How climate policy wars are frustrating corporate Australia
* Businesses increasingly frustrated by political
* Economists say RBA might stay on sidelines for much longer
* Oil Search boss says glad to work in PNG, not Australia
* New energy minister campaigned against wind farms for
By Swati Pandey
SYDNEY, Aug 29 (Reuters) - Australia's revolving door of
political leadership has hit confidence in sectors particularly
prone to policy uncertainty, such as energy, which could hurt
business investment and push back the timeframe for a central
bank interest rate hike.
The resource-rich economy has seen five changes of prime
minister over the past decade with Malcolm Turnbull last week
becoming the latest to lose the top job amid political
Growth has mostly remained unscathed - Australia has posted
27 years of uninterrupted expansion - but 10 years of political
deadlock over climate and clean energy policies, among others,
have created headaches for pockets of the economy.
Divall's Earthmoving and Bulk Haulage, which employs 250
people, has drawn business from wind farm developments northeast
of the capital city Canberra but is considering scaling down
operations due to political risks.
"Because of the policy failure in Canberra, some of the wind
farms we work for are now sitting on the fence and that is
hurting us," Andrew Divall, the firm's founder, told Reuters.
He is particularly nervous about policy direction under new
Energy Minister Angus Taylor, who has long campaigned against
wind farms and earlier this month called the obsession with
emissions "a massive mistake."
Climate and energy politics have long been problematic for
Turnbull, whose views on climate change put him at odds with
sceptics in his own Liberal party, last week was forced to water
down a long-awaited energy policy in a failed bid to stave off a
challenge to his leadership.
Several Liberal party members, including former Treasurer
Joe Hockey and ex-Prime Minister Tony Abbott have in the past
publicly bemoaned wind farm aesthetics, calling them
"appalling"," ugly", "noisy" or "visually awful."
Neither of them have supported other forms of renewable
energy either. Turnbull cited such "bitterly entrenched views"
in his farewell speech last week as a reason for the political
Research group BIS Oxford estimates electricity engineering
works to slump more than 27 percent to A$8 billion over the next
five years with fewer projects in the pipeline and as the
"current energy policy failures deter new investment."
Also weighing on confidence is the prospect of a federal
election, which needs to be held by May next year and could
effect yet another change of prime minister with the opposition
Labor party currently ahead in the polls.
Amid the policy limbo and risks already hitting the housing
market, some economists expect the central bank to keep rates at
a record low 1.50 percent beyond 2020 to help support the A$1.8
Westpac chief economist Bill Evans last week cited the
political environment as one of the reasons for the Reserve Bank
of Australia to stay pat until the end of 2020, as it revised
Evans expects the uncertainty to weigh on business
confidence, spending and employment plans which in-turn would
hurt an already cautious consumer.
"DISAPPOINTING AND HUGELY FRUSTRATING"
The absence of a stable carbon policy over the past decade
has resulted in underinvestment in energy generation, which has
led to soaring power prices. That has, in-turn, hurt
energy-intensive manufacturers such as aluminium, steel and
Alinta Energy, now owned by Hong Kong's Chow Tai Fook
Enterprises, was forced in 2016 to shut a coal-fired plant in
South Australia because it had become unprofitable.
Building products maker Brickworks has repeatedly
said soaring energy prices were piling on cost pressures and
stifling business investment, while gas pipeline company APA
last week lambasted politicians for causing the
instability in Canberra.
"It's disappointing and hugely frustrating for me to see our
elected leaders putting their election agendas ahead of the best
interests of the country," APA Managing Director Mick McCormack
told Reuters in an interview.
CONTINENT OF INSTABILITY
Australia has not had a prime minister complete a full
three-year term since 2007, a stark comparison to some less
developed economies in the region.
Ironically, Papua New Guinea, once considered a part of the
politically volatile chain of island nations to Australia's
north known as the "arc of instability", has had the same prime
minister since 2011.
Oil Search boss Peter Botten expressed relief that
most of the company's oil and gas operations were in Papua New
Guinea, not Australia.
"I'm actually glad that I work primarily in Papua New
Guinea, where the fiscal regime and policy settings seem to be
substantially more stable on key areas of energy development
than in Australia," Botten told reporters.
(Reporting by Swati Pandey; additional reporting by Sonali Paul
in MELBOURNE; Editing by Sam Holmes)
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