MB has warned and warned and warned. Not only on the blog. Via the broader media and backchannels to anybody who would listen.
That Albo’s cowards didn’t listen is no great surprise. It is pretty clear by now that Albo leads by paralysis. He says it’s by consensus in the model of Bob Hawke but, in actuality, it is by fear of action in the hope of upsetting the least number of people.
The problem with that approach is that it has no way of dealing with crisis. And crisis is the real business of government. The turning points at which real change becomes possible.
Conversely, if you don’t take advantage of crisis then it takes advantage of you and everybody gets angry.
That Albo has surrounded himself with poltroons is no surprise, either. A lily-livered leader will seek “yes men” as his peers. It is all a part of his visceral risk-management.
It is pretty basic psychology. Because Albo’s cowards are so afraid of rejection, they constantly self-sabotage themselves into situations requiring them to risk it.
Nowhere has this become more salient than in energy. Australia is gripped by an unprecedented crisis. The convergence of climate change transition, the Evil Gas Cartel, coal prices, and the Ukraine War, are in the process of lifting Australian utility bills by 60% over a year. This is 2% added to the CPI and 3% over two years with spillovers. It is the end of all manufacturing, a demolition of real wages, and crashing of house prices. All the opposite of the Labor platform.
Worse, if nothing is done, the problem will grow and the shock will become 200% utility bill rises. This is 10% added to the CPI over two years. The new gas deal signed by Resources Minister Mad King before she shot through on a gas junket gives the Evil Gas Cartel full license to do it.
Yet the problem is easily fixed. Three possibilities present themself.
Domestic Reservation
Gas and coal prices are the key problems. It is they that are driving power prices crazy. An easy solution for gas is to domestically reserve at a fixed price of $7Gj. Any fallout from that for the Evil Gas Cartel is its problem. Remember, it point-blank lied to Australia about having enough gas when it built its export plants.
Coal is harder. There are many more companies in that sector so it is not so easy to enact reservation. It is still possible but the mechanism will need to be more sophisticated.
Super-profits taxes
In one way, this is an easier solution than domestic reservation. It can be applied as a blanket to gas and coal firms and the money be recycled as energy subsidies for businesses and households.
But, there are problems.
It is easily gamed via transfer pricing and other scams. And the energy rebates are inefficient.
As well, super profits taxes can be inflationary. The bill shock still hits the CPI, and the subsidies lift spending, further pressuring prices. The central bank will do its best to trim out the CPI shock but it may still push the cash rate higher and thus all it is really doing is saving income at the cost of wealth.
Export levies
This is the best-in-class solution. A Ukraine War export levy is not a tax. It is a fiscal equalisation mechanism.
All mining revenues above pre-Ukraine benchmarked prices for gas and coal are levied to the government. This crashes the local price of both fuels and electricity prices. It erases the inflation problem.
It also inundates the budget with cash, scores of billions of it. Nor does it require the breaking of export contracts because it is about price, not volume.
Levying gas at $7Gj and coal at $100Gj is about right.
This is what Albo’s cowards must do:
- Resources Minister Mad King must be sacked for botching the ADGSM and, unbelievably, taking an oil and gas junket this week, making negotiations appear more like a corrupt ram raid.
- The Cabinet of Cowards must declare a national emergency and enact the Ukraine War Fiscal Equalisation Levy (UWFEL) law with immediate effect.
- No consultation with anybody other than The Greens (to pass it through the senate) is needed.
It’s that or it is doom for Albo’s cowards as every energy bill that arrives in every household and business east of WA for the next two years builds an insatiable rage at Albo’s cowardice.
