The Baird Government’s popularity is a lesson for Abbott

Privatisation is obviously not a dirty word but nor is climate change in NSW's corridors of power. One National Party MP has even declared the NSW Government will do all in its power to promote renewables. Abbott may be able to learn something from their different approach to Baillieu-Napthine.

Desperate to deflect blame for the Victorian Coalition government being voted out after just one term, federal government MPs point to the fact that the NSW Coalition is doing exceedingly well in the polls. Hence, they argue, the federal government can’t be a significant factor in the recent Victorian election.

But in some respects the Baird Government provides a helpful guide for the federal Coalition as to how to turn their fortunes around. This is because the Baird Government is to an extent striving towards the sensible middle, resisting ideological calls to the extreme. 

There are two cases in point that help illustrate this in the contrast they present to the ideologues: one is the decision to privatise the NSW electricity network businesses; the other is their continued commitment to do something constructive on climate change. Privatisation is considered right-wing, climate change left-wing. But if you make decisions based on evidence you couldn’t give a damn what wing an issue comes from. Those governments that are seen to make decisions based on weighing the evidence for a sensible compromise rather than ideology tend to ultimately win over the public.

Privatisation

Firstly on privatisation of the NSW networks – this was a brave decision by the Baird Government that went against the tide of public opinion. It illustrates they aren’t just a bunch of timid politicians whose popularity is a product of giving in when anyone screams loudly. They made the decision ultimately in the best long term interests of the broader NSW community. 

The chart below, taken from a recent benchmarking study undertaken by the Australian Energy Regulator, helps to illustrate why. While this is somewhat simplistic, it is a very strong hint that customers pay far more for their poles and wires where they are government-owned relative to privatised. Yes, on average the NSW network businesses have to serve a population that is more dispersed than the Victorian networks but, as the chart below clearly illustrates, once we take into account customer density, the government-owned NSW network businesses (and Queensland’s ENX and ERG) still charge their customers substantially more than the privately run Victorian networks (and South Australian – SAPN). 

Source: Australian Energy Regulator (2014) Electricity distribution network service providers – Annual benchmarking report

Powercor (PCR) and AusNet Services’ (AND) performance in particular completely blows apart the excuse about population density. In spite of having a quarter to a half of the customer density of the likes of NSW’s Endeavour and Ausgrid, their cost per customer is around a third less. Sure, their reliability is not quite as good as the NSW networks but customers' supply is still only interrupted for less than 0.03% of the time while having to cover a vastly greater distance per customer.

Climate change and clean energy

In the Baird Government climate change is not considered a dirty left-wing political slogan to be expunged from the dictionary. And you would think so, given the bureaus of meteorology and Academies of Science across every major advanced economy agree the weight of scientific research clearly indicates human activity will significantly warm the planet. Yet in the Victorian Government the ideologues were let loose. Victorian public servants were instructed to not use ‘climate change’ but, rather, ‘climate variability’. They were also told not to attribute any financial value to reduced greenhouse gas emissions in cost-benefit analysis.

It was an interesting contrast to see that while the Victorian Government chose to axe its energy efficiency target scheme, the NSW Baird Government was expanding its very similar scheme. 

The balance of evidence indicates that these schemes will provide a net economic benefit and represent one of the lowest costs mechanisms for reducing carbon emissions. That doesn’t mean they’re perfect, these schemes have to be closely monitored and regulated to ensure quality is not compromised. For example, the Victorian Government took too long before cutting back the incentive to roll-out stand-by power controllers.  

Also, in spite of the Victorian Government being in the box seat to receive billions of dollars in wind farm investment from the federal government’s Renewable Energy Target, they decided they didn’t want it. In an unprecedented planning regulation, they declared that anyone within 2km of a wind turbine could veto a wind power project development.

Meanwhile, just two days ago a NSW Government parliamentary secretary from the Nationals Party, Leslie Williams, told a forum of stakeholders that, “We will do all in our power to encourage and promote investment in, and the use of, renewable energy.”

And in news that might come as a bit of a shock to Prime Minister Tony Abbott, Williams informed the meeting:

There are already more than 8000 megawatts of large-scale renewable energy projects in the NSW planning system, either with development approval or in the process of getting one. Even if half of these renewable energy projects are realised it would bring 65,000 direct and indirect employment opportunities during construction and 3500 for operation and maintenance.

By comparison, the total NSW coal industry employed around 22,000 in 2013-14.

While Tony Abbott continues to insist the RET drives up electricity prices, Williams sided with the balance of evidence (including modelling from the Abbott government’s own review). She declared the Renewable Energy Target would reduce power bills, improve competition and offset the risk of rising gas prices.

A caveat

None of this is to deny that it also helps the Baird Government’s popularity that the prior NSW Labor government was a corrupt, incompetent shambles driven primarily by its own self-interest and whatever came out of the latest focus group. Meanwhile, the prior Victorian Labor government may have made some notable mistakes, but they weren’t corrupt, and the mistakes were at least made as part of genuine effort to improve the lot of the broader community. 

Yet even this carries a lesson for Abbott. Just today on ABC Radio’s 774 program, ex BCA Chair and head of the Commission of Audit, Tony Shepherd said he would welcome working with a Victorian Labor Government along the lines of the prior Bracks-Brumby government. This was a government few independent observers ever accused of being ideological and driven by serving their own supporter base. Instead it strove for the sensible and practical on most occasions. 

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