­bor had no en­ergy plan. His ap­pears still­born. There is even talk of no clean en­ergy tar­get, just a “re­li­able” or “se­cure” en­ergy tar­get that would in­clude coal in the mix, mak­ing it el­i­gi­ble for govern­ment fund­ing. Again, a Lib­eral govern­ment is se­ri­ously con­sid­er­ing tak­ing the com­mer­cial risk banks and other fi­nan­cial in­sti­tu­tions won’t. Weren’t La­bor govern­ments the only ones that would be so “reck­less”, to quote a favourite Turnbull barb?

La­bor is in fact anx­ious to do a deal. Its pre­ferred en­ergy in­ten­sity scheme, pric­ing car­bon, sim­i­lar to the one Turnbull cham­pi­oned nine years ago, is on hold. Per­haps with an eye to be­ing re­spon­si­ble for the mess af­ter the next election, shadow min­is­ter Mark But­ler sees bi­par­ti­san agree­ment as the only way for­ward for the na­tion. He doesn’t care what Turnbull calls the tar­get, as long as what is in place is real. He wants a pol­icy that takes into ac­count the in­ter­na­tional con­sen­sus on the need to ad­dress cli­mate change and de­liv­ers on our Paris com­mit­ments.

The tragedy for Aus­tralia is that, if La­bor wins the next election, Turnbull’s suc­ces­sor as Lib­eral leader will be even less in­clined to leave the par­al­lel coal uni­verse than he is. It could even be Tony Ab­bott. He is talk­ing to fel­low MPs in terms of “when he be­comes leader again”.

Ab­bott, his al­lies in the Na­tion­als and the de­nial­ists in the Lib­er­als are cer­tainly do­ing their best to stymie Turnbull’s chances of show­ing the sort of na­tional lead­er­ship for which vot­ers are cry­ing out.

PAUL BON­GIORNO is a colum­nist for The Satur­day Pa­per and a reg­u­lar com­men­ta­tor on the ABC’s RN Break­fast.

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