Flat White

The Libs farewell free markets on electricity

11 December 2018

12:14 PM

11 December 2018

12:14 PM

I’m starting to wonder what the point of the Liberal Party actually is. I was until recently under the misapprehension that as Australia’s foremost party of the centre-right, the Liberals were meant to stand firm on a number of issues; not least minimal government interference in the market and low taxation. Oh, how wrong I was – as this past week has demonstrated.

The Morrison Government’s talk of a ‘big stick’ energy policy, intended as an amendment to the Competition and Consumer Act, was the first red flag, with the scheme reeking of statism. For one, it proposes that the government have the authority to compel power companies to supply electricity on terms of quantity, duration and price that have been determined by the treasurer, for a period of up to three years.

Moreover, the policy would enable the treasurer, through a court order, to compel power companies to sell shares and assets on conditions that the court deems appropriate. The fact that it is the court, and not the treasurer, that would exercise this ‘divestment’ power is only a result of backbench worries about High Court action by power companies; the original plan was for the treasurer to personally oversee forced asset sales. So much for small government…

Clearly, this bill, if it were ever implemented (which is thankfully very unlikely due to lacking crossbench and opposition support) would enable significant government meddling in one of the most important industries in the nation. And all this from an allegedly centre-right party. What’s more, this government power-grab is also unlikely to fix the energy problem. Statism simply doesn’t work. Australia might be rich in resources, but the recent past shows us that is no saving grace when the politicians get it wrong and government interference prevails. Socialist Venezuela has had petrol shortages of late despite having the largest proven oil reserves of any nation in the world. Likewise, the American oil crisis of the nineteen-seventies was greatly exacerbated by government intervention and price controls, with shortages common.

No matter how energy-rich the nation is, it’s not unreasonable to think that if this proposed law were utilised as it could well be utilised, then Australia would face more headaches in the future; with high prices being the least of our worries. The fact that such a proposal is not coming from a beret-wearing Che Guevara type, but a man with an honours degree in ‘applied economic geography’, makes this as bizarre as it is unsettling. The Liberals are having an identity crisis, and central tenets of the centre-right, such as minimal government intervention in the economy, are getting lost in the process.

Unfortunately, this isn’t the end of it. Lost among all this talk of energy policy and the headline-grabbing arrest of Chris Dawson, was the kerfuffle, excellently reporting in the AFR on Friday, over a new levy on shipped imports that was initially announced in the 2018 budget. This new tax, if we’re calling ‘levies’ what they really are, has been rightly labelled as “a cash grab tariff on trade” by the chief executive of Shipping Australia.

Ostensibly done in the interests of the nation’s biosecurity, the tax is to apply, from July 2019, on all imported materials: such as cars (of which we produce none), fuel (of which we import 90 per cent), household goods and building products, whether or not they actually pose a biosecurity risk! From even such a cursory look, this measure screams ‘tax-grab’. The government is asking consumers (whom the cost of the tax will most likely be passed onto) to pay more for products that are not, or barely even, produced in Australia; irrespective of whether they pose an environmental risk to the nation. Hell, if you aren’t yet convinced on the true nature of this tax, just know that every vessel arriving in Australia already pays a charge meant to cover biosecurity threats anyway.

Why then, at a time when Australians haven’t seen real wage growth in years, does the supposedly centre-right government of Scott Morrison feel the need for a new tax? Well, with an election coming up, the man has got electorates to porkbarrel and voters to buy off, and so is opting for the politics of tax and spend. Sound familiar? It should. Parties of the economic Left have been doing it for years, but why oh why is it coming in such a blatant fashion from the Liberals now?

While industry groups have won some concessions on the biosecurity levy, with the proposed amount of the tax being reduced, it actually gets worse. This disastrous tax has now been extended to cover ships carrying exports; directly affecting the profitability of Australian goods sold overseas. The bulk of this estimated $125 million tax burden is to be borne by the minerals sector; employers of thousands of hard-working Australians, and vital to our national economy.

So there you have it, massive government interference in the energy sector and economic self-harm through the raising of prices for consumers, and the damaging of export competitiveness. And to what end? A policy that would be unlikely to have a positive impact in the energy market; and a government cash-boost only necessary because the Liberals don’t have the guts to cut egregious waste and spending in the public sector.

I present to you ladies and gentlemen, the modern Liberal Party.

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