Turnbull turns Chifley on energy
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.
This article was first published in the print edition of The Saturday Paper on Sep 16, 2017 as "Too many Chifleys, not enough on emissions". Subscribe here.