Australia’s Economic ‘Miracle’ Is Ending No Matter Who Wins Vote

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The energy impasse has left Australia with outdated power generators and soaring electricity prices. It’s an extraordinary position for a country endowed with almost every known source of energy: solar, wind, oil, gas, coal and uranium deposits. But the stop-start policy programs that shift with each change of government have hindered investment.

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“There’s no road map,” said Kari Armitage, managing director of equipment supplier Quarry Mining. “We’re in that phase of trying to fly the plane and build it at the same time.”

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Armitage, who wanted to keep her vote in Saturday’s election private, said no matter who wins there needs to be a bipartisan consensus on energy policy, so that small companies like hers can adapt to the transition.

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Jeff Drayton is the mayor of Muswellbrook, a town near Liddell where one-in-five employees worked in the coal industry at the 2021 census. He said there has been a lot of interest in new industries for the town, including green manufacturing, but without government support and policy consistency, the future remains deeply uncertain.

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“We had a Danish industrial delegation over here, it took me quite a while to convince them that we still have two sides of politics who don’t agree on energy policy. They couldn’t believe it,” Drayton said in an interview in his office. “Their view was: ‘our government stopped arguing about energy policy 20 years ago.’”

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Guy Debelle, deputy governor of the Reserve Bank until 2022, reckons Australia’s renewables industry could have wider significance than delivering clean energy, it could unlock a new era of economic growth.

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“Some of the drivers of Australia’s past economic outperformance are beginning to dissipate,’’ he said, referring to a likely downward trajectory in Chinese demand for iron ore over the next decade.

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“Improving productivity is an option, but it’s not easy to identify how this occurs,” Debelle said. “Australia’s clearest opportunity, where it’s fortuitously placed because of its vast natural advantages, is in green energy. We have the capacity to produce a lot of it — sun, land, wind.”

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While Labor has been a keen adopter of renewable energy and emissions targets since at least 2007, the Liberal-National Coalition was slower to commit to net zero emissions by 2050 and recalcitrants remain.

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Under the Coalition’s election platform, seven retiring coal plants will be transformed into nuclear reactors, supported by renewables, gas and storage. The opposition insists that it will restrain power prices by incentivizing gas exporters to keep some of their uncontracted fuel in Australia in a bid to keep a lid on those prices.

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In the four years through 2024, average nationwide wholesale electricity prices increased about 60%, according to the Australian Energy Regulator. The government has sought to cushion this blow with rebates to households, but it has taken a toll in an inflationary environment with elevated interest rates.