Turnbull and Shorten must unite - and silence Abbott

In a political street fight you’d certainly want Tony Abbott on your side, rather than against you. He is the champion of the negative. While he could, and should, have been a real asset to Malcolm Turnbull, he has been totally counterproductive. Ignore all he says and does. He is just for Abbott, hoping to return to the leadership by destroying Turnbull.

Abbott has not been driven by evidence-based policy, or even ideology, nor a desire to support better government, but simply by a desire to undermine Turnbull, to get even with him for taking the leadership. He seizes every opportunity to do this.

Tony Abbott in Parliament on Tuesday.

Photo: Alex Ellinghausen

For example, having lost decisively at this week’s party meeting, he and a few of his easily misled mates now threaten to cross the floor when the NEG legislation is put to a vote. This is not a matter of principle. It is cold, calculated, disunity – hang the electoral consequences.

Given he has held so many positions on climate over the years, Abbott’s claim to support a genuine policy alternative to the NEG is about as believable as his commitment on losing to Turnbull that “there will be no wrecking, no undermining, and no sniping. I've never leaked or backgrounded against anyone. And I certainly won't start now."

He provides no detail of this alternative. He acts as if voters won’t remember that it was the Abbott government that made the Paris commitment to reduce our emissions by 26-28 per cent by 2030, as he now wants to opportunistically scrap that commitment. At the time of setting the target he claimed something of a win by overruling the recommendation of the Climate Change Authority to commit to a 50-60 per cent reduction.

His principal argument against renewables is that they have been subsidised and it is the cost of this subsidy that has caused the increase in electricity prices. The simplicity of this position ignores other significant factors such as the impact of the climate wars, the cost of gold-plating the distribution network and the capacity of “gentailers” to gouge both the wholesale and retail markets.

Abbott would have more credibility if he were to argue for a level playing field which would also see the elimination of all subsidies to the coal and fossil fuel industries.

In his references to the NEG, Abbott never admits that the subsidy ceases as soon as the Renewable Energy Target is achieved, which could be as early as next year. At this point the value of the certificates, which currently effectively carry a subsidy of 8 cents per kilowatt hour, will collapse, significantly changing the viability of existing solar photovoltaic projects and wind farms. These business models will also change with the Finkel requirement that the focus shift to dispatchable power, requiring them to add storage to their projects.

He also ignores the fact that the cost of coal-fired power is artificially low compared to what it would be if it was coming from a new, ultra super critical coal-fired power station, simply because current generators acquired their plants at very low prices, so they can essentially price their power on the basis of just operating costs, not having to service a significant initial capital cost.

He also ignores the mounting realities of financial markets, where an increasing number of international banks are reluctant to finance new coal-fired power plants, and a major insurer, AXA, has announced it is not prepared to insure any new coal-fired power plants and is moving its investments away from fossil fuels.

The reality is that it is increasingly likely that any new coal-fired power plant in Australia would need to be government-funded, with all the attendant issues that that would involve.

Tony Abbott's argument on energy is too simplistic and ignores significant facts.

Photo: Bloomberg

Abbott would have much more credibility if he was calling for a thorough independent assessment of the relative costs (all unsubsidised) of electricity generation from new plants, into the future, using the various technology alternatives – coal, solar thermal, Snowy Hydro 2, dispatchable solar PV and wind, and so on.

Only on this basis would it make sense for government to pick up the ACCC recommendation to “underwrite” new generation by offering low fixed price off-take agreements, for the latter years of a project, to improve its bankability. Surely, this would be most effectively done with a transparent, independent, tender process.

As if the climate wars between the government and opposition haven’t been destructive and irresponsible enough, all Abbott has done is also internalise them within the government parties.

It is concerning how easily our politicians of all persuasions ignore the views of the voters who see climate as a significant challenge. They see the transition to renewables as desirable and inevitable. They expect that government and its processes should rise above petty political point-scoring and attempted blame-shifting. They expect nothing less than genuine bipartisanship on an issue that is of enormous inter-generational significance.

In these terms, Turnbull would, and should, do much better, by not only outing the prejudices and folly of Abbott and his mates, but also by negotiating directly with Opposition Leader Bill Shorten, in our national interest. If they could agree, the likes of Abbott become irrelevant.

If Turnbull and Shorten can’t agree, even fewer Australians (one in three didn’t last time) will vote for either major party at the next federal election.

John Hewson is a professor at the Crawford School of Public Policy, ANU, and a former Liberal opposition leader.

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