Blaming your problems on the previous government is poor form. But blaming your problems on something that another government did over 25 years ago is, to put it politely, taking the mickey. Yet that is exactly what Daniel Andrews did recently when he effectively blamed former premier Jeff Kennett for the spiralling energy prices that have occurred on his watch.
‘Privatisation has not worked,’ Andrews declared in his ‘state of the state’ speech, alluding to the Kennett Government’s sale of Victorian energy assets in the early 1990s. ‘The scales need re-setting, privatisation and de-regulation has gone too far.’
This despite the fact that the Andrews Government has raked in billions of dollars from privatisation when it suits them, including $9.7 billion for leasing the Port of Melbourne and a windfall of $2.9 billion just this week for flogging off the land titles office.
Let’s see this for what it is: A cop-out, and an extremely weak one at that. Facing thousands of electricity-starved Victorians in November, Andrews is looking for something – anything – to deflect blame from his catastrophic energy policies.
Andrews is right about one thing: Power bills are soaring, up by a whopping 20 per cent, or $500 per year for the average family. But Victorians are not mugs, and few will forget Labor’s disastrous stewardship of energy policy that has created this mess.
It doesn’t take a Nobel prize-winning economist, for example, to realise that taking a fifth of the state’s electricity supply offline would lead to shortages and, in turn, increase prices. Yet that is exactly what the Andrews Government did by taking the wrecking ball to Hazelwood Power Station. At the time of its closure, Hazelwood supplied 20 per cent of Victoria’s energy, affordably and reliably. That is until the Andrews Government – for purely ideological reasons – whacked a $252 million tax on the brown coal needed to run it, forcing the operator to close down the plant.
In short, because of Daniel Andrews’ vendetta against brown coal, Victoria has walked away from a cheap and plentiful source of power. To make up the shortfall, Victorian consumers have had to effectively purchase more expensive power from elsewhere, largely by importing it from interstate. As the Australian Energy Regulator noted in March: ‘The exit of Hazelwood removed a significant low cost fuel generator which was largely replaced by higher cost black coal and gas. Victoria changed from being a net exporter of relatively cheap brown coal generation, to being a net importer.’
Worse still, the Andrews Government has kept the handbrake on other sources of cheap power. Not content with wasting our brown coal, the government has foolishly maintained a moratorium on onshore gas exploration. This is despite dire warnings from the Australian Energy Market Operator that without an increase in supply, Victorians could face severe gas shortages within just three years.
And for all that, the premier has the chutzpah to blame Kennett-era privatisation for an energy crisis that has flared up more than two decades later. According to Daniel Andrews, everything would be fine, if only Victoria’s electricity assets were still owned by the state government. But given all the stuff-ups that have occurred in the last four years alone, does anyone seriously think that greater government involvement in the energy market is the answer?
Make no mistake, Australia’s energy woes have occurred as a direct result of over a decade of government interference. Privatisation in Victoria made no difference to electricity costs, with prices remaining relatively stable from the early 1990s until the tail-end of the 2000s.
But from 2009, electricity prices around the country rose rapidly as the Rudd Government massively expanded the renewable energy target. Whereas previously, power companies were free to buy electricity from whichever source was cheapest, Rudd’s turbo-charged RET forced retailers to purchase energy from unreliable and uncommercial sources like wind and solar. Meanwhile, investment in conventional sources like coal tanked as revenue was effectively redirected elsewhere. Power prices were pushed even higher in the ensuing decade of government tinkering, ranging from Julia Gillard’s carbon tax to the ongoing chaos surrounding the so-called national energy guarantee.
Meanwhile, state governments have made things worse with their own forays into energy policy. Then-Premier Jay Weatherill famously boasted about his state’s ‘big international experiment’ with a crazy 50 per cent renewable energy target. South Australians saw the results of this ‘experiment’ first-hand when power prices soared and the blackouts started.
Not that Victoria is too far behind, with the Andrews Government committed to its own renewable energy target of 40 per cent by 2025. According to the relevant government website, this pointless green gesture will ‘establish Victoria as a leader in renewable energy’. That will be of great comfort to consumers, no doubt, as they shiver through another harsh Victorian winter.