Nothing sparks a debate in this country quite like energy policy, and so the commentariat has been waiting with bated breath for the federal government's white paper on the topic. Its launch yesterday was met with cries of "more of the same," although our scribes have found solace in an accompanying speech by Resources Minister Martin Ferguson. Elsewhere, there's a glimmer of hope at the stalled Oakajee project, and cost cutting might extend the resources boom until 2020.
But first, Fairfax's Adele Ferguson labels the government's energy white paper "another so-what report", as it stops short of recommending privatisation.
"World peace is something everyone aspires to and yet the world abounds with conflict. The same can be said about electricity prices, yet there has been a noticeable absence of reform... There is nothing revolutionary in [the government's energy white paper] and it doesn't change the fact that reform was required three months ago, last year, a decade ago – but nothing has happened and nothing can happen unless Queensland, New South Wales and Tasmania come on board."
The Australian Financial Review's Jennifer Hewett finds more value in the way the report was delivered.
"Resources and Energy Minister Martin Ferguson is one of the rare politicians who prefers to play it as straight as he can. This made his speech to accompany the release of the Energy white paper a welcome antidote to the usual simplistic lines. He was more focused on explaining the complexities of energy policy than scoring easy political points. This included conceding that the carbon price added "marginally’’ to costs, but concentrating on the need to get the rules right to allow the market to work. He made only relatively brief reference – and certainly no detailed defence – to costly government programs such as the $10 billion Clean Energy Finance Corporation demanded by the Greens. Instead, he said tactfully that the results were far from guaranteed and a 'range of technologies included in the projected energy mix are yet to become commercially viable'."
Business Spectator's Stephen Bartholomeusz also gives Ferguson his tick of approval.
"Martin Ferguson has the reputation for being one of the more knowledgeable and least political of the Gillard Government’s ministers. Today he launched the government’s energy white paper which, because it represents a long-term policy framework that doesn’t involve near term spending, enabled him to buttress that reputation without unduly unsettling his colleagues. … Ferguson’s general promotion of market-based approaches framed by intelligent regulation as the foundation for long-term energy policies… is laudable."
Meanwhile, The Australian Financial Review's Chanticleer columnist, Tony Boyd, turns to Mitsubishi Corp’s decision to slow down work at the $10 billion Oakajee port and rail project in Western Australia. For his part, Boyd sees hope.
"Oakajee joins the long list of major projects in iron ore, coal and uranium that are either being put on hold or where investment is being slowed to a trickle… Mitsubishi, which has already pumped about $700 million into the port development and associated iron ore mine at Jack Hills, has been searching for a Chinese equity partner all year. But the change in leadership in China has put all major investment decisions on hold. However, that uncertainty could be removed soon as the Communist Party’s 18th National Congress started yesterday and will run until November 14."
Also in resources, The Australian's economics editor, David Uren, notes there are eight LNG projects undergoing feasibility studies at the moment — if one is approved he expects the resources boom to peak later than next year, while several approvals could prolong until at least 2020. The biggest issue is costs.
"It is one thing for Australia to provide a stable and secure source of supply, but it needs to be capable of being brought into production at a reasonable cost. That is not possible in a world where a welder on an LNG project can earn as much as $400,000, having negotiated a $100,000 pay rise in the past year. The government is doing what it can to accommodate requests from project operators for temporary overseas visas to help them manage labour shortages. But elevated construction costs are undermining the project projections."
At the same newspaper, Brian Frith offers a dives deep into Resolute Mining's complex "bear hug" that forced Noble Resources to accept its rival financing offer.
And Frith's colleague Tim Boreham uses Yellow Brick Road's new mortgage deal with Macquarie to springboard into an analysis of other players in the non-bank space, which he says hold better value for investors.
Finally, The Australian's Adam Creighton takes aim at calls for "evidence-based policy", which he says stifle economic reform. He reckons it's much better to pursue an "ideology-based" approach.