Abbott-Joyce Monash Forum undermines Turnbull

Prime Minister Malcolm Turnbull during Question Time in the House of Representatives at Parliament House last month.

The idea that drives the latest core conservative revolt — a new coal-fired power station run by the government, if needed — is delusional and flawed at every point. It fails on policy, politics and consumer grounds. The conservatives are becoming coal power socialists. They are losing the plot.

This push is surely one of the most bizarre transitions on record. It cannot succeed. But the damage it can do is potentially huge. Smart Coalition backbenchers should keep their nerve and stand by the existing National Energy Guarantee policy endorsed last year by the cabinet and partyroom.

Given Tony Abbott and Barnaby Joyce as spear carriers, this push is guaranteed to ignite populist conservatives and their media champions across the nation. The drums will be beating — but many backbenchers have refused to sign.

Only a fool could miss the timing of this revolt and its lethal political agenda — it is designed to exploit Malcolm Turnbull’s 30th Newspoll loss and comes just before the vital federal-state ministers meeting where Energy Minister Josh Frydenberg hopes to win design approval for the government’s NEG policy.

This episode exposes the nostalgic mindset that blinds the conservatives. They are locked into past dreams when they swept the country offering cheap power prices and repudiating Labor’s carbon tax. They refuse to admit the caravan has moved on.

Here’s the reality. A new coal-fired power station would take four to six years to build and fit, and cannot offer the slightest scrap of relief to power consumers for years. The Monash Forum wants a $4 billion government plant on the Hazelwood site, which means consumers ultimately will have to pay.

This is ideology before rationality. But this time the ideology is nationalisation, not free enterprise. Labor will mock the ideology and repudiate the policy. The conservative lobby doesn’t get it — an electoral contest in which coal is pitted against renewables is a losing contest for the conservatives.

They want a phase-out of subsidies for renewable energy and a $4bn billion boost for coal. And they think this is a winning formula! They may gather votes in regional areas but they will lose overall in the nation.

The conservatives fall into the trap the progressive side of politics can only dream about — making coal the issue. Imagine if the Turnbull government accepted this position and pledged a $4bn government-owned new coal plant. This would ignite the climate change brigade around a campaign to denigrate the Coalition as a pro-coal, dirty-energy, anti-renewable, denialist government. There are no prizes for guessing the outcome.

The partyroom endorsed the NEG last year in a win for Turnbull and Frydenberg in an effort to try to integrate energy and climate change policy. This solution was part technocratic, part politics, part compromise. There are no perfect answers any more, just the least worst. Devised by the regulators, it remains the best prospect of ending the destructive investment-destroying and polarising condition of our energy policy.

The reality is if this policy fails there is no plan B — just more chaos. But the conservative core seeks to impose a condition on the NEG, namely that it must stand alongside a government-backed coal plant. As Frydenberg signalled yesterday, this is inconsistent with the policy and the market-based investment process it seeks to establish.

If this episode prejudices or undermines the Turnbull government at the energy ministers’ meeting, the damage would be immense. It is a fanciful yet irresistible to draw a parallel with the events of 2009 when Abbott and the conservatives ruined Turnbull’s leadership by destroying partyroom support for his commitment to a carbon pricing scheme advanced by the Rudd government.

The differences this time are that a majority of the partyroom will stick with Turnbull’s position, the alternative is untenable and the government has the ability to advance fresh initiatives: witness the talks promoted by Frydenberg and Turnbull to promote coal within the NEG framework.

Sponsored by the government, talks over a possible sale of the Liddell power station are expected to be held involving the energy ­retailer Alinta, headed by Jeff Dimery, in co-operation with Manufacturing Australia, representing the nation’s main manufacturers with a vested interest in long-run energy supply.

Frydenberg said yesterday the NEG provided scope for fresh market-based investment in coal and upgrading of coal plants. “We would be pleased to see Liddell remain open or sold by AGL to another party on a commercial basis,” he told The Australian. Keeping Liddell open may still be unlikely but any such sale would constitute an immense win for the Turnbull government.

The government previously asked the Australian Energy Market Operator to conduct an audit of coal-fired power stations to assess options for upgrading. In its September advice to government, AEMO stressed “the value of avoiding unnecessary investment in new power plants with uncertain long-term business viability” but backed investment to extend “current dispatchable resources” — meaning coal plants.

The Monash Forum is correct in bemoaning the huge rorts constituted by renewable subsidies for many years along with the renewable energy target. This has been an appalling example of Australian public policy. One of the principles underpinning the NEG is the ending of subsidies. Turnbull and Frydenberg argue that the falling cost of renewables means subsidies are unjustified, a stance that infuriates the progressives.

The Monash group, however, admits the extent to which the progressives have won the climate change debate in this country. Its foundational letter says “the political risk caused by emissions reduction policies, especially the extreme ones implemented or proposed by the Labor Party, means that no private company is likely to build another coal-fired power station here in Australia even though coal continues to be our lowest-cost source of reliable baseload power”.

Banking and financial institution investment resistance to coal is the source of much conservative anger and frustration. The Monash Forum says government must substitute for the flight of private investors from political risk. The truth is that using one bad practice to justify another is, and always has been, bad policy. In this case it is also doomed politics.

The conservatives have played into Labor’s hands by insisting there is little difference between Coalition and Labor energy policies. What are they thinking? Why do they give Labor this get-out-of-jail ticket? For a start the differences in the emissions reduction targets are enormous — 26 per cent for the government and 45 per cent for Labor.

Beyond that, Labor is pledged to a 50 per cent renewable target by 2030 with some state Labor parties promising even more. Frydenberg has said under the NEG renewables would contribute 28-36 per cent of the total energy mix by 2030, with solar and wind providing only 18-24. Labor is hostile towards the NEG precisely because it believes its commitment to renewables is so feeble.

Under the NEG, coal and gas still provide 64-72 per cent of the energy mix by 2030, a far higher level than envisaged by Labor. Yet Coalition conservatives are unhappy. They remain infatuated by the idea of maximum product differentiation from Labor as the key to political success.

Product differentiation cannot be an end in itself. It must also make sense. Sadly, the conservatives deny what stares them in the face — that there is already a substantial product differentiation on energy and climate policies.

The government seems caught in conflicting emotions. Is it trying to destroy Turnbull’s leadership without having any successor in mind? Is it determined to ignite a new internal brawl over energy policy without having a viable alternative option? Has it given up on the election in pursuit of domestic battles it intends to wage in opposition?