Tuesday, September 12, 2017

Today by Sean Kelly

Turnbull’s massive gamble
The PM may have sabotaged himself with his big energy fight


A government in a fix can count on its ability to do at least one thing: pick a fight that everyone notices.

That is what the government has done with its quest to keep AGL’s Liddell power plant open. Malcolm Turnbull, wanting to talk about anything other than citizenship and same-sex marriage, has successfully put his battle with the power giant up in lights.

But setting your own terms for what winning that fight looks like? Good luck with that.

What we’ve seen in the past 48 hours, as this battle has unfolded amid rolling disputes about who said what in which meeting, is an attempt from Turnbull and his minister, Josh Frydenberg, to create a goal for themselves they know will be reached, because any one of a number of options will satisfy them. AGL had agreed, they said after a meeting yesterday, to either sell the plant, keep it open or replace the energy it provides.

And for a little while, that seemed like a victory.

Pretty quickly, though, AGL changed the game, by releasing a statement that was pretty clear in saying that, while its CEO would bring to its board the government’s request to consider keeping the plant open or selling it to someone else, that really was just going through the motions. Elsewhere in the statement, you could find the phrases “once the Liddell coal-fired power station retires in 2022”, “By giving advanced notice of closure of its coal-fired power plants” and “As Liddell approaches the end of its life in 2022”. Not a lot of ambiguity there. “Considering” something is, clearly, not the same as “considering it seriously”.

The government did its bit to help, with Frydenberg emphasising the sell-or-keep-open options in interviews.

Suddenly, the government had been left with a different political equation. Should Liddell stay open past 2022 – as a result of a sale or a decision by AGL to keep it open – then the government gets a win. Should AGL find another way of generating the same amount of energy, the government loses. And given that AGL seems much keener on the latter than the former – for the simple reason that a company has more obligations to its shareholders [$] than to the government – a political loss seems likely.

In other words, the government has, once again, generated a lot of heat in order to reap a short-term political gain, while setting itself up for a bigger loss down the track.

But folks, that’s not all.

Alongside this debate has been the ever-present spectre of the Clean Energy Target debate, which the government is going to have to resolve one of these days. And it’s true that, as some have pointed out, this is connected to Liddell, because the government is asking AGL to plan for the future without telling AGL what the future is going to look like. 

In fact, the connection is potentially much more direct than that. Last week, a report from James Massola and Peter Hannam contained this observation: “Fairfax Media spoke to six Coalition MPs who identify as conservatives or who are from The Nationals on Thursday, and all confirmed that a ‘grand bargain’ was needed to ensure the medium-term future of coal plants for Environment Minister Josh Frydenberg to secure support for a Clean Energy Target.”

Not that long ago, it seemed that Turnbull and Frydenberg might be able to get a CET past the Liberal and National party rooms as long as its design allowed, technically, for the possibility of the continued existence of coal-fired power stations. Just theoretically, you see. Labor, for reasons of its own, had moved away from its opposition to this, to potential acceptance, given the possibility was only theoretical. Perhaps the climate wars really were about to end.

And here we come to the other downside of putting the Liddell fight up in lights. Why would pro-coal MPs accept the theoretical possibility of coal-fired power stations staying open, now that they’ve seen just how unlikely that possibility is in reality? Suddenly, “ensuring the medium-term future of coal plants” looks like it might have to actually involve guarantees of that future, not just vague promises that it is theoretically possible. And if AGL says no to the government, then those guarantees are going to be very hard to give.

In other words, should Turnbull and Frydenberg lose on Liddell, the chances of them losing on the CET go up as well. This may be one reason you have seen Frydenberg, for the last week or so, talking about how the Australian Energy Market Operator report “reset the debate” [$] to be all about stability.

All that said, it is still possible that Turnbull comes out on top. The motivation of companies in situations like this can be opaque. Perhaps AGL is playing some complicated game in which the end result is a highly subsidised sale of Liddell, ensuring maximum profit. In that case, Turnbull’s penchant for political gambles will have paid off. He will have a clear win to bray about, and it just might boost his chances of that “grand bargain” on climate with his own MPs. But boy, is it a gamble. Given the demonstrated ability of climate policy to blow political leaders up – including, in the past, Turnbull himself – that’s a gamble with incredibly high stakes.

In other news


‘Whipbird’ by Robert Drewe

Robert Drewe’s ‘Whipbird’ is a complex story of a family and their foibles

Louise Swinn

Whipbird is a distinctly old-fashioned book. It’s full of opinions, there’s a refreshing amount of philosophising, and characters make politically incorrect assumptions. Catholicism and religion in general sit at the centre of the discourse, and there’s a surfeit of nostalgia.” read on


The honesty and complexity of ‘Beyond Veiled Clichés’

Amal Awad’s book presents Arab women in their own words and in their own right

Aicha Marhfour

“Unusual for a book released by an Australian publishing house, it offers glimpses and moments of a similar transcendence. Here is a book that is not, for once, written as a primer for a white readership, to demystify Arabs. While accessible and sure to become a staple of university courses and white feminist book clubs, Beyond Veiled Clichés is written by an Arab woman, for Arab women.” READ ON

Sean Kelly

Sean Kelly is a columnist for The Sydney Morning Herald and The Age, and was an adviser to Labor prime ministers Julia Gillard and Kevin Rudd.



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