Wednesday, February 22, 2017
There's a long history of politicians professing to be terribly concerned about "the cost of living" and nothing good ever comes of it. It's always about saying things to keep or win your vote and rarely about doing anything real – let alone sensible – about prices.
Politicians start "focusing" on the cost of living when the spin doctors running their party's focus groups report that the cost of living keeps coming up in the things the punters are saying.
But this is a strange time for the cost of living to be high on people's list of complaints. The rate of inflation has been below the 2 per cent bottom of the Reserve Bank's target range for two years.
My theory is that the cost of living is what you complain about when you've got no bigger worries. Say, that unemployment is shooting up and you're worried about losing your job.
Politicians' professed concern about the cost of living invariably leads to bulldusting because, where prices are set by private businesses operating in the market, pollies have neither the ability nor the desire to do anything about them.
Any price you have to pay is a price some business receives. And it'd be very lacking in generosity should any government want to lower that price.
That's why so often pollies limit themselves merely to continually repeating "I feel your pain".
It seems, however, that Malcolm Turnbull's spinners are using "the cost of living" as a catch-all for "focusing" on three prices in particular: for energy, childcare and housing.
Particularly in the case of childcare, these are prices heavily influenced by government policy. The government has never wanted to talk about housing affordability, so the focus groups must be telling it to do something.
As for childcare and energy, my guess is the government has thought of these itself, believing them to offer it an edge against Labor in the eternal blame game.
If the government's latest omnibus bill passes through the Senate, it will be able to trumpet the late arrival of the big cuts in the cost of childcare first promised in the budget of May 2015.
If the omnibus doesn't make it through, the government will be loud in blaming the high cost of childcare on Labor.
There's no industry more heavily government regulated than energy. Indeed, the "national energy market" was artificially created by federal and state governments in the late 1990s. It's governed by a rule book of more than 1000 pages.
The government has three goals in energy, with plenty of room for conflict between them: to keep energy flowing without blackouts, meet our Paris commitment to reduce carbon emissions, and keep price rises to a minimum.
The industry is going through huge disruption as renewables replace fossil fuels, and the government hasn't yet come up with a policy to achieve its conflicting goals, but that's not the point.
It believes it has more credibility with voters on energy prices than Labor has, so it will have little trouble shifting the blame for price rises and blackouts to Labor. That's especially so since responsibility for energy is shared with the states, and most of the premiers are Labor.
Focusing on energy prices will also divert attention from a topic where the Coalition's credibility with voters is much less than Labor's: climate change.
Do you buy "energy"? People I know buy electricity and maybe gas as well. The pollies have switched to talking about "energy" because they don't want to mention that three-letter word "gas".
That's because the big price hikes in recent times have been for gas. It's gone from being a third of the price of gas in America 10 years ago, to three times the American price today.
When the boss of BlueScope Steel warns of a looming "energy catastrophe", that's what he's referring to. Our manufacturers now face hugely higher prices for the gas they use.
Politicians on neither side want to talk about gas prices. Why? Because federal governments of both colours were responsible for letting it happen. They allowed the development of a liquefied natural gas export industry in Queensland.
Now, all the gas produced in eastern Australia can be exported to Japan or China for much higher prices. If we want some, we have to pay the "export parity" price.
This has given a huge windfall gain to our gas producers. But it's also disrupted the electricity market by making our gas-fired power stations uneconomic.
But please don't think about that. The real problem, we're told, is too much renewable energy which, though it's been encouraged by the renewable energy target begun by John Howard and continued by Tony Abbott, is all Labor's fault.
It appals me the way first, climate change, and now energy policy have been turned into partisan, salute-the-flag issues. If you vote Liberal you're expected to be dubious about climate change and have a grudge against renewable energy, particularly wind turbines; if you vote Labor it's compulsory to love both.
There'll be a lot of game playing on energy this year, but much less effort put into fixing the problems while minimising price increases.