Energy is at the root of Australia’s political crisis – Financial Times

The revolving door of Australian politics is spinning again, with prime minister Malcolm Turnbull on the verge of being ousted and replaced by what would be the country’s sixth premier in little over a decade. Oddly, the instability is not the result of economic problems. Growth and job creation are high.

The troubles stem instead from dysfunction in political institutions, a shock jock rightwing media and a shift to a US Tea Party-style populism within the ruling Liberal party, which appears more interested in pursuing “culture wars” than holding on to power. The result is an alarming inability to tackle Australia’s biggest issue: energy and climate change. Mr Turnbull may end up a victim of his own two-year efforts to craft a bipartisan energy policy.

Even as Australia exports billions of dollars of coal and liquefied natural gas every year to Asia’s fast-growing economies, the government has struggled to keep the lights on at home. Gas shortages, lack of infrastructure investment and spiralling costs are a drag on the economy. South Australia suffered a statewide blackout in 2016.

Progressives and conservatives have fought for almost two decades over how to tackle climate change and shift a coal-dependent energy sector towards cleaner power. With no policy capable of attracting support from both the ruling Liberal-National coalition or opposition centre-left Labor party, and a three-year election cycle, power companies say they cannot justify long-term investment in new generation or storage.

Mr Turnbull’s solution was the National Energy Guarantee, a package of policies aimed at tackling problems of reliability, high prices and the need to cut carbon emissions. Business backed the package, and Labor said it supported it in principle.

But on Monday Australia’s brutal “energy wars” re-erupted, as a rump of conservative backbenchers objected to plans to legislate emission reduction targets agreed to in the Paris Agreement. Mr Turnbull survived a Liberal party leadership challenge on Tuesday from his conservative rival, Peter Dutton. But the narrow 48-35 victory margin left him badly wounded.

Mr Dutton has not ruled out pulling Australia out of the Paris Agreement — following the populist path of the Trump administration in the US. He is also threatening to unleash a public inquiry into power producers and remove sales taxes from electricity bills of families and pensioners. Such policies risk consigning Australia to another decade of energy insecurity, rising prices and failure to meet its obligations on carbon emissions.

The powerful mining and energy sectors previously lined up behind climate-denying politicians, as when former prime minister John Howard refused to ratify the 1997 Kyoto protocol. This time most companies, including industry heavyweight BHP Billiton, publicly called for a bipartisan policy that seeks to bolster energy security while reducing emissions.

That makes the Liberal-National coalition’s latest decision to hit the self-destruct button over energy policy especially ill-timed. Australia faces its worst drought in a century and a third of corals on the Great Barrier Reef recently died due to raised sea temperatures. Since it dropped a carbon tax in 2014, emissions have been rising.

The NEG was imperfect and inferior to some previous policy proposals. But without it, in Australia’s febrile political culture there is every chance the next prime minister — whoever that is — will repeat the mistakes of the past and again prove unable to resolve an issue of vital importance to the country, and its international partners.

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