Daily Bulletin

The Conversation

  • Written by Michelle Grattan, Professorial Fellow, University of Canberra

As the government seeks to rein in the excessive expectations of what it can do to make housing more affordable, Malcolm Turnbull is throwing everything at his energy security policy.

Think whatever-it-takes. Think big picture. Oh, and if you are of mature years, think Rex Connor.

This week’s plan to place controls on gas exports to ensure adequate local supplies is a drastic course which a Coalition government would normally not even contemplate.

Only last month Nationals cabinet minister Matt Canavan, speaking about suggestions that a set proportion of supply should be reserved for the local market, said: “We don’t make sure we have enough scotch fillet in the supermarket by telling farmers they can’t sell their beef or cattle to overseas markets.”

Indeed. But fillet steak, or lack of it, is not a vote-sensitive issue, nor does its price have major implications for individual businesses and the broad economy.

Canavan, the Resources Minister, will administer the new controls. The gas industry has railed against the intervention, with the Australian Petroleum Production and Exploration Association saying restricting exports is “almost unprecedented” for Australia and warning of sovereign risk.

The government responds that the gas market is distorted, excessive prices are affecting the viability of Australian business, and this is a short-term measure. It stresses the long term aim is to remove state restrictions on exploration and development.

This week’s move has got a tick from some respected economists. Saul Eslake says: “In the particular circumstances I think it’s the right thing to have done – even though it runs against a lot of free market principles”. John Daley, CEO of the Grattan Institute agrees: “In a situation where the market manifestly is not working, there’s a strong case for the government to step in. Companies have been given ample opportunity to sort the situation out and they haven’t.”

The government no doubt will hope that producers, with the whip raised over their heads, will move before the lash has to be applied.

The measure will likely go down well with the public – provided it has a noticeable effect on prices.

We remember the Coalition hype that abolishing the carbon tax would be a miracle cure for high electricity costs. Many factors contribute to prices. Even if the gas initiative applies significant downward pressure to wholesale prices, helping businesses, Turnbull has conceded the flow-through to households will be diluted.

As to the big picture energy ideas, it seems a case of the bigger the better. A planned expansion of the Snowy Hydro has been flagged. And now there is talk about possible north-south and west-east gas pipelines.

While he was spruiking hydro in Tasmania last week, Turnbull said the government was “looking very closely at a pipeline opportunity between the Northern Territory and the east coast”, and connecting the huge resources in the north west of Australia to the east was “an option”. In Queensland this week he was enthusiastic about a pipeline from the north of the state.

Energy Minister Josh Frydenberg, appearing with Turnbull last week, said the idea of a west-east pipeline is “appealing, it is nation-building and it is one that the government is seriously considering”.

“This idea goes back to Rex Connor,” said Frydenberg, who was born in 1971, the year before Connor became minister for minerals and energy in the Whitlam government. A cross-continent pipeline was among the aspirations of that highly controversial minister, a fierce economic nationalist. Connor was at the centre of the government’s loans scandals, as he sought to raise funds for his projects through a dubious Pakistani money man, Tirath Khemlani.

The opposition of the time attacked Connor relentlessly. The irony of the pipeline talk is not being missed by those in the Coalition who know their history. Nor should it be forgotten that Connor’s pipeline didn’t eventuate - there is a long road between idea and achievement.

As Turnbull aspires to get a lift by thinking big, the Coalition searches for hope in the smallest positive sign, as it nervously monitors the polls.

This week’s Newspoll had Labor leading 52-48% on the two-party vote compared with 53-47% three weeks ago; the Coalition primary vote remained unchanged.

The slight movement was seen as a green shoot in some Coalition (and media) circles, when in fact it was effectively a status quo poll. The green shoots are yet to come. That’s if they ever do. These days, when voters become cynical, they make judgements quickly and brutally and it’s hard for a government to turn them around.

The Liberal Party is itself a major drag on Turnbull’s prospects of recovery, with the right standing on his neck and bitter factional fighting in key state divisions.

Tony Abbott will remain an established, regularly-critical voice, now enjoying access to high profile media spots. He’s defiant about his right to speak, declaring this week, “because I am a free citizen of a free country and a member of a party which doesn’t practice Stalinism, which believes in free speech, well, I’ll say my piece”.

When he became leader, Turnbull could have expected that by now Abbott would have faded into relative obscurity, even if he was still in parliament.

That would have happened if Turnbull had lived up to expectations. Instead, with his successor struggling, Abbott is still in the foreground of politics. Some believe he now accepts he won’t get the leadership back but just wants to see Turnbull quit before the election.

One thing that nobody around the Prime Minister has a big idea for resolving is the debilitating Abbott issue.

Authors: Michelle Grattan, Professorial Fellow, University of Canberra

Read more http://theconversation.com/grattan-on-friday-turnbulls-pipe-dreams-channel-ghost-of-rex-connor-76801

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