“Socialism” is how critics have described the proposal of some federal Coalition MPs gathered together as the Monash Forum that the government build, own, and operate a coal-fired power station.
The proposal certainly is a bit socialist. However the reality is that the socialism ship sailed some time ago when it comes to energy policy in this country. In an ideal world, the government would have nothing to do with the running of coal-fired power stations. Also in an ideal world, household electricity prices in Australia would not have more than doubled over the last decade – as has happened. The reality is that the government has broken energy policy in this country, and government intervention might be required to fix it.
The federal government building a new coal-fired power station at an estimated cost of between $2 billion and $4 billion is no more socialist than the government spending $6 billion of taxpayers’ money to get full ownership of Snowy Hydro Limited and then spending up to another $6 billion constructing the fabled “Snowy 2.0”. Being a bit socialist has never stopped Coalition and Labor governments before. The government owning a telecommunications company is a bit socialist. And “socialist” is one word to describe the Turnbull government’s legislation giving a government agency the power to decide who can be an executive at a bank and how much they can be paid.
A discussion about socialism in Australia is for another day, but our economy bears no resemblance to the neoliberal nirvana it is often made out to be. The two most important prices in society – the price of money and the price of personal labour – are basically set by government-appointed committees, namely the Reserve Bank and the Fair Work Commission.
Nassim Nicholas Taleb, in his brilliant book Antifragile – Things that Gain from Disorder, ponders what the average American citizen would say if asked whether a semi-governmental agency “should control the price of cars, morning newspapers, and Malbec wine.” Taleb speculates the citizen would most probably “jump in anger, as it appears to violate every principle the country stands for, and call you a Communist post-Soviet mole for even suggesting it.”
As Taleb points out, the Federal Reserve manages and controls the price of another good, called the lending rate. “The libertarian presidential candidate Ron Paul was called a crank for suggesting the abolition of the Federal Reserve, or even restraining its role. But he would also have been called a crank for suggesting the creation of agency to control other prices.”
When he rebuffed the Monash Forum earlier this week, Treasurer Scott Morrison said the government would not subsidise any new coal-fired power stations or indeed any other sort of power station: “The days of subsidies in energy are over whether it is for coal, wind, solar, any of them.” If only this were true. If the Renewable Energy Target scheme is not a subsidy to the renewable energy industry, then the Treasurer should explain what else it could be.
The Treasurer also talked of the need to have “the best functioning energy market with the lowest possible price for businesses and for households and this is what the National Energy Guarantee and our energy policies are designed to achieve”. Unfortunately there’s no such thing as a “functioning energy market”. What there is instead is constant interference, manipulation, and tampering by state and federal governments in the price and supply of energy in Australia.
The National Energy Guarantee has the same relationship to the concept of the “market” as Politburo elections in the Soviet Union had to “democracy”.
As the federal Department of the Environment and Energy explains, the so-called energy market established by the “Energy Security Board” comprises an independent chair and deputy chair “along with the expert heads of the Australian Energy Market Commission (AEMC), the Australian Energy Regulator (AER) and the Australian Energy Market Operator (AEMO).”
No doubt the commissars of energy of Australia of 2018 will create a “market” system every bit as successful and enduring as that invented by the commissars of socialism in Moscow in 1960 as they decided on the “market” for brown shoes in Novosibirsk.
John Roskam is executive director of the Institute of Public Affairs