Tony Abbott came to office promising to restore confidence to the economy and to deliver business certainty. But while he hasn’t wavered in his determination to repeal the carbon price, his equivocation on his election promise to maintain the Renewable Energy Target (RET) is delaying investment, driving up electricity prices and causing the kind of sovereign risk he once blamed the mining tax for.
Despite the assurances of his front-bench colleagues, the wind industry in Australia has concerns the Prime Minister won’t keep his promises. Rather than provide certainty, he has appointed Dick Warburton, the former Caltex chair and an avowed climate sceptic with no specific knowledge of the electricity industry, to review the RET. Despite the fact new renewable energy capacity needs to be built to meet the 2020 target, there are now no new wind projects going ahead.
Unfortunately for consumers and companies who buy electricity, the wind industry’s lack of faith in the Coalition to keep its promises is putting upward pressure on electricity prices. Contrary to claims by the oligopolists who do very nicely out of the current electricity market, economic modelling has confirmed what students are taught in economics 101 – increasing supply pushes prices down. Even the modelling commissioned by Dick Warburton’s review found the RET was pushing electricity prices down.