The science is clear. Human induced climate change is a major threat to the citizen of Australia. Unless I am mistaken the most basic and fundamental obligation of any government of any persuasion is to ensure the safety of its citizens. Isn’t it?
The need to rapidly build new renewable energy assets is clear. We know we need to build new capacity ahead of coal closures, and doing this will create excess supply of power in the short term, driving down power process and building redundancy into the system allowing large coal assets to be progressively withdrawn without causing a power shortage or elevated prices.
The need to build transmission assets and storage assets is clear. Without both we can’t bring clean power to the market we can’t balance the network.
The massive opportunity is also clear. Australia could become a major minerals processor, chemical producer and even renewable energy exporter … powered by low cost renewables.
So what is the deal? Why is this so hard?
Why can’t our politicians agree a sensible climate change and renewable policy?
Basically, it is very simple.
Many politicians – even those with good intentions – are trapped in system that cannot produce good government. Most are trapped in political parties with toxic cultures involving a highly unhealthy system of patronage and bullying where their basic role to act in the interest of the people as our representatives and has been lost.
Australian politicians are some of the most highly rewarded in the world. Surprisingly to many they have a “variable remuneration” system almost guaranteed to weaponize a poor culture of internal bullying and facilitate illogical, bad behaviour and basic wholesale mismanagement of our country. A system offering vastly more spoils than in similar countries.
One need look no further than the banking royal commission to recognise what is going wrong with our Government system that is leading to energy policy and climate change remaining a vexing policy issue.
Two key issues were found to be the major cause of mismanagement in the banking sector.
Those issues were:
- High variable remuneration.
- A poor culture of non-compliance across the organisation starting at the top
Both are evident in the political system today with non-compliance representing lack of integrity in the political sector
Our politicians are rewarded by political parties with various roles and positions. Ministers appointed by the party, for example, receiving variable remuneration (a bonus called a- “salary supplement”) worth about 100% of their salary for just holding the position of a senior Minister. There are similar corrosive “salary- supplements” for many positions our politicians hold.
They get this extra compensation for serving the party well.
You serve the party well by raising significant $$$ for the party from donors.
This all spills down to the fact that for politicians in major parties see their key role is to raise money for the Party and therefore benefit themselves financially.
It almost goes without saying that behind every weak or climate change denying minister is a successful donation book.
The danger of this extra compensation is amplified, as only the government of the day gets this high “salary supplement”. Good government needs effective government and opposition, but we have a system the penalizes good opposition and just rewards those in government even if hopeless.
That is why our political system is structurally dysfunctional and you see continued internal fighting and bullying; no hope of bi partisan agreements; an unwillingness to uphold the Westminster standards of ministerial responsibility and honesty; and where integrity goes out of the window as political parties claim the legal right to mislead and deceive the voters.
Winning is all that matters and it is into this mess that we throw climate and energy policy and this is what you get.
1. No Carbon Budgets –
The biggest donors to both parties are those most effected by effective policies to reduce emissions being the Big Emitters and fossil fuel groups. They carry a simple message to both parties: If you want our money you must not support policies that create an economic price of carbon or limit emissions. As the receipt of these donations effects the earning of members of Parliament the more you resist climate action the more donations you are likely to get and as a result the more money you get in your pocket and better positions you will get in Parliament. That explains why any attempt to introduce a cost on carbon has been terminal on both sides of politics.
2. Policies that are political strategies –
The current game with the Collinsville coal fired power station is just is show for the Queensland state. There is no logical or rational reason one will ever get build a new coal generator unless indemnified for a future price on carbon, but it makes a point of difference for the QLD election. Also understand that the Nats need to be more extreme that the Liberals as they are competing for the similar donation pot. There is a bit of a split agreed. Libs focus on big emitters for $$ and Nats on fossil fuel miners.
3. Independent Climate Bill
One is trying now to weave a way through a needle. Zali Steggall and the independents and their bill is well pitched into this mess. It doesn’t have a price on carbon (or it would be dead on arrival), but it does have a target in 2050 that allows the government of the day to try to sort out how it deals with emissions. It could be a policy they need to justify doing nothing in the sort term. That said I support it as it is something.
4. Massive state intervention without real analysis.
Take Snowy 2.0. That was a solution that could be understood from the old liberal supporters and looks like the government is doing something. Most importantly it doesn’t break the rule as it has no carbon cost etc. It is politically strategic. The option of staging the construction of a few more cables between Tassie and Victoria would be cheaper and more effective but that would help the Victorian government avoid a power crisis however the Liberals have learnt that a good energy crisis is an election winner and as explained winning is all that matters so to hell with the citizens
5. Technology Lead Solutions/Target.
The government is now talking about a technology lead solution… that works perfectly in this framework as it is not a charge on big emitters, a price on carbon or seen to be against fossil fuel. It is about taking money from the taxpayer and throwing that at the problem… rather than making those who are causing the problem pay.
Now this is infused into the system to such an extent that we have a regulatory system that also fails to accept the science and regulators continue to develop a power network and regulatory policies that are only appropriate should the science of climate change be wrong.
Even the much-praised Integrated System Plan fails to plan for the energy changes consistent with climate science as AEMO can’t be seem to get too far ahead of the Government.
AEMC and AEMO – the rule maker and the market operator – effectively wash their hands of the problem, saying that they can only design a system that the consistent with government policy, and if those policies are inappropriate and expose consumers and businesses to higher costs and risks then that is a matter for Governments.
In this way, we are imbedding and building the political failure to deal with climate change into our actual markets and physical assets and it is leading to significant costs to business and consumers.
Already we are seeing clean energy projects constrained and penalised for actually investing in the new assets the system desperately needs.The network issues these new projects face was foreseeable and known by the regulators who had all the information about new pending developments. But they let them all proceed, almost with total disregard to the loss and damage it would do to investors.
In summary, there is nothing vexing about climate change policy.
When you understand the underlying cause, nothing will end the policy crisis in Australia unless you change the culture of political parties which is fuelled by a very poor remuneration structure and incentive arrangements fuel by a dangerous donation system.
Oliver Yates is a former CEO of the Clean Energy Finance Corp, and an independent candidate in last year’s federal election.