Our energy policies are failing, with the root cause being Federal and State divisions of power that are now out of date.
Energy policy is among many state-based policies that are incoherent and incompatible across borders. The Federal Government could bring in legislation to override these current failures in order to modernise and simplify these complex and confused state policy settings, but instead, all we get are words, more failure, and more cost to consumers.
Even the language of national electricity grids, markets, national regulators and operators is deliberately misleading. The truth is there is no central commonwealth energy legislation that determines the future of electricity generation, supply, and retail.
Instead, through the monolith that is the Council of Australian Governments (COAG), each State agrees to model their own state legislation on, ironically, South Australian legislation, and by doing so, a state-controlled national market, of sorts, has developed.
Yet now, to make even the smallest change to current arrangements means each state would have to agree to it through COAG, and administrative arrangements (regulation or legislation) run the gauntlet of each State legislature. With the market changing so rapidly, this arrangement is slow, cumbersome and failing. Look at the basketcase Renewable Energy Target (RET) debate for just one of many recent examples.
Added to this, both major parties choose not to talk about this structural failure because the sensible answer hurts party politics the most. There is an obvious, and sensible solution to this failing electricity debate, and that is for the Federal Government to introduce overriding Commonwealth legislation on energy policy, allowing for a more nimble approach to decision-making through just "one Cabinet/one Parliament" decision-making. However tread on the toes of political party members, donors, and vested interests the most. So the national interest takes the bullet instead.
Gambling policy could get a federal revamp too. Gambling legislation is fragmented across state borders, and while it’s abundantly clear that gambling is damaging, the Federal Government is unwilling to take on a country-wide overhaul.
State budgets rely heavily on the royalties and returns from current arrangements in energy and gambling. Apart from land and housing taxes, it is pretty much all State Governments have left. A quick look at recent state budgets shows between 10-30% of annual revenue comes from gambling and energy royalties in any one year. This, and this alone, is why State Governments will scratch at the eyeballs of anyone who tries to change current arrangements.
The big winners from this national policy failure in energy and gambling are your State Governments. And your major political parties who run your State Governments know this and remain inactive and silent because of it. Instead, they toy with the ‘idea’ of making change, whilst really doing nothing but using the failure to their political advantage.
Increased energy costs is a win for State Government budgets. More people gambling is a win for State Government budgets. Federal politicians of both major parties are fully aware of this, but in their defence, they are trapped by the party structures that hand them power in the first place.
The power of internal political party arrangements is strong and very hard to unlock. This was shown with former Prime Minister Julia Gillard getting torn apart by her own side when she tried to move on gambling policy.
I personally got to see how precious these state-based royalties are guarded. I saw it in the 1990's when I was NSW Shadow Minister for Gaming and I took on the VIP high-rollers at Sydney's Casino, where money laundering was rife at the time. I saw first-hand how protecting the Government budget was the priority over all else, even if the washing of illicit drug money was the source of that income.
Then I saw it in 2012 when I introduced a National Electricity Bill to parliament, that would have given all powers for energy policy to the Commonwealth. It was at this time I was served with defamation papers by one Energy Minister, and called all the names under the sun by others, of all political persuasion. It was as if I had walked into an orgy uninvited.
Until this failure of our Federation is made the priority issue, and until we have Parliamentarians of real courage willing to address it, then nothing will change. In energy policy, power prices will go up, peak loads will rise beyond manageable, and state governments will continue to silently benefit. Likewise, in gambling, more problem gambling will cause more social harm, consumer protections will continue to be ignored in areas like online gambling, and criminality will flourish. And of course, state governments will silently benefit.
Instead, the real answer is in the unexciting work of tax reform. Tax reform that acknowledges State budgets will be up to a third worse off by the Commonwealth progressing on these two important national policy areas, and finding ways to compensate and address this. Reaching agreement on a centralised, single Parliament approach to energy and gambling policy is long overdue, and now it’s becoming urgent.
Our country will continue to wallow in the frustration of a lot of rhetoric and not a lot of action in both policy areas if we don't make this bold move.
And without this tax and structural reform, Australians will continue to be worse off. And so will our national politics.