Leading article Australia

Just another hoax

21 October 2017

9:00 AM

21 October 2017

9:00 AM

Two out of three ain’t bad. Or so we are supposed to believe. So let’s start by accepting that the ‘scrapping’ of renewables subsidies and the ditching of the Clean Energy Target are good things. Or at least, two positive steps in the right direction, philosophically speaking. Which they are.

But only if they are for real.

For an avowed climate change believer like Malcolm Turnbull – and the Greens-flavoured advisers he surrounds himself with – to even pretend to be stopping wind and solar subsidies from 2020 onwards is surely to be applauded? After all, the fixation on renewables subsidies has discouraged long-term investment in traditional forms of energy production, namely coal. And a key claim of the climate lobby for several years now has been that ‘renewables are becoming cheaper and cheaper’, with some going so far as to ludicrously claim that ‘renewables are the cheapest form of electricity’. Good. Now we might actually get to see just how ‘cheap’ renewables really are.

Or will we?

Because a look at the finer detail of Messrs Turnbull’s and Frydenberg’s proposed ‘game-changing’ scheme is troubling to say the least.

It appears that the whole thing may be one giant con job. Last year, just over 21 million certificates (each certificate equals 1 megawatt of renewable power) had to be purchased, by law, by Australian electricity retailers. The cost made its way onto your electricity bill. This year that figure rises to over 26 million, and carries on rising every year until 2020, when it reaches a peak of 33 million certificates. But rather than being scrapped at that point, as the punters have been led to believe, the amount simply freezes and carries on at 33 million certificates for each and every year for the rest of the decade. Do the maths. The cost of this ‘tax’ to Australian consumers (assuming certificates still cost between $50 and $80), is a staggering 20 to 30 billion dollars between now and 2030.

Adam Smith famously spoke of private companies who ‘levy for their own benefit an absurd tax upon the rest of their fellow-citizens’. Under Mr Turnbull’s and Mr Frydenberg’s latest scheme, money is still siphoned out of the Australian economy and handed straight over to the (mainly Chinese-owned) rent-seeking renewables industry. That it is these companies, rather than government, that raises this ‘absurd levy’ is a sneaky sleight of hand. Companies that fail to purchase sufficient certificates must pay penalties or face deregistration. Hardly a ‘free’ market. The theory is that the ‘certainty’ provided by this strategy will push the cost of certificates down over time, thus ‘saving’ the consumer a hundred bucks or so by the end of the decade.
Typically for climate change policy, this calculus is just another clever hoax. The projected ‘reduction’ in future costs is a regular feature of climate change ‘fixes’. Consumers would be prudent not to spend their $115 dollars in advance. Australians are more likely to witness a Tasmanian Tiger having intimate congress with a Yowie atop Lasseter’s Reef than ever lay their eyes on that particular wad of cash.

Only if the government were to reduce the penalty to zero could they thereby claim to be genuinely scrapping renewables subsidies, thanks to the absence of penalties.

Also being supposedly ‘dispensed with’ is the Clean Energy Target. This was Chief Scientist Alan Finkel’s ‘big idea’ (not sure how much the impoverished taxpayer forked out for Mr Finkel’s much-hyped report, but it doesn’t appear to have been particularly good value for money) and was, in true Turnbull fashion, left lying on the table long enough to get everyone riled up before it was deservedly whisked off again.

The Clean Energy Target managed, however, to do one thing spectacularly well. It put the Turnbull Coalition Team, already labouring under the accusation of being Labor-lite, into the politically terminal position of having a climate change target virtually indistinguishable (42 per cent versus 50 per cent) from Bill Shorten’s. That was enough to set the hares running, and more importantly, to galvanise Tony Abbott.

Which brings us to the real nub of the problem. Put simply, so long as the Paris Agreement remains government policy, Australians will end up paying much more for electricity than we should be paying. After all, this is the whole point of the Agreement – to savagely punish first world energy consumers by crippling them financially.

Scrapping the CET and supposedly ‘ending’ subsidies may appear to be important milestones. But the reality remains: Australian voters should be given the choice between the Paris Agreement and its demand that we reduce our emissions (and we haven’t even contemplated reducing other emissions targeted by the Agreement, such as cars) or scrapping it altogether and putting our own economic interests to the fore. Thus far, only Tony Abbott has called for the latter.

Despite two phony steps forward, Mr Turnbull remains hog-tied to the climate change hoax. Until this changes, electoral annihilation is a given.

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