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Coming back to haunt you

In his recent Budget reply speech, Opposition Leader Peter Dutton laboured (pun intended) on the increasingly difficult to achieve promise by Prime Minister Albanese that power bills will be $275 less in 2025. While the government is claiming the modelling done in 2021 supports the accuracy of the promise, 2021 modelling doesn’t account for changes in circumstances since then.

Technically, the Coalition has a point. It is hard to see how a substantial reduction in power bills in comparison to 2021 prices can be achieved anytime soon. It also shows the inherent risk in predicting certain outcomes into the future. While a ‘guaranteed’ reduction in costs sometime in the future when we are in an environment of rising prices, rising interest rates and wages falling in real terms sounds appealing, it’s policy shorthand like this that has a habit of coming back to haunt you.

There seems to be two problems here. The first is the marketing around election coverages. In the case of the power bill promise, either the promise was completely made up which is unlikely given the apparent care Albanese has taken with the implementation of his other policies, or secondly the power bill reduction was deemed to be too complicated to sell any other way in 30 seconds on the nightly news.

Renewable generation capacity has a far lesser variable cost than traditional coal/gas power generation. The inputs that create the power in renewable systems are sun, water and wind. All of them are free unlike the coal or gas used to generate energy in ‘traditional’ energy generation. While both systems have costs for capital, labour, materials, distribution and administration, a large component of the rapid increase in energy costs is due to the current demand for fuel. Assuming the government’s 2021 modelling relied on implementing increased renewable generation and their discussion about rewiring the nation, it is reasonable to expect the cost of inputs would fall before 2025, resulting in cheaper power.

Australians accept uncertainty in other areas of their life. For a start, anyone that backs a horse or enters the Lotto would like to claim a financial victory – alas most don’t. Your car probably doesn’t get the exact fuel consumption gained when tested to the applicable standard, at best it is a guide that your vehicle is better or worse than a similar sized and specified vehicle driven the same way. Arguably anyone that uses public transport would be used to the service turning up some time after the time published in the timetable. Most take out a loan to buy a house, promising the lender that you will be able to make payments up to 30 years into the future come what may. Unfortunately in some cases, that just doesn’t happen for a variety of reasons.

So why can’t we accept uncertainty in political promises? For example, would the person that has no solar panels or battery save $275, or would it be a person with a large solar system and batteries that may be almost completely off the grid be the beneficiary of the claimed amount? Former Prime Minister Julia Gillard fell foul of the same problem when claiming the Carbon Emission Reduction Scheme implemented by her government was not a ‘carbon tax’. Technically it wasn’t, however the political shorthand over the branding eventually caught up with her.

It’s a similar predicament to that faced by Scott Morrison and Josh Frydenberg when they promised that next year’s budget would be ‘back in the black’ – it wasn’t. Morrison and his Cabinet prior to the 2022 election were fond of suggesting that EV’s would destroy the weekend because the electric ute hadn’t been invented – well it has and one is available for sale in Australia this month. The ALP is just as ‘clever’ as the Coalition in pointing out when promises haven’t been achieved when it suited their marketing program.

As Opposition Leader, Peter Dutton doesn’t have to deliver anything until the next election. He has plenty of time to seek information, take advice, form a considered opinion and explain how his proposals would benefit Australia and Australians into the future far beyond the potential timeframe of either an Albanese or Dutton government. Pity he seems to be not letting the facts get in the way of a good story.

As The Guardian reported recently

Giving his budget reply speech, the opposition leader said the Coalition wanted more renewable energy, but it just wasn’t possible yet, and it was a mistake for the government to allow ageing and expensive fossil fuel power to be phased out now.

More specifically: “The technology doesn’t yet exist at the scale that is needed to store renewable energy for electricity to be reliable at night, or during peak periods. That is just the scientific reality.”

So on Dutton’s reading, the International Energy Agency is not an expert in the energy field

The IEA said in the most affected regions “higher shares of renewables were correlated with lower electricity prices, and more efficient homes and electrified heat have provided an important buffer for some – but far from enough – consumers”.

Russia is the world’s biggest fossil fuel exporter. As countries looked to source oil, gas and coal from elsewhere, this caused a huge spike in costs that continues to reverberate around the globe.

But costs had been rising even before Putin’s invasion.

“Climate policies were blamed in some quarters for contributing to the initial run-up in prices, but it is difficult to argue that they played a significant role,” the IEA report said.

“In fact, more rapid deployment of clean energy sources and technologies would have helped to protect consumers and mitigate some of the upward pressure on fuel prices.”

The report listed a host of factors contributing to rising prices, including the speed of the economic rebound from the pandemic, droughts in Brazil cutting hydropower, heatwaves in France cutting nuclear output, flooding affecting Australian coal production, and failures by governments to introduce policies to increase clean energy investments.

Dutton isn’t even correct when it comes to Australia’s electricity system. On the basis that everyone has to have a hobby, David Osmond, a Canberra based engineer with a global energy developer, has been recalculating Australia’s weekly energy usage based on a hypothetical grid that relied primarily on renewable energy with a five hour, predominately using large batteries, storage capacity. His Twitter reports seem to contradict Dutton’s claim that renewables cannot power Australia. Rather than taking their word for it, maybe the news media should be looking at claims of politicians and challenging the marketing and spin. It’s not that hard to find the evidence.

 

 

Absolute certainties have a habit of not being so absolute or certain given time, events or changing parameters. It would do politicians well to remember this. Rather than falling into the trap of promising absolutes when asked, maybe it’s time for a discussion on why the plan or program will benefit the community instead.

What do you think?

This article was originally published on The Political Sword

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5 comments

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  1. New England Cocky

    Agreed. ”There seems to be two problems here”.

    The first problem is that selling public enterprises that provide essential services was known to increase future cost of those services as private owners profit gouge as monopoly providers of the service. Then of course those profits are exported overseas immediately to the Cayman Islands or other jurisdictions out of the control of Australian authorities.

    The second problem is that replacing the lost essential services may be more expensive than retaining the original services. The exception is provision of electricity from alternate sources like solar, wind & tidal. Then the necessity of re-building the corporate knowledge to manage the ”new” government asset.

    However, as seen with the original Snowy Scheme trust, even that almost insurmountable legal protection was overcome by the RAbbott-Turdball-Scummo COALition with the complicity of state governments determined to benefit their party donors at great cost to the Australian voters.

    There are no bounds to the lack of imagination, foresight and commonsense economic thinking among Australian politicians.

    Once again Peter ”Boofhead” Duddo has demonstrated that the only thing he has to offer Australian voters is his resignation. He may be a loyal minion of the Murdoch main stream media-ocrity but as the article shows he is so fafr up his own backside that he is looking out his nostrils.

  2. Phil Pryor

    Apart from the problem (it is) of conservatism, that relentless search for justification of greed, ignorance, selfishness, egotripping, carelessness, short cuts, oppression and snobbery, we have facts, undeniable ones, of conservative fixation on control, domineering, coercion, overseeing, treachery. Everything privatised in Australia in my lifetime has finished up worse for wear, for us, for prosperity, for fairness. As for Dutton, there’s more brains in a can of Pal.

  3. Terence Mills

    News Corp and SKY are going overboard in their campaign to unseat Daniel Andrews – they are clearly not promoting the coalition but aiming directly at Andrews.

    They have again called for an investigation into the car accident involving Catherine Andrews some nine years ago and off course “the stairs that brought a Premier down” is still an issue for the Murdochs.

    Meanwhile SKY’s Peta Credlin tonight launches her exclusive “The Cult of Daniel Andrews” and in the process demonstrates why she could never be considered an impartial or serious ‘journalist’.

    What’s the situation on the ground in Victoria ?

  4. Fred

    The travesty of selling off the utilities such as the “poles and wires” by the various governments has always led to the increased cost of power. Bad decisions are made based on the fallacy that business is more efficient than government. Privatising a monopoly community asset such as a power station/generator means the price will rise by at least the profit margin everything else being equal. Planning the roll out of a national asset, whether an electricity grid, railway network, telecommunications infrastructure etc. can be done either by government or commercially but both have corrupting forces that need to be carefully managed, i.e. politicians that insist in being involved in planning the route, greedy corporations, incompetent management, excessive bureaucracy etc.

  5. Zathras

    Regardless of the spin and sales pitch beforehand, privatisation has always – and only – been about transferring public wealth into private hands and always results in higher costs to the public.

    As for the political strategy of attacking Andrews personally I’ve noticed for a long time that parts of the media spend all its time attacking the left but never seem to get around to supporting or defending the policies of the right but this latest incarnation is looking more like a pathological hatred and is sometimes borderline psychotic in nature.

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