The new Labor shadow cabinet has immediate and important policy decisions to ponder – tax and boats being the obvious ones.
The Conservative Party’s position is for less of both.
But, as The Australian reports, Labor’s previous opposition to the Morrison government’s so- called “big stick” energy laws presents a special sort of political quandary.
Does Labor under Anthony Albanese want to be cast on the side of the energy giants, or go into bat for families and industries being driven into destitution with ridiculous gas and electricity prices?
The fact AGL, Origin and Energy Australia are having conniptions about the laws, which are now more likely to get through with a friendlier Senate, is hardly a surprise – but not for the reasons they are suggesting.
What the power companies are really troubled about is the prohibited action component that will slap them with an escalating range of penalties for market manipulation in the wholesale markets and price gouging in the retail market. This is the main purpose of the laws and it seems to have been missed. While divestment may appear to be “anti-market”, the attempt to curb cartel-like behaviour and price manipulation can hardly be described as an offence to the free market.
The best example of what these laws would seek to prevent is AGL’s behaviour following the closure of the Hazelwood coal- fired power plant in January 2017.
The French majority owner Engie was quickly blamed for pushing up power prices with the withdrawal of supply. But a research paper released by Victoria University and the Victoria Energy Policy Centre laid the blame squarely with AGL’s abuse of its market power to force up wholesale prices to the extent that it delivered the company an $800 million profit windfall.
The way it forced a repricing of the market before the plant even closed, and without any material change in cost or supply, was genius, but according to the government it was malevolent. Consumers paying higher prices in NSW and Victoria can directly blame AGL for blatant manipulation of the market, it suggested.
At the moment, the government can send it a note asking it not to do it again. Under the proposed legislation, the ACCC would advise Treasury of what it believed was manipulation, at which point Treasury would notify the company, or fine it on an escalating penalty regime.
The winners out of this are clearly consumers. And this means not only retail customers, but energy-intensive industries that are dying a slow death in Australia because of energy prices.
The energy companies are not as concerned as much about being stripped of assets – as it is unlikely to ever happen – but are cranky because their ability to play up in the wholesale market will be seriously constrained.
Picture: Labor’s new leadership team – Kristina Keneally, Penny Wong, Anthony Albanese, Richard Marles
