Labor’s ‘windfall billions’ a major problem for Turnbull government

The existence of Labor “windfall” billions for renewable energy companies, which consumers will have to pay, puts the focus on a political problem for the Turnbull government — hidden subsidies pushing up power costs.

Malcolm Turnbull and Josh Frydenberg didn’t create the extra burden for households, business and industry from 2020 to 2030. The Rudd Labor government did as it aggressively pursued an entire remake and expansion of the Howard government’s modest renewable energy scheme.

It seems possible Rudd and his colleagues did not anticipate the later effect on electricity prices, considered a lower priority issue as the ALP re-engineered climate-change policy and renewable energy incentives.

By 2009 and early 2010, as Rudd fought a losing battle to ­introduce his carbon pollution reduction scheme, the rapid expansion of rooftop solar systems with generous feed-in tariffs was threatening to throw renewable energy out of balance.

Despite declarations that extending subsidies, through renewable energy certificates, to renewable power generators who agreed to contracts and built facilities before 2010 would be “windfall profits”, Labor overruled objections and extended the subsidies for another decade. There was no sovereign risk because the contracts specified a 2020 cut-off.

While this will require an explanation from Labor, the political problem belongs to the Prime Minister and Energy Minister.

Both are selling their latest scheme to provide lower-cost electricity as doing so without taxes, an emissions trading schemes or subsidies — but that’s actually “new” subsidies.

All the agreed existing subsidies for renewable power generators, including these windfall profits consumers will have to pay for in the next decade, remain.

But the exposure of Labor’s inexplicable bonus of at least $3.8 billion will prompt calls to prevent the windfall gains from 2020 as contracted.

It’s hard to talk about no new subsidies without looking at unreasonable existing ones.