Opinion
Power and inflation crises work for the new government but for how long?
Waleed Aly
Columnist, co-host of Ten's The Project and academicThere’s something about hearing the government of Australia’s biggest state ask its residents to minimise their electricity use during certain hours that evokes a sense of decay. Australia is a place that has felt beyond such things for most of our lifetimes. And yet, here we are, consulting news sites every few hours to see if the blackouts are about to arrive.
Meanwhile, in very much related news, inflation gallops away from our earning capacity, taking lettuce beyond reach, with promises of worse to come. Largely for this reason, the Fair Work Commission this week decided to raise the minimum wage a whopping 5.2 per cent. And inflation will likely outstrip even that within months.
Power and inflation crises suit the new government but for how long?Credit:Andrew Dyson
Ordinarily, such crises would be disastrous for the federal government. But that’s spectacularly untrue in this case for two reasons. First, the Albanese government is too new to be blamed for these things, or to be expected to have done much about them. Second, both crises underscore the new government’s view of the world to the exclusion of its predecessor’s.
That’s easiest to observe in the minimum wage example because the commission’s increase basically matches the government’s recommendation. That’s significant because when Anthony Albanese announced that position during the election campaign, Scott Morrison immediately seized on it as evidence of his economic looseness.
Had the Fair Work Commission ultimately concluded the government’s recommended increase was significantly too high, perhaps there might have been something to that criticism. Having campaigned on being a champion of real wage increases for the most vulnerable, Albanese would have appeared both ineffectual and economically unsound. As it is, he can claim to have read the economy better than the Coalition, while also prioritising those struggling most.
But the energy crisis, too, yields a tale. We’re in this situation in no small part because of a failure of our coal-fired power. Its infrastructure is ageing, not well maintained, leaving us with a significant proportion of our coal-fired generators being offline just as the weather means we need them most. Some of this is scheduled maintenance. But some of it is unplanned outages, too.
Worsening inflation will cause the price of groceries to rise further.Credit:Wayne Taylor
Meanwhile, gas isn’t picking up the slack because we export a lot of what we produce, and the war in Ukraine has made it extremely expensive. All this has driven up power prices beyond a level many consumers can afford, and beyond what our power regulator finds acceptable. Accordingly, the regulator imposed a maximum price, which energy providers regarded as unprofitable. This led those providers to withdraw supply, hence the threat of blackouts. Now the energy regulator will basically pay them to put more energy into the grid.
It’s hard to square this with the Coalition’s traditional narrative that coal is the cheaper, more reliable energy source. Certainly, we’ve suffered from low wind and solar output, too, but there’s a basic infrastructure problem here that makes the problem worse. Put simply, our grid doesn’t get the most out of renewables because it isn’t made for them. You could update it, but you’d need the federal government to implement renewable-energy policies that attracted that sort of investment. That wasn’t the Morrison government’s forte. But it does happen to chime with Labor’s “Rewiring the Nation” policy.
This isn’t to guarantee that the new government will be able to solve these crises. Critique is easier than governing. But in the Albanese government’s favour now is that it at least appears to be speaking a language relevant to these problems in a way the Morrison government wasn’t.
That’s reasonably common on the demise of a long-term government. Often, they leave behind a fistful of low-hanging fruit for their successors: the hills on which they needlessly chose to die. For John Howard, it was his refusal to ratify the Kyoto Protocol and apologise to the Stolen Generations. Kevin Rudd therefore very quickly did both, giving his early premiership a burst of momentum and soaring approval ratings.
Albanese is a similar beneficiary at the moment, with approval ratings to match. It’s not just on energy and wages, but on a suite of areas that crystalised the Morrison government’s exhaustion. So, he and his ministers are rushing all over the world, meeting leaders in our region, being obviously chummy with Jacinda Ardern, finalising compensation to the French for that scuppered submarine deal. Each of these things plays to perceived weaknesses of the Morrison government on the world stage. But perhaps the simplest example is much closer to home: the new government’s quick return of the Nadesalingam family to Biolela.
What’s noticeable here is the minimum of fuss, and the absence of any meaningful public resistance. Indeed, what was so marked about the Biolela case was the broad alliance of people who supported their return to the community. Refugee advocates sung in unison with people like Alan Jones and Barnaby Joyce. There was simply no political capital to be extracted from continuing to detain this family, but the Morrison government had backed itself into a corner. Having taken a zero-tolerance, no-exceptions stand against the family, it had to continue taking it, even though it was fighting a battle no one was particularly invested in seeing them win.
New governments, unburdened by their own histories, seem to have the luxury of common sense for a time. But only for a time. The Rudd example shows that soon enough, inherited problems become your own, and freshness can dramatically give way to disappointment. And it is here that the Albanese government will have its work cut out.
Inflation affects every part of economic life, and efforts to control it can easily veer us off into recession. But this current bout of inflation, exacerbated by a war, is a global phenomenon beyond national government control. At some point, Fair Work might stop acquiescing to significant minimum wage increases. Meanwhile, the energy market is famously difficult to reform given the layers of government involved.
These troubles promise to outlive any new government’s grace period, at which point we’ll find out precisely how many levers the new government has at its disposal, and how adept it is at pulling them. Eventually, low-hanging fruit must give way to fruit of the government’s own.
Waleed Aly is a regular columnist.