by Ebony Bennett
[Originally published in the Canberra Times, 23 Febuary 2019]
These last two weeks of Parliament may prove a turning point for the 2019 election, but only time will tell if they mark the moment the Coalition got back in the game or the point at which voters wrote them off entirely.
At their best, elections inspire “policy auctions” where politicians compete to announce and defend the best, most ambitious and well-reasoned policies. That seems almost laughably quaint right now.
An incumbent government can do permanent damage on its way out of office—to the country and to themselves. Just as the Coalition seized control of the election agenda by declaring they would have to reopen Christmas Island detention centre, a series of scandals engulfed them. The self-inflicted scandals, each probably survivable on their own, together form a miasma of entitlement that floats around the Morrison government like a swarm of blowflies around a fresh cow pat.
A $423 million detention services contract was awarded to an obscure company, Paladin Group, registered to a beach shack at the end of a dirt road after a ‘restricted tender’ (restricted to just Paladin).
Tim Wilson potentially funnelled the details of wealthy and angry retirees to his distant relative’s business through a parliamentary committee process. Matthias Cormann somehow didn’t notice that he hadn’t paid $2780 for family holiday flights that he had booked with his mate, the CEO of ASX listed travel firm Helloworld. That fact emerged around the same time senate estimates revealed that the very same same CEO organised a meeting for one of his senior executives with Joe Hockey, because the US Ambassador “owed him”.
The Attorney General appointed several former Liberals to extremely secure and lucrative jobs at the Administrative Appeal Tribunal. The revelation that two Commonwealth Ministers, one of whom was the Justice Minister, refused to talk to the AFP for an investigation. There may be more.
The looming deadline of an election should be a policy auction of the best ideas. But the rush to an election also encourages slapdash policy making, blunt pragmatism and naked opportunism. If the government is likely to lose the election, laying a policy time-bomb can look downright attractive.
Late last year, Prime Minister Scott Morrison and Energy Minister Angus Taylor announced their
plans to underwrite new “firm” electricity generation.
The underwriting will probably involve a subsidy for gas or coal-fired generation, such as a price guarantee. The government is putting Australians on the hook because banks and other financiers will not touch fossil fuels without a top-up from the taxpayer.
That’s all the details we have. The government hasn’t decided, let alone publicly released, what underwriting mechanism it will use, how much generation it will underwrite or what kinds of projects it will accept.
The first round of “registrations of interest” closed on January 23 and the government will now release its “final program guidelines”. The government will then proceed with a formal request for proposals. We do know Minister Taylor is keen to agree on proposals before the election.
The government is building the process while running it, and it still hasn’t explained how it will fund the projects. There is no legislation authorising them to fund coal-fired generation and legal advice obtained by the Australia Institute finds unauthorised government spending is potentially unconstitutional.
Keeping the process moving quickly, before documentation is finalised, avoids scrutiny—necessary when you haven’t figured out where the money is coming from, or how much you will need.
Slapdash policy is a kind of political sabotage: it’s harmful to our political order, it undermines public confidence in government and it can obstruct policy that actually improves the lives of Australians.
A rushed process also risks costing the taxpayer far more than is necessary and they may even spend the money on the wrong thing altogether.
The electricity market is undergoing a period of transition and there is a real risk of overpaying for the wrong types of electricity generation, or for more generation than we need. We’ve already seen this with the poorly-managed privatisation of the electricity market from the 1990s onwards.
Research released in January by The Australia Institute finds that bureaucratic overhead (managers and sales people) has doubled in the electricity industry since privatisation, resulting in deadweight costs of a billion or more dollars per year.
Australia’s greenhouse gas emissions are rising when they should be falling and locking in more fossil fuel generation is not just politically and economically reckless, it’s environmental sabotage too. Additional coal or gas-fired power stations will only fuel the extreme weather Australia suffered through this summer.
Minister Taylor has raised the prospect of indemnifying these projects against future carbon prices, making it even harder for any future government to achieve our emissions reduction obligations. The Australian Industry Group estimated this could cost taxpayers billions.
To put it simply, the policy is bad because they are rushing it, and they are rushing it because it is bad. It’s the same rushed process that led to the $420 million contract with Paladin’s beach-shack-headquartered company, and the handing of $21.5 million to the Pacific International Hospital to provide healthcare on Manus Island, without even finalising a proper contract.
Why hurry? With Paladin, the urgency was ostensibly to make sure refugees and asylum seekers had access for basic services when the previous company’s contract finished. But a coal plant will take years to commission. With a federal election due by May, there is no good policy reason for rushing. The only reason for the Morrison government to sign contracts now for a new gas or coal-fired power plant, is if it does not believe it will be the government after the election.
In many ways, funding fossil fuels actually gets more attractive for the Coalition if they believe that Bill Shorten is destined for the Lodge. The financial risks will fall on future governments.
The additional carbon pollution will rip through Labor’s emissions reduction target. Any “kill clauses” in the contracts would hit Labor’s budget. The optics of tearing up contracts for so-called “cheap” electricity will hurt Labor.
Underwriting new fossil fuels is particularly attractive because the mess it makes will hurt the next government, not this one.
Leaving time bombs is not compatible with governing in the interests of the people, but it may look like canny politics. However, there is a precautionary tale for would-be Machiavellis who think they can lay a trap for incoming governments.
In late 2014, the Napthine government engaged in an unseemly scramble to sign contracts for the $5 billion East–West Link before the Victorian election. The East–West Link was an unpopular proposal to build an 18-kilometre tollway between Clifton Hill and Sunshine West.
The Labor Opposition had threatened to cancel the contracts if elected. This gave the Napthine government a perverse incentive to make the contract as harmful for Victoria as possible, because if Labor tore it up, the costs would be incurred during their government.
In the end, the Napthine government guaranteed the proponents against financial loss from successful court cases and included expensive “kill clauses” that would cost the Victorian taxpayer hundreds of millions of dollars if the contracts were cancelled.
After signing the contracts, the Napthine government promptly lost the election to Labor. One detail they may have missed is how desperate and undemocratic they looked to voters in attempting to control the state even after losing an election.
The Andrews government cancelled the contracts as they had promised – at a cost of hundreds of millions of dollars to Victorians. As damaging as this was to the state coffers, it does not seem that it did any lasting harm to the Andrews government which was re-elected with a much larger majority.
Voters have little sympathy for those who try to grip the levers of power from beyond the political grave—something that should give the federal government pause before laying any “time bombs”
of their own.
Ebony Bennett is Deputy Director of The Australia Institute @ebony_bennett