Thus Spake Mungo: Turnbull’s NEG – negative or just negligible?

By Mungo MacCallum

Malcolm Turnbull crows that his National Energy Guarantee (NEG) is a game changer – and so it is, but that doesn’t mean much.

The energy game has been changing for well over the last decade, and in all likelihood will go on changing for the next ten years at least. The point, surely, is not to keep changing the game but to end it, delivering certainty, price stability, and above all political success.

This may yet happen, but as last week spluttered to a close, you wouldn’t want to bet your power bill on it. All that can sensibly be predicted so far is that there is a lot of tweaking and dickering required before Turnbull can proclaim that the light on the hill is in fact reliable, affordable and sustainable – even in his own limited terms.

The NEG was obviously created in haste bordering on panic, as the regulators – the experts, as Turnbull likes to call them – struggled to implement the agenda that Turnbull had set them: no emissions trading scheme, no renewable or clean energy targets, cut subsidies for wind and solar, but not coal, gas or Turnbull’s pet project Snowy Hydro 2.0

The most obvious hole, of course…was the claim that power prices would fall by up to a couple of bucks a week – not immediately, of course, but in a few years when and if everything turned out alright.

Then, in the process, offer at least the hope of cheaper costs for households and businesses, maintain the promise that the Paris agreement is on track and make enough room between the government’s policy and the opposition’s demands to leave the opportunity for a brick fight if one is needed.

Mission Impossible, in fact; but they were able to produce something half way credible, which is a credit to their determination to stick to a third rate, self-contradictory brief, even if they were manifestly unconvincing as they attempted to justify it.

The most obvious hole, of course, and the one Bill Shorten latched on to first, was the claim that power prices would fall by up to a couple of bucks a week – not immediately, of course, but in a few years when and if everything turned out alright. What, he demanded, was the modelling on which that figure was based?

Well, none, actually – the best Turnbull could muster was an indignant declaration that it was the assessment of his experts – three long-term regulators of the market, whose lamentable failure has led to his NEG in the first place, a lobbyist from the widely derided Business Council of Australia and his head honcho, the career public servant Kerry Schott, who, Turnbull boasted, had a degree in pure mathematics. As it happens, so do I, but I do not presume to pull complicated predictions off the top of my head and round them to the last dollar.

To be fair, Schott was at least willing to admit that in fact the line about $115 a week was little more than an educated guess; an informed one, no doubt, but really not much better than the educated guesses of the critics who suggested that in fact the bills may well increase as a direct result of the new regulations to be promulgated by NEG, and even if there were some nugatory savings, they would inevitably be absorbed in the other constant increases endemic in the fraught process of delivering energy.

And as for how such putative savings would come about – after some prodding, it emerged that the biggest catalyst would be a burst of new investment, driving down prices through market competition. But as we have been repeatedly warned, such investment would depend on long-term bipartisan agreement on policy. Which means that it will come back to Labor, which appears to be in no great hurry to rush to the table.

Turnbull admits that the states will be crucial, and the Labor states are, to put it mildly, sceptical. Turnbull said he wanted a respectful discussion with them, and proceeded to shower them with insults and abuse. In the meantime Shorten and his shadow minister Mark Butler are content to play funny buggers, demanding more (or indeed any) details of the skeletal proposal before deciding to embrace, reject, or most likely dicker with it until the various balloons take off, settle, or just pop.

Until then there will be mischief to be made, the most blatant tactic being to agree with various economists that it could be a clever con to blindside Tony Abbott and his rump: NEG is in reality a sort of Clayton’s emissions trading scheme, a carbon price in disguise. And as such it can perhaps be endorsed as a basis on which Labor can build when in government.

Turnbull and his Energy (forget about the Environment) Minister Josh Frydenberg of course indignantly deny that it is anything of the kind, but they would say that, wouldn’t they? The point is that for all the bluster about engineering and economics, there is very little real change for ordinary consumers (or hard-working families as we are compelled to call them in the government’s politically correct jargon) to cling to.

There may be no blackouts over summer – indeed, there had bloody well better not be. But the bills will keep coming as usual, with the only hope of solace a non-guaranteed pittance some time after 2020. This is not exactly a vision to capture the imagination of the masses, and it is probably not very smart of Turnbull to try and sell it as such. It looked like a panic move: conceived in haste, devised without any real analysis and, crucially, unlikely to provide the political dividend that was its desperately sought purpose.

The weary sceptics claim that this it worse than half-hearted – it is a downright cop out. They say NEG is short for negative. There is some truth in that, but the accusation will not worry Turnbull as long as the party and the punters will wear it. The real worry is that it will be seen as too little, too late, too like buck passing – that NEG is in fact short for negligible.

And if that is the case, Labor will be emboldened, the hesitant steps towards bipartisanship will be abandoned, and the games – particularly the endless blame games – will continue as usual. Plus ca change, plus la meme chose,