The
word “adhockery”, I am told, was first used around 1890. But this term,
which denotes an over-reliance on temporary solutions rather than on
consistent, long-term plans deserves a renaissance when it comes to
energy policies of the Turnbull government.
Has it really come to this? We are seriously being told that what we need to do is keep open a 50-year-old coal-fired power station for another five years from 2022. And this power station is generally regarded as the least efficient and most rundown we have. We’ve reached a new low point in adhockery.
It seems the government lurches from one short-term and temporary fix to another. They first tried to scrap the RET, which saw a thriving industry shrivel in the face of uncertainty and needed a bipartisan fix to get back on its feet, which Labor delivered. Then it was “Snowy 2.0”, which at this stage is really a feasibility study into a “wet battery”, which might be sensible but is years away in terms of delivery and even if delivered won’t provide any additional new generation. Now it is the jawboning and attempted public humiliation of a company to force it to keep open an asset which it correctly regards as past its use-by date.
And of course this is not to mention gas. When Labor announced our “national interest test” policy on gas exports at the last election, because we could see this crisis coming, the government claimed there was no problem with gas exports and that our policy was dangerously interventionist. Now they beat their chest about how interventionist they are prepared to be, just 12 months later. Adhockery.
Sensible people know there is a better way and that the lack of a coherent and stable policy framework is leading to a lack of investment and feeding into energy price rises which are eating away at our competitiveness.
It’s been three months since the chief scientist Alan Finkel delivered his report to the government, which made it crystal clear that “uncertainty around emissions reduction policies was pushing up prices and undermining reliability”.
Bipartisanship is critical if we want to get new investment in the energy sector. Why would a business look to invest in new electricity generation – typically investments which have 20- to 40-year investment horizons – if they see the government withering and dithering without any clear policy as to how it’s going to achieve its international emissions reduction commitments? It simply won’t. Hence Labor has said it is prepared to put aside its preferred policy solutions and embrace a clean energy target (CET) as recommended by the government’s own review, in an attempt to get that bipartisanship.
Political systems decide what and what not to contest on a partisan basis. In Australia, we don’t contest gun control for example. We long ago decided it was in the national interest not to have a partisan debate around this issue, in contrast to America. In Britain, the political parties decided not to contest energy and climate change, with all three major parties adopting very similar policies. Surely we can be mature enough to do the same in Australia.
This adhockery has real economic costs, which concern me as the shadow treasurer and I wish concerned the treasurer more. As the chief executive of Alinta Energy said, the status quo in energy policy is like “playing a game of football with invisible goalposts: we don’t know what it is we are shooting for”. Or as the Business Council of Australia has said, “If we continue to do nothing then we will continue to pay higher prices and have a less secure electricity supply”.
To put it another way, how can AGL for example be expected to make an important investment decision like on the Liddell power station, and what should replace it when it inevitably closes, when the government can’t provide a consistent policy framework in which to make that decision? Central questions like, will it be more economical to invest in new gas generation or intermittent renewables with battery storage, are impossible to even begin to answer unless you know the policy framework that will exist, not just next year but for many years to come.
When asked about certainty in the energy sector, the Reserve Bank governor said recently that “I couldn’t disagree with the proposition that providing some certainty about the future structure of the electricity generation industry would be useful for the country, for investment, on prices and on household budgets”.
“Jobs and growth” has been the treasurer’s mantra for the last year. Yet he’s happy to sit back and watch as billions of investment goes missing in the energy sector, a situation that is driving jobs and growth down, not up. In fact, it has been estimated that policy certainty associated with energy and climate change could detract up to 1% from GDP.
A belief in well-designed regulation of properly functioning markets as the best way to drive positive outcomes for ordinary people used to be something the Liberal party believed in. This is sadly no longer the case. The Coalition is instead pressuring business to make decisions which may or may not be in their financial interests and flirting in financing new coal generation. All the while using taxpayers’ money for handpicked subsidies through its Direct Action policy. But according to the government, it’s the Labor party that “will turn us into Cuba”. Go figure.
The Australian people and businesses expect that the treasurer is spending every waking moment in delivering the best policy settings for the nation instead of engaging in cheap stunts with lumps of coal and attacking energy company executives.
If the Liberal party is incapable of putting in place these vital energy policy settings, then it will fall to the next Labor government. But the economic price to be paid for this short-termism in the meantime is going to be very substantial.
Has it really come to this? We are seriously being told that what we need to do is keep open a 50-year-old coal-fired power station for another five years from 2022. And this power station is generally regarded as the least efficient and most rundown we have. We’ve reached a new low point in adhockery.
It seems the government lurches from one short-term and temporary fix to another. They first tried to scrap the RET, which saw a thriving industry shrivel in the face of uncertainty and needed a bipartisan fix to get back on its feet, which Labor delivered. Then it was “Snowy 2.0”, which at this stage is really a feasibility study into a “wet battery”, which might be sensible but is years away in terms of delivery and even if delivered won’t provide any additional new generation. Now it is the jawboning and attempted public humiliation of a company to force it to keep open an asset which it correctly regards as past its use-by date.
And of course this is not to mention gas. When Labor announced our “national interest test” policy on gas exports at the last election, because we could see this crisis coming, the government claimed there was no problem with gas exports and that our policy was dangerously interventionist. Now they beat their chest about how interventionist they are prepared to be, just 12 months later. Adhockery.
Sensible people know there is a better way and that the lack of a coherent and stable policy framework is leading to a lack of investment and feeding into energy price rises which are eating away at our competitiveness.
It’s been three months since the chief scientist Alan Finkel delivered his report to the government, which made it crystal clear that “uncertainty around emissions reduction policies was pushing up prices and undermining reliability”.
Bipartisanship is critical if we want to get new investment in the energy sector. Why would a business look to invest in new electricity generation – typically investments which have 20- to 40-year investment horizons – if they see the government withering and dithering without any clear policy as to how it’s going to achieve its international emissions reduction commitments? It simply won’t. Hence Labor has said it is prepared to put aside its preferred policy solutions and embrace a clean energy target (CET) as recommended by the government’s own review, in an attempt to get that bipartisanship.
Political systems decide what and what not to contest on a partisan basis. In Australia, we don’t contest gun control for example. We long ago decided it was in the national interest not to have a partisan debate around this issue, in contrast to America. In Britain, the political parties decided not to contest energy and climate change, with all three major parties adopting very similar policies. Surely we can be mature enough to do the same in Australia.
This adhockery has real economic costs, which concern me as the shadow treasurer and I wish concerned the treasurer more. As the chief executive of Alinta Energy said, the status quo in energy policy is like “playing a game of football with invisible goalposts: we don’t know what it is we are shooting for”. Or as the Business Council of Australia has said, “If we continue to do nothing then we will continue to pay higher prices and have a less secure electricity supply”.
To put it another way, how can AGL for example be expected to make an important investment decision like on the Liddell power station, and what should replace it when it inevitably closes, when the government can’t provide a consistent policy framework in which to make that decision? Central questions like, will it be more economical to invest in new gas generation or intermittent renewables with battery storage, are impossible to even begin to answer unless you know the policy framework that will exist, not just next year but for many years to come.
When asked about certainty in the energy sector, the Reserve Bank governor said recently that “I couldn’t disagree with the proposition that providing some certainty about the future structure of the electricity generation industry would be useful for the country, for investment, on prices and on household budgets”.
“Jobs and growth” has been the treasurer’s mantra for the last year. Yet he’s happy to sit back and watch as billions of investment goes missing in the energy sector, a situation that is driving jobs and growth down, not up. In fact, it has been estimated that policy certainty associated with energy and climate change could detract up to 1% from GDP.
A belief in well-designed regulation of properly functioning markets as the best way to drive positive outcomes for ordinary people used to be something the Liberal party believed in. This is sadly no longer the case. The Coalition is instead pressuring business to make decisions which may or may not be in their financial interests and flirting in financing new coal generation. All the while using taxpayers’ money for handpicked subsidies through its Direct Action policy. But according to the government, it’s the Labor party that “will turn us into Cuba”. Go figure.
The Australian people and businesses expect that the treasurer is spending every waking moment in delivering the best policy settings for the nation instead of engaging in cheap stunts with lumps of coal and attacking energy company executives.
If the Liberal party is incapable of putting in place these vital energy policy settings, then it will fall to the next Labor government. But the economic price to be paid for this short-termism in the meantime is going to be very substantial.
- Chris Bowen is shadow treasurer and Labor member for McMahon
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