Over the past week the Ukraine government has desperately asked Australia for more coal. This follows devastating Russian attacks on Ukraine’s electricity sector.
There has been radio silence from the Albanese government in response. Given Labor’s hostility to coal, I can just imagine what our government’s response could have been, the best we can offer you is a Chinese made solar panel.
Energy prices are at astronomical highs. Coal prices are more than three times their previous highs. In normal times, high prices would encourage more supply because high profits give incentives to miners to produce more and make more money.
The expected increase in production is not happening this time though. The International Energy Agency concluded that every US$10 per tonne increase in the coal price, leads to a US$1.5 billion increase in Australian coal investment. Given the increase in prices over the past year, we would expect coal investment of US$13 billion in Australia, but only about half of this amount has been invested.
The reason for this multi-billion dollar shortfall is that investors no longer trust Australia as a stable place to do business. Spending billions of dollars on a mine is like getting married. You’re going to be in a relationship for a long time so you won’t make the leap if there is no trust.
Just the other week, the new Labor Government stopped approvals for 18 coal and gas projects after a request from the Environment Council of Central Queensland. In Labor’s first budget, they gave $10 million to a green lawfare organisation. While the Labor party is cozying up to the green activist movement, why would anyone risk investing billions in Australia?
And, things could get a whole lot worse. Just six months since the election, Labor is now considering imposing a coal and gas tax. Labor has no mandate for this tax but it seems a desperate attempt to cover for their broken promise on lower power prices.
Labor did have a mandate to deliver lower power prices. Anthony Albanese promised us 99 times before the election that he would lower power prices by $275 a year. Instead, Labor’s first budget revealed that power prices would go up by 56 per cent. There are no refunds on a new government.
So now Labor is planning to tax the industries of Central Queensland to pay for their broken promises. The rough plan seems to be that Labor would tax the “super profits” of our industries to subsidise the power bills of others.
Higher taxes do not lower prices. They increase them. All that higher taxes would do is further deter investors in Australian energy. That will create even more shortages in the future and even higher prices.
And, what happens when renewables apparently replace fossil fuels as Labor believes? Who will pay for our power bills then?
As the Ukraine war shows, the world is a long way from ending fossil fuels. To lower energy bills of Australians, we need more energy not less, and that means encouraging the development of all our energy resources, including solar and wind.
