I’ve been trying to find a positive take on the government’s energy solution – something that isn’t just a hollow talking point about the ‘national interest’ or ‘profiteering’, such as this from “the world’s biggest nerd”, Minister for Industry Ed Husic:
“What the Australian government is doing is in the national economic interest – bringing down or working to bring down energy prices.
Anyone that is arguing against that is arguing from narrow commercial or political interests. And the way that the Australian government has acted in extraordinary times is to respect the common sense view of the Australian public that we should be able to get access to an Australian resource for households and businesses at a reasonable price and not by prices, I might add, that are guided by war-time profiteering.”
But alas, I’ve yet to turn anything up. A recent survey of 47 Australian economists showed just three favoured regulating energy prices (and they should probably turn in their credentials). Even people who you might expect to support gas and coal price intervention are less than thrilled by the plan:
“Frank Jotzo, professor of environmental economics and climate change economics at the Australian National University, said the proposed price controls would stymie the transition away from fossil fuels.
‘Government intervention to suppress prices is, by and large, not the optimal way to go,’ he said.
‘I argue this in the context of preserving the incentive to switch away from gas and coal, not in the interest of maximising gas producer profits.
‘The solution to high prices is high prices because they bring forward green investment,’ he said, arguing in favour of a windfall tax that would then be distributed to households and businesses.”
A windfall tax also has its problems. One of them is that Australia already has one called the Petroleum Resources Rent Tax, a 40% tax on profits which was so poorly written that some projects may never pay it. Another is that unless they’re designed very carefully, they can be gamed. But it would still be worlds above the current price cap plan.
One wonders how the bureaucrats at Treasury allowed this to see the light of day. Perhaps they were ignored, or not consulted about the policy implications at all – just instructed to model the expected household savings so Albo had a “Treasury modelling” figure he could cite.
Whatever the case may be, it’s not a great start for Albo and his relatively new government.