How could there be an energy crisis?

The answer, I think, is that Australia has a crisis of government, and the energy crisis is one consequence.

The pandemic was telling. At the start of 2020, enormous cooperation and goodwill across the community overflowed into government ranks. Federal and state politicians and their bureaucrats seemed determined to join forces to solve the public health crisis.

By 2021, however, major fractures in the national effort opened up with the collapse of testing, breaches of hotel quarantine, confusion over border closures, delays in vaccine arrival and so on. In the end we scraped through.

The failure of federal governments to deliver real services in Australia is deeply worrying. A federal government is at its best when all it has to do is spend money, like for social security, aged care, childcare and the NDIS, or provide funding to the states for health and education services and transport projects.

But when called on to deliver actual things - think computers in schools, insulation bats, defence procurement, Snowy 2.0, the National Broadband Network and, now, a National Energy Market - the federal government demonstrates dreadful incapacity.

This energy crisis could well be the standout example of federal government failing. The starting point was the early 1980s when the nation's post-war, state-owned electricity assets were starting to crumble. Widespread blackouts hit the eastern states in the winters of 1981 and 1982. Parliamentary inquiries revealed poor maintenance schedules, inefficient work practices and indulgent capital spending. They weren't the best of times for advocates of public ownership and management of key assets.

But the response by state and federal governments was haphazard. Many on the left argued for expensive refits of state-owned utilities. In contrast, the right was inspired by the privatisation and deregulation actions of British prime minister Margaret Thatcher. A market for electricity is the solution, said the privatisation cabal, sell the assets, let the private sector do the generation, distribution, and retailing, the market is the solution, everyone's a winner.

By and large, the right won the debate, and so the Australian energy system commenced the long journey to where we have arrived this winter. A National Competition (Hilmer) Report in 1993 set out the architecture for replacing the utilities with an electricity market. South Australia and Victoria led the flog-off of power stations and grids. NSW was tentative, and struggles over privatisation between factions and unions were instrumental in Labor losing office at the 2011 state election.

Under the O'Farrell and Baird Coalition governments, the sell-off proceeded at a pace.

Meanwhile, in 2004, the Howard Coalition federal government unwrapped its energy market dream team: the Australian Energy Market Commission (AEMC) to write the rules, the Australian Energy Market Operator (AEMO) to run the market, and the Australian Energy Regulator (AER) to ensure compliance with the rules.

But Howard's plan lacked a crucial ingredient, what to do about carbon emissions at a time of climate change? How would a market system remove fossil fuels from the electricity production process?

It was a task that would behead the Rudd and Gillard Labor governments. Rudd's 2008 Carbon Pollution Reduction Scheme (CPRS) was trashed by an unholy alliance of the Greens and the conservative parties. Gillard's Clean Energy Act in 2011 was mauled to the bone by the Liberal's Tony Abbott.

Then it was a task that de-throned Abbott's successor as prime minister, Malcolm Turnbull, when his National Energy Guarantee was binned by climate change deniers deep inside the Coalition parties. And, as night follows day, the failure to deliver on energy and climate change was central to the Coalition's loss last month.

The task has now fallen to the Albanese Labor government. It claims, like many before it, to have a plan to solve the energy crisis while genuinely addressing climate change.

Success will put Albanese on a mantle, the first government to solve an energy crisis nearing half a century in duration.

Our journalists work hard to provide local, up-to-date news to the community. This is how you can continue to access our trusted content: