Gas export tax would help to fix Australia’s energy crisis, says Dr Ken Henry

The dire state of Australia’s domestic electricity market, and our lack of investment in renewables, has been a mess of our own making, former Treasury secretary Ken Henry has said.

Australia has also squandered its opportunity to use its huge domestic gas reserves as a transitional fuel to shift our electricity system away from a heavy reliance on coal to renewables, he says.

“It’s been squandered through politicking — partly ideological, partly I think driven by personal ambition — and it’s put us in a very bad place,” he told the ABC this week.

“It’s too late to have the sort of reliance upon gas-fired power as a transitional fuel that we were imagining last century.”

Dr Henry, who was Australia’s Treasury secretary from 2001 to 2011, argued in 2004 that Australia should adopt a national emissions trading scheme.

In his 2010 Tax Review, he warned energy markets could become unstable if investors weren’t provided with sufficient certainty to make long-term investment plans for renewable energy. 

Now, looking back, he says no-one involved in energy policy-making in the late 1990s and early 2000s could say that they didn’t see Australia’s current energy crisis coming.

But a gas export windfall tax could help to fix things, he said.

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Would a gas export tax fix Australia’s energy crisis?(Rachel Pupazzoni)

Australian policymakers blew it

Dr Henry spoke to the ABC following one of the most tumultuous weeks in Australia’s energy policy experience.

Last week, the electricity system on Australia’s eastern seaboard was thrown into chaos as a shortage of power supply ran headlong into spikes in demand as people increased their energy use during a severe cold snap.

Some fossil-fuel generators had withdrawn a huge amount of capacity from National Electricity Market, which worsened the forecast shortage of electricity and prompted unprecedented regulatory intervention.

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