Politicians pulling funny faces as winds change

While harmony is a nice-sounding word, it is a rather strange policy goal. Why would a state with as much wind as South Australia want to "harmonise" its reliance on wind energy with less windy states? Will Queensland and Tasmania be expected to "harmonise" their reliance on solar power or hydro-electricity? The ACT would likely struggle to meet any "harmonised" targets for tidal power generation. As former NSW premier Kristina Keneally reminded us this week, when it comes to the role of the states and territories in Australia, consistency is the hobgoblin of small minds.

Of course, it is not just the physical differences between Australian states and territories that justify the differing ambitions, goals and policies found across our federation; the desires of voters and their willingness to fund them differ significantly across our vast continent as well.

While it is not polite to admit it, the ACT has the highest average income in our federation. Our population is, by Australian and world standards, highly educated, well travelled and in pretty good health. It is also younger than average. Put simply, if Canberrans can't bring themselves to invest in the future, who on earth could? The fact that Canberrans might be more ambitious in their support for renewable energy than some other states should not surprise, or concern, anyone.

But, politics being what it is, despite the ACT having the most ambitious, and least unharmonious, renewable energy target it is the South Australian government that has attracted the ire if the nation's conservatives this week.

Since strong winds ripped 20 electricity transmission towers from their foundations the nation's media have been full of the most remarkable assertions about what, apart from the obvious, might have caused the state-wide blackouts in South Australia. And the fact that the experts are yet to provide a detailed diagnosis has not prevented our political debate from already shifting on to what the solution should be. COAG energy ministers have already met, and, drum roll please, a review has been ordered.

Alarmingly for the ACT, the emerging consensus among conservatives seems to be that "the problem" with Australia's electricity market stems from the fact that some individual jurisdictions have sought to augment the national renewable energy target with their own state-based schemes. Leaving aside the fact that the South Australians are not among those jurisdictions, and leaving aside the fact that all of the wind turbines built in South Australia to date have been funded by the Commonwealth's renewable energy target, it looks like the ACT's ambitious target may be next in the political firing line.

On the one hand, ACT residents who are keen to keep driving new investment in renewable energy could draw some comfort from the fact that the ACT Liberals have expressed their support for the local 100 per cent renewable energy target, but, on the other hand, the timidity of Jeremy Hanson's support for that target this week is a significant source of concern.

The local Liberals were never enthusiastic about the 100 per cent target. When it was announced, Mr Hanson described it as "too much too fast" and complained that "every time you turn on your lights Andrew Barr is going to be dipping into your pocket". But as the ACT election drew closer and the community support for the scheme grew stronger the Liberals dropped their criticism.

When Malcolm Turnbull launched the Canberra Liberals' campaign this week he did not rebuke them for their support for Canberra's 100 per cent renewable energy target. Similarly, the local Liberals did not rebuke the Prime Minister for his efforts to demonise Canberra's plan to fill the void left by the federal government's cuts to the national renewable energy target last year. The silence was both deafening, and concerning.

Of course, it wasn't just Canberra's renewable energy target that the Prime Minister failed to mention in his speech on Tuesday night. Despite Mr Turnbull's renowned interest in public transport he failed to mention the tram in his speech, although he was cleverly goaded into criticising it by Mr Hanson. The Prime Minister was also silent about the benefits of adopting the land tax reform pursued by the local government and attacked by his local compatriots.

Land tax reform such as that embraced by the ACT government has been promoted by economists and treasuries around the nation for decades. Back when all tax reform options were on the table last Mr Turnbull singled such reform out as evidence of the kind of big changes that the country needed to consider.

If Australia is to embrace challenge like climate change, tax reform, or any other complex problem, we need political leaders to adopt and hold principled positions for long enough to convince the public that they stand for something. Mr Turnbull was a strong supporter of renewable energy before he became prime minister, and this week he has become one of its strongest critics. Jeremy Hanson has been a strong critic of the ACT's renewable energy target but more recently has become a supporter. Such flip-flopping does little to give voters, or investors, the confidence that our system requires.

The Australian federation is, like all federations, a complicated beast. As Australians we share a currency and a constitution, but as territorials we are free to make many of our own laws, but not all. When it comes to products like electricity that, literally, flow across borders it makes sense to align some policies, but there is no constitutional, technological or economic reason to align all of them.

Politicians often discover "budget black holes" after they are elected and it is often not until such "discoveries" are made that we learn that the "principle" of budget repair takes precedence over the "principle" of keeping promises about spending cuts.

With a week to the ACT election now is the time for Canberra's aspiring representatives to make clear whether they support the principle of ACT leadership on issues like climate change, even if the federal government or other state colleagues might prefer "harmony".

Competitive federalism relies on the willingness of individual states to blaze a trail for others to follow. As the election approaches we need to hear not just what aspiring leaders want for Canberra, but they are willing to fight with our federal partners to deliver them.

Richard Denniss is the chief economist for The Australia Institute.

Twitter: @RDNS_TAI