The energy crisis, inflation, refugees and climate wars offer Albanians a choice: good policy or good policy?

On Thursday, Anthony Albanese and Energy Minister Chris Bowen formally updated Australia’s international commitment to its climate change action plan. This is now a 43% reduction in emissions by 2030, in line with the policy adopted by Labor in the election.

They were observed by representatives of the business sector, relieved by the prospect of greater political certainty, which in turn will pave the way for more confidence in energy investments.

At a press conference later, Bowen said forcefully: “Today Australia is going climate change.”

Well, yes and no. The Albanian government promises a more progressive climate and energy policy, in line with the needs of the inevitable transition to a low-carbon economy.

But at this precise moment, it may seem less that we are around the corner than that getting off the old road is going to be even more complicated than we imagined.

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What’s behind Australia’s energy crisis?

Who is responsible for the energy crisis?

The Albanian government blames the energy crisis in eastern Australia on the Coalition’s failure to put in place a policy to ensure adequate and timely investment in renewable energy.

That’s right, but that’s not the whole story.

The energy system has recently been hit by unforeseen challenges, including the war in Ukraine.

Then, as regulators tried to manage the situation with a price cap, power producers acted to advance or maintain their commercial interests. All of this led Australia’s energy market operator to take over the system on Wednesday.

The Albanian government is doing what it can, working with states and supporting AEMO.

But regardless of having a more rational policy than the one that existed before, the government still sounds rather between and between on the role of gas and coal in the next years of the transition.

The “climate wars” are not over

Any idea that the “climate wars” are over is misplaced optimism – the opposition will exploit the immediate problems to ensure they stay on.

Long-term political thinking is essential. But, politically, the public very often thinks in the short term, and their way of thinking can change in no time.

Given its political position this week, the government would welcome it.

The Essential poll released this week endorsed the job Albanese is doing by jumping 17 percentage points between May and June to 59%. His disapproval dropped 23 points to 18%.

When people were asked if Australia was going in the right direction or on the wrong track, 48% thought it was going in the right direction (up 8 points) and just 27% said the wrong way (down 15 points).

These results partly reflect the sheer relief at the dispatch of the Morrison government and in particular of Scott Morrison himself. But whatever the mix of drivers, the big question is how strong will be the political shield of the Albanian government as it faces a huge shake-up in the months ahead.

Inflation and interest rates are rising

Reserve Bank Governor Philip Lowe does not often emerge into the television spotlight. When he appeared on ABC on Tuesday night, it was to predict that Australia’s inflation rate would hit 7% by the end of the year. Lowe also reiterated that he expects the official interest rate to rise to 2.5%.

Reserve Bank Governor Philip Lowe after a press conference at the RBA headquarters in Sydney.
Reserve Bank Governor Philip Lowe does not often emerge into the television spotlight.(ABC News: John Gunn)

A day later, the government received good news when the Fair Work Commission announced its 5.2% increase in the minimum wage, slightly above the latest inflation figure of 5.1%. The increase, however, was smaller for rewards, and inflation is already ahead. Although the commission does not believe the hike is a risk to the economy, critics have claimed it will hurt small businesses and fuel inflation.

Meanwhile, there were signs of thunderclouds overseas. In the United States, the Federal Reserve raised its benchmark interest rates by 75 basis points, against an inflation rate of 8.6%. Fears are growing of a recession in the United States, with serious consequences for other countries.

Internationally, the weekend meeting between Defense Minister Richard Marles and his Chinese counterpart is a welcome sign that after the change of government, China is interested in unfreezing a dysfunctional relationship for years. .

But the Chinese are big on games and Albanese’s response – basically saying, show us you’re serious by removing trade restrictions on our exports – was spot on.

Refugees test political lens again

A less welcome sign was that smugglers were testing the new government, with several Sri Lankan boats intercepted since the election.

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The government’s determination to prevent boat arrivals is beyond doubt. But he also has to pay attention to signals.

He did absolutely the right thing in allowing the ‘Biloela’ family from Sri Lanka to return to their town in Queensland. And in due course, they should get permanent residency.

But for Albanese, being photographed with them was more problematic.

Former Labor agent Cameron Milner, writing in The Australian this week, underscored the optics on another front, with a warning to Albanese – whose travels so far have been fully justified – on the need to stay on the lookout. home.

Removing tax cuts would go against Albanese’s word

A few weeks ago, it would have seemed an overly long bow to suggest that the situation facing the government has parallels to that facing the Whitlam government in the wake of the international oil shock. But while the details are different, the magnitudes can be compared.

Mega crises require flexibility. But be too flexible and it can come back to bite.

For example, as the budget approaches, there will be increasing calls for the government to abandon the very costly Coalition Stage Three tax cuts, which are now estimated to cost the budget over $200 billion between 2024-25 and 2031-32. They were legislated years ago, when the budget situation was benign rather than in deep deficit.

But Albanese will turn a deaf ear, knowing that breaking his word would create more problems than delivering the tax cuts. It would undermine confidence in his word, and it would undermine his government.

This can be framed as a choice between the best practice policy and the “safe” policy. Usually a leader should opt for a good policy, even if it involves a U-turn. But in this case, Albanese would be wise to stick to his political goal, given that a U-turn would dent his credibility.

Michelle Grattan is a professor at the University of Canberra and chief political correspondent at The Conversation, where this article first appeared.