LENORE TAYLOR August 11, 2012
Power play ... Prime minister Julia Gillard, above, at the Smart Grid Smart City display in Newcastle. Photo: Marina Neil
There's nothing the media loves as much as a good rhetorical war. We've had culture wars. History wars. The particularly odious ''mummy wars''.
So if a prime minister wanted to make a political point about a subject as arcane as federal/state negotiations about changes to the regulation of the determination of electricity prices, what could she do? Start a war of course. A power war. A power play.
And didn't it work a treat? When there's a rhetorical stoush to be had we're all on the battlefield, even if it is littered with organisations with obscure-sounding acronyms that regulate a market almost no one understands.
The Opposition Leader, Tony Abbott, was left decrying the whole thing as a ''stunt''. Well, he'd sure know one of those when he saw it. The Prime Minister, Julia Gillard, did make some very valid points. Investment - much of it over-investment - in ''poles and wires'' have pushed NSW power prices up 70 per cent over the past four years. Even this year the carbon tax accounts for only 9 per cent of the average 18 per cent price rise. The regulatory system has been perversely allowing, even encouraging, the non-carbon tax price rises. The state government, which owns electricity assets, has been benefiting.
But we knew that.
We knew because the head of the Australian Energy Regulator, Andrew Reeves, has been saying so to anyone who will listen for more than a year. Except it wasn't a ''war'' then, so not many people were listening.
We knew because Rod Sims, now the Australian Competition and Consumer Commission chairman, warned about it at the very first meeting of the cross-party committee that dreamed up this carbon-pricing scheme.
We knew because the government's climate change adviser, Ross Garnaut, screamed it from the rooftops more than a year ago. He called on the Resources Minister, Martin Ferguson, and state energy ministers to intervene to change rules governing the operation of the AER.
And how did Ferguson respond then? Well, quietly. Negatively, even. He said the regulation of the energy sector was ''leading edge''.
He said the nation's energy ministers tried to keep ''away from the spotlight of the daily media cycle'', that it was ''not in the public interest to trivialise these matters in a high-level public debate over the network regulatory system''. He pointed out the electricity industry was at the time preparing for the carbon price, and new rules that forced lower rates of return for sections of the industry would make that process all the more complicated.
No, no no, Martin. That is not the kind of rhetoric that will start a war. That's way-back-in-the-business-section rhetoric. That's don't-even-think-about-getting-on-the-TV rhetoric.
That's not the kind of talk to get blanket media coverage for a week to coincide with the arrival in the letterbox of horror winter power bills and allow the federal government to spread the blame and drown out Abbott. Which might be why the Prime Minister replaced Ferguson at the last minute to give Monday's speech.
Asked about the swap by radio broadcaster John Laws (now would Martin have segued the speech into days and days of radio? I think not) the Prime Minister explained: ''I determined to do it because of the importance of this issue, and my real sense of urgency that as Prime Minister, working with state premiers and chief ministers, we have to act in December this year. So I wanted to send out that message very loud, very clear, and also be very clear with people about what's driving power prices.''
And the message has been received, very loud and very clear. Lord knows why it took the government this long to start making the point.
But looked at factually, rather than as a vehicle for political spin, the whole ''war'' narrative was hyperbolic. To be fair, Julia Gillard never called it a ''war'' but she used lots of implied threats and ''ultimatums'' against the ''price-gouging states'', and she must have known where that kind of talk would lead.
There were already two processes underway. The AER has asked the Australian Energy Market Commission to look at rule changes. The politicians have no say in this matter.
And energy ministers were already due to consider other rule changes later in the year, a matter the Prime Minister now says will be decided at the December Council of Australian Governments meeting. The states say they support change. As far as anyone in the industry can ascertain, they were never against it. There was no obvious need for dark warnings about the use of ''big sticks''. Well, not yet anyway. But what's a war without some ''big sticks''?
As the chief executive of the Energy Retailers Association of Australia, Cameron O'Reilly, said yesterday, Gillard has ''picked the right issue'' but was ''two years too late'' and ''there were already processes in train to change the regulatory regime before her intervention, and no sign the O'Farrell or Newman governments were pushing back against those processes''.
Some commentators saw hypocrisy in the Prime Minister decrying the ''bad'' price rises caused by over-investment, while insisting ''good'' price rises due to the carbon tax were necessary to drive change. But the carbon tax is designed to make it relatively cheaper to generate clean energy. Over-spending on poles and wires sends no price signal to generators and makes all power more expensive for consumers in equal measure.
And Gillard also neatly set up the next question. How would an Abbott government have prevented the over-investment and how would it prevent it in the future?
Since the regulator, several states, most people in the industry, and even his energy spokesman, Ian MacFarlane, concede over-investment has occurred and is a problem, and since it is a verifiable fact that the tax is a small part of price rises over recent years, you'd think even the Coalition leader would have to stray from the script and answer with something beyond ''axe the tax''.
But no. Abbott responded: ''I'd abolish the carbon tax, that's what I'd do … This is a fabrication from the Prime Minister, this is an absolute furphy.''
But the past master at setting up false conflicts and over-simplifying complex processes had the slightly irritated, bewildered tone of someone who had been beaten at his own game. And that alone means from Labor's point of view the power war was definitely worth having.