In spite of heady rhetoric, the Bracks Government has failed to pursue vigorous regulatory reform, and this is beginning to impact on the economy. Transport expenditure is misaligned with user needs, we are seeing ballooning expenditure on bureaucrats, and we have seen bans on new, well-proven technology in agriculture.
These measures have been followed by the imposition of additional energy costs on consumers, with the requirement of the Victorian Renewable Energy Target to provide subsidies to new, exotic renewable sources.
Victorian governments have an ignoble history of providing subsidies to new developments and encouraging the Commonwealth Government to provide tariff assistance to support businesses that cannot compete.
This has changed over the past 25 years. In the early 1980s, led by the Hawke government, Australia commenced a process of gradually winding down its protectionist policy approach.
This entailed eliminating regulations that created monopolies or offered price advantages to some companies.
Part of this was a gradual removal of the long-standing mollycoddling of domestic industries, shielding them from overseas competition.
The reform program encompassed businesses involved in energy, telecommunications, transport and many other industries that had been protected from the realities of competition and had grown fat and inefficient as a result. Forcing businesses to stand on their own feet and face competition toe-to-toe has been the midwife of Australia's economic success.
As a result, John Howard has been able to lay claim to a record 10 years of solid uninterrupted growth during his stewardship. But it was an ALP Commonwealth government that planted the seed initially.
Under the Kennett government, Victoria played an important role in the national scene, with reforms that transformed the state from basket case to national dynamo.
The Bracks Government did not reverse the Kennett-era reforms, but it has not pursued the same path of reform. The Victorian economy is starting to languish.
On most measures, during the past quarter Victoria was propping up the states and territories at the bottom of the national growth league.
Victoria's policy on renewable power seems set to add a further straw. Independent research estimates that the requirement placed on us all to use 10 per cent renewables will cost Victorians over $800 million, and will have a negligible impact on the reduction of greenhouse gasses.
The Government says its program will bring benefits, but that is based on internal research it has refused to release. Indeed, in welcoming a new hydro electric power station in Bogong, Bracks said: "This new power station would not have been possible without the Victorian Renewable Energy Target which was approved by Parliament last week".
The Opposition has pledged to scrap the legislation if elected. And, unfortunately for the Premier's credibility, a spokesman for the company concerned, AGL, the very next day said such action would not destroy the economics of its new hydro project. At least therefore, with the Kiewa scheme hydro facility, Victoria is not being saddled with an investment that is intrinsically uneconomic. This is not the case with the many wind facilities under construction and planned, some of which must be even less viable as a result of the Opposition's statement.
AGL, like any other well run business, is alive to the possibilities of earnings from government subsidies and is likely to time its investment decisions accordingly. But in giving a renewed impetus to subsidies and regulatory constraints, the Bracks Government is taking us back to a future that will once more leave the state as the nation's economic laggard.
This is regrettable. With its regulation review initiatives, the Bracks administration demonstrated an awareness of government culpabilities and how they could detract from economic growth. Although it has reduced regulation in some areas, like planning approvals, there are few examples where it has put its fine words into policy outcomes.
ADVERTISEMENT
No comments:
Post a Comment