Gillard's Solar Burn-Out


The challenger is defeated. The incumbent stands victorious, her party united around her.

Cue the Ennio Morricone and roll the closing credits? It’s not quite as simple as that. Mired in ennui and surrounded by the wreckage of Labor’s reputation, Prime Minister Julia Gillard now faces the task of restoring her government’s standing with voters. It won’t be easy.

Events this week in the wake of Kevin Rudd’s farcical leadership challenge show why. No sooner had the challenge been defeated than Senator Mark Arbib decided to resign. Arbib, a factional power-broker from the New South Wales right, quit as both Senator and as a minister, citing family reasons and a desire for the Labor Party to "heal".

That means Arbib’s cabinet spot is up for grabs in the coming ministerial reshuffle. It also means New South Wales Labor has to nominate a new Senator for the Premier State. The rumour mill had barely begun grinding than the name of former premier Bob Carr was thrown up for consideration. Reportedly, Carr would have been quite amenable to being drafted to Gillard’s front bench, but desired the freshly vacated position of Foreign Minister, so recently held by Kevin Rudd.

This, unsurprisingly, was just a little irritating to Stephen Smith, a former foreign minister and the current Defence Minister, who was the man asked to make way for Rudd when Gillard brought him back to the cabinet after the 2010 election. Smith is one of the government’s better performers and was a strong Gillard supporter in the recent stoush. So Carr’s nomination was nixed — but not before the whole matter leaked out to the press, which predictably made merry with the confusion.

The micro-controversy is not unusual in the messy business of ALP politics, but it again demonstrates just how difficult this government finds it to keep sensitive internal information out of the national media. As a result, a good performance in Question Time yesterday went largely unremarked upon, and 24 hours of the "clean air" so desperately desired by political operatives was wasted.

As if to prove the oft-made point that the government is error-prone, the Carr-for-Canberra push was rapidly followed by another unforced error, this time in the area of solar hot water subsidies.

The government has been running a $1000 federal subsidy for households to install solar hot water systems for nearly five years now. On Tuesday night, Labor’s Parliamentary Secretary for Climate Change, Mark Dreyfus, peremptorily shut the scheme down. There was apparently no industry consultation; interested parties found out via a media release which stated in no uncertain terms that "to be eligible for the rebate before the scheme closes, systems must be installed, ordered (and a deposit paid) or purchased on or before 28 February 2012." Seeing as the release was sent after the close of business the 28th, that left rather little opportunity for those seeking to get in before the rebate ended.

Dreyfus has been bravely defending the abrupt decision, arguing that axing the scheme is "good budget practice" and suggesting that the program might have run over-budget if it had been allowed to continue through to 30 June. Dreyfus also said "it would not have been appropriate to tell individual businesses because to do so would give a competitive advantage to an individual business." No-one has paid much attention.

The reaction from the solar industry has been predictably negative. Renewables lobbyists and the solar industry slammed the move, while job losses have been foreshadowed at hot water manufacturer Rheem.

"The disastrous solar policy roller-coaster continues," Australia Solar Energy Society’s John Grimes was reported as saying. "Another solar scheme shut down without notice, more solar jobs lost. That’s bad policy and bad process."

The Clean Energy Council’s Kane Thornton made a similar point. "Cutting this program without warning in the middle of a financial year is yet another example of stop-start policymaking that continues to plague the entire clean energy sector," he said.

It’s hard to argue with that assessment. Federal and state renewable energy policy in recent years has been yo-yoing between generous subsidies and abrupt phase-outs, particularly for household solar. Time and again, initial enthusiasm for so-called "complementary" measures like subsidies for householders to buy solar panels or a solar hot water system has led to generous government hand-outs. These subsidies have spurred rapid growth for a host of solar installers and manufacturers, driven by aggressive marketing that prominently features the free government cash. Then, when governments try to rein in the spiralling cost of such subsidies, activity in the subsidised industry collapses.

It’s happened a number of times in recent years, at both state and Commonwealth level, as feed-in tariffs and renewable energy certificates have first been introduced and then abruptly cut or devalued. In New South Wales, for instance, the O’Farrell government slashed the solar feed-in tariff after a $760 million blow-out in the cost of the subsidy. But O’Farrell then backed down on the cut after uproar from consumers and industry. The nation-wide wind back in feed-in tariffs has caused deep distress in Australia’s solar PV industry, particularly among businesses mainly selling small systems to householders.

Tuesday’s solar hot water roll-back fits the pattern exactly, with a short-term boom stopped in its tracks by the end of a government subsidy. While it may be good for the budget’s bottom line, the firestorm of criticism from consumers and businesses is another distraction for a government trying to get a bit of momentum. It also raises uncomfortable questions about the consistency of the government’s various industry policies. At the same time as Julia Gillard and her government is rolling back subsidies for solar, the government has committed to big new hand-outs to uncompetitive industries like auto manufacturing and steel making.

Then again, Gillard undoubtedly has a bigger fish to fry, in the form of the budget surplus, which now looms larger than ever for a government trying to demonstrate its economic credentials and prove that it can keep its stated commitments.

While Wayne Swan and Penny Wong bury their heads in the spreadsheets, Gillard also has the short-term task of choosing the new-look cabinet. It’s a puzzle that will require delicate balancing of factional interests with a need to get far better performances out of key front-benchers than the Prime Minister has so far enjoyed. And she’s going to have to do all that in the teeth of a hostile media, which has almost uniformly written her off.

Gillard is generally at her best with her back to the wall. Given the scale of her political challenges over the next 18 months, that’s just as well.

Launched in 2004, New Matilda is one of Australia's oldest online independent publications. It's focus is on investigative journalism and analysis, with occasional smart arsery thrown in for reasons of sanity. New Matilda is owned and edited by Walkley Award and Human Rights Award winning journalist Chris Graham.