Business issues 'big stick' warning
The business sector wants the Federal Government to abandon its “big stick” approach to energy legislation.
New measures to be introduced to parliament this week grant the Commonwealth divestment powers that could be used to break up energy companies that do not do enough to get prices down.
The idea has ruffled feathers both in the business community and within the LNP itself, leaving many uncomfortable with the prospect of intense market intervention.
The Australian Energy Council, Australian Industry Group, the Business Council of Australia and others want the government to abandon its plans, warning they will “specifically discourage badly needed investment in the energy sector”.
“The signatories to this statement are robustly opposed to the creation of unilateral divestment powers for the treasurer. Such discretionary and quasi-judicial powers represent deep and genuine sovereign risk,” the groups say in an open letter to the government.
“They are inconsistent with best practice for a modern economy, such as Australia’s, and were specifically considered and rejected by the ACCC and the Harper competition policy review.
“If enacted, these powers would cast a pall over investment in all sectors of the Australian economy and threaten the economic attractiveness of a country highly reliant on foreign investment.”
The ‘big stick’ sets a “dangerous precedent” and could undermine the interests of consumers, the letter states.
“Driving down prices for any market requires investment. Investors require clear, stable and predictable rules so that they have the necessary confidence to make those investment decisions,” the group said.
“This legislation will only lead to increased investment uncertainty and prices.
“We urge the government to abandon the bill and work with the business community on reform options which enhance Australia’s economic stability, encourage investment and deliver better outcomes for consumers.”