15
Sep
2017

Our Power Bills

Is Turnbull Capable of Determining an Energy Policy?

Today’s Australian says that the Renewable Energy Target (RET) of 23.5% by 2020 will not be changed as part of what is described as Turnbull’s overhaul of energy policy (see Renewable Energy Target).  That target was reduced by Abbott when he was PM and the recent National Party Conference voted to “repudiate the central finding of the Finkel review for a clean energy target and eliminate subsidies for renewable to maximise the difference with Labor over surging power bills”, and hence to reject the Finkel proposed clean energy target of 42% of renewable energy by 2030. However, it appears that the halt to increasing the RET mainly reflects the mounting cost of the subsidies, which ran to a remarkable $2 billion just last year and which may already have reached the point where a continuation of the scheme would exceed the RET target without any new investment. There is a reference in today’s report to the likelihood of allowing more subsidies to those whose projects have not been completed. In other words the taxpayer is handing out money to a badly constructed scheme, not to mention the bad decision to have one at all before properly reviewing the basic need for it.

The National Party Conference vote also refers to “surging power bills”. That has led Shorten to claim that during the time the Coalition has been in office (since 2013) the average cost of electricity to households in Sydney has increased by $1000. However, while Energy Consumers Australia (which is part of the Environment Department) is reported as saying Turnbull is correct in claiming Shorten is wrong,  the latest web Update of Energy Consumers does not extend beyond January 2017 and would exclude the very sharp recent increases. My AGL electricity bill for September (which arrived two days ago) is 40 per cent higher than it was a year ago when calculated on a daily basis. That is an increase of $360 per quarter or about $1440 a year if continued. Further, contrary to Turnbull’s recent announcement that electricity retailers have agreed to be more explanatory, AGL offered no justification.

Separately, the ACCC head is reported as classifying AGL as a monopoly but being over-ruled by the Competition Tribunal. There is a strong case for Turnbull to insist on another inquiry (AGL’s share price has risen).  Reports of a survey also indicate that very few believe policies which are current or promised by each major party will lead to lower prices. Indeed, even if AGL’s Liddell generator is bribed to continue beyond 2022 (AGL  has said publicly that it wouldn’t), each party promises to further reduce the use of coal-fired generators and prices must increase further. Turnbull’s attempt to devise an energy policy by appointing Finkel as Chief Scientist and commissioning him to report on that policy even though he has no background in climate policy, is to put it mildly a policy in total disarray.

Andrew Bolt rightly says that Turnbull “can win the next election just by fighting Labor’s global-warming crusaders on electricity prices. In fact, he and Energy Minister Josh Frydenberg have banked on it. But Turnbull is wrong: the way he and Frydenberg are fighting — timidly and erratically — is backfiring” (see Bolt on Turnbull). Turnbull and his advisers have made so many bad decisions on energy policy that he is adding to his polling problem.

Iran and North Korea

The testing by NK of missiles capable of carrying a nuclear weapon (or worse) has been subjected to enormous public attention and questioning in the media, with the latest missile this morning landing in the Japan sea and being accompanied by a statement from an NK authority to the effect that Japan should be sunk too. This will add to the case for a pre-emptive response.

But what has been neglected has been the threat from Iran. The attached article by an Israeli policy analyst at Melbourne-based AIJAC draws attention to several aspects of the mounting threat from there, including the report that Iran may have obtained 19 advanced ballistic missiles from NK, its hosting of the head of Iran’s Parliament (sic), and its policy of establishing greater influence regionally, including in Iraq/Syria (see AIJAC on Iran/NK Threat)  The author concludes that If there is one lesson from North Korea, it is that failure to act now to halt Tehran’s progress will have serious repercussions later.Iran’s hegemonic ambitions and destructive activities already extend well beyond its borders. Adding nuclear weapons to the mix will set up a dangerous future for what is already the world’s most fragile and unstable region”.

Shann On Improved Econ Outlook

Ed Shann, who is one of Australia’s best economic analyst, writes in today’s Herald Sun that “China is booming again”  and that the world economy looks healthier than for some time. This assessment is encouraging and contrasts with other rather  gloomy ones (see Shann on China/World Outlook).

EU & Australia Free Trade Agreement?

I was amused to read yesterday that, in responding to the possible adverse effects from Brexit, the President of the EU said  the EU should strike new trade deals and “we are asking that we open up negotiations with Australia and New Zealand”. This after many years of discriminating against imports from Australia!

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