The past week has reinforced just how poorly so much of the mainstream media so often manage their responsibility to inform the community.
Obsessed with the furore over the “shit happens” story, a self-confection by a TV channel, most of the commentariat, because of a lack of people who can analyse the energy sector with any real understanding of context and issues, has paid little attention to the two most important power-related points to emerge this week.
The first was a front-page story in the Australian Financial Review in which Paul Simshauser, AGL Energy chief economist, finance professor at the Griffith University Business School and chairman of Loy Yang Power, reinforced the industry view that, on present trends, and including a carbon charge, consumer power prices must double by 2015. Given the 140 per cent increase in media “shock/horror” stories about power bills in the past two years, how this warning can be let through to the keeper without pursuit of Gillard and Swan, is beyond me.
The second issue to emerge was in the latest report from the Department of Climate Change on Australian greenhouse gas emissions — in which the key new fact is that achieving the five per cent below 2000 abatement target for 2020 now requires reducing emissions by 160 million tonnes a year by the end of the decade, up from 144 Mt, the department’s estimate only a few months ago.
Reporting this bald fact is far from enough, and not helped by all the “usual suspects” from the green side being given another opportunity to strut their stuff.
There has been far too little focus by the media and the Federal Opposition on the major issue: the carbon cost required to reach the 2020 target. The latest report stiffens the belief by some of us that a charge of around $50 a tonne is the realistic requirement, with major implications for residential and business customers, not least energy-intensive, trade-exposed industries.
Public perception, based on government spin under Rudd in particular, has been that the carbon charge will be low and residential users will be compensated. The reality is that that the target cannot be reached with a low charge and the real cost of compensation could dent the federal budget in the second half of this decade, even more so now that it faces substantial costs for extreme weather damage.
(How allowing householders to escape the impact of carbon pricing while giving some big users substantial compensation, too, works in terms of the abatement target escapes me — how going down this road works in terms of a sustainable economy is an even bigger question.)
I find a surprising number of people in the community under the impression that the Renewable Energy Target will play a major role in achieving the abatement target. As the new DCC report shows, the abatement to be achieved by the current RET will be just under 30 Mt in 2020 — not even a fifth of the target and requiring an outlay of about $20 billion of investor funds on wind farms, leading in itself to an increase in end-user bills of about five per cent at the decade’s end.
As for the ever-popular solar power option, DCC has made it clear repeatedly that putting PVs on every household rooftop in Australia would achieve just 16 Mt abatement in 2020 — and cost an astronomical $200 billion at present capex levels. (This does not stop the popular media from writing up solar in glowing terms every time another opportunity arises.)
The poor performance of most of the media with respect to analysing and reporting on the doubling of the power price and the real carbon charge needed to achieve greenhouse gas targets does not excuse the Coalition from its responsibilities to take up this issue.
The Coalition has performed poorly on this since, under Malcolm Turnbull, it ignored the original prediction in October 2009 — by the Business Council of Australia, using Port Jackson Partners modelling — and it has failed to take the issue up in any meaningful manner (other than sloganeering) in the last federal election and since Federal Parliament resumed.
Gillard, of course, keeps operating on the Hawker-Britton manual: her latest piece of spin being to hire Tim Flannery to fear-monger as background to her efforts, in concert with the Greens, to drive through a carbon price this year and retain voter support (in the recurrent opinion polls and at the subsequent “only poll that really matters”) by winning over the public mood.
This issue is an open goal for the Federal Opposition, but it seems unable to even find the ball, let alone shoot. Continuing to jump up and down about a small flood levy, albeit one that is probably not needed and is not especially popular with the community, is not the main game when the latest news highlights the size of the power problem with only a small amount of investigation.
Among the issues of substance requiring strong, continuous Opposition focus is the linked problem of power costs and the size of the carbon charge really needed to deliver the abatement target.
Repeating the “great big tax on everything” mantra, which did have some effect in the past, is not good enough.
The real point here is not just the benefit to the Coalition of the political opportunity to hurt Gillard and Swan, but the responsibility it has in the national interest to lead community understanding of what lies ahead.
In this respect, it has failed to date as much as the Gillard Government. Right now, it has an opportunity to score — and not just in its own interests.