


Phillip Coorey

Labor leaves the door open for an end to the energy wars

Phillip CooreyPolitical Editor

These days, Paul Howes scratches out a living at KPMG. Four-and-a-half years ago, as national secretary of the Australian Workers Union, he was one of the more precocious talents in the labour movement, unafraid to think and speak outside the policy square.

His call at the union's 2013 national conference to establish a domestic gas reserve on the east coast was regarded as leftist lunacy by both sides of politics.

Howes warned that unless some gas was reserved for domestic use, and limits on coal seam gas extraction were lifted, the massive investment boom in LNG would soon affect the supply and price of domestic gas. And consumers, business and manufacturers would all suffer.

To have any hope of winning over his backbench, Turnbull will need to unveil a CET that somehow embraces so-called clean coal. David Rowe

"This is one of the most important resolutions we'll debate at this conference," he said.




Divided opinion

Then-resources minister Martin Ferguson, who these days scratches out a living working for the energy sector, agreed with Howes on CSG but not on the need for a reserve, claiming it would "deter the very investment needed to deliver more gas to the domestic market".

Howes berated Ferguson, arguing he "should be there talking about what resources can do for this country, not for the companies that extract them in the first place".

Howes' subsequent retreat from the political sphere was a loss for the labour movement. He was not the only one ringing the alarm bell. Similar murmurings were coming from such well-known ratbag socialists as the Australian Industry Group and Dow Chemical boss Andrew Liveris.

All have been swiftly vindicated. Any major party today would love to lay claim to the fact that they had called the bluff of the gas giants four or five years ago and pushed for such a reserve or, better still, established one. But neither did.

Better late than never, Labor, before the last election, did propose a form of domestic reserve in which a national interest test would apply to future developments or expansions, but that was slammed by the Coalition as protectionist.

Now, in this new era of regulating to correct market failure and appease hostile voters, the Turnbull government has retrospectively threatened a reserve by giving itself the power to curb gas exports and force more fuel into the domestic market.


Playing the blame game

Both sides agree but that did not stop the issue becoming a political flashpoint this week when Bill Shorten urged Turnbull to stop lollygagging and use the powers.

Turnbull, instead, spent much of the week stressing that the gas crisis was the fault of the Labor government for giving the exporters total control five years ago.

On Thursday afternoon things turned nasty when Labor's energy spokesman Mark Butler accepted that when Labor was in government, it knew there would be a "price impact" on domestic gas by allowing Australia's natural gas reserves to be locked up by exporters.

Energy Minister Josh Frydenberg pounced: "If they knew prices were going up why didn't they take action? Did they not care about the impact on family household bills, businesses, jobs and investment."

Butler countered, saying the gas companies lied. They gave assurances they would not drain domestic gas supplies to fill export contracts and that domestic gas would cost the same as the Asian price.

As a result of them breaking these assurances, domestic gas hit twice the level of the Asian price, he said. Pretty much an admission Labor was sucker punched.

Voters want action


Butler said the Coalition must share the blame. "Does anyone honestly believe the Liberal Party was opposed to these export projects at the time and would have stopped them had they been in power?"

The message for both parties is voters do not care whose fault it is. They want it fixed yet Thursday showed just how much of an obstacle partisan politics can be towards reaching much-needed solutions on energy. The temptation for a blue rather than agreement triumphs.

Because that day began with a significant gesture from Labor towards helping the Turnbull government overcome its internal divisions and reach a consensus on the design of a clean energy target (CET).

Butler told Melbourne ABC breakfast radio that Labor was prepared to cut the government some slack in the final design of the CET.

He was not doing it to be kind to the enemy, or mischievously trying to foment division, but out of realisation that the energy crisis is just that, and no longer an academic argument.

Unless there is a legislated long-term policy both major parties support and, therefore, will not scrap if there is a change of government, the investment strike in the energy sector will continue, as will higher prices and increased volatility.

Labor has already swung a long way by announcing it is prepared to dump its policy for a more onerous emissions intensity scheme and embrace a CET if that is what it takes to end the climate wars.

A CET will mandate a certain percentage of energy each year be generated by clean sources. The CET modelled by Alan Finkel designated renewables and gas as clean sources. One Liberal MP said if Turnbull put that to the party room, "the place would blow up".


Coal not in the race

To have any hope of winning over his backbench, Turnbull will need to unveil a CET that somehow embraces so-called clean coal. Labor agrees with the market that no-one will build a new coal-fired power station so there is no harm in designing a CET that allows "clean coal" to be designated a clean energy source because it will be academic

"We have been careful not to rule anything out," Butler said.

"Josh Frydenberg and Malcolm Turnbull have a difficult path to tread through the Coalition party room processes to come up with anything they are authorised to negotiate with us.

"We're trying to give them some room to maximise the chances of the Parliament finally being able to deal with this issue."

It was a gesture overshadowed by the bickering about gas but thankfully, not killed off.

"I won't take my bat and ball and go home because Josh is being nasty to me," Butler said.

Phillip Coorey is The Australian Financial Review's chief political correspondent.


Phillip Coorey

Most Viewed In News