Illustration: Guy Shield
It was the final weekend of February when federal Senator Cory Bernardi launched the official state campaign for his start-up political party, the Australian Conservatives. At the Kent Town venue on Adelaide’s inner east side, the party faithful had settled in and when it came time to start the show, Bernardi was called to the microphone. The senator, who bears a striking resemblance to Lurch from The Addams Family in both form and function, stood from his front row seat and bounded onto the stage. What followed was a series of eyebrow-raising election announcements that anywhere else would have been dismissed as the ravings of a lunatic.
Only this is South Australia, it is election season and Senator Bernardi is a man who has never been one to shy away from a bad idea. Headlining his election pitch, Senator Bernardi pledged to the cameras and the people of South Australia that his party would build a nuclear waste dump within its borders. This was not a new proposal by any stretch – a state government plan to build a storage facility which would take 13 per cent of the world’s nuclear and radioactive waste had been shelved just last year for lack of popular support. A second federal plan to build a low-level storage facility at Hawker in the state’s north has tentatively remained ‘in planning’ since it was first announced in 2015.
Pushing on, Bernardi made a pledge to change state law to allow for ‘all forms of energy production’, including nuclear power generation. Doing so would leave a lasting ‘legacy’ for future generations, he insisted – though a 2016 Royal Commission had already found that building a nuclear reactor would be too costly. ‘We could be the Saudi Arabia of the south, but the major parties have turned their backs on this opportunity,’ he said.
This sentiment, again, was not new; the Senator was not the first politician to look longingly at the Olympic Dam uranium mine in the state’s north as their knees buckled at the thought of all the money it could bring. Former Labor Premier Mike Rann had been the first back in 2007 when he suggested that uranium would be the ‘fuel of the future’.
‘To put it into perspective, if uranium is the fuel for the future, we’re not the Texas, we’re the Saudi Arabia of it in our state,’ Rann said.
Ten years on, South Australia had embraced a different kind of green by leading the country, and indeed much of the world, in its embrace of renewable energy. After years of waiting around for the invisible hand of the market to sort it out, the state government finally announced a direct intervention last year. In the face of federal inaction and hostility, the state government promised to build the power plants and the infrastructure it needed to ensure a stable power supply. Going solo also freed the state to do what was most effective. Alone, renewables might not be enough to fill the gap left by the closure of the state’s car industry, but building on the state’s already considerable comparative advantage offered a way to develop new industry while taking some pressure of the state’s policymakers. All industry minister Kyam Maher had to do to bat away questions about the impact of the Holden closure was point to the Tesla battery as proof the future was already here.
Tesla’s shiny new lithium-ion battery facility at the Hornsdale Power Reserve, three hours north of Adelaide, is as much a symbol as a piece of equipment.
Tesla’s shiny new lithium-ion battery facility at the Hornsdale Power Reserve, three hours north of Adelaide, is as much a symbol as a piece of equipment. It is, essentially, 100 megawatts of lightning in a box that works by balancing out the load on the power grid at a rapid rate. Too much up, the battery turns off. Too much down, the battery gives it some juice. There may have been other projects across South Australia just as impressive, but the battery came with the name-brand of Elon Musk, the technology mogul recently namechecked on Star Trek alongside Zefram Cochrane and the Wright brothers.
For South Australian Premier Jay Weatherill, an unpopular leader who at the time was facing certain defeat at the March 17 election, the success of the battery was a gift from the gods. To simply stand next to Musk was to bask in the glow of his techie celebrity, and it was this quality Weatherill tapped so effectively. When the battery booted up 40 days ahead of schedule, and actually worked, everything seemed to turn around. The success of the battery ended the hand-wringing over the wisdom of renewable energy in the national electricity debate, as states like Victoria looked west with thoughts of building their own.
It was even a coup on a political level. In the early days of his tenure as Prime Minister, Malcolm Turnbull had loudly promoted his innovation policy to encourage more tech start-ups, but ended up watching on as Weatherill, his favourite punching bag, shook Musk’s hand on the world stage – the political equivalent of flipping the bird to the Prime Minister.
It was against this new alliance of Silicon Valley and the Labor Party that Bernardi saw opportunity. The conservative warrior had long been willing to fight for his beliefs and he understood that there was a cross-section of the community which looked on the whole thing with distrust and suspicion.
‘Elon Musk, I’m convinced, is the monorail salesman from The Simpsons,’ the Senator told his audience. ‘There is an ideological obsession, there’s been an infection in the federal parliament, and it’s been here in South Australia, that renewables are somehow going to power our way to the future. It’s not. That’s not how it works.
‘When the sun doesn’t shine and the wind doesn’t blow, the power doesn’t flow.’
How exactly Elon Musk became caught up in a provincial election on the other side of the world is something of a complicated matter, as is the story of how the state’s energy supply became so politicised. That is a tale about power, electricity and how greed has a tendency to rule in a state like South Australia.
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The first thing to know about the whole situation is that South Australia is poor. With only 7 per cent of the country’s population, the state has so far been able to pay its bills thanks to redistributions and transfers through the GST revenue drawn from its wealthier neighbours. This has often been a source of tension. Back in 2014 Maurice Newman, then a key advisor to former Prime Minister Tony Abbott, even suggested the federal government should cut South Australia off entirely, as if the whole state had collectively failed to turn up for a meeting with its Job Network provider.
The next thing to understand is that South Australian politics is a contest between two competing centres of power divided by geography. The centre-left draws its leadership mostly from the professionals who live on the west side of Adelaide, and their support from a working class base that extends out to the north of the greater Adelaide metropolitan area. The centre-right side of politics draws its representatives from the local burghers on the eastern and southern sides of the city, and a base largely from regional areas. As Jane Howard has pointed out, for the last fifty years it’s been the state Labor party who have called the shots in Adelaide. In all that time, the Liberal opposition has only ever managed to hold office for a grand total of 13 years. At the last election in 2014, the opposition famously managed to lose an unlosable election, despite getting the majority of the popular vote.
Everything that happens in South Australia flows back to the State Bank collapse eventually.
It would be easy to read this state of affairs as some kind of innate aversion to change on the part of constituents, but that reading is also too simple. Through time and frustration, South Australians have learned that when confronted with a choice between one party that promises to cut everything and spend nothing, and a second party that promises to cut nicely and spend a little, they should always vote with the latter, every time.
In this way, everything that happens in South Australia flows back to the State Bank collapse eventually.
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Seventeen years before the Global Financial Crisis, South Australia suffered through its own local financial crisis, triggered by its very own version of Lehman Brothers.
At its height, the State Bank had truly been something. Starting out in 1984 as a small provincial firm with a remit to help fund local housing investment, the organisation quickly grew to a multinational entity with branches in London, New York and Hong Kong, before it all came to a screaming halt. The cause boils down to a tale as old as time: unrelenting greed.
The villain of the State Bank story was Tim Marcus Clark, a man with a toothy grin and dollar signs in his eyes. Clark had big dreams for the State Bank in the early days. Thanks to his close friendship with then Labor Premier John Bannon, he was given a wide berth to chase them. In what might have been a shot-for-shot remake of the opening scene from Wall Street, Clark stacked the ranks of his institution with bold young men who knew everything about nothing, particularly banking. Under his watch, and protected by public guarantee, Clark pushed them to close as many deals as they could, as fast as they could, knowing full well that if the debts they wrote went bad, the good people of South Australia would pick up the tab.
And that’s exactly what happened. Clark’s bank rapidly racked up $3.15 billion in bad loans, with nearly half of all lending going to speculative investments and the commercial property sector. The day of reckoning came on 10 February 1991, when a nationwide recession, the one Paul Keating declared we ‘had to have’, exposed the weakness in the bank’s books. An institution which had recorded a $90 million profit only the year before collapsed, forcing the state government to bail it out to the tune of $970 million.
The immediate effect of the collapse was the effective nuking of the South Australian economy and the remaking of Adelaide. At the 1993 election, a total rout of the Labor party installed the Liberals with 37 out of 47 seats, the largest majority of any government in the country. As the newly elected premier, Dean Brown’s first move in office was to call an Audit Commission to examine the condition of the state’s public service. A year later the Commission returned a two volume report, benignly titled Charting the Way Forward – Improving Public Sector Performance, which called for significant austerity, including funding cuts to education, health and policing as well as the sale of public assets.
So that is exactly what the Brown government set about doing. What was left of the State Bank was salvaged and sold, while state funding for everything was slashed – a curious solution to a problem which had come about entirely thanks to predatory lending practices in the private sector and limited government oversight.
John Olsen, who led the Liberals to a second, albeit significantly smaller, electoral victory in 1997, would double down on Brown’s vision. During the election Olsen promised his government would not sell off the state-owned energy provider, the Electricity Trust of South Australia. But once parked safely in office, Olsen went ahead and did it anyway, pushing through the sale in 1999 despite fierce opposition. The rationale at the time was that it would help pay the state’s debts while also lowering power prices in the long run.
During the election Olsen promised his government would not sell off the state-owned energy provider…But once parked safely in office, he went ahead and did it anyway.
‘It’s part of that same story from the mid-1980s onwards, when there was a movement to corporatise and privatise electricity systems throughout the states, following the neoliberal economic model that prevailed in the US and Britain,’ says Professor John Spoehr, director of the Australian Industrial Transformation Institute at Flinders University.
‘South Australia and Victoria were the places that experienced that to the fullest extent. It wasn’t just the privatisation of the assets. It was the creation of the National Energy Market and the principles that surround it.’
According to Giles Parkinson, editor of RenewEconomy, the result effectively created a small power grid dominated by a few large generators and retailers.
‘South Australia is a unique situation,’ Parkinson said. ‘That’s the reason it’s subject to big pricing increases at various times. That’s been happening for years and years and years and that’s not happening because renewables arrived.’
South Australians could barely wait to kick Olsen from office at the next election for his betrayal, though by then the pattern was set and Labor were locked in to it. Ever since Keating, Labor’s politics throughout had been largely neoliberal with social democratic characteristics. To keep the state functioning, costs had to be cut and services privatised, first under Rann, then under Weatherill. While some effort was made to reduce the impact on those with lower incomes, it was hard to hold back the rot. Underfunded public institutions managed by departments where patronage counted more than merit soon found themselves under stress, which only compounded as time went on.
In recent years, it wasn’t hard to pick up the broader narrative of decay in South Australia. Glimpses of it were available in the nightly news, from mundane (but increasingly frequent) reports on burst water pipes to Nicola Gage and Angelique Donnellan’s sophisticated investigation for the ABC into the government-run Oakden nursing home, which exposed systemic neglect of the elderly in state care. Those working with victims of domestic violence and ice addicts would tell how there were no services to support them. Even the Supreme Court building in the city centre, the ultimate symbol of justice, was left to literally crumble for lack of funding.
The close call at the 2014 election changed a few things for the state Labor government. It was an election they never expected to win – and when they did, there was a sense it might not happen again. So they set to work rebuilding the Adelaide CBD and focusing their attention on the kind of projects that made for flashy vote winners. A new stadium was built, complete with a footbridge leading directly to the doors of the casino. So was a new hospital, which has become one of the most expensive buildings in the world. There were brand new medical research facilities that catered to the state’s best and brightest and small bars were encouraged to give the place some life. As the March 2018 election loomed large, a more pressing issue took hold; none of it would count for much if the lights didn’t turn on.
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On the evening of 28 September 2016, storms clouds rolled across South Australian skies and people cracked jokes about the apocalypse. Over the course of the one-in-50-year weather event, 80,000 separate lightning strikes would touch down across the state. Gale force winds with speeds of up to 50 to 75 kilometres an hour, and gusts of between 90 to 120 kilometres an hour would lash the landscape. In a state where tornadoes are unheard of, two would barrel down the centre of the continent, bringing down powerlines and stripping houses of their roofs.
According to industry regulator AEMO, those tornados tore down three separate power transmission lines, sending a cascading series of failures coursing through the grid. As the voltage dipped in response, safety mechanisms on wind farms designed to protect them from damage in exactly that sort of situation tripped. As the amount of electricity flowing into the grid dropped, the Heywood Interconnector in Victoria booted up to compensate, but the sudden flow of power tripped another safety mechanism, sending it offline. Within a fraction of a second, the frequency across the South Australia grid plummeted so fast, the state’s load-shedding mechanism didn’t register the change. When supply couldn’t meet demand, the whole thing went down, plunging 1.7 million people into darkness.
When something on that scale happens almost anywhere in the world, people tend to look to their political leaders to project an aura of calm, measured confidence. South Australians wouldn’t be so lucky. As their local leaders struggled to handle the crisis, their federal counterparts started looking for airtime. Political figures from the Prime Minister down were rushing to pin the failure on the state’s high uptake of wind and solar. Malcolm Turnbull would describe the blackout as a ‘horror show’ and South Australia as a ‘socialist paradise’ for its ‘experiment’ with renewable energy. Apparently the big storm and flaws in the state’s corporate-owned infrastructure had nothing to do with it.
When a [blackout] on that scale happens almost anywhere in the world, people tend to look to their political leaders to project an aura of calm, measured confidence. South Australians wouldn’t be so lucky.
It was also deeply dishonest, because it was the federal government who put the windfarms in South Australia. By leaving intact federal policies that encouraged investment in renewable energy, many had found their way to South Australia for its favourable geography. Rick Sarre, Adjunct Professor of the University of South Australia’s Law School and a current Labor candidate for the seat of Bragg, says beating up the state offered an easy out for the Coalition which had signed up to the Paris Climate Change agreement, but is beholden to the coal mining communities on the east coast from which it draws support.
‘It’s the love affair that Queensland and New South Wales and Victoria have had with coal,’ Sarre says. ‘South Australia never really had coal. We’ve always had Leigh Creek, but that’s brown coal, its crap coal and it’s closed now anyway. What the eastern states have is black coal and they employ people. They don’t want to cut the cords.’
Danny Price, Managing Director of Frontier Economics and the architect behind South Australia’s energy plan, agrees, saying that going after South Australia made for a convenient distraction.
‘What [the 2016 September] blackout did was – this is my perspective – but Turnbull used it to create a wedge to demonstrate to his own backbench that he was not pro-renewables and not pro-Greenhouse policies,’ Price said.
‘South Australia’s finest hour was probably the blackout. It motivated them to leave behind the national politics and drive forward as a state.’
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On 9 March 2017, some 162 days after the storm, Lyndon Rive, then head of Tesla’s battery division, was in Melbourne to hold an elaborate launch event at a former power substation. During the ceremony, Rive would claim that Tesla Inc and its batteries could solve South Australia’s power problems in 100 days, if someone would just let it.
Wondering if he were serious, Mike Cannon-Brookes, the billionaire founder of Australian tech start-up Atlassian tweeted at billionaire tech mogul and Tesla CEO Elon Musk asking for confirmation. If so, he would lay down $50 million to make it happen. In response, Musk said he was totally serious and not only would his company install a 100 megawatt battery system to help stabilise the grid, he would do it within 100 days, or it was free.
As news spread of the wager, some South Australians greeted it with a characteristic level of mistrust. The world might have cheered, but some in the state looked on warily as two billionaires made a $50 million bet on the welfare of 1.7 million people in a place where neither lived. South Australians, on the whole, may be supportive of renewable energy – that wasn’t the issue. What they didn’t support was the privatisation of the power grid – they had demolished a Liberal government for selling it, and elected Labor to do something about it – but after sixteen years of uninterrupted rule and one big, bad blackout, infrastructure policy was now seemingly being decided over social media.
And if that is how we are going to do things from now on, some asked, what exactly are we paying politicians for?
After sixteen years of uninterrupted rule and one big, bad blackout, infrastructure policy was now seemingly being decided over social media.
For critics on the left, the sentiment was coded by reference to Musk’s wealth. The Henry Ford of our times may now shoot cars into space, but he is also a creature of Silicon Valley. Building the infrastructure of the information age brought tech titans like Musk more treasure than their railroad owning counterparts from centuries past, but the relentless pursuit of market share and the casual indifference to ethics on which it depended, frankly, scared the shit out of some people.
Those critics on the right meanwhile were responding to an instinct far more basic: they just plain didn’t want to be taken for suckers. South Australia had seen more than its fair share of rich men turning up with a grand vision, only to underdeliver. It was that impulse those to the right of the Liberal Party tried to leverage for political gain when a meme comparing Musk to the monorail salesman from The Simpsons began circulating online.
Whatever the public perception, Danny Price says things were already in motion before that fateful day on Twitter. The state government may not have been actively courting Musk, but by then its energy plan had already been written. That plan called for the construction of a fast-response battery and a state-owned 250 megawatt emergency response gas power plant, even if that second part was something Labor preferred not to highlight. An open tender process had already been under way, and Tesla had put in a bid like any other company. By the end, they had come out on top, and the rest became headlines.
The story of the Tesla battery, then, is really a study in the construction of competing political narratives. To the Weatherill government, it represents a complete revival of its electoral fortunes and a narrative of triumph over the federal government. To its opposition, the battery’s success forced a recognition that the world had changed. Some, like Cory Bernardi, saw in it a chance to tap the hard-earned cynicism of South Australians for their own political gain. For everyone else? The day the Tesla Battery sent its first finger of lightning back into the grid was probably just another day, as ordinary as any other.
