Victory on energy can only be won through compromise

09 Aug 2018 |

An opinion editorial by Australian Chamber CEO James Pearson

Australia’s political tribes are approaching tomorrow’s COAG meeting on the National Energy Guarantee as if it were a do-or-die elimination final, egged on by their loudest supporters and each hoping to land a mortal blow on the other. Will coal or renewables win the day? Which will go down, power prices or emissions?

The flag wavers in the stadium might be cheering the contest, but out in the real world Australian businesses and households are being mugged by spiraling power bills and wondering if our politicians have forgotten that they are national leaders, not tribal chiefs. When they come together at COAG, federal, state and territory ministers are deciding on behalf of the nation, not their political parties.

The policy reality is that the NEG embraces the goals of lower energy costs and lower emissions, as well as increased reliability of our power supply. It aims for sustainable outcomes and is technology neutral.

The political reality is that the push to reduce emissions more quickly won’t succeed if energy costs remain high. The push-back will only grow louder and stronger if energy costs continue to rise.

And the idea that we should ignore the need to cut emissions and the significant technological disruption that is already occurring in the energy sector flies in the face of reality, too.

Victory can only be won through compromise. Lower emissions and lower power prices are not incompatible.

The National Energy Guarantee (NEG), plus key recommendations by Rod Sims, Chairman of the Australian Competition and Consumer Commission on how to lower energy costs, are two sides of the same coin. The NEG and the ACCC recommendations together, can keep us on track to meet our national commitment to reduce emissions and deliver lower energy costs.

A stalemate tomorrow will take Australia back to square one on energy. It would be a profound failure of political leadership for which federal, state and territory governments, and our major political parties, will bear responsibility for years to come.

The Australian Chamber of Commerce and Industry – representing business of all sizes and sectors across the community – supports the NEG as a framework for emissions reduction because it is flexible enough to adapt to advances in technology and the plummeting cost of renewables. It will change as circumstances change. And change they will. In the words of the Energy Security Board, it will “accommodate different levels of emissions ambition overtime”.

It is this flexibility which should allow all sides, and all governments involved, to compromise and endorse the NEG.

Initial agreement on the NEG should be followed by swift consideration and action on the ACCC’s recommendations. The ACCC has made 56 recommendations on how to lower electricity prices. Many of them make sense. And Rod Sims suggests that electricity bills could fall by around one-quarter, perhaps more.

That would be a great win for households and business.

It’s two years since the lights went out in South Australia. That woke up the nation to the shameful reality that Australia, a sophisticated developed economy with abundant natural energy resources, couldn’t guarantee its own power supply. At the same time, the power bills went up. And up and up and up.

Faced with higher electricity costs, businesses, particularly small businesses who can’t pass the cost increase on to their customers, will have no choice but to find savings somewhere else. And that means they will put off wage rises, cut back on hours or cut out jobs. Others will close their doors and lay off their staff. And some will relocate to other countries, where energy doesn’t cost an arm and a leg, and employ people there instead of in Australia.

Common sense says that politicians should support business to sustain and create jobs, not destroy them. The NEG and ACCC recommendations are a blueprint for compromise in the energy and climate wars which is just that – common sense.

Duncan Bremner

Director - Public Affairs and Advocacy

P  |  0448 822 666

E  |  [email protected]

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