Anthony Albanese has secured a significant and timely political victory on energy prices before Christmas that will bolster his reputation as an effective deal-maker and leader of a government that is delivering outcomes.
But at what long-term cost?
Having pledged during the election to reduce power bills by $275, only to discover in government that they would in fact be going up by four times that amount, it was the win he needed to restore credibility with voters on energy pricing.
It’s important to remember that this new deal will not lower power prices. It will only reduce the amount they are already going to go up. And the horse has already bolted on the current quarter and the next.
What it does is offer vulnerable families direct relief by the middle of next year with rebates on bills, while consumers and businesses more broadly will eventually benefit from the price caps designed to blunt dire forecasts for rising gas and electricity prices over the next 12-18 months.
The retail politics of the agreement – struck on Friday afternoon with the states and territories – work strongly in the Prime Minister’s favour.
The majority of Australians backs government action to curb price rises.
Treasury believes the measures will have the added benefit of being a dampener on broader inflation.
The cruder optics also work well for Labor’s left-flank constituency. Coal and gas suppliers look to be penalised for profit-taking on prices inflated by war.
Whether it is the right policy for a sector in need of longer-term reform, however, is another question. The big unknown is what impact the price caps will have on future investment in supply.
The mining industry warns of serious consequences for such an acute state intervention in the market.
Tania Constable, Minerals Council of Australia chief executive, said the process exposed deep vulnerabilities in the energy system, which wouldn’t be solved by making it more complex.
The petroleum industry, representing the gas producers, have labelled it a “radical intervention” that will smash investment confidence and have the ultimate effect of pushing prices up. They argue that more supply is the answer.
Both the federal and state governments, however, know there is little sympathy in the community for the producers’ laments – even if they were to be right.
NSW Premier Dominic Perrottet, who drove the negotiations for a compensation package that delivered for consumers rather than producers, had more to gain from this outcome than the other premiers, with an election four months away.
For Albanese’s Industry Minister Ed Husic, who has railed against the coal and gas suppliers, it will be seen as a vindication of his early positioning and a major internal victory.
Union, law firm cut off alleged rape victim
A young lawyer was allegedly raped by a delegate at a Health and Community Services Union conference, while the ‘worker-friendly’ law firm that sent her there has won a bid to halt her compensation.
Ex-union boss to lead Safe Work
One of Anthony Albanese’s closest union allies, Tony Maher, has been appointed to lead the workplace health and safety watchdog.