Bob McMullan (Fraser, Australian Labor Party) Share this | Hansard source

I second the amendment. I thank the member for Moore and the member for Kooyong for facilitating my continuing to make my remarks now. The amendment does raise a number of important issues not covered in the bill, but of course I do support the bill. The Energy Efficiency Opportunities Amendment Bill 2006 is mainly technical in nature and will enhance the operation of the existing arrangements in a manner that is necessary and desirable. It is not of itself in that way a very important bill, but it is a bill about a very important subject and, together with the second reading amendment, gives us an opportunity to discuss some important issues relating to this matter.

The bill amends the Energy Efficiency Opportunities Act 2006 to establish mandatory energy efficiency opportunities assessments for large energy-using businesses and public reporting of outcomes following the announcement of this measure in the government’s energy white paper entitled Securing Australia’s energy future. The amendments that the bill makes are minor in nature. Essentially  they are about addressing some ambiguities of application and administration of the existing policy. I welcome this bill, and I welcome the amendment, which goes to broader issues about energy efficiency and related questions concerning alternative fuels and renewable energy industries.

I particularly support some of the remarks made by the shadow minister. If we fail to get our energy efficiency and energy pricing messages right, it is going to have a serious effect on the poorest households in our communities. It is that issue to which I particularly want to pay attention. Some data produced by NATSEM indicates the extent to which electricity is a very important part of household expenditure. Of course, we all know that intuitively, and I know it particularly because it is a big issue here in my constituency. Canberra is essentially a very affluent community, but one of the corollaries of that is that it is a very hard place to be poor. There are a variety of reasons for that, but one of them is climatic; heating in winter is very expensive and a very big burden on the poorest families. If we do not get the overall energy market efficiency measures, the price signals and then the social support to compensate for the consequences of price signals right, we are going to hit the poorest people very hard.

NATSEM, the National Centre for Social and Economic Modelling, at the University of Canberra here in my electorate—which I think is an outstanding national research agency—have done some work based on the recently released ABS household expenditure survey on the cost to consumers of electricity. They have found that across all households the average expenditure on electricity for the home was $17 a week. That is a lot of money. People in the lowest income decile—the lowest 10 per cent of households—spend less, but it is a higher proportion of their income; they spend about $13.60 a week.

The context in which I want to refer to that relates to some findings in the Switkowski  report. I do not agree with the conclusions of the Switkowski report, but that is not my point for the moment. I think it has done a lot of good work in establishing the factual foundation for debate about wide-ranging energy solutions and responses to global warming. The Switkowski report has said that nuclear energy is not viable unless we introduce a price for carbon, but that would increase the price of electricity by 20 to 50 per cent. I think that, to make nuclear power viable, electricity has to go up by more than that; but I want to do more work on the Switkowski report’s material before I get into any detailed critique of that. My assessment is that it has understated it, but it has certainly pointed in the right direction. It has certainly got the broad thrust of the implications right, particularly as it relates to nuclear power—and I want to speak about that but then come back to the more general question of energy costs.

The 20 to 50 per cent increase in electricity costs that would be required to make nuclear power viable would cost low-income families, on the NATSEM data I have just quoted, between $140 and $350 a year. That is $350 a year for our poorest households. For average households, it would cost about $450 a year. That is a lot for all of us, but I know in my own area, and every member of parliament would know in their area—particularly where there are concentrations of low-income families—that the idea of paying another $350 a year on the electricity bill would really have serious consequences for the life choices of those households.

In preparation for a recent speech I made here in Canberra to the Australia Forum, it became clear to me that the cost for average families would be a problem. The Switkowski report established that the minimum increase in electricity prices to make nuclear power viable was a 20 to 50 per cent increase. In fact, I believe it would be even more. But, even if the Switkowski report’s modest assumption should prove correct, it would hit families hard. Low-income families often need to spend a higher proportion of their income on electricity, especially here in Canberra.

My critique is that the government in advocating that we need to go to the nuclear power model is in effect saying to the poorest households in my electorate, ‘You have to pay $350 a year for the pleasure.’ The government is not admitting it; it is saying that we can go in that direction without that cost. But Switkowski says that we cannot. But I do not want to mislead—it is probable that any proper response to climate change will put upward pressure on electricity prices. It will not need to be as much as for what I regard as the economically unviable option of nuclear power. Switkowski actually says that, even if we see a 20 to 50 per cent increase in electricity prices, there will still need to be government assistance for the initial investment to get nuclear power going. Why anybody would contemplate that I cannot imagine.

But realistically, as the shadow minister said, it is probable that any proper response to climate change will put upward pressure on electricity prices. Therefore, while we are addressing this, we need to make sure that we have measures in place that will respond to the adverse social consequences of increases in electricity prices, particularly on low-income families. In public policy debates in Australia we tend to get a narrow focus, and people who are very compassionate on social justice issues generally talk about environmental issues and have proposals for their solution which would have profound consequences on electricity prices and therefore on the living standards of Australian families—and they do not blink an eyelid. I suspect they do not see the connection.

I support this bill and I support the second reading amendment moved by the shadow minister, but I want to say to the government that the energy choices that it is making are taking us in a direction that will have a very big impact on low-income families, and I want to say to people on the other side of the debate, who think that there are easy solutions with very expensive renewable energy options supplying our electricity, that they want to wish away the social justice implications of those changes. We have to face up to both. We have to deal with climate change. I do not regard nuclear power as a viable solution, but we have to deal with climate change and we have to deal with an emissions trading system for carbon—and that is going to have consequences on electricity prices. Both the government’s route and the opposition route have implications—one much more than the other, in my opinion. But whichever route we go down we need to realise that our energy solution, as with our water solutions, have the potential to have profound social justice implications, and we need to factor that into our thinking and into our policy responses. This bill is a useful bill in what it does. Its significance is in what it does not do. But I hope the bill receives a speedy passage.

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