Peter Strong: Why the energy debate has failed small business

SmartCompany, June 20, 2017
[Council of Small Business Australia chief executive Peter Strong writes:] For decades we have had debate and discussion around climate change and what to do about it. The debates have generated more emotion than solutions and as a result of doing nothing, we have a power crisis unprecedented in living memory. The states are a major part of the problem.

This will cost jobs. This will cause businesses to fail. This will create suffering for many people.

In the end the federal government commissioned the Chief Scientist, Dr Alan Finkel, to conduct a review. After all these years, indeed decades, of discussion we have a well-informed review with recommendations. Now is not the time to once again procrastinate — we need a decision and we need action.

Think Finkel.

We must implement the recommendations of the Finkel Review now and we must also bring some of the recommendations forward. Leaders have to get together now through the Council of Australian Governments (COAG); they need to be locked in a room and not allowed to leave until they all agree and start solving this problem.

Read more: Three experts weigh in on the Finkel Review’s plan for Australia’s electricity market

Plenty of commentators have already deplored the situation we find ourselves with energy. It is a comprehensive failure of public policy. The small business community is diverse and we all use and need power. We need it to assist in employing some 4.5 million other people across the country.

Examples of the problems we face aren’t hard to find:

  • A poultry farmer in Victoria is facing a series of power outages over the next twelve months. He has some 300,000 hens. If there is a blackout, he has 10 minutes to have back up power in place or his stock will perish — a terrible thought. He of course has his plan in place and a back-up generator ready, but if the outage lasts a long time he then has to consider a back up for his generator. More than 10 minutes lost in repairing or changing over to a new power source is the end of his business;
  • An engineering company in Victoria has had a 154% increase in annual power costs and will have to pass this onto customers or dismiss employees; and
  • A small suburban supermarket has a power cost increase of $40,000, which will likely result in job losses and higher prices.

Stress and confusion is the main product of our power failure.

When the carbon tax was introduced under the Gillard government, the Council of Small Business of Australia made a statement that we were not for or against the tax as small business people are diverse; some hated the idea, some thought it wasn’t enough and most of us were too busy to make comment. Small business people are also voters and will let the politicians know what they think of their policies at an election.

But we all needed to know what the impact would be on our businesses. In some cases the impact would be minimal (for those with low power usage and for home based businesses) and for others, the impact would be substantial (those with large cold storage rooms or hairdressers and dry cleaners who use a lot of power). We told the government we needed certainty and we needed a carbon tax calculator. The government provided no helpful information so we had to develop a carbon tax calculator of our own for use by our members.

Now we have a greater crisis. A crisis caused as much by navel gazing laissez-faire economists as it is by emotional reactions to energy arguments. We still need to know what the costs increase will be and when outages are likely to occur so we can prepare.

An emotional debate

What stops solutions is that the debate around energy and climate is full of emotions, not facts. I know from watching people argue about this issue for years.

When I owned my bookshop in Canberra I had a section devoted to “Climate change and the environment”. We had books that argued for climate change and those that argued against climate change. Then when it became obvious that change was happening in weather patterns, the books also focused on whether it was human impact that was creating the change or was it just a natural thing that happened cyclically.

Twice I had to intervene in arguments between customers that had become heated and dangerous. Finger pointing, red faces, angst and rising blood pressure were to a degree entertaining but in the end it was an occupational health and safety problem and I had to ask the customers involved to either settle down or leave the shop (not the best way to get a sale but what can you do?). So as a marketing gimmick and for the sake of bookshop peace, I very deliberately separated the books into two new sections at either end of the shop. One section had the signage: “Climate change is a commie conspiracy” and the other section was called: “Climate change AKA give up we’re all doomed”. Interestingly, my sales in that second genre picked up.

The lesson from this is that emotional arguments might help to sell books but no individual in these arguments changed their views. Rather, it was the quiet introspective customers who actually used the books to formulate a view, not justify an opinion, whose views changed.

It appears to me that some of the back bench of the current government are responding to the debate emotionally. We don’t have time for emotions any more. We need action and solutions.

The facts are plain and scary, very scary:

  • We have power outages that we haven’t seen in a generation;
  • We have price increases that are beyond belief;
  • There will be job losses and business failure; and
  • There will be major price increases in everyday essentials like food, milk and petroleum products, as well as in manufacturing and construction.

I suppose that behind every black polluted cloud will be a silver, lead and zinc lining. That silver bit could be that as unemployment and inflation rises we might get some action on economic policy rather than just following the same tired economic formula from the bane of future prosperity — those laissez-faire economists.

The Turnbull government showed in the most recent budget that it was willing to take steps to keep the economy growing and to intervene (a little) where necessary to make that happen.

We now need the government backbench to support action through the Finkel Review. We also need bipartisan politics; the opposition needs to support Finkel now and be aggressive in that support.

In the end it should be obvious to all and sundry that no matter what we do there will be fierce and sometimes emotional critics. Whether it is an emission trading scheme, a carbon tax, a sequestration regime or a tree planting campaign, there will always be critics and some of those critics will criticise anything and everything. Ignore them.

Right here and now we have a quality and well accepted report from our nation’s Chief Scientist; we have decades of debates and a multitude of international reports to inform that report; and we have a crisis caused by inaction.

Think Finkel — now. Act Finkel — now.