Archive for August, 2015

Can do (much) better

The Council of Australian Governments’ Energy Council seemingly has decided to take it on the chin.

Confronted by a politely but sharply critical draft report on energy market governance from the panel chaired by Michael Vertigan, 12 ministers from the nine jurisdictions, meeting in Perth for the first time since the federal energy white paper was handed down, have produced a communiqué resolving “to improve the efficiency, visibility and transparency” of Council functions – and emphasizing the need for market institutions and officials “to materially improve the responsiveness to the Council” of advice on how to deal with market change.

Curiously, the promise to do better is buried on page three of the seven-page communiqué the Energy Council issued after the Perth meeting.

The headline message the ministers wanted to impart is that the Council “aims to reduce the cost of energy for households and businesses” while maintaining national competitiveness and economic growth, reducing carbon emissions, improving sustainability and protecting consumers – pressing all the political “hot button” issues in one sentence at the very top of the communiqué.

The difficulty is that a large number of Us Outdoors see the Council as the problem, not the solution, as evidenced by this comment from the Vertigan panel (whose final report will be delivered in September): “Throughout (our) consultation process and in submissions, a consistent commentary has been provided that the Council and its senior committee of officials lack a focus on strategic direction and are not providing effective and active leadership.”

The panel adds: “A strongly recurring (stakeholder) theme was that there is a lack of transparency and accountability in the Council’s work. For example, the Council’s terms of reference are neither final nor publicly available.”

Stakeholders, the panel says, believe Council agendas are too long and lack clear focus “and that the opportunity for early, effective and targeted input to the policy development process does not exist.”

Vertigan and his colleagues go on to comment that the lack of a clear common purpose among nine governments can have “significant implications for reform.”

They point to stakeholder complaints that a national approach on issues is “difficult” where some governments don’t implement Council decisions or only partly implement them or even renege on a commitment they have made.

I will note here that the sacrament of confession in the Roman Catholic rite works for the penitents where they not only acknowledge their sins and have a firm purpose of amendment but also actually deliver – and the last bit is as important and the first two.

So, too, it is here: the CoAG Energy Council is still playing political games – witness the opening statement of the communiqué as presented above – while swiftly passing remedial action down the line to public servants and market institutional bodies and promising to do better in communications.

The real issue is that the energy policy fish is rotting from the head.

It is the inability of political leaders of governments to both form holistic, workable approaches to the complex challenge of energy security and carbon abatement and then to convert them in to a national approach that encourages investment and wins the confidence of voters that is the cause of the malaise perceived by stakeholders and complained about so vigorously to the Vertigan panel.

The inescapable observation is that the buck should be travelling up the line to CoAG first ministers, who want to be seen to be cutting energy bills, protecting consumers, growing the economy and contributing to “saving the planet” through carbon abatement without at any time in the past decade genuinely grappling with the over-arching difficulties.

The Business Council says in one of its current submissions that “energy policy must achieve a balance between promoting economic growth, energy security and environment sustainability; policy that is developed with an eye to each of these objectives is more likely to build consensus and minimize the risk of future changes.”

It then sums up how well our political leaders have managed this task by stating that the energy sector today faces tensions that have been exacerbated by policy missteps by all levels of government over a number of years.

As it happens, the Energy Supply Association is also out and about at the moment pointing to the fact that, while recent regulatory developments are contributing to reducing the operational costs of electricity supply on the east coast, policy interventions are pushing them up.

The association challenges the body politic to find a way to pay for policies without bundling the costs in to power bills – for example, via taxation.

As I wrote in “Business Spectator” this week, it is one thing to have the endless argy-bargy in the media about how much populist green measures really add to energy costs, it is another entirely for governments to do the sums for the real cost of picking winners and present them as a tax bill.

Coming back to the Vertigan panel draft report, this is an important document, covering a lot of ground in 97 pages.

The panel observes that, while some of the criticisms fed to it by stakeholders are justified, it is clear that many submissions “imply expectations of the Energy Council which are unrealistic in a multi-jurisdictional political/administrative environment.”

The panel comes to the view that the Energy Council is the “premier and appropriate body to have over-arching responsibility and policy leadership for the energy market, including enabling co-operation between the (national) government and the State and Territory governments.”

In the absence of such leadership, it adds, it is unrealistic to expect reform to be delivered by individual (institutional) bodies.

It sees a way forward in the Council agendas being “targeted at strategic priorities within a broader reform agenda” and it wants the senior committee of officials to take responsibility for ensuring the agendas are fit for purpose and for guiding the politicians to ensure effective decision-making.

We’ll see what stakeholders think of this in the weeks ahead.

Personally, I think the problem lies higher up the chain.