With Australia’s elections already looming on the horizon for next year, both parties are setting the stage to begin their campaigns. This week has seen Labor surprise many in the country with the release of its official energy policy, which it hopes will gain support from those across the political spectrum who favor a stable energy plan.
Labor’s proposal aims to bring an end to Australia’s decade of stunted growth regarding energy policy. During this time, successes in this area have mainly come from private initiatives that did not involve the government.
Having failed to get a National Energy Guarantee (NEG) through the floor, previous Liberal Prime Minister Malcolm Turnbull saw his demise because his bill changed so significantly. This has been a problem for many previous leaders, who also could not get the support needed to deliver a concrete policy. The current Prime Minister, Scott Morrison, has thus far downplayed the need to offer anything major and has given his backing to coal in the next few years, which many say puts him at odds with Australia’s commitments to climate change.
Labor has seen this as an opportunity to fill the gap and play to those on both sides who are frustrated by a lack of stability. Its aim to phase out coal and increase the number of green jobs as well as spending on renewable energy has received plenty of praise from some quarters, but others have criticized it.
One of the main criticisms involves how Labor plans to fund its policy, as it admitted that it will initially be using a total of $15bn in Commonwealth debt to finance its projects. This will go toward new electricity generation projects and an upgrade of transmission lines into the grid as Labor makes energy a huge focus for its party ahead of next May’s elections.
The Investor Group on Climate Change, which holds strong political sway and has a portfolio worth $2tn, said that using so much funding from the state could cause serious problems for investors, who may fear that the landscape has changed and will make them less sure of where they should put their money.
Emma Herd, the group’s CEO, said that Labor’s intent ‘risks undermining the long-term signals that investors need’ and feels that its plan has the potential for ‘increasing investor uncertainty.’
Intriguingly, many others have echoed a similar line in wanting Opposition Leader Bill Shorten and the Labor party to back the NEG, saying that it delivers the kind of stability that Australia needs. As Morrison still refuses to engage with the bill, given how it drove his Liberal party apart before his promotion to Prime Minister, the battle lines are becoming clearer.
Morrison previously said the idea of the NEG is ‘dead’ and has appeared to shift away from looking to reduce Australia’s carbon emissions through policy. However, Shorten is warming to the idea, especially if he believes that it can get Coalition support.
While the cost of Labor’s energy plan has yet to come to light, it may involve using debt leveraging, which should incur significant amounts of interest to pay. Labor also plans on a $10bn investment in the Clean Energy Finance Corporation if it wins the election, although this is an asset and makes the expense to the taxpayer much lower.