Scott Morrison and Angus Taylor have spent the past three and a half years trying to chain Australia to an unreliable and uneconomic source of power that now threatens to send family electricity bills skyrocketing — but ironically may also help Mike Cannon-Brookes in his effort to derail AGL’s demerger.
AGL plans to split itself into a retail and renewable asset company and a coal-fired power generation company — now universally known as ShitCo — if shareholders approve the demerger on June 22.
Except this week, the truly rotten state of what ShitCo would be was on display when AGL revealed it had been forced to cut its full-year profit target because of a breakdown of one of the generation units at its giant Loy Yang A coal-fired power plant in Victoria’s Latrobe Valley. Unit 2 was taken out of service in April (prompting Morgan Stanley to declare it at the time “a worst case”) and will be out until August. That will cut $40-70 million off earnings, with earnings before interest, taxes, depreciation, and amortisation (EBITDA) now forecast to be between $1.23-1.30 billion.
It’s the second time that Unit 2 has broken down in the past three years, following a seven-month, $100 million outage in 2019, illustrating how unreliable Australia’s ageing coal-fired power generation capacity has become — despite reliability being its one alleged selling point against renewables. Coal-fired power has not been competitive with renewables on price terms for years.
Worse, coal-fired power prices are set to surge, driven by the global spike in energy prices. Households face significant electricity bill rises in coming quarters, adding further to cost-of-living pressures that have surged under Morrison. Those power price rises, from an increasingly unreliable power source, are partly the result of Scott Morrison and Angus Taylor’s repeated attempts to shackle Australia to coal, rather than accelerate the decarbonisation of the electricity grid, since Malcolm Turnbull’s ouster in 2018.
But the Unit 2 shutdown also strengthens the hand of those opposed to AGL’s demerger plan, which is the subject of an independent report before the shareholder vote. Most prominent is Sydney tech billionaire, Michael Cannon-Brookes, who swooped and grabbed a near 11.3% stake in AGL yesterday. Cannon-Brookes combined with Canadian infrastructure giant Brookfield earlier this year in an unsuccessful takeover bid for AGL, with the intention of dumping the demerger and bringing forward the transition of the company out of coal.
Cannon-Brookes told the AGL board yesterday the split was “globally irresponsible” and he would vote against it at the June 22 meeting. At this point, ShitCo and the demerger — which has never attracted strong investor support — looks dead.
Ironically, it is Taylor himself who has strengthened Cannon-Brookes’ hand as well.
As Crikey reported a month ago, before caretaker commenced, Angus Taylor — whose actions as energy minister have more or less amounted to angrily yelling from the sidelines — made one last effort to further strengthen coal’s death-grip on the Australian energy sector by announcing his intention to pursue new rules to prevent coal-fired generator owners from bringing forward their shutdown.
Those rules, which are unlikely to be approved by the states, actually make ShitCo even less attractive to investors, because they would prevent the new company from actively managing its assets in a way that maximised shareholder returns. Instead, they face being trapped in coal, if Taylor got his way.
Cannon-Brookes’ investment suggests he doesn’t think Taylor will be energy minister after the election. But he might be grateful that Taylor, with his coal obsession, has done him one final favour in helping kill off the demerger and open the way for a very different future for AGL.
Fantastic. Great move. Well done, Angus.
Angus Taylor’s coal obsession brings to mind Oscar Wilde: Each man kills the thing he loves…
I note also the LNP are the party of free markets. Their philosophy is the market knows all so we need small government and just let the market run the world. Seems that falls apart if the market wants to do something contrary to what the people bribing you want. Then you have to abandon the ideology and interfere, massively and stupidly, if necessary. Which is exactly what we are seeing and another reason to suspect unseen forces, such as massive bribes to people.
My distrust of Taylor and Morrison is so high, that I wouldn’t put it past them, to be planning to buy with public money, the dirty, unstable and increasingly unprofitable arm of AGL.
The brilliant ‘coal-keeper’ scam, for one, suggests you may well be right.
Your idea is almost identical to a plot-line in The Ragged-Trousered Philanthropists published in 1914. In the town of Mugsborough the local council announces a scheme to buy town’s privately-owned gas works as an asset for the community. The gas works is actually an unsafe under-invested ill-maintained broken-down liability not worth a penny, but the profits of the absurdly inflated sale price will be split between its owners, the councillors and the local newspaper publisher, so that rag is full of stories praising this bold investment, the generosity of the seller and the far-sighted councillors doing so much for the town. There’s one honest and decent councillor, Dr. Weakling, who realises it’s a fraud and tries to warn the public. He is told by the others to shut up, he ignores them and the local rag publishes terrible lies about him that destroy his reputation, making him a pariah and forcing him out of public life. Plus ça change, plus c’est la même chose.
Dr Weakling’s fate recalls Dr Stockman in Ibsen’s “Enemy of the People” or, more recently, Brody & Mayor Vaughan in JAWS.
Truth is not generally well regarded by vested interests.
Whatever IPA-generated BS the LNP continues to mouth regarding free markets is obviously undermined (nudge, nudge) by their handouts to every fossil fuel company that asks for a bag of cash.
And of course, since the market worldwide is already abandoning the coal-train to oblivion, while our noble leaders continue to spruik the joys of burning the planet, you’d have to say their commitment to free market capitalism is about as thin as a five dollar bill. It’s when the dollar bills form a nice thick wad that they suddenly take an interest.
Not to mention that their philosophy (when it suits them) is for the government not to pick ‘winners’ that distort the market.
Unless the options are maaaate/non-maaate. And then, whatever.
How does Angus Taylor and/or his party benefit financially from supporting coal?
Do we know?
Are all the funds that flow from Gina Rinehart to Liberals publicly documented? Or might some funding go under the radar?
Has anyone tried to account for all of the funds that flow that way?
If so, could you point me to a publication?
If not, what difficulties to journalists face trying to investigate this question?
The rules for disclosure of political funding are near enough completely useless so of course we do not know (for sure – we can guess) and journalists trying to investigate face almost insurmountable obstacles. The federal rules on disclosure of political donations have a high threshold before individual donations need disclosure and it is very easy to game that limit by multiple donations below the threshold and to pass money around between various branches and so on. It is also simple to fund political parties through intermediaries without any scrutiny and there are also no rules about disguising donations as the purchase of goods and services, for example buying a dinner for an absurd price of many thousands of dollars.
Some parties and independents voluntarily release some or all details in a timely fashion. At the other end of the spectrum the Liberals and Nationals take full advantage of the rules (which they made for the sole benefit of themselves and their paymasters) to ensure very little is known. Even the information that is made public only emerges after so much time has passed it has become irrelevant.
It is a wonderful example of the extreme dishonesty and hypocrisy of the Liberals that they are currently complaining bitterly about the funding of the ‘teal’ independents. Those independents are being completely open while the Liberals always refuse to reveal where the bulk of their money comes from.
I think the political disclosure you have focused on is only half the story.
The money that flows secretly into the personal accounts of MPs is probably the greater story, but I think we are not far off now from finding out how well or otherwise the money trails have been hidden.
The politicians don’t have to take brown enveloped stuffed with cash or bank transfers the way corrupt local councillors do. Why take the risk? At the federal level ministers can and do get their personal rewards entirely legally with consultancies, directorships and so on, typically of course after they leave office.
It’s very much a ‘you scratch my back, I’ll scratch yours’ arrangement. Except the backs are being scratched mostly with taxpayer money.
Totally.
Looking forward to the trajectory of a number post political careers including Canavan, Taylor, Fitzgibbon, Pitt etc.
A nice starting point for the nascent federal anti-corruption commission?
“The money that flows secretly into the personal accounts of MPs” – but isn’t that bribery?
The current definition of an honest politician seems to be one who stays bought.
Well, you do have to wonder about their obsessive attempts to avoid a federal ICAC . . .
Though honestly, I think what’s driving their corruption isn’t a simple matter of direct bribery, it’s a combination of cultural factors and longer term back scratching – supporting the power base of the “right kind of people”, which clearly includes them and their immediate friends, as well as more direct jobs for the boys style things. As a bonus this latter can be used to corrupt people from both sides of the political divide.
But again, given their paranoia about a decently set up anti-corruption watchdog they may well have enough of the simpler kind of bribery going on that it’ll get interesting for them if Labor wins on the 21st.
Depends on how many degrees of separation are between the donor and recipient.
We can only hope.
The benefit may be the expectation of well-paid employment/consultancy in the future. Don’t hold your breath Angus.
Oh, I don’t know. I’m sure there’s a robber baron who would employ Angus to write drivel in one of this rags.
Frank, the amounts are small – and I don’t think there are hidden bribes. But they are ‘signals’ as part of the well documented “Game of Mates” (see Murray & Frijters) and the “revolving doors” (see Michael West) which ensure helpful ministers will enjoy lucrative post-parliament positions on boards, as lobbyists, etc.
The greatest obstacle to honest, forensic reporters following the money into politics would be their editors beholden to proprietors – eg Michael West et al.
For all the difficulties put in the way, it is nonetheless possible to obtain highly indicative data from open source information for anyone sufficiently determined.
Far simpler is to note ‘Pappa’ Hemingway’s response to F Scott Fitzgerald’s fatuous “the rich are different from you & me” – “Yes, they have more money!”
How can we know that they have more money?
Conspicuous overconsumption, else what is the point of rolling in it?
Expenditure, the basis of GST/VAT/MoMs and other consumption taxes developed on the Continent (where it was a given that any sensible person lies to authoritarian government) are the alternative to honest declarations of income, whether corporate or personal.
Rather than try to scrutinize & add up donations, gifts, bribes & assorted greasings, just note the expenditure of electioneering politicians and parties during campaigns and levy a heft tax on that.
While I agree with most of what you say, that quote from F Scott never actually happened, outside of a short story called ‘The Rich Boy’. This was not in praise of wealth, but about a nasty young fascist. It’s like Elementary, my dear Watson, or ‘It’s life Jim, but not as we know it’.
Hemingway had a sometimes-warm, sometimes-acrimonious relationship with Fitzgerald, decided to mock the lines from “The Rich Boy” in his short story “The Snows of Kilimanjaro.
“The rich were dull and they drank too much, or they played too much backgammon. They were dull and they were repetitious. He remembered poor Scott Fitzgerald and his romantic awe of them and how he had started a story once that began, ‘The very rich are different from you and me.’ And how some one had said to Scott, Yes, they have more money. But that was not humorous to Scott. He thought they were a special glamorous race and when he found they weren’t it wrecked him as much as any other thing that wrecked him.
Understandably, Fitzgerald was shocked and offended.
Okay, I’ll check that out. I’ve read nearly everything by Fitzgerald, and much of it shows a profound suspicion of wealth – The Great Gatsby, for one. I’m slowly going though Hemmingway, but I’ve yet to come across anything as good as For Whom the Bell Tolls.
Try “A Moveable Feast” and ignore the rest of his maudlin macho meandering.
…I meant that ‘Feast‘ shows far more than necessary and saves further exposure.
I agree with Frank. The only way you can explain the actions of the LNP, Taylor in particular, is if you assume significant bribes are being made out of sight. If we accept that assumption the logical thing is to start poking around looking for how it is done, what form it takes and who the parties are. Its possible ASIO already knows the details because there are national security implications. Its certain the big accounting firms know since they would be providing advice and the means. Start with PWC. They have done very well out of this government. Possibly for good reasons that we dont know about.
Certainly for all the furore about donations, coal miners don’t overtly give enough to the Libs & Nats to justify this kind of blind support from the leadership.
Don’t discount tribal game playing and the pleasures of sticking it to Labor or the Greenies.
Mike Cannon-Brookes could outplay a lightweight like Taylor even when asleep.
Taylor is a shallow man of no conviction – but we don’t have a federal ICAC yet…..