Government stares down backbench concerns over energy break-up powers

The government had to overcome objections from its own MPs to the controversial divestiture laws on Monday, while conservatives slammed the "draconian" plan as a breach of Liberal Party philosophy.

Liberals including Russell Broadbent and Scott Ryan aired their concerns in a repeat of a similar meeting one week earlier, when their colleague Jason Falinski questioned a $500 million policy to guarantee deposits for first-home buyers.

The confidential meetings witnessed serious concerns about the government's direction on the two bills just as Prime Minister Scott Morrison engages in a rhetorical stoush with business leaders over their campaigns on his policies.

While Energy Minister Angus Taylor secured formal support for the energy policy in the gathering of about 30 MPs on Monday, this came only after Mr Broadbent warned against the forced divestiture power as an extreme step for a Liberal government.

Assistant Treasurer Michael Sukkar had to tough out similar complaints at the same backbench treasury committee on Monday of last week, when Mr Falinski questioned why the government should guarantee a portion of the home loan deposits for 10,000 customers a year.

Liberal MPs declined to comment on the record about the discussions, given party conventions that forbid speaking about the closed-door gatherings, but seven sources confirmed the debates over the two bills.

One said the party room would accept Mr Taylor's "big stick" energy bill with the divestiture powers because it included a sunset clause that meant it would expire in 2025.

After clearing the party room on Tuesday, the energy bill is expected to be introduced to Parliament this week, with Labor yet to decide its position because it has not seen the bill. The home loan deposit scheme was introduced to Parliament last week and has been referred to a Senate inquiry. Labor backed the idea when Mr Morrison announced it during the election campaign.

The original energy policy gave Treasurer Josh Frydenberg the discretion to demand the break-up of an energy company if the Australian Competition and Consumer Commission (ACCC) found it abused its power, but this was modified to require the Federal Court to order the divestiture rather than the minister.

Mr Taylor assured the meeting that this step could be taken only after the ACCC had imposed other penalties on the company, including fines.

Among those to probe Mr Taylor on the laws was Senator Ryan, the president of the Senate and a former minister, who was among a group who had pushed to removed ministerial divestment powers in favour of giving the Federal Court the power.

One MP, who had previously pushed back against the new laws last year, said many Liberals were resigned to the fact that Mr Morrison's election victory meant he could get his way despite "serious misgivings" over policy.

"I don't love it but it was an election commitment," the MP said of the "big stick" bill. "We don't like it but we have to swallow it."

Mr Broadbent, whose electorate of Monash is home to EnergyAustralia's Yallourn power station in the Latrobe Valley, questioned why the law was needed in light of other "heavy-handed" regulations on private enterprise brought forward during the last term of Parliament.

Mr Broadbent flagged his philosophical objections to some Coalition policy in a speech last week.

"Many members on different issues will take that stance on behalf of their community sometimes, when they need to represent their community in a fulsome way because their constituents are directly affected by an individual matter," Mr Broadbent said.

"These issues are important, and when it comes to matters of principle where you have taken a stand for a long time, I don't believe the nation wants members of parliament who say one thing on Monday and then, under pressure, say another thing on Friday."

As well as the energy and housing affordability bills, some Liberals have concerns about a draft law to impose mandatory jail sentences on child sex offenders because it would tie the hands of judges. Some also object to laws that would force companies to report cash transactions over $10,000, saying this would be an unnecessary intrusion for small business.

Business Council of Australia chief executive Jennifer Westacott said on Monday there was "no doubt" the energy legislation was a "risk to investment" but added that industry had to be pragmatic because the government had won a mandate at the election.

"You can either work constructively with people or just keep opposing things without trying to get it right now and that's our objective," she said.

Institute of Public Affairs director of research Daniel Wild said the energy bill was "illiberal, draconian, radical and anti-competitive" as well as out of step with liberal ambitions to reduce regulation. "The extra cost of regulation will be pushed onto consumers and small businesses in the form of higher electricity prices," Mr Wild said.

Liberals were divided on the merits of the "big stick" bill, with South Australian MP Tony Pasin defending the policy in the meeting on Monday. "We act on behalf of shareholders too, they happen to be the Australian people," Mr Pasin told the meeting.

Another MP in the meeting said he did not think many colleagues were troubled by the law. "My sense was that 95 per cent of people were comfortable with it," he said afterwards.

One Liberal MP, Andrew Laming, said there was a case for stronger action against unfair practices but that divestiture was a last resort. "It's not the first step in a cascade of interventions, it's the last step," Mr Laming said.