The introduction of Big Stick legislation designed to give the federal government divestiture powers has flopped in Parliament, with the Liberal Party’s backbench forcing the government to revise key components of the plan.
From a joint statement by Treasurer Josh Frydenberg and Energy Minister Angus Taylor, it is clear divestiture powers will remain in the legislation, but instead of giving the treasurer the final say on breaking up the energy giants, the treasurer will have to apply to the courts.
The statement also notes that divestment proceedings will be triggered by misconduct found by the ACCC, with court-ordered civil penalties orderable up to $10 million.
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The statement says the treasurer could only make an application to the court where both the ACCC and the treasurer are satisfied the order would result in a net public benefit.
The treasurer will have the power to issue contracting orders that will permit the treasurer to require electricity companies to offer electricity financial contracts to third parties.
Key figures from the energy industry vehemently oppose the legislation, urging the government to abandon it for the good of investment and sovereignty.
Labor is celebrating the knock-back of the legislation, which received objections from more than 20 backbenchers.
“This ridiculous policy, this Venezuelan-style intervention, this intervention in the economy which would chill investment, has collapsed under its own weight,” Shadow Treasurer Chris Bowen said in Canberra on Tuesday.
The Australian Energy Council (AEC) says it welcomes the Federal Government’s agreement that any divestment power must be consistent with the Constitution, but “remains alarmed at the Government’s intention to legislate an onerous and unprecedented set of Government market interventions which will only increase risk to investors and costs for consumers”.
“The ACCC Report specifically recommended against the need for a divestiture power and did not find misconduct in the market, rather recommended welcome reforms to improve its transparency and operations,” the AEC said in a statement.
“The ACCC correctly identified the primary drivers of high prices – cost pressures across the supply chain and the policy vacuum.
“The industry recognises that customers need support in an environment of high prices, and is already working with the regulator to implement those recommendations which will assist consumers to get a better deal.”