Two quite separate events yesterday illustrated, in painful detail, exactly how badly policy-making in Australia has run off the rails. For a country with a proud record of making tough but eventually worthwhile economic and fiscal decisions over the last 30 years, our process for making decisions has now gone badly awry.
Over in the west, as part of the landslide victory of Labor, Nationals leader Brendon Grylls lost his seat of Pilbara, despite the Nationals overall suffering only a tiny fraction of the big swing against the Barnett government. Despite leading a more independent National Party than the Liberal Party minions back east, Grylls was every bit the traditional advocate for regional boondoggles and wasted spending that we see in the eastern states. But he also supported an increase in mining royalties, and as a result became the target of a $2 million mining industry campaign across all media platforms. Labor opposed the royalty hike as well, and in the end was the beneficiary of the mining industry’s largesse.
You can bet every politician in Australia, to the extent they weren’t aware of the power of the mining lobby after the fate of the Rudd government, now fully comprehends that mining companies can blast you out of public life entirely if you dare to suggest they pay a fair level of royalties or a fair share of tax. As journalist Michael West has been demonstrating for years, the big mining companies are serial tax avoiders and routinely resort to the figleaf of pretending that royalties and taxes are the same thing in order to hide their failure to contribute. And as Ross Gittins pointed out recently, this mostly foreign-owned industry also regularly wildly overstates its economic importance.
While the mining industry, which is a tiny employer, generates significant export revenue and high commodity prices help the budget bottom line, in policy terms the mining industry is a parasite, a leach on the body politic that uses its money to skew political debate. It pumps out a torrent of “independent modelling” designed to justify its rent-seeking and attack policies that are in the national interest but which don’t benefit the mining industry, it has handed over $3.5 million in donations to the federal Liberal Party alone since 2010, and it stands ready to deploy millions in advertising dollars not merely to influence debate but to shut down politicians who might challenge it altogether. On climate policy, on energy policy, on fiscal policy, on environmental policy, the mining industry has engaged in constant wrecking that has led to terrible policy outcomes for taxpayers and voters.
Meanwhile in Adelaide, Jay Weatherill and Tom Koutsantonis were announcing the South Australian government’s energy package, a curate’s egg of incentives and grants for battery storage, new gas-fired power generation, access to existing gas supplies and greater gas exploration, including giving affected farmers royalties from gas development. Within minutes, federal Energy minister Josh Frydenberg had attacked the package and said he would try to stop it, claiming it would lead to price rises and harm users in other states (apparently oblivious to the fact that energy prices have risen far more quickly since the carbon price was repealed in 2014 than before it). You can bet that if Weatherill and Koutsantonis announced they were embracing “clean coal”, Frydenberg would have been cheering them on — albeit with a rebuke for their previous embrace of renewables.
It’s impossible, it seems, for the Turnbull government to stop playing politics on energy policy. Today’s meeting between Malcolm Turnbull and gas company executives is likely to see more criticism being leveled at Labor states for fracking moratoria.
But South Australia and the Commonwealth are agreed on one thing — governments need to get back into power generation. South Australia proposes to establish a new back-up gas-fired power plant. The Commonwealth is considering subsidising coal power, like it’s 1974 again.
It wasn’t supposed to be like this. We were coming to the end of a nearly-three decade-long process of getting governments out of power generation and distribution and establishing a market mechanism to achieve the most efficient power network. A carbon pricing scheme would have used market incentives to drive the transition to a renewables-based power network without the need for clumsy mechanisms like a renewable energy target. Instead, the Coalition’s bloody mindedness, industry rent-seeking and climate denialism from the minerals sector and other key players and a lost decade on climate policy have trashed investment, and now the backwash from that is threatening to tear apart a market-based power network.
And from the ordinary voter’s point of view, an immensely complex long-term experiment in establishing a national energy market has delivered only rapidly-climbing prices and power blackouts. No wonder they’re disenchanted with economic reform — the reformers can’t even keep the lights on. It’s a policy failure on a vast scale, the likes of the parasitic minerals sector own it as much as anyone else.