Miners gang up on the RET

Superpit Kalgoorlie

Kalgoorlie’s Superpit – still spitting out a river of gold.

Australia’s miners have carried its economy along on a wave of investment and export growth over the last 20 years – so when they talk – governments listen (see our post here).

Here’s a cracking piece by Minerals Council Chief, Brendon Pearson that appeared in The Australian.

No end in sight to soaring electricity prices
The Australian
Brendan Pearson
19 February 2014

THERE is a tombstone in an English churchyard with the following six-word epitaph: “I told you I was sick.”

As the number of closures in the manufacturing and minerals-processing sector grows, it is worth reflecting on how and why the repeated warnings from these sectors about the debilitating impact of steadily higher energy costs were ignored.

Less than a decade ago, Australia enjoyed the lowest energy costs in the developed world. It was an intrinsic part of our comparative advantage as a trading nation. But today that advantage has largely gone.

As a result of the carbon tax, the renewable energy target and a range of other energy policy interventions at the federal and state government level, Australia has some of the highest electricity costs in the developed world.

Household electricity prices have increased by more than 110 per cent in the past five years, and are projected to increase another 7 per cent in 2014-15.

Australian businesses – which account for 70 per cent of total electricity use in Australia – have experienced an almost 80 per cent increase in prices since 2009 and there are more rises on the way.

The causes are not hard to find.

The carbon tax accounted for 16 per cent of the electricity bill for a typical large industrial user in NSW in 2012-13.

In 2013-14, the carbon tax added an estimated $6.4 billion to the nation’s tax bill.

That’s equivalent to a 10 per cent increase in company tax revenue in one year.

Defenders of the carbon tax often point to schemes such as the Californian emissions trading scheme as examples of comparable effort by other nations.

But we should not forget that Australia’s carbon tax raised the same amount of tax in its first six weeks as the Californian scheme is projected to raise in its first two years.

Official estimates suggest that the RET will generate a transfer of $20bn from householders and industrial users by 2020.

We have turned an economic strength into a weakness and are beginning to feel the consequences. Across the Pacific, by contrast, the US has turned a weakness into a strength and is seeing its manufacturing sector expand rather than contract.

Meanwhile, in the EU, which Australia mistakenly adopted as a model for its energy policy, the de-industrialisation is accelerating.

It is not too late to change direction.

The case for the immediate repeal of the carbon tax could hardly be clearer. After all, both sides campaigned on its “termination” at the federal election last year. The best signal of resolve to deal with energy costs the parliament could deliver would be the early passage of the repeal bill.

The review of the RET must also frame its work around a single-minded determination to reduce energy costs.

The government’s broader deregulatory agenda is also critical here.

This includes a renewed push on energy market reform, a root-and-branch effort to tackle red and green tape across all federal and state agencies as well as the streamlining of project approvals and structural obstacles to energy exploration.

A reduction in the costs of new and existing energy projects will eventually lead to a dividend at the electric power switch.

We should also not be afraid to restart the conversation on nuclear power. Despite being home to more than 35 per cent of the world’s uranium reserves, Australia stands out among its peers with its legal prohibition of nuclear power.

A mature, sensible, measured debate about nuclear energy surely should not be beyond us.

In the absence of such a conversation, there can be no genuine and thorough exploration of the true economics of nuclear power generation in Australia, no genuine and thorough proposals from alternative reactor technology providers (such as small-scale, remote power plants) and no genuine and thorough engagement with potential site host communities.

Australia should resolve to regain our status as a low-cost energy jurisdiction.

There is no more regressive tax on low-income earners than a high electricity bill. There is no more insidious burden on export and import competing firms than steadily rising energy costs.

Low energy costs must again become a defining objective of our energy policy, not as they have been for the past five years – its first casualty.

Brendan Pearson is chief executive of the Minerals Council of Australia.
The Australian

STT says: “hats off Brendan”.

The RET is an insanely expensive and utterly ineffective way of reducing CO2 emissions in the electricity sector – which is the whole point of the RET in the first place (see our posts here and here).

But Brendan underestimates the cost of the RET when he says:

Official estimates suggest that the RET will generate a transfer of $20bn from householders and industrial users by 2020.

The effect of the RET legislation doesn’t stop at 2020 – that’s just the year when it starts to have the maximum impact on power prices.  Under the current policy the RET rolls on until 2031.

Brendan’s figure of $20 billion being transferred from householders and industrial users to wind power generators via the REC Tax from now until 2020 is – on the figures we’ve seen – pretty close to the mark.  To date the REC Tax has added more than $8 billion to Australian power bills.

However – beyond 2020 – the REC Tax will keep on keeping on for another 11 years – during which time it is estimated that it will add another $30-35 billion on top of Australian power bills.

So – if the RET retains its current shape – Australian householders and industrial users can look forward to transferring another $50 billion to wind power generators over the next 17 years.

But STT doesn’t believe the RET will last for very much longer.

The Head Boy has taken a special interest in the RET review – making sure it was taken out of the hands of Ian “Macca” Macfarlane and Greg Hunt – and appointing a crack team headed up by Dick “RET Slayer” Warburton.

Tony Abbott rightly sees cheap energy as crucial to Australia’s future growth and prosperity – and the RET as a serious obstacle to that future. From here on – only a fool would bet on the RET.

brendan pearson

Brendan Pearson – out to help scrap the RET.

About stopthesethings

We are a group of citizens concerned about the rapid spread of industrial wind power generation installations across Australia.


  1. Keith staff says:

    Look to Germany for the lessons. Business there is talking about the “de-industrialisation” of the German economy if
    the madness of the the renewables push is allowed to continue.
    And,….. Look to the USA showing renewed manufacturing strength because of abundant cheaper energy coming on-line.


  1. […] when miners talk, sensible governments listen (see our posts here and here). Here’s The Australian on what the miners are saying about the mandatory […]

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