With the Labor leadership debacle somewhat behind us, PM Julia Gillard faces the grand task of turning the ship around, writes Ben Eltham in New Matilda. However, recent events show that she has once again failed to steer the headlines toward a positive direction. The sudden retraction of the $1000 federal subsidy for  households to install solar hot water systems has been slammed by consumers and business as ‘disastrous’ for the energy sector and labelled as the kind of ‘stop-start policy making’ simply aimed at attaining a budget surplus. The move has also raised a few eyebrows about the consistency of the government’s industry policies, given that they continue to provide large subsidies for uncompetitive industries like auto manufacturing and steel making, yet are rolling back subsidies for solar.

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.

Read Ben’s full article in New Matilda here