It is a particular, and indefensible, inequity in our present system to see those who pollute our rivers, or dump asbestos on a vacant lot, and so on, charged, fined, even jailed, for such activities, yet a coal-fired power plant can pump alarming quantities of CO2 into our atmosphere and be “protected” in doing so.
The two key elements of the Morrison government’s so-called energy policy are very anti-Liberal, indeed, socialist – leaning on, bullying, intimidating, otherwise attempting to regulate power prices, and the “Big Stick” of threatening forced divestiture of some of the assets of the “gentailers” (principally AGL, Energy Australia and Origin) if they “fail to comply”.
In the minds of some in the government, a parallel is being drawn between the activities and abuses of the Big Three power companies and the Big Four banks, not just in terms of their electoral unpopularity, but also particularly in the sense of their exercise of oligopolistic market power, and abuses of their “social licences”.
However, this may work in crude, point-scoring, electoral terms, but it is probably unwise to exaggerate, as more detailed analysis of their actual relative price-fixing activities and profitability (against assets and equity) may suggest some caution.
Morrison’s short-term difficulty, having sold Energy Minister Angus Taylor as “minister for getting electricity prices down”, is that, even at their “toughest”, they are unlikely to have much discernible impact on power bills by the time of the next election. But they will have sold out on their traditional beliefs and standing to do so.
The concept of forced “divestiture” not only burns their credibility as traditional Liberals, but would represent a significant and, to most, an indefensible abuse of executive government power.
This issue has been floated before and formally assessed by parliamentary committees considering the Misuse of Market Power Bill in 2014, by the Harper Review of Competition Policy, the Australian Competition and Consumer Commission, the Law Council, and others – and generally rejected.
The parliamentary committee referred to “disadvantages outweighing potential advantages”, risking “significant disruption and economic damage, with unpredictable consequences for competition”.
The Harper Review, building on the earlier Hilmer and Dawson reviews, expressed concern about the likely impact on the efficiency of the businesses and potential harm to consumers. More recently, Harper has criticised the “hasty” introduction of the divestiture power in relation to the energy sector, "arguing that the aim of market intervention should be to block anti-competitive conduct, not to restructure the industry”.
The ACCC described it as “an extreme measure”, preferring other “means to restore competition to a level which serves consumers well”. The Law Council has described it a “truly draconian”, carrying a “serious risk that it will create several less efficient businesses”. Lawyers Ashurst have described it as “an extraordinary and invasive power”.
Overseas evidence suggests that such a power has only ever been used sparingly in the US, and not yet in the EU and Canada, even though the power exists.
All this would lead you to conclude that this latest manifestation of an “energy policy” by a Liberal-controlled government, dumping virtually all that it once believed in, and advocated for, and adopting all that it once abhorred, has been simply proffered out of political desperation, risking very serious potential consequences for the power sector, that is of such fundamental significance to our broader industrial base and to households.
All this also seems so inconsistent with Morrison’s recent speech dubbed his “Sermon on the Murray”, apparently built in the Menzies tradition. Has he really lost all sense of what it means to be a Liberal? Or will he say or do anything, including jettisoning all previous beliefs, just to win?
Voters will probably ensure that he forfeits his right to govern.
John Hewson is a professor at the Crawford School of Public Policy, ANU, and a former federal Liberal leader.