Wednesday, September 27, 2017

Today by Sean Kelly


Authority issues
Political weakness tends to multiply

Supplied by ABC News

“I support the company … The government is stuffed. Too many people have got Turnbull by the short and curlies.”

That’s an AGL shareholder, speaking to the Financial Review’s Ben Potter [$], before today’s AGL annual meeting. He was explaining why he was backing the company’s decision to shut down the coal-fired Liddell power station and replace it with other energy sources.

Shut it down? Wasn’t it just a few weeks ago the government was strongly suggesting Liddell could, and should, be kept open past its set closure date of 2022? That if AGL wouldn’t keep it open, it should be sold to someone who would?

Well, yes, but AGL also made it clear that wasn’t very likely. Today, at the annual meeting, senior figures at the company doubled down. Their rhetoric wasn’t watertight – perhaps the government could throw enough money at the problem to get the result it needs – but their intention was clear enough.

When you talk about who has got Malcolm Turnbull by the short and curlies, you’d usually think of the right of his party – and you’d be correct. But this is a perfect illustration of the nature of political strength, or, more to the point, political weakness. It tends to multiply.

AGL’s decision will be very largely driven by what is best for shareholders. But of course it’s easier to resist a prime minister you know isn’t drawing from a large reservoir of authority. That goes triple for a PM or a party you’re not sure will be there for that long.

Elsewhere today, another prong of Turnbull’s energy strategy was being dealt with. The prime minister met with gas executives in Sydney, in an effort to prevent a shortage of gas.

This is a more complicated landscape than Liddell. The PM had a win. The gas companies agreed to find the gas Australia will need for at least the next two years. And that’s not all. As Turnbull explained: “They’ve stated that they will offer first, as a first priority, domestic customers any un-contracted gas in the future as a priority … They have also given commitment to provide regular reporting to the ACCC on sales, offers by them to sell gas, and bids to buy gas, from customers they have declined.”

That’s a big part of the story, but not all of it. Before the meeting, the exporters made clear that they would be able to find the gas – but only if Australian businesses agreed to buy it now, rather than waiting until prices were cheaper. In other words: yeah, we’ve got the gas, and we’ll sell it, but only if the price is right.

There is another meeting on Tuesday, so the issue has a little way to run. But this meeting did not deliver a guarantee on prices. And price is one of the big issues for Turnbull – as he said on Monday, “The recent rises in the cost of gas are the single biggest factor in the current rise in electricity prices.” Preventing a shortfall may stop those prices skyrocketing, and the ACCC arrangements may have some effect, but it’s hardly clear Turnbull has met the expectations his rhetoric set up.

Again, that probably has something to do with the fact that businesses are just not that intimidated by Turnbull.

And again, this is partly to do with the PM’s tendency to establish expectations – as he did on Liddell, as he has with power prices – and then not quite deliver. In this case, it comes from the government’s decision to give itself the ability to restrict LNG exports, but then not to act, or “pull the trigger”.

It is entirely possible this is a sensible thing for a government to do, as Barnaby Joyce argued today: “I see policemen every day and they have a car, a siren and they have flashing lights and they have a holster on their hip. We don't expect them to use it every day.” But the problem for Turnbull is that threats only work if there’s the suspicion that you might, someday, carry them out. As Bernard Keane pointed out [$] earlier this week, there have now been umpteen “warnings”.

The other difficulty is that raising problems, as a government, can leave just a little too much room for oppositions. Labor’s calls for a banking royal commission are the most stunning example of this – this has been a constant pain for the government. What made it possible? Turnbull’s own attacks on the culture in our big banks, which he then proceeded to do not very much about. We’re seeing a repeat on gas exports. Once Turnbull accepted the possibility of restricting exports, Labor was given a ready-made soundbite every time the gas issue came up: “Pull the trigger! Pull the trigger!” we hear every few days.

All of this is not even including the most significant short-and-curlies issue for the PM: the internal Coalition debate over a Clean Energy Target. And there was another noteworthy warning today that the government’s failure to agree on this is no help to power prices.

That shareholder wasn’t just dismissive of the current government. He went on: “This country is absolutely ridiculous. It needs an absolute shake-up but unfortunately I don't think we have got the politicians to do it."

If Turnbull keeps up his talking-big-acting-small routine, we will all soon have the opportunity to see whether he’s right.


In other news


MUSIC

The Monthly music wrap: September 2017

The majesty of Björk, new releases from Ibeyi and The Orbweavers, and more

Anwen Crawford

“Björk’s new single, ‘The Gate’, released last week, must be one of the most extraordinary things she’s ever done, which is saying something. For more than 30 years now she’s been expanding pop music’s various dimensions – musical, visual, technological – with the strength and abundance of her own creative power. Let me name that power for what it is: genius.”read on


CARTOON

In light of recent events

How much do couples actually enjoy each other’s company?

Oslo Davis

“A recent New York Times survey revealed that men and women were ‘wary of a range of one-on-one situations’ with someone of the opposite sex who was not their spouse. Private work meetings and going out for drinks were ‘inappropriate’ and required ‘extra caution’. But what about one-on-one situations with someone of the opposite sex who is their spouse?”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.

@mrseankelly

 

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