When Jon Stanhope was in charge, ACT Labor presented as a steady-as-you-go hard-working government, a touch arrogant in its days of majority power, but certainly not revolutionary in its approach or rhetoric. With Katy Gallagher as Chief Minister, and the Greens Shane Rattenbury in the cabinet, we have a government that is unique in Australia – and possibly, the world – in its zeal to transform the city in which its citizens live.
For those who believe in federalism, there is a cheering asymmetry between the government on Capital Hill and the one on London Circuit. Socially progressive (it was not for want of trying that the legislation for gay marriage did not succeed); not averse to telling us what is good for us (we are too fat, and must walk and cycle more); and, above all, environmentally zealous (we are to power ourselves from renewables and ride in public transport); the ACT government’s values could not be further removed from those of the Abbott government.
When it comes to renewables, the ACT government clearly feels it has the wind, so to speak, in its sails. Buoyed by two successful solar auctions, Environment Minister Simon Corbell recently announced plans for wind farm auctions to take place. But dreams are expensive, and as ACT citizens will, either directly or indirectly, be paying the bills, some questioning of the vision seems in order.
Labor governments love targets, and the ACT’s target is that by 2020, 90 per cent of the energy consumed in the city will come from renewables. Production will be underwritten by a feed-in tariff of 18.6 cents per KWh. To meet the target, the total amount of installed capacity will need to be about 500 megawatts. (To get a rough idea of the magnitude of the task, a 50-hectare solar farm will generate about 20 megawatts. A 150-turbine wind farm, at two megawatts per turbine – and that is a very big turbine – adds up to 300 megawatts).
If any jurisdiction in Australia could feasibly undertake this project, it is probably the ACT. We are a city-state, so the legislative powers of a state government can be brought to bear on a relatively small population. The consumers of the power (who will also pay the support tariff) are mostly relatively well-off.
This is just as well, because the annual cost of the subsidy, if the 90 per cent figure is reached, will be roughly $41 million a year for the residential sector and $60 million for non-residential. This is a fairly large impost, but as ACT industry is mostly government-based, the associated investment is unlikely to move out of the ACT. Another important point to note is that, when the sun does not shine and the wind does not blow, baseload power is available from coal-fired NSW power stations.
The government tells us (based on a 2013 survey) that there is considerable public support for large-scale investment in renewables in order to combat climate change. This is all well and good, but respondents were not asked where they thought these facilities should be located. Relative to the amount of power they generate, renewables take up a lot of room (solar farms) and disfigure otherwise scenic landscapes (wind farms).
Not surprisingly, having a solar farm next door to you is not a popular option. I have a very small one on my roof, but I would not be pleased if, like the residents of Royalla, I had a large one on adjacent land. Solar farms are industrial installations and that is exactly what they look like. Solar farms would gobble up a good deal of the urban open space in the ACT, which is why the ACT government has turned its attention to wind power. Modern wind farms, when running at full pelt, produce a lot of power but they also produce a good deal of noise. Again, I find it perfectly understandable that those who have bought rural land would not be happy about having these installations next door to them. Community engagement – and by this I mean real, not token, community engagement – will be of the essence here.
There is also a degree of double-think about subsidies. We now know that Australians don’t care to support industries, such as car manufacturing, that cannot survive without subsidies. When this happens, it is called ‘‘corporate welfare’’. In the case of green industries, however, substantial subsidies are the order of the day, despite the fact that Australia has ample supplies of relatively clean fuel in the form of natural gas. Or at least, we would have ample supplies if we did not allow almost all of it to be exported. Renewables are regarded as the industries of the future, despite the fact that very little of the technology will be locally produced.
There are obvious risks in all this, both to the renewables companies and to the citizens of NSW. ACT citizens may get sick of the higher bills and demand the supportive legislation be overturned. Alternatively, the renewables companies may not be able to make money, even with the subsidies, and cease production, leaving giant dead turbines to litter the landscape. My guess is that, when it comes to actual commitments, progress towards the overall target will be slower than the government imagines. But I don’t imagine anyone will be watching too closely. Who now remembers no waste by 2008? At least the renewables venture is a good, brave try.
On the other hand, I’m afraid I just do not understand the case for Capital Metro, the ACT government’s plan to link Gungahlin and Canberra City by light rail. The government’s own benefit-cost analysis, submitted to Infrastructure Australia in 2012 shows that, compared with bus rapid transit, light rail is simply not economically attractive. The best benefit-cost ratio for light rail documented in the Infrastructure Australia document is 2.34. Under the same assumptions (which relate to very high density development along the transport corridor), bus rapid transit has a benefit cost ratio of 4.78 to one – more than twice the return for each dollar invested than for light rail.
It might be argued that, in the absence of a viable carbon-pricing scheme, the environmental returns from renewables might well be zero. But at least the upfront costs are not insuperable. Capital Metro, on the other hand, seems simply unaffordable. Bus rapid transit offers a far more realistic way of encouraging public transport use (and arguably an improved Gungahlin-to-City bus service would be more cost effective even than rapid transit).
Yet the government has already budgeted millions for feasibility and engineering studies for light rail and insists that construction will begin in 2016 (after the next ACT election?). Meanwhile, these funds are not available for other, more pressing projects. The idea of the light rail cars, clanking down Northbourne Avenue, shredding trees and burning money as they go, just does not bear thinking about.
Professor Jenny Stewart is a Visiting Fellow in the School of Business, UNSW Canberra.