Morrison’s energy ‘big stick’ cut down to size

Scott Morrison’s “big stick” powers over energy companies have been whittled down, but critics remain unimpressed.

Former foreign minister Julie Bishop in question time yesterday. Picture: AAP

Scott Morrison’s “big stick” powers over energy companies have been whittled down, with the government agreeing to judicial oversight of forced divestment orders for alleged market manipulation, following a backbench outcry and warnings of a constitutional challenge.

But energy companies, business groups and a handful of Liberal backbenchers — including Julie Bishop — warned that even with the additional safeguard, the powers set a dangerous precedent that would threaten investment across the economy.

The Coalition joint partyroom yesterday agreed to support the proposed new divestiture powers for wholesale electricity companies, for conduct ruled by the competition watchdog to be “fraudulent, dishonest or in bad faith, for the purpose of distorting or manipulating prices”.

For the power to be used, the Australian Competition & Consumer Commission would have to make a recommendation to the Treasurer, prompting an application for a Federal Court-issued divestment order.

The legislation, which is not supported by Labor, would have a 2025 sunset clause.

“Where energy companies deliberately manipulate the market to distort prices, there will be a power of divestment,” Josh Frydenberg said yesterday. “The Federal Court will then be empowered to make that judicial order.”

The Treasurer challenged Labor to back the bill, one of the centrepieces of the government’s energy policy since its abandonment of the national energy guarantee, saying it was based on similar powers in the US and Britain.

“This legislation is all about putting consumers first; getting lower energy prices for Australian families and for Australian businesses,” Mr Frydenberg said.

“This is now a test for the Labor Party. Whose side will they be on? Will they be on the side of the Australian consumers as the Liberal and National government is, or will they take the side of the energy companies?”

But Labor Treasury spokesman Chris Bowen said the government’s “much littler stick” would threaten investor confidence while doing nothing to lower power prices.

“This ridiculous policy, this Venezuelan-style intervention, this intervention in the economy which would chill investment, has collapsed under its own weight,” he said.

“It was poor policy and it has shown to be poor policy.”

With Labor opposed to the bill, the government needs two crossbenchers to pass the legislation in the lower house, and eight of 10 crossbenchers in the Senate.

Ms Bishop told the Coalition partyroom the policy threatened investment, could be regarded as a sovereign risk, and was inconsistent with Liberal values.

Three other backbenchers — Jason Falinski, Russell Broadbent and Craig Laundy — also spoke out strongly against the proposed legislation.

The Australian Energy Council, which represents big power generators, said the divestment threat “will only increase risk to investors and costs for consumers”.