Labor division risks killing energy guarantee

State Labor governments are poised to scuttle the PM’s signature energy policy at a make-or-break COAG meeting.

Victorian Premier Daniel Andrews and the Premier of Queensland Annastacia Palaszczuk are poised to scuttle the PM’s signature energy policy this week. Picture: Stephen Cooper

The Victorian and Queensland Labor governments are poised to scuttle Malcolm Turnbull’s signature energy policy at a make-or-break COAG meeting on Friday as the party’s influential environmental wing warns that outright rejection risks a repeat of Kevin Rudd’s aborted 2009 attempt at an emissions trading scheme.

Victorian Premier Daniel ­Andrews has all but declared the proposed national energy guarantee dead, saying he had told the Prime Minister that Victoria would not sign up without guarantees the plan would survive the federal Coalition partyroom.

Queensland Labor sources said the Palaszczuk government would also oppose the NEG in its present form, with the emissions ­reduction target of 26 per cent of 2005 levels before 2030 almost half the state’s 50 per cent target.

Both state governments are due to hold cabinet meetings today to formalise their positions but ­already appear to have broken with Bill Shorten and federal Labor’s position to not yet rule out backing the NEG, if and when it is brought to parliament for a vote, provided there is room to increase emissions reduction targets.

Mr Andrews’s threat drew an immediate response from federal Energy Minister Josh Frydenberg. “If the Victorian government was to block the NEG it would be a huge own goal, against the national interest and punishing Victorians with higher power prices,” he told The Australian.

Labor posturing on NEG: Frydenberg

The country’s peak business groups will today call on states and territories to act in the nat­ional interest and back the NEG, which requires commonwealth and accompanying state legislation to be ­embedded in the current national energy framework.

The Energy Security Board, which has produced a final design for the NEG to go to the Council of Australian Governments meeting on Friday, has said the design would result in a 45 per cent drop in power prices over the next 10 years, leading to a $550 reduction in annual power bills — $150 due directly to the NEG and $400 ­attributable to renewable energy.

It would also secure supply, with reliability guarantees imposed on power companies, and ensure compliance with the Paris climate-change commitments.

The ALP’s influential environmental wing, the Labor Environment Action Network, has argued that while the states are right to be wary, outright rejection of the NEG would be “ludicrous”. But any support should be conditional on the ability to ramp up the emissions reduction targets to meet Labor’s stated policy of 45 per cent on 2005 levels by 2030.

The Andrews government is locked in a battle with the Greens and activist groups including GetUp! and Greenpeace ahead of the November state election, with the government being urged to walk away from the NEG because its emissions reductions targets are said to be too weak.

“Some environmental organisations seem to have forgotten the lessons of Labor’s attempts to deliver the (carbon pollution reduction scheme) in 2009,” LEAN spokeswoman Felicity Wade told The Australian. “The Labor states are right to be wary. This government has failed to deliver any workable response to climate change or spiralling electricity prices over two terms.

“Considering the desperate need for workable policy and the failure to date of the Turnbull-­Abbott government to deliver it, outright opposition to the NEG is ludicrous. It is in the interests of all Australians that the federal parliament sort out the current ­paralysis in electricity policy to deliver the certainty and a pathway ­toward both a cleaner and more affordable system.”

In what now appears to be a deliberate and co-ordinated political strategy designed to blame Canberra, the Labor states are claiming dissidence inside the federal Coalition partyroom as the reason they cannot sign up.

Mr Andrews said yesterday there was little point signing up to a policy that he suggested had no guarantee of surviving a week. “We are not signing up to the NEG until the Prime Minister can demonstrate that he’s actually got the numbers in his own government to deliver on the commitments he is making,” he said.

A senior Queensland ALP insider said the Palaszczuk government could not support it.

“We are not signing up next week, that is a given,” the source said. “A lot more work needs to be done before we can settle on a design that we can all agree and that will stick. The most fundamental question is whether what will be put up has the support of the federal ­Coalition partyroom.”

Mr Frydenberg accused the states of being hostage to the green lobby. “The question for Labor states this Friday is will they listen to the experts and deliver lower power prices for their communities or cave in to the Greens,” he said.

Mr Frydenberg said Victoria had been consulted at every step by the ESB: “Indeed, the ESB makes clear in their final report the states are not, and have not been, asked to sign on to the 26 per cent emissions reduction target, as determining the emissions trajectory is a federal responsibility as the signatory to Paris.”

However, Mr Turnbull and Mr Frydenberg still face a significant backlash in the ­Coalition partyroom when it meets on Tuesday next week. Tony Abbott has flagged he could cross the floor to vote against the NEG if it makes it to the floor of parliament and has not been rewritten with a bias back towards coal-fired power.

Mr Frydenberg has tried to downplay the significance of Friday’s meeting, saying the goal is to get in-principle support from states and territories. A phone-hook up with COAG members after the Tuesday Coalition partyroom meeting would then seek to lock in formal agreement.

Legislation is also needed at a commonwealth level to enshrine emissions and reliability targets, with no guarantee of Labor’s support or that of the crossbench.

Business Council of Australia chief executive Jennifer Westacott said: “For the first time in a decade we have a policy on the table that puts both affordability and reliability at the centre of the debate, alongside reducing emissions to meet our international commitments.

“It will be the Australian community and businesses that pay the price if the COAG Energy Council plays politics with NEG.”

Manager of opposition business Tony Burke said yesterday federal Labor had not ruled out supporting the NEG.

“If they’re putting a mechanism in place, that’s good, but it needs to be one that will work and one that does not permanently lock Australia into ridiculously low emissions,” he told the ABC.

The recently elected Liberal South Australian government, which has indicated support for the NEG, has said it was determined to undo the damage done by the former Labor government that presided over some of the highest power prices in the world in its pursuit of renewable energy.

Additional Reporting: Samantha Hutchinson, Michael Owen