Policy divide came with real bitterness

Tony Abbott in Question Time ahead of the Coalition meeting. Picture Kym Smith

The federal Coalition has put its dysfunction on display again.

Always up for a brawl on climate change, Liberals and Nationals MPs have thrown themselves into an internal row that tells Australians to look elsewhere for leadership.

In public, MPs assure voters they have a way to keep power bills down. In private they rip each other to shreds because they do not know what to do.

• Australian politics live coverage: Follow all the fall-out from the energy row

The policy divide at the Coalition party room meeting on Tuesday night came with real personal bitterness.

Tony Abbott interjected so often throughout the meeting that Craig Laundy, a frontbench ally of Malcolm Turnbull, called the former prime minister out and asked that he show respect to those who wanted to speak.

Russell Broadbent, once a strong supporter of Turnbull, warned so strongly about the risk of higher electricity prices that he got a rebuke from Paul Fletcher, another frontbencher very loyal to the Prime Minister. “It was quite ugly,” says one witness.

There can be no long-term solution on energy from a group that will fracture so easily on policies it agreed to less than two years ago, such as a renewable energy target and a goal to reduce greenhouse gas emissions.

The Coalition party room meeting heard MPs who questioned the government’s stated plan to generate about 23.5 per cent of electricity from renewables by 2020 and to reduce emissions by 26 to 28 per cent by 2030.

Abbott wants to scrap the RET even though the nation’s chief scientist, Alan Finkel, says this would harm investor confidence. The chair of the Coalition’s backbench committee, Craig Kelly told the meeting the emission reductions should be slowed in the near term to “back end” the cuts in later years. Queensland MP George Christensen told colleagues he regretted agreeing to the emissions targets two years ago.

Consider what this tells energy investors, let alone voters. Even if Turnbull can find a way through this chaos to decide a new energy policy, who can be sure how long that policy would last?

Even if the Coalition holds power at the next election, can investors be confident that the rules set in 2017 will still be in place in 2019 when their new wind farms or gas-fired power stations are meant to be built?

Some Coalition MPs dream of attracting investors to build a new coal power station to last four decades, but their promises of certainty ring hollow. Think of the size of the government guarantee needed to shield an investor from the prospect of a change in policy or a change in government. The Coalition’s internal disputes only add to the risk premium.

Observers should be wary of seeing the dispute as a revolt or backlash. While some MPs described the debate in those terms, others disagreed.

MPs who hate the Finkel proposal for a clean energy target certainly mobilised faster than others, so the story of the revolt was the first story told. Even so, Turnbull and Energy Minister Josh Frydenberg were careful to use the meeting to listen to concerns rather than advance a policy.

That meant the MPs turned their sights on the Finkel report rather than on Turnbull and Frydenberg.

“Nobody from government is proposing anything yet so it can’t be described as a backlash or a revolt,” says Queensland Senator Ian Macdonald, one of those who warned against the clean energy target.

Yet the message was clear and it means Turnbull will steer clear of the clean energy target in the form modelled in Finkel’s report, which assumed an emissions intensity threshold that would knock coal power stations out of the scheme.

The unspoken warning to Turnbull is that he puts his leadership in danger if he goes too far on energy and climate policy, just like he did in 2009 when Abbott replaced him.

Nobody in the party room meeting advanced an alternative to the Finkel plan. Many agreed that doing nothing was not an option — Frydenberg’s key message. While a clean energy target looks almost impossible, some form of energy mechanism is still on the table.

The clean energy target could be structured to offer help to coal as well as wind and solar but it will not be worth the “clean” brand.

Anything that satisfies Abbott is likely to be too generous to coal and therefore rejected by Labor and the Greens. Even if it scrapes through the Senate crossbench, it offers no policy certainty for the long-term.

Shorten will be more than happy with this political gift from this divided Coalition.

And the climate wars will continue.