Turnbull A Gonna & High Cost of Energy Policies.

Turnbull is Finished, But…

Today’s media is replite with analyses which, although not actually saying that Turnbull is finished as PM, leave the reader with little else but to conclude that this is the case. Below is a summary of conclusions by several commentators

• John Stone, who has long argued that Turnbull must go (as have I), refers in Spectator Australia for 2 December to the progressive deterioration in polling for the Coalition and Turnbull over the past 16 months. He argues that, for more than 9 months, “voters are no longer listening to Turnbull” and “it’s time for a circuit breaker –in the form of a Liberal leadership change – to be brought on” (see DIS-CON NOTES –No More Shilly-Shallying). Stone says that, while the primary focus in his DIS-CON notes of October was to ensure that Labor is defeated in 2019 rather than to nominate a replacement for Turnbull, he now refers to two developments which support Abbott as the replacement.

First, that while in Weekend Australian of 11-12 November Chris Kenny had  acknowledged that some say that “ leadership switching is fatal”, he had also argued that it is more readily supported where it involves re-installing “someone elected in a landslide in 2013 and robbed of a chance at re-election”. Second, Stone argues that the survey process on same-sex marriage adopted by “the Turnbull/Brandis/Pyne coterie” had been “devious” and that there has been a subsequent reneging “on the legislative protections promised by Turnbull against the further attacks on our freedoms that the changed definition of marriage will now inevitably produce”. He  added that the three Liberal assistant ministers who had strongly criticised this publicly would not “survive” under Turnbull but would under Abbott.

• Terry McCrann says that “PM and Treasurer were playing desperate ‘two minutes-to-midnight’ politics in calling the RC that they, sensibly, didn’t want and which we, the country and bank customers, most certainly do not need. But we have an awful — and that word is used deliberately — lot of politics coming up over the next month. By Christmas, we could even be on the way to an early new year election and the near certainty of a Labor government and a PM Shorten with a much tougher anti-bank agenda. If the government loses the Bennelong by-election next month to Labor’s ‘celebrity’ candidate, former NSW premier Kristina Keneally, and the unknown Coalition rebel carries out his threat to quit, the Prime Minister’s position would become completely untenable”.
• David Crowe almost has two bob each way but notes that  “the cabinet decision to launch a royal commission into banks captures the government’s shocking dilemma in a single moment. It admits defeat against more than a year of sharp politics from the Opposition Leader. It concedes the power of a handful of Nationals to beat the leadership (not just Turnbull) into submission. It responds to the Coalition’s failure to hold a majority in parliament, which is in turn the result of a weak performance at last year’s election”.
• Dennis Shanahan says that “while the Turnbull government offers “financial certainty” as a justification for the (RC) backflip, the basic reason is it has lost its parliamentary majority, lost the faith of Nationals MPs and senators, lost the ability to persuade angry backbenchers not to cross the floor, lost prime ministerial authority and lost the politics to Bill Shorten. The minority Turnbull government has suffered a humiliating parliamentary loss while the House of Representatives was suspended to avoid such a loss”.
• Andrew Bolt had yesterday advised his readers to “look at the disastrous polls. Look now at government MPs trembling at the shock of the Queensland state election, where One Nation won more than 20 per cent in the seats it contested, stripping the Coalition of votes and victory. It’s over and some Coalition MPs are openly challenging Turnbull’s authority as leader”. But Bolt also advised Abbott not to try to replace Turnbull because  “it’s not worth it, Tony. You’d lose. You wouldn’t save the Liberals — no one can — and you’d be blamed for failing. I saw how being sacked as prime minister nearly killed you and, as a mate, I’d hate to see them finish the job and dance on your ashes”.

All this suggests that at next week’s Party Room meeting Turnbull will be confronted with a motion of no confidence. But who will move it? There is as yet no indication that anyone wishes to take over the job of restoring the Liberal Party’s polling – and Turnbull has created such a disastrous situation (one which, underneath, he may even have wanted) that this would be understandable. But given that Abbott decided to stay in Parliament after he lost to Turnbull, he almost has a responsibility to try.

Of course, it cannot be assumed that such an opportunity will arise. Turnbull might move to prevent it by calling an election before next week and the GG would find it difficult to reject such a move.

Energy Policy

I have argued in previous Commentaries that federal (and state) decisions are being made on electricity policy without adequate analysis of the economic costs and are being justified wrongly. That has particularly applied to the National Energy Guarantee (NEG) scheme, which Turnbull rushed out on the argument that it reflected the view of “experts” as a way of fulfilling Australia’s (voluntary) commitment on reducing carbon emissions. The body specially created to recommend the regulatory arrangements, the Energy Security Board (ESB), is chaired by Kerry Schott and indications were given that details would be soon published by the ESB. But judging by her recent AFR letter this now appears likely to take some time (see ESB’s Schott Says Neg Needs more Work). Note in particular her comment that

“Finally, the work of the board in the near future must focus on two things. First, exactly how the National Energy Guarantee will work and how compliance in the market will be monitored and rewarded. This is not about modelling any number of different scenarios but rather about the market design of the Guarantee”.

This appears to confirm that Turnbull’s announcement of NEG was not based on any detailed and careful analysis.

Today, we also have a report (not yet studied by me) that the cost of the increasing renewable usage in the states is a major cause of the increase in electricity prices. This seems to differ from what has been said by both Federal and State Ministers and by  claims that subsidies to new renewable projects can be stopped because they are not needed. (Such claims seem, however, to be rejected by investors in such projects).

If the Coalition elects a new leader, a top priority should be to change existing federal energy policies and fully explain the false justifications. That will be difficult given what has already been said. If however an election ensues, we can expect the new Labor government to go further down the same track as Turnbull and his Chief Scientist: indeed quite a bit further.