The Prime Minister’s “Snowy Hydro 2.0” project began life as an attempt to influence Newspoll — specifically, in response to what Malcolm Turnbull saw as a blatant effort by Tony Abbott to influence Newspoll against him in February. The idea was, we learnt via Senate estimates, cobbled together in two weeks in March, so that Turnbull could announce the project on March 16.
Despite talk about it costing $2 billion and adding 2000 megawatts of energy in a “game changer” for the east coast electricity grid, the March announcement was only for a $29 million feasibility study, to be finished by the end of the year. Since then, there’s been constant confusion about the numbers. There was no specific funding allocated for the project in the May budget — as the Herald Sun noted at the time. Treasurer Scott Morrison did offer to purchase the stakes of the NSW and Victorian governments in the Snowy Hydro company, for an unspecified cost (which wouldn’t affect the budget deficit, as being an asset it would be on the capital account). But there was no money for the $2 billion it had been estimated the project would cost. This wasn’t surprising, as what looked like a large-scale commitment to infrastructure spending in the budget turned out to actually be some dodgy accounting around the funding of the inland rail boondoggle, a cut in ongoing infrastructure spending and some nebulous commitments to funding in the years beyond the forward estimates.
Problematically, the cost of the Snowy Hydro proposal then blew out 50% at least, with Snowy Hydro admitting at estimates that it hadn’t factored in an additional $1 billion for the transmission lines required to connect the expanded capacity up to the grid.
Today the Prime Minister was back to, in effect, re-announce Snowy Hydro 2.0, because he needs to be seen to getting things done rather than being bogged down in marriage equality, Tony Abbott’s war against him, citizenship, and whatever is the crisis du jour of this beleaguered government. Inauspiciously, however, a planned drop by Turnbull’s office to News Corp tabloids on today’s announcement was spoilt when Fairfax’s James Massola got wind of it first and spoilt it yesterday. I’ve been saying for a while that Turnbull’s office can’t manage the basics and it will keep hurting them until they learn.
What is the PM announcing as he potters about in the tunnels under the Snowy Mountains? Is he committing to the $2 billion/$3 billion cost of the scheme? Or the $5 billion-plus to buy out NSW and Victoria? Apparently not — if you persevere to the bottom of the cut-and-paste job in News Corp papers, and get past all the numbers being bandied around about 5000 extra jobs and 350,000 MW/h (and a bizarre reference to “the Tumut mountains”, wherever they are), it turns out it’s $8 million in planning funding. Which, by the way, isn’t new money, it’s just been brought forward.
Anyway — I carp. None of this is out of the ordinary for politicians, who love to recycle infrastructure announcements and throw all kinds of confusing figures around to disguise that there’s no new money being spent — and isn’t it nice that in pumped hydro, we have a new metaphor for the endless reuse of infrastructure spending announcements.
More serious, though, is that if the Turnbull government signs up for the <insert arbitrary figure here> billion dollar project, it will be doing so without any assessment of whether the project makes any sense. It’s only a few weeks since the Productivity Commission, those old economic stick-in-the-muds who love to point out nonsense from governments, noted about both the South Australian government’s energy announcement and Snowy Hydro 2.0:
“Whether these projects will proceed is uncertain, but there is a risk that they will lead to the wrong infrastructure in the wrong place and the electricity consumer will end up paying higher prices as a result. The more that market forces dictate what and where, the less likely that the investments will end up as white elephants… it is important that any proposals be carefully evaluated and that consideration be given to alternatives that might address emerging problems in the electricity market in a more efficient and less costly manner. A risk, otherwise, is that future generations of taxpayers will be called on to foot the bill for precipitate responses to perceived crises now.”
It’d be a hell of thing if that happened to Snowy Hydro 2.0. That would make that March Newspoll the most expensive poll in Australian history.