Adam Bandt (Melbourne, Australian Greens) Share this | Hansard source

I move Greens amendment (1) to the Clean Energy Amendment (International Emissions Trading and Other Measures) Bill 2012 as circulated in my name:

(1) Schedule 1, page 59 (after line 8), after item 81, insert:

81A After section 160

Insert:

160A Review by Productivity Commission of financial assistance for coal-fired electricity generation

  (1) As soon as practicable after the commencement of this section, the Productivity Minister must, under paragraph 6(1)(a) of the Productivity Commission Act 1998, refer the following matters to the Productivity Commission for inquiry:

     (a) the matter of the reasons for, and need for, financial assistance for coal fired electricity generation;

     (b) the matter of the following impacts of the existing arrangements for financial assistance for coal-fired electricity generation:

        (i) impacts on Australia’s electricity generation mix and timeframes for retirement of existing electricity generation plants and investment in new generation plants;

        (ii) financial impacts for coal-fired generators in receipt of compensation and for other generators across the industry;

        (iii) impact on Commonwealth finances;

        (iv) impacts on the competitiveness of the Australian electricity market.

  (2) In referring the matters to the Productivity Commission for inquiry, the Productivity Minister must, under paragraph 11(1)(b) of the Productivity Commission Act 1998, specify the period ending on 31 December 2012 as the period within which the Productivity Commission must submit its report on the inquiry to the Productivity Minister.

Note:   Under section 12 of the Productivity Commission Act 1998, the Productivity Minister must cause a copy of the Productivity Commission’s report to be tabled in each House of Parliament.

  (3) For the purposes of paragraph 6(1)(a) of the Productivity Commission Act 1998, each matter mentioned in subsection (1) of this section is taken to be a matter relating to industry, industry development and productivity.

160B Commonwealth Government response

  (1) If the report on an inquiry referred to in section 160A sets out one or more recommendations to the Commonwealth Government:

     (a) as soon as practicable after receiving the report, the Productivity Minister must cause to be prepared a statement setting out the Commonwealth Government’s response to each of the recommendations; and

     (b) the Productivity Minister must cause copies of the statement to be tabled in each House of the Parliament before the end of the period of 7 sitting days of that House after the day on which the Productivity Minister receives the report.

  (2) As soon as practicable after the Productivity Minister tables the report in each House of the Parliament, the Productivity Commission must publish the report on the Productivity Commission’s website.

Note: The Productivity Minister must cause a copy of the report to be tabled in each House of Parliament—see section 12 of the Productivity Commission Act 1998.

160C No limit on Productivity Minister’s powers

     This Division does not limit the Productivity Minister’s powers under paragraph 6(1)(a) of the Productivity Commission Act 1998.

When the price on the pollution package was agreed to, it was agreed to as a package. A number of people were coming from a number of different positions, all coming with goodwill, all wanting to see Australia take its first steps towards a clean energy future. As a result, there was a significant amount of negotiation, which is not surprising when you consider the disparate interests that were involved: Labor, the Greens and the rural Independents.

Ultimately there was agreement on the price to be put on pollution, even though people might have started from different positions and preferred a different outcome. There was agreement on the architecture, even though some people might have preferred that things had been a different way. There was agreement on the scope of what would be in and what would be out of this package of legislation, even though some people would have preferred the inclusion of certain kinds of transport, which were ultimately excluded because that was necessary in order to reach an accommodation. Agreement was also reached on compensation, not just to emissions-intensive trade-exposed industries but also to coal fired power stations, even though it was also a contentious subject.

I think that everyone involved in the discussions was and remains agreed on the principle of energy security—that is, it is important that the transition to a clean energy economy be made in a way that does not compromise the energy security of this country. There was debate, however, about the best and most efficient way of making the transition. We as the Greens, along with Professor Garnaut, said publicly that one of the best ways to ensure that the transition, as it affected coal fired power stations, did not disrupt energy security would have been to offer loan guarantees to coal fired power stations, which would have meant that the Commonwealth did not have to expend any money, that security would have been guaranteed and that the stations could have had an orderly transition out of operation as had been intended. But that was not the government's position, and ultimately the package gave what we consider to be quite generous compensation, over and above what we argued was necessary, to coal fired power stations. But we as the Greens agreed to the compensation because, under the energy security heading, was a very important part of the package: the agreement to pay for the closure of around 2,000 megawatts of the dirtiest coal fired power stations in this country.

I read from the clean energy documents, where it is stated under the heading 'Energy security fund':

First, there will be scope for payments for the closure of around 2000 megawatts (MW) of very highly emissions-intensive coal-fired generation capacity by 2020. This will start the process of replacing existing, highly polluting electricity assets with cleaner generation.

They go on to say:

Closing some of our highest-polluting coal-fired generation capacity will make room for investment in lower-pollution plant.

That is right, and it was a key plank of the package which was negotiated. The fact that this plank was included in the package allowed us to sign off on what we felt was overgenerous compensation to coal fired power stations. We did so because, on the one hand, they would be getting the money, but, on the other hand, around 2,000 megawatts of their generating capacity would be closed.

The government has since decided not to proceed with the closure of 2,000 megawatts of the dirtiest power production in this country. Either the government did not proceed because the minister who was responsible, but who is not the minister sitting at the table now, did not have his heart in it, or they did not proceed because—and this is the public justification that is given—to do so would not have represented good value for money. (Extension of time granted)One of the only reasons that the companies which own the coal fired power stations could say there was no economic incentive for them to close the stations is that they are being so generously compensated. A $5.5 billion compensation package is going to these companies—$1 billion in cash and $4½ billion in free permits to come—and that influenced the companies in their discussions with the government on the package. If we accept that the discussions took place in good faith, then the companies went armed with the knowledge of changed international circumstances, a big stack of cash in the pockets and the promise of free permits to come and, as a result, the companies are not now closing the coal fired power stations as envisaged in the promise that the government made to the Australian people in the clean energy package. Even worse, there is the prospect that some of the dirty coal fired power stations, which were meant to transition out of operation as part of the package, will receive windfall profits. In other words, if the package is passed, the cash that they have already received plus the compensation in the form of free permits that they are about to receive might make them financially better off than if the package had not been passed.

Because the government changed the goalposts by taking out one key element of the package, it is important to adjust it, because the package was agreed on through compromise by all sides, and, if one part of it is taken out, we should recalibrate it. One of the best ways of doing so would be by taking this opportunity to say: 'Over the coming years, if these coal fired power stations aren't doing as poorly as might have been thought and if in fact they stand potentially to make a windfall profit, then they have potentially been overcompensated. Let's get the Productivity Commission in to give a genuine review of the adequacy of their compensation.' We accept that the payments in cash have been made—that is done and dusted—but there is no reason that the future $4.5 billion worth of compensation, in the absence of evidence that is absolutely necessary for energy security, needs to go to the companies. In fact, there is now a very strong case that the overcompensation of the companies which own the dirty coal fired power stations is distorting the intention of the legislative package and getting in the way of replacing dirty coal fired power with clean and renewable energy. In the context where the goalposts have been changed, in the context where they might be getting windfall profits that will keep them in business longer than they otherwise would be, in the context where we are not closing 2,000 megawatts of the dirtiest coal fired power, it makes absolute sense to preserve the integrity of the original agreement by having the Productivity Commission review whether or not this compensation is too generous. When one takes the compensation package as a whole, that is $275 per woman, man and child in Australia that is going into the pockets of these dirty coal fired power stations and that could be going to clean and renewable energy.

I commend this amendment to the House. It is a sensible amendment. One should have no concerns about the Productivity Commission looking at the adequacy of this compensation in the light of changed circumstances.

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