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Aug 15, 2014

Kite flying with Dick Warburton: junk economics to push a barrow

The government has commissioned Dick Warburton to conduct an independent review of the Renewable Energy Target. But "independent" might be something of a stretch ...

Dick Warburton has been flying quite a few kites recently as he and the rest of the panel put in place by the Prime Minister to review the Renewable Energy Target (RET) grapple with some uncomfortable realities.

The type of kite flying Warburton is engaged in doesn’t rely on taking a trip to the park. Rather it is the activity by which ideas are put in the public domain to assess their acceptability or legitimacy. In the latest kite-flying exercise, Warburton tested the idea that somehow an oversupply of energy and increased competition in electricity generation could be turned into a negative, when the vast majority of economic analysis demonstrates a net benefit to consumers.

This uncomfortable reality has been confirmed time and again via numerous economic studies, including the government’s own modelling conducted as part of the RET review. All of these confirm that the RET is increasing competition in the energy generation sector, suppressing wholesale electricity prices and driving lower retail electricity bills as a result. Add the jobs and regional investment to the tally and the RET is a winner for everyone –except the incumbent coal generators.

It’s not the first time that Warburton has spoken publicly about the review, which is yet to be completed. He recently criticised Clive Palmer for standing in the way of legislative changes that may result when the review is finally completed.

It is concerning to see the chairman of an “independent review” test so many ideas and positions, including pre-empting legislative amendments before the government of the day even receives, let alone considers, the report.

This seems to be a dangerous position for the review panel to be taking and possibly quite unhelpful for the government if it wants to avoid the ever-growing perception that the independent review is anything other than a stitch-up from the start.

Or perhaps the government doesn’t think the review is independent either, as it continues to fly a number of its own kites. Recent comments by several government representatives, including some very senior ministers, indicate a level of hostility towards renewable technologies that borders on religious zeal. The Prime Minister himself also pre-empted changes to the RET when the review had barely begun.

Public comments from the review panel chair and senior government members give the strong impression they already know the answer, and the role of the so-called independent review is to backfill the justification.

There can be no more damning evidence of this as Warburton begins to ignore economic modelling he has commissioned in favour of a recently released piece of economic modelling commissioned by the Australian Chamber of Commerce and Industry, Minerals Council, and the Business Council.

This piece of “garbage in, garbage out” modelling relies on assumptions provided to Deloitte by these business lobby groups that bear little resemblance to reality and that were clearly developed to support a desired, negative outcome.

For example, the modelling uses solar PV and wind prices that are out of date, thereby grossly over-estimating the cost of new investment in clean technology. They also classify gas as a “less costly” non-renewable technology when every other energy modeller in the country has determined that gas is pricing itself out of the market.

Quite frankly, if the panel relies on the piece of economic junk commissioned by ACCI and their business colleagues while ignoring all other inputs, including the work they commissioned, it will confirm that the review is nothing short of expensive window dressing.

If that’s the case, there will be no breeze stiff enough to make Warburton’s report fly.

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4 thoughts on “Kite flying with Dick Warburton: junk economics to push a barrow

  1. Jaybuoy

    It’s insulting…but no worse than Abbott as minister for women..

  2. leon knight

    Jaybouy – Just about everything about this government and their ugly backers is an insult to virtually the entire electorate.
    The few suporters the LNP have left in mainstream Australia must be desperately hoping that some adult behaviour will shortly manifest iteself, but I fear they wait in vain.

  3. Luke Hellboy

    It usually takes about 2 or 3 terms in office for governments to reach this level of arrogance and hubris. This is the only area in which the COALition is ahead of its time.

  4. graybul

    ONE MILLION TWO HUNDRED THOUSAND HOUSEHOLDS are watching VERY CLOSELY! Taking into consideration University Students, Unemployed Youth, Pensioners, Low Income Car Drivers et al Oh Oh forgot . . NSW Liberal Voters who have lost Representatives . . together, represent a very pissed off Electorate come next Federal Election!!