Short circuit: how brutal retail politics derailed energy policy (& how to get it back on track)

State and Federal Energy Ministers get together a few times a year at the Council of Australian Governments (COAG) Energy Council to decide (or not, as the case may be) on a collaborative approach to national energy policy.

As a consumer representative in the energy policy process, Dean Lombard attends the Stakeholder Roundtables held before each meeting so lobbyists and advocates can ask questions of or make suggestions to the Ministers and bureaucrats.

In the post below, he looks at what has short-circuited good energy policy process in Australia and what needs to be done – by social policy researchers and analysts and citizens and voters – to find a way forward.

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Dean Lombard writes

There was a cute moment at the latest COAG Energy Council Stakeholder Roundtable when the lights dimmed momentarily and Federal Energy Minister Josh Frydenberg, referring to the recent South Australian blackouts, joked that the AGL rep was heading out to fix the problem and that he and Tom (Koutsantonis – South Australia’s Energy Minister) were blaming each other.

It was a really humanising moment – politicians work hard to do a difficult job and they have a camaraderie with each other that transcends party lines. Being close to them, I see what they actually do and I'm impressed with their commitment and dedication even when I disagree with their policies and politics.  And I get defensive of them when friends rant about lazy, useless, overpaid politicians.

But then I also think about how this is no laughing matter – the pointless political games we have seen in recent years over energy and climate policy have driven massive price increases that have hit low-income households really hard, causing financial hardship which, for some, has led to serious health impacts (from being unable to afford to heat or cool their homes), homelessness, and bankruptcy (emergency relief and consumer law organisations have seen these outcomes from unserviceable energy debts).

And that’s not all, of course. The policy vacuum has also compromised the capability of our national energy system, and dealt such a blow to our progress on contributing to the global effort to avert dangerous climate change that it’s going to be painful and expensive to catch up.

So yeah, I chuckled and enjoyed the moment, sharing knowing glances with people at my table. We're all like enemy soldiers playing football in no-man’s land: the MPs from the different parties, the big business and small business and consumer reps. We all share a thing that no-one else does, and we would put ourselves out for each other as much as we would argue stridently against each other if the situation called for it.

But why is there this stupid war at all?

Power struggles and surges

Part of the problem may be the rarefied parallel universe that serving politicians live in. It’s a 24/7 job and it must be difficult for many who have worked in politics for years to understand the lives and experiences of ordinary people. Arguments become a bit abstract, like points on a board instead of real consequences.   

This is the dynamic that means while everyone can see that draughty, uninsulated rental homes are costing tenants a fortune in either money (to keep warm or cool) or poor health (when they can’t keep warm or cool), it simply cannot be reconciled against the terrible imposition of telling ‘mums and dads’ what to do (in terms of energy efficiency and general rental standards) with their property investments.

Add to this the combative nature of politics. A lot of good policy ideas can end up being set aside in favour of whatever it takes to get a voice in the party room and enough butts on the seats in the houses of Parliament.

Advocates and lobbyists know full well that the only worthwhile time to push for the sort of policy initiatives that Sir Humphrey Appleby of the political satire Yes Minister would call ‘courageous’ is in the first few years of the political term: because for the last 18 months everyone is in election mode and only things that will make good ‘announce-ables’ – uncontroversial, and expected to be broadly supported by the most desirable voters – will be considered.

Everything else will go on hold for the honeymoon period after the election. We’ve seen this play out in energy efficiency policy: programs developed by government but held off until the run-up to an election, because they were good ‘announce-ables’, only to be lost when the government changed. On regaining government, good programs are redeveloped and the more do-able ones put in place by mid-term, but the difficult ones seem to live forever in limbo like the never-released album of a classic band.

And these days, it’s not just the electoral cycle that sets the policy environment. Power struggles within both major parties have seen the federal parliament in quasi election mode almost constantly since 2010. This has meant that good policy has frequently been left on the backburner, while policy-shaped carrots and sticks have been brandished willy-nilly to build allegiances, satiate vested interests, and attract valuable voters.  

This type of politicking is a major reason for the lack of a policy framework to guide the transition of the national energy system – from a monolithic grid designed to send electricity from big fossil fuel-based power stations to users to a bidirectional network that can move it between multiple nodes that both consume and generate electricity. This critical work has been left undone as a succession of would-be prime ministers and their supporters have wielded energy and climate policy for their own ends.

Peta Credlin, Tony Abbott’s former chief-of-staff, shone a light on this in February when she told Sky News of Abbott’s “brutal retail politics” in reframing the price on carbon as a ‘big new tax’ to shift the debate from climate policy (‘courageous’) to living costs (‘announce-able’). It represented classic wedge politics – using policy as a weapon to attack the opponent and win power.

Retrofitting energy policy

Energy policy has been a national tragedy. We’ve had heaps of time to plan for an orderly transition to a lower-emissions energy system that meets Australia’s energy needs while also supporting emissions targets. As an energy policy advocate representing the interests of residential consumers, I was at forums 12 years ago where senior executives from big mining, manufacturing and energy businesses were all saying that they accepted carbon pricing was inevitable and they simply needed to know what the policy settings would be so they could plan their investments and make the transition.

The 2007 election was mainly fought over industrial relations: carbon pricing was a given and contenders John Howard and Kevin Rudd simply had different ways of doing it. But all hell broke loose under Abbott and Credlin.

Mining, manufacturing and energy people saw their opportunity for short-term gain and cheered on the Coalition's new climate change denialism in order to wring a few more years out of their already-depreciated assets. This created a difficult environment for new investment in electricity generation – because already-depreciated power stations are really cheap to run – so once those old power stations finally started closing (due to the high cost of maintenance and necessary upgrades), supply shortages started to manifest, causing increased price volatility and lower reliability. Those same businesses are now begging for the policy certainty they helped undermine.

South Australia's energy problems, including mass blackouts, have been blamed on the high proportion of wind generation, but that’s a vast oversimplification. The real issue is that changes in the generation mix (which are driven by the market, as new wind and solar are cheaper than new coal and gas) simply need to be planned for, because a diverse energy system has a larger range of operating parameters.

This is not complicated, and it’s been done before all over the world – but the absence of forward-looking policy has meant that planning hasn’t happened.

It’s like building a house without a plan – we know the floor goes on the bottom and the roof on top with the walls in between, but we don’t really know how much wood and Colourbond we need, or where to put the wires and pipes and doors and windows. So the builders end up cutting holes in walls and frames they’ve already built to retrofit everything – just like the energy market institutions are now frantically making new rules and market procedures to bring reliability and security back to the energy grid.

What’s the solution?

With the Finkel Report making a clear case for a policy-driven transition plan and everybody except the Minerals Council and Tony Abbott’s supporters agreeing that the coal era is over, the energy market is getting there; though we are still in for a rough ride as the rusty machinery creaks into gear.

But energy policy is just a symptom of the bigger problem. What’s the alternative to the dysfunctional political playground?

I envisage a world where politics is a contest of ideas, not power and positioning. I know it’s stupidly utopian, but imagine if the Government and the Opposition argued about the merits of different approaches to managing the transition we need to go through, instead of declaring loyalty to a lump of coal or an industry or vested interests or an issue that a desirable demographic supports or opposes without understanding.

Imagine if they were prepared to lose power for sticking with their vision instead of changing their vision to stay in power. Imagine if they educated the general population about climate change and how the energy system needs to change – like the Whitlam and Fraser governments educated us about multiculturalism – instead of exploiting our ignorance to shore up electoral support.

It feels naïve. It sounds ludicrous. But step away and look at it from more of a distance and you can see how problematic our political system has become and how much is needed to fix it.

So what can we do? It seems a daunting task for one person to change a broken system. But we created it, collectively. Maybe we can just start chipping away at it, for a start becoming more educated about the issues. It’s not that hard to go right to the source and look up the report or paper on which a politician or media personality is casting judgement and have a look for ourselves. 

Maybe we can talk with our friends and relatives. But perhaps more importantly we ought to work against the polarisation and partisanship that drives it all. It’s so easy to exist in our own bubble on social media as well as in our workplace and social life. When we stop cheering our preferred team and shouting at the others, we can start talking about the actual issues and working for the good rather than the perfect. As the Alternative Technology Association said in its response to the Finkel Report:

In 2009, most environment groups across Australia either formally opposed or publicly criticised Kevin Rudd’s emissions trading scheme, largely on the basis of its soft targets. They had a point; but this approach gave opponents of any action on climate all the ammunition they needed to destabilise both major parties and prevent any integrated climate and energy policy. Eight years later, here we are again: an imperfect policy on climate but one that has broader merit and, in ATA’s view, is substantially better than current arrangements. We will be working to advance the interests of ATA members and Australian consumers.

Once we put our team colours aside, maybe we can start to see that we’re all in this together, and that we make a better world with a contest of ideas rather than slogans. And that, like when choosing a restaurant or a movie, it’s OK if we don’t get exactly what we want all the time.

Dean Lombard is a social worker who has worked in energy policy advocacy for more than a decade.  Working formerly at the Victorian Council of Social Service (VCOSS) and now at the Alternative Technology Association (ATA), he has played a key role in the development of the policy framework in both the national and Victorian energy markets, particularly with regard to the hardship framework, the Victorian smart meter program, energy efficiency policy, and consumer information programs. He has expertise in consumer protection regulation, energy tariffs, stakeholder management and navigating the policy process.

As Senior Energy Analyst at the ATA, Dean is responsible for advocacy and policy development in national and state energy markets, on consumer issues in general as well as issues relating to micro-generation, renewable energy, energy efficiency, smart networks and demand-side participation. Currently he is working primarily on consumer issues in network tariff reform and smart metering, and the policy and regulatory issues in energy market transformation.

The ATA’s work on energy market transformation is funded by Energy Consumers Australia (www.energyconsumersaustralia.com.au) as part of its grants process for consumer advocacy projects and research projects for the benefit of consumers of electricity and natural gas. The views expressed in this post do not necessarily reflect the views of Energy Consumers Australia.