Gary Gray (Brand, Australian Labor Party, Shadow Minister for Resources) Share this | Hansard source

My purpose in rising this evening is to speak on the Energy Efficiency Opportunities (Repeal) Bill 2014. It is a bill that is about red-tape repeal. It is not a bill that is about energy efficiency. I think we should understand that and accept that at the very start.

In 2004 the then Howard government, with bipartisan support, considered its white paper on energy, Securing Australia's energy future. That white paper explored a whole range of matters of great interest to do with the national need for energy and energy policy. The energy white paper, in June 2004, identified the improvement of Australia's energy efficiency performance as a key part of the then Howard government's energy policy in order to achieve greater prosperity, sustainability and energy security.

Energy efficiency is about productivity. It is about lower inputs and bigger outputs. It is about lower costs. It is about doing things better. It is about doing things smarter. It is about doing things more cost-effectively. The purpose of the Energy Efficiency Opportunities Bill 2005, which grew from that 2004 white paper, was to establish the mandatory energy efficiency opportunity assessments that were announced in that white paper. The Energy Efficiency Opportunities Program required corporations who use more than half a petajoule of energy to identify and assess energy efficiency options and opportunities and subsequently to report the outcomes of those energy assessments both publicly and to the government.

The EEO Program was put in place because, unlike other modern economies, Australia did not have an overarching energy efficiency program. It did not have a view of industry and energy use that could help shape the more efficient use of energy in our economy. The Energy Efficiency Opportunities Program was part of a framework. It took its place alongside a range of measures that pursued the benefits of using energy more efficiently. It stood alongside energy market reform, important measures that were put in place to help make our national energy market more efficient. It stood alongside the Solar Cities program, important ideas to introduce large-scale solar energy into the power supply of cities. It stood alongside improved appliance and building standards, at a time when many appliances were transitioning from older technology to new technology. In that context, television sets and TV screens become important. The TV screens of the 2004-05 era would become very hot very quickly and were very big consumers of energy. As that technology improved, those screens got better and better and began using lower and lower amounts of energy. That reduced energy consumption in the home became something that consumers took a great interest in. This program was an industrial counterpart to the domestic measures that had been in place to assist families with their own family budgets to manage more sensibly the electrical goods that they purchased.

The broad range of energy efficiency measures announced in the 2004 energy white paper had the potential to increase economic welfare and to lower the rate of growth in greenhouse emissions—so higher economic growth, lower greenhouse emissions, lower greenhouse gas intensity in our economy. These were all good measures, thoughtfully implemented by former Prime Minister Howard and his governing team, which included the current Minister for Industry, the member for Groom. These measures enjoyed bipartisan support. We often hear how measures introduced in this place become the subject of partisan debate and argument, but in 2004 when then Prime Minister Howard introduced his insightful Securing Australia's energy future white paper it received immediate bipartisan support.

I will go to some of the matters that were raised in that energy white paper, because Securing Australia's energy future became in every way the cornerstone of what happened next in sensible energy policy, designed to lower our economy's greenhouse gas intensity while lowering household bills, lowering the costs of doing business and making doing business a more sensible affair when it came to using electrons. I will quote from the Prime Minister's foreword to that very significant document, the first energy white paper our nation had produced:

The framework is backed up by substantial new initiatives, including additional incentives to encourage petroleum exploration in frontier areas; a comprehensive reform of fuel taxation to reduce the cost of fuel in business use; innovative trials of solar technology teamed with leading edge efficiency technologies to demonstrate "solar cities" of the future; a fund to generate at least $1.5 billion in investment to demonstrate low-emission technologies to reduce greenhouse gas emissions from our energy sector; extra effort to back up our world first Renewable Energy Target with new commercialisation assistance for emerging renewable technologies; and a wide ranging effort to ensure the careful, prudent use of our valuable energy resources by industry and the community.

That is the important point: 'a wide-ranging effort to ensure the careful, prudent use of our valuable energy resources by industry and the community'. That is direct language that speaks to the point of energy conservation. Energy conservation is about energy efficiency. The report goes on to say:

Improving Australia’s uptake of commercial energy efficiency opportunities has the potential to increase economic welfare and lower the rate of growth in greenhouse emissions. Increased energy efficiency reduces overall demand for energy and would also delay the need for new energy generation equipment.

This is an insightful report done 10 years ago at a time when our economy was growing rapidly, at a time when the greenhouse intensity of our economy was also growing lockstepped with that economic growth. This was an attempt by the Howard government to step back, to look at what was happening and to ask: 'What would be a light touch? What would be an appropriate set of measures that would help save business money, help reduce the cost of services to our community and, most importantly, therefore improve the economic lot of all concerned?'

That terrific report done 10 years ago asks the question: what is energy efficiency? It answers it very simply:

Energy efficiency refers to gaining the same or a higher level of useful output, using less energy input. Energy efficiency is important in both stationary and transport energy.

When we consider the repeal of this act, one might reasonably say, 'Let's repeal this act because it's failed so miserably in that cause. Let's get rid of it because, despite all of the work that went into the generation of the first energy white paper our country had ever seen, its conclusions were bunkum and inadequate. The policy framework had failed.' But guess what? The Energy Efficiency Opportunities Framework has proved to be remarkably successful. The former Department of Energy, Resources and Tourism engaged ACIL Tasman to review the Energy Efficiency Opportunities Program at the end of its first cycle of operation.

The 2013 full-cycle evaluation of the program found: 'It has been successful in its objectives of raising awareness of and embodying energy efficiency practices in Australian industry.' It came to that conclusion that it had done that for a full seven years. It also concluded: 'The program had been effective in driving down emissions and had saved industry approximately $323.2 million per year in power expenses.' This was a seven-year review. This is an energy efficiency program that had saved approximately $323.2 million per year in power expenses. But the government says: 'Let's get rid of that because that is red tape. Something that has saved industry over $300 million is something that we will get rid of because it is red tape.' I fully accept that the government has an objective to remove red tape, but sometimes we do have to step back and consider the effectiveness of programs.

When former Prime Minister Howard sat down with his ministers—and former Minister Macfarlane was one of them—to conclude what would be a light touch, an insightful way of putting in place energy conservation measures, this is what they came up with and, remarkably, what they saved was over $323 million per year in energy expenses. Corporations found government regulation to have been beneficial in providing a structure and a framework for companies to embed energy management systems.

In many ways, when this legislation was introduced Australian companies were not thinking of energy efficiency as part of a pragmatic side of asset management or, for that matter, a pragmatic response to business costs. So the program alerted businesses to this very important input whose costs could be controlled. ACIL Tasman also argued that the program had delivered benefits to participants well in excess of their costs. One would have thought that a not unreasonable measure of the effectiveness of business regulation is whether or not the benefit outweighs the cost. ACIL Tasman did not simply conclude that the benefit of this program outweighed its costs; they concluded that the benefits of this program over the full-cycle analysis had generated savings to industry in power expenses of over $300 million.

They also argued that there is still more benefit to be gained by continuing with the Energy Efficiency Opportunities Program through a second cycle. The program has significantly lifted the energy management capability and awareness of Australian businesses, with many corporations now reporting that key elements of the program are now standard business practice. We have a government, through a light touch and an insightful view, actively changing the culture of energy consumption and, one might as well say it, wastage and building better business practices. This is not simply an efficient program and an effective program, but you would have to reasonably conclude it is an incredibly insightful program. The independent full-cycle analysis report showed that corporations found that government regulation had been both beneficial in providing a structure and a framework for companies and it had also embedded energy management systems through which information and data could be used for further energy efficiency.

What kind of energy efficiencies? Those energy efficiencies were to be found in transport systems, building design, air-conditioning systems and the adoption and adaptation of new technologies. This is a successful program. It is a program that has been closed because of an ideological desire to get rid of red tape, even if that red tape delivers benefits that are lower than the costs of the administrative burden. That is a simply astonishing decision.

I hasten to add that the opposition will not oppose the government in this measure. We made very clear that the government is able to make these decisions even though we are simply dumbfounded by the logic that appears to underpin it. The government argues that the program has run its full course and it is no longer needed. Indeed, the explanatory memorandum which has been circulated reads as follows:

Through its application businesses have built up a bank of energy efficiency projects which can be considered based on current energy prices and specific circumstances. With energy prices driving companies to use energy more efficiently and the increased capacity to respond embedded in industry, the government considers this program, underpinned by the EEO legislative framework, to be no longer required.

Fantastic. So a low-cost administrative program that had generated deficiencies in excess of $320 million a year is replaced by a simple principle that says, 'Let's just put the price up. Let's let the price drive efficiency here instead of common sense, discussion, best business practice and allowing that best business practice to be shared amongst peer companies.

The explanatory memorandum goes on to say:

The Energy Efficiency Opportunities Program has been successful.

That is what the EM to this bill says. It says:

It has lifted energy management capability and awareness significantly with many corporations reporting that key elements of the program are now standard business practice. With energy productivity now core business for many Australian industries, industry is best placed to define the right processes and make decisions on how best to manage energy within their businesses. The energy market has also changed …

This is a government that will get rid of your red tape even if it saves you $320 million and will bang up the price because that is a much better way of forcing more efficient practices. It argues in this explanatory memorandum that electricity in particular has been the driver for better energy management and the need for the regulatory response, the low-cost fit-for-purpose regulatory response designed by former Prime Minister Howard and his energy minister Ian Macfarlane, unequivocally resolved by the independent consideration that has taken place unequivocally concluding that this program has been not just in the benefit of Australian industry but in the benefit of Australian consumers.

The full cycle report conservatively estimates that during its first cycle analysis the energy efficiency opportunities program was responsible for approximately 40 per cent of the energy efficiency improvements in the Australian industrial sector—four out of 10 of the energy efficiency measures came from the culture and practice that had been established by a program that cost less than $20 million and a program that saved year in, year out over $320 million. We will get rid of that and just bang up the price of energy and electricity because that is a much better way of saving energy.

The evidence suggests that there is even more benefit that could be gained by continuing with the energy efficiency program through to its second cycle. It is been estimated that it could be responsible for a further 20 per cent of energy efficiency improvements that would be due in that second cycle. So this low cost, insightfully designed, consistent framework from the very first energy white paper that our country had ever produced, countersigned by former Prime Minister Howard, brought into this place by the current energy minister Macfarlane, would have produced after the second seven-year cycle a total efficiency gain of some 60 per cent. You could reasonably conclude from that that the over $320 million per year that have been saved through this program would have continued each year through that further seven-year cycle. The government argues that they are closing down the program to remove unnecessary regulatory burden, remove that unnecessary regulatory burden and replace it by inefficiency. Yes, obtaining and processing information is costly. Yes, it would be an efficient for a policy to provide further information if the cost of doing so outweighs the benefit that could be expected. This place is not into the generation of red tape for the sake of red tape. The independent review found that this program's benefits were not outweighed by the cost of administration. In its first recommendation the independent review said:

We find that the EEO program to date has delivered benefits to participants well in excess of their costs. Significant improvements have been seen in the performance of participating corporations against the elements of the assessment framework. Many barriers to improved energy efficiency have been reduced and the identification of opportunities increasingly integrated into normal business operations.

Anywhere else this would be seen as simply an outstanding success, not only an outstanding success but a low-cost success delivering benefits to industry, to consumers and to all concerned.

The complementary nature of the EEO program flows from it being targeted and addressing information type market failures. Such failures while reduced do still remain an important barrier, and for this reason EEO program should completed second cycle.

That was independent review's recommendation.

The program enjoyed bipartisan support. The repeal of the program will be unhindered by the opposition, but let us not pretend that that means we support the repeal of this program. It will be unhindered by the opposition. There are still more benefits that could be derived from this program. The opposition has reluctantly concluded that ultimately the government does not want to support this initiative, so in that context we will allow the bill to pass. You cannot force a government to do something it does not want to do, even if it is a program that has a pedigree second to none. This is a program that looked at an economy that was consuming energy at a voracious rate. It looked at the energy future of our economy and it concluded there are several ways in which a government can respond to the situation. One way is to keep producing energy. Another way is a low-cost, fit-for-purpose regulatory approach that brought about best business practice—and in the design of that, former Prime Minister Howard and Minister Macfarlane are simply to be congratulated.

I will say this about the bill also. I was approached today in the corridor and asked for the opposition's view of the bill, whether we would allow it to pass or whether we would oppose it. One of the practices that has grown around the current government is that they do not talk to us. No communication had taken place of an official nature to ask our view of the bill. The communication that had taken place was incidental. Our view of the bill is that if the government want to do it, we will not oppose it. But we could have engaged in a discussion with the government because I feel the government cannot be aware of the savings that amount to over $320 million a year from this light touch, fit-for-purpose regulatory approach. I feel the government could not have considered the review that ACIL Tasman had conducted at taxpayer expense, where ACIL Tasman concluded that this was an 'efficient piece of regulation whose costs did not outweigh the benefits of the regulation'. It is a real pity that such a consideration did not take place. If the government wishes to change its view then we are all ears to that view. But we do accept the need for business to be liberated and we do accept the need for the reduction of red tape. The former government exercised that intent on many occasions, reducing red tape where it could.

It is also worth quoting again from the explanatory memorandum:

Rising energy prices and the improvement of internal energy management processes have reduced the need for the EEO legislation. Repealing the legislation would reduce the compliance costs of the 464 participating businesses by over $17 million per year.

I have no doubt at all that the 464 complying companies, who would also have taken their share of the $323 million savings that were inherent in this program, would probably have thought in better consideration some pieces of regulation bring with them benefits that massively outweigh the costs.

Looking forward in the energy environment is a difficult and in many ways a flawed thing. Let me explain what I mean by that. I am a Western Australian and our capital city of Perth has enjoyed electricity reticulation of some form or other in locations for a little over 130 years. Generation started from premises in what is now the CBD of Perth and within 50 years it is said that over 140 electricity supply undertakings were offering AC or DC transmissions. Electricity was, in those days, a nascent but diverse industry in a small and growing settlement.

Electricity generation, electricity use, electricity reticulation, electricity efficiency and energy efficiency is a growing business. It is a growing part of our economy. The government had insight in 2004 and 2005 to look to energy efficiency not simply as a one-off, a stunt, a gimmick or simply a bit of padding for a white paper but to have it form the core of the first energy white paper our country had ever produced. In 104 years of the Commonwealth government, in 104 years of the Federation, never before had an Australian government attempted to take an overarching view of the economy and of its energy needs, and to conclude a view about its energy future. As I have just related, that small, historic picture of the colony of Swan River and of Perth 140 years ago and what we knew to be the energy economy of 2004 is quite different to the energy economy of today.

In 2004, the iPad had not yet been released. In 2004, we all used a PC. It was plugged into a 240-volt outlet in the wall. We now mostly use iPads or some form of palm device. I see the member for Kooyong across the table using his now. It is an efficient way of communicating. I know that he will be communicating to his department now: 'I think we've got this wrong. I think the savings to our community through this particular energy efficiency measure are so profound and, as ACIL Tasman have independently found, the costs of the regulation were massively outweighed by the savings.' That device that would be recharged from a five-volt or a 10-volt recharging device is the very incarnation of the energy efficiency that we see today across our economy.

We are an economy that is growing, an economy that is robust and an economy that is currently reducing its energy consumption. That reduction in energy consumption is from a combination of matters. It is what makes it for the first time really difficult for governments to consider what our energy future will look like and one of the reasons that the government have begun constructing a new white paper. When the government arrive in this place with its new white paper, it will seek bipartisan support for the content of that new white paper. The opposition will ask: 'For how long? Will you support the measures in the new white paper for as long as it is fashionable or will it just be a fad?' Some of the things that we do need to be done in an enduring way.

Thought and consideration, and taxpayer dollars, went into the construction of the white paper, and into the framework that was negotiated with every state and territory government in the Commonwealth. Its processes, which, in its early days, were presented to 250 Australian companies, became the processes that saved money and cut costs for 464 companies, at a cost of $17 million. I am not saying that that cost is insignificant.

The opposition will allow this measure to pass. I am not saying that the government should not cut red tape. The opposition will allow this measure to pass. But the opposition would also say to the government: 'Please—think about these measures. Think carefully about the cost that it saves, the cost that you impose, and the culture of energy efficiency and energy saving that was created from the insightful steps first taken by Prime Minister Howard, because it is that culture of innovation and energy conservation that is the real saving. It is that culture that is the real benefit for our economy. And it is that culture that is destroyed by the removal of this program.'

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