Power and inflation crises work for the new government, but for how long?

There is something about telling the government of Australia’s largest state to its residents to minimize their electricity consumption during certain hours, which evokes a sense of decay. Australia is a place that has spent most of our lives feeling above such things. And yet, here we are, checking news sites every few hours to see if the blackouts are about to arrive.

Meanwhile, in a lot of related news, inflation is galloping away from our earning capacity, hitting out of reach, with the promise of worse. Largely for this reason, the Fair Work Commission decided this week to the minimum wage no less than 5.2 percent† And inflation is likely to surpass even that in a few months.

Grocery prices will rise further due to deteriorating inflation.Credit:Wayne Taylor

Normally, such crises would be disastrous for the federal government. But that is spectacularly false in this case for two reasons. Firstly, the Albanian government is too new to be blamed for these things, or to expect to have done much about them. Second, both crises underline the world view of the new government, to the exclusion of that of its predecessor.

This is easiest to see in the example of the minimum wage, because the commission’s increase is basically in line with the government’s recommendation. That’s important because when Anthony Albanese announced that position during the election campaign, Scott Morrison immediately seized on it as evidence of his economic debauchery.

If the Fair Work Commission had finally come to the conclusion that the increase recommended by the government was significantly too high, it might have been criticized. After campaigning to champion real wage increases for the most vulnerable, Albanian is said to have proved both ineffective and economically unhealthy. As it is, he can claim to have read the economy better than the coalition, while also prioritizing those who struggle the most.

But the energy crisis also provides a story. We find ourselves in this situation, not least because of a failure in our coal-fired power station. The infrastructure is aging and poorly maintained, leaving a significant portion of our coal-fired generators offline, precisely because the weather means we need them the most. Some of this is scheduled maintenance. But some of it is also unplanned outages.

The energy network is under pressure due to the maintenance of a series of coal-fired power stations.

The energy network is under pressure due to the maintenance of a series of coal-fired power stations.Credit:Fairfax Media

Meanwhile, gas is not taking over because we export much of what we produce, and the war in Ukraine has made it extremely expensive. All of this has pushed power prices beyond levels that many consumers can afford, and beyond what our power regulator finds acceptable. The regulator therefore imposed a maximum price, which energy suppliers considered unprofitable. This led to those providers having to shut down the offer hence the threat of blackouts. Now the energy regulator will basically pay them to supply more energy to the grid.

It’s hard to reconcile this with the coalition’s traditional narrative that coal is the cheaper, more reliable source of energy. Of course, we’ve also suffered from low wind and solar yields, but there’s a basic infrastructure problem that exacerbates the problem. Simply put, our grid isn’t making the most of renewables because it’s not built for it. You could update it, but you would need the federal government to implement renewable energy policies that attracted that kind of investment. That was not the forte of Morrison’s government. But it does fit with Labor’s”Rewiring the Nation” policy.

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