by ERIC ABETZ – ENERGY policy is looming as a fracture point in Australia’s political discourse.
At the next election, Australians will have a clear choice between the philosophies of “magic pudding economics” and “the magic of the market”. The path Australians take will determine their long-term well-being.
Energy supply and cost are key indicators of the sophistication, well-being and wealth of a society. That is why energy policy is so important. It makes or breaks an economy and the overall well-being of the people.
Today, Australia is locked into an internal debate over the future direction of energy policy. Is the answer government intervention or the “magic of the marketplace?”
Venezuela is a stark reminder of which approach destroys a nation and its economy, driving people into poverty on the back of unparalleled government intervention.
Opposition Leader Peter Dutton’s powerful speech to the Australian Petroleum Production and Exploration Association’s (APPEA) annual conference in Adelaide left no one in doubt that he champions the free market over government regulation and taxation, setting him and the Coalition in stark relief to Labor’s interventionism.
Up until the 1990s, Australia, blessed as it is with an abundance of energy resources, had some of the cheapest and most affordable energy in the world, allowing Australia to be considered a first-world economy.
The disadvantages of distance from markets, relatively high wages and regulatory burdens were largely overcome by the very competitively priced energy available to its wealth and job creators.
This picture has slowly but surely altered, indeed deteriorated, with the pursuit of so-called renewable energy targets and a commitment to zero emissions.
Australia now suffers from some of the highest-priced energy in the world despite its abundant energy resources.
While Australia is busily closing down its coal-fired power stations, the rest of the world is busily buying up our coal in record quantities and at record prices.
Each time another Australian coal-fired power station is closed or mooted to be closed, the predictable happens – our prices for energy go up.
Higher energy prices are now impacting Australia’s inflation surge leading to those on lower incomes being unable to heat or cool their homes and small businesses struggling to remain viable. The cost of living is a real issue, and quarterly power bills are a substantial cause.
Into this deficit of a coherent and sensible energy policy, Dutton, in his Budget Reply speech, showed courage, foresight and leadership by placing the nuclear energy option on the table as a potential and viable answer to the desire to reduce emissions while enjoying the stability of an energy supply that renewables are never able to provide (other than hydro).
He has now doubled down on making energy policy a key point of difference with his APPEA call to arms speech.
As the government zealously pursues its zero emissions target, it fails to recognise the damage that is being occasioned by the closures of coal-generated energy outpacing the supply and introduction of renewables.
Gas is seen as a transitional energy source to make up the ever increasing and looming shortfall in supply in this energy policy failure scenario. And the government believes it needs to intervene to save us from even more blackouts by directing the gas sector.
The government intervention in the energy market has led Australia into this impasse. The government’s answer to their self-inflicted dilemma is to now prescribe even more intervention with the capping of prices on gas and coal amongst other proposals.
Showing he is not afraid to take on the government’s energy policies, Peter Dutton has delivered a full-frontal challenge, not only to the government but the resources sector as well.
Dutton called out what he sees as the paucity of the knee-jerk government response, which he describes as a carbon tax larger than that proposed by former Prime Minister Julia Gillard all those years ago and a very real threat to sovereign risk which the resources sector, and more importantly Australia, can ill afford.
He also called on the sector to stand up and protect itself from the unparalleled interventions from the government. Such a call in an era where executives are too eager to present themselves as woke rather than looking after their shareholders’ interests was brave and timely.
In fact, it is a sad reflection that a political leader has to encourage a sector to fight for itself.
In more sensible and conventional times, it would be the relevant sector calling on parliamentarians to stand up for their sector.
Australia’s relatively balanced budget, despite the eye-watering expenditure levels, has been gained on the back of the royalties from our resources sector. It keeps Australia afloat. It deserves protection and support.
Doing reputational damage to it and demonising it is hardly smart, given it is Australia’s economic life support.
Frightening the resources sector and stifling investment through price caps and taxation will lead to less exploration and ultimately fewer export earnings which in turn leads to less government revenue.
Exposing Energy Minister Chris Bowen and his government’s approach to its long-term consequences is true leadership. This forward-thinking and projection is what Australia desperately needs in this debate which is mired in an atmosphere of short-term thinking and environmental zealotry.
For an opposition leader to engage in such truth-telling provides an insight into Dutton’s determination to be a leader with a long-term vision and do that which is best in Australia’s long-term interests.
Energy policy is looming as a real divide, and Australians will have a choice between “magic pudding economics” and “the magic of the market”.PC