August 09, 2012
Regulators have the facts but struggle to stop price gouging.
HAS there ever been a bigger blame game than the attack on the carbon tax? Forget the facts; just feed the public perception of pain, regardless of the real, modest impact on living costs. This week, Prime Minister Julia Gillard hit back and has been accused of playing the blame game herself. She is entitled to do so when the facts of price rises are so much on her side.
It says much about public debate in Australia that wild claims about the carbon tax's ''devastating'' impact have taken hold. Simple arithmetic tells us a tax that raises $4 billion this financial year in a $1.6 trillion economy can have nothing like the impact a decade ago of the GST, then worth $25 billion, in an economy less than half as big. The Reserve Bank offers no support for the doom merchants. On Tuesday, Governor Glenn Stevens stated: ''Inflation remains low, with underlying measures near 2 per cent over the year to June, and headline CPI inflation lower than that. The effects of the price on carbon will start to affect these measures over the next couple of quarters. The Bank's assessment of the outlook for inflation is unchanged: it remains consistent with the target over the next one to two years.'' The central bank's independent assessment is starkly at odds with Opposition Leader Tony Abbott's claims that the impact on living costs will be ''almost unimaginable''.
But what of power bills, ''the new petrol prices'', as Ms Gillard aptly put it? Carbon pricing is aimed at big emitters such as power generators. The tax will lift retail power bills by 9 to 10 per cent, for which most households get fully compensated. The Australian Bureau of Statistics records electricity price rises in the past five years of 84 per cent in Melbourne, 79 per cent in Sydney and 67 per cent in Brisbane. As Ms Gillard observed, you can't blame the carbon tax for that.
The Independent Pricing and Regulatory Tribunal and the Australia Energy Market Commission also provide precise cost breakdowns of bills that refute carbon tax alarmism. Spending on transmission and distribution networks accounts for 57 per cent of the average household bill and 40 per cent of scheduled increases between 2011-12 and 2013-14. The industry seeks to divert blame to green energy programs - renewable energy targets, feed-in tariffs, energy efficiency and demand management - but these total only 6 per cent of the average bill. Rising retail margins had a bigger impact, the AEMC says. The industry has a perverse incentive to spend more, relying on inflated demand forecasts, because of a regulatory regime that delivers a guaranteed return based on capital expenditure and assets.
The federal government's energy white paper estimates up to 25 per cent of electricity costs result from peak demand that occurs over less than 40 hours a year. Demand management is by far the best way to limit costs, but the industry has no incentive to promote this. Consumer demand, which is price-sensitive, has been falling for some years but spending submissions to the regulator stubbornly forecast strong demand growth. The AEMC estimates up to a quarter of $45 billion in approved network spending may be unnecessary.
This is a scandal, but governments that own electricity assets have an incentive to let it happen. The New South Wales government budgeted for a 41 per cent jump in dividends this year when bills rise 18 per cent. The Gillard government has a clear political motive to act, but the move is timely too because prices for the next five years will start being set next year.
Representatives of all the regulatory authorities are concerned about the industry motive for excessive spending. The Australian Energy Regulator, which oversees the National Electricity Market, sees a need for greater powers to police the industry and Ms Gillard has vowed to use the ''big stick of regulation … if required''. Such is the price gouging built into the system, the government would be failing in its duty to consumers if it did not step in.
ROBERT Hughes is dead. Long live Robert Hughes. And so he shall, in the realm of words and ideas. Hughes - critic, historian, essayist, Australian - died this week in New York. He was 74. Tributes have flowed from this country and from both sides of the Atlantic. And so they should. Peter Carey called him ''one of the greatest writers our country has produced''.
In this cacophonous age of countless small voices, his was that of a giant. He combined a rigorous intellectualism with the ability to write like an angel. He was not afraid of a fight if he thought he was right. And he always thought he was right; for, in a critic, there must never be doubt. Hughes showed the world that this small nation on the other side of the globe could, if it put its mind to it, be servant to no one.
To that end, he was a strident and vocal (what else?) proponent of Australia becoming a republic. He spoke and wrote often on why he saw it as imperative for this country's future that it remove itself from the shackles of Britain.
In a speech in Melbourne in 1997, he said: ''In a democracy, you look up to values, to shared ideals, not to charismatic totems that have lost most of their charisma. In a democracy, you take a level look around at your fellow citizens, back to the past, ahead to the future. That is the Australian way. It is the republican way. It is the way we have to go.''
Hughes, like many of his generation, left these shores in the '60s to find his calling. He landed first in England, and began writing art reviews. His work was noticed by Time magazine, which offered him a job as its art critic. Hughes was fearless in his views. He could zero in on mediocrity and reduce it to rubble in a sentence. His knowledge and erudition were wide, deep and breathtaking. Effortlessly, or so it seemed in his writings, he could switch from modernism to American culture to the history of Rome. Although New York was his home, Australia and its past still lived strongly within him.
In 1987 he wrote The Fatal Shore, a history of this country's convict beginnings. It became a bestseller. Carey, in The Guardian, wrote of Hughes's ''roaring Australianness''. Hughes ''had shown us who we were, or what darkness we had to confront in order to grow up. He had grasped the cruelty of our birth and shoved it in our face.''
The latter is the mark of an imperious presence, who knew that their place in the world was the equal of anyone else's. His was an Australian mind. A medal, perhaps, should be forged in his memory.