PM fast-tracks divestment powers amid High Court threat

With the Senate only sitting for two weeks in February and then for budget week in April, before the election is called for May, the government needs the legislation through the House of Representatives before Thursday when it rises for the year.

In an ambush sprung late on Wednesday, Treasurer Josh Frydenberg secured the backing of four crossbenchers – Bob Katter, Andrew Wilkie, Cathy McGowan and Rebekha Sharkie – to suspend the usual business of the house and bring on the bill immediately for debate and a vote by Thursday. The same four crossbenchers are likely to vote for the bill’s passage, despite last-ditch pleas by the energy industry to take the time to allow proper scrutiny. The bill was only released hours before debate began.

Ms McNamara, who was formerly the senior energy policy adviser to prime minister Tony Abbott, believed the bill was still unconstitutional despite it being amended so divestment had to be ordered by the Federal Court, rather than the Treasurer.

It would be challenged on the basis it contravened the forced disposal of property “on just terms”, which is also known as “The Castle” defence, after the popular Australian movie in which the lead character fought the compulsory acquisition of his house.

 David Rowe

But Ms McNamara said even more “insidious” than the forced divestment powers were provisions enabling the energy minister, based on a subjective judgement, to force power companies to lower their prices if wholesale prices fall.

She said this completely fails to comprehend the complexity of power pricing, including hedging.

“There remain constitutional issues with the Bill and it is devoid of detail, uncertain and vague to the extent that market participants could not be confident about how to comply with it,” she said.

Origin Energy chief executive Frank Calabria said the bill was being rushed in an intemperate manner and it would not make power cheaper.

“This bill discriminates against companies like Origin by removing incentives to invest in generation as we will be prohibited from earning a return on that investment, despite wearing the risk,” he said.

“We struggle to see how this legislation will reduce prices, with the more likely consequence that it increases risk, and therefore cost, for energy companies investing right at the time the market needs new supply to bring prices down for customers.

“The bill remains a significant over-reach.”

Prime Minister Scott Morrison dismissed the arguments of the energy companies as talking their own book.

He rounded on Labor for opposing the changes.

“The Labor Party spend most of their time saying that we are the champions of big businesses,” he said.

“Well I’ll tell you who is sitting in bed with big businesses that want to rip off Australian customers on their electricity prices, the Labor Party.”

The government rejected Labor claims that forced divestment of government-owned generators in Queensland, Tasmania and Western Australia could lead to privatisation. The bill stipulates that if a government-owned asset it divested it must be operated by a new state-owned entity.

Labor opposes the bill saying it will increase sovereign risk, deter investment and not bring down power prices.

Read More

LEAVE A REPLY

Please enter your comment!
Please enter your name here