Thursday, 23 March 2017
Matters of Public Importance
I have received a letter from the honourable member for Port Adelaide proposing that a definite matter of public importance be submitted to the House for discussion, namely:
The Government's continued failure to address the national energy crisis.
I call upon all those members who approve of the proposed discussion to rise in their places.
More than the number of members required by the standing orders having risen in their places—
For two years now, Labor has been warning of a looming crisis in the eastern Australian gas market and urging the government to take action. Even that far back, as far as 2015, it was becoming clear to us, at least, that the LNG exporters that had been set up in Gladstone were using gas that was previously supplied to Australian users—Australian manufacturing companies, Australian power generators and Australian households.
At our national conference in the middle of 2015, there was a full debate on this looming gas crisis about policy options that we would consider as an opposition going into the 2016 federal election to deal with this looming crisis. As I think most people observing this debate know, we adopted at that conference, and took to the federal election, a national interest test for gas exploration—a form of gas reservation to ensure that enough of eastern Australia's gas was going to be available to Australian businesses and Australian households before starting to ship it off overseas. The response from the Prime Minister was perhaps predictable: he rubbished it. He said it was old-style leftism. He had no other ideas, of course, because he thought—and he reassured the Australia people and Australian businesses—that everything was fine in the eastern Australian gas market.
Well, everything is not fine. We are now in a full-blown gas crisis in this country, and this government has been asleep at the wheel. Without decisive action, this crisis is going to have a devastating impact on the Australian economy and on thousands and thousands of Australian jobs. It has already become apparent in the power generation sector right across the National Electricity Market on the eastern seaboard. Power generation from gas-fired power over the last 12 months has fallen by more than one-third. It is impacting reliability—as we have seen across the NEM over the course of this summer—and it is the key factor driving electricity prices up across the NEM.
But it is a particularly severe crisis in manufacturing, particularly in manufacturing sectors that rely on gas not just for reliable and affordable electricity but also as a key feedstock. These manufacturing companies have operated for decades on the basis of an historic price of around $3 or $4 per gigajoule, which was the price that was in place when we left government in 2013. Under this government, prices have spiked.
Mr Frydenberg interjecting—
I hear the minister talking about parity pricing.
Mr Frydenberg interjecting—
Well, the spot price in Sydney is about $10 per gigajoule at the moment. Last week it was $12.40 per gigajoule. The AiG and Manufacturing Australia are talking about their members being quoted prices upwards of $22 per gigajoule, up from the historic price of $3 to $4. The minister well knows that is not parity pricing. That is scarcity pricing, because this government has mismanaged a serious supply crisis in the gas market, such that manufacturers operating overseas, in other countries, are able to purchase Australian gas at the moment at about half the price being quoted to manufacturers in Australia—an utterly outrageous outcome.
Last week the Prime Minister finally woke up and recognised a gas crisis. He called, as is his wont, a gas summit, to talk. He brought the gas companies to Sydney. Mind you, there were no manufacturers, no power generators, no state governments involved in this area—just the gas companies. True to form, he talked and he talked and he talked. Then he wagged his finger and 'Malsplained' what the problem was in the gas industry. The problem with this Prime Minister is all he could do was talk. He has this problem with the banks. He thinks if he goes to one of their birthday parties and gives them a stern talking to that they will change their behaviour. That is not how this mob works.
I will go to the communique coming out of the PMO about this summit. 'Gas producers guarantee Aust. supply: PM' is the heading. I thought that maybe there was something that came out of this summit, but the 'gas supply guarantee' is just that the gas will be available to meet peak demand periods in the NEM, such as during heatwaves. There is absolutely nothing for manufacturing, absolutely nothing for the power generation sector and absolutely nothing for all of those other days during the year other than heatwaves. Many have made the point—and did the day after—that more talk is not going to work. More talk is going to do nothing to relieve this very serious crisis. We need action. But we know that around this chamber and out in the community this government is not very good at action. They are very good at talk, particularly this Prime Minister, but not very good at action, particularly when it comes to energy policy. That is because this is a government paralysed by ideology and paralysed by their internal divisions as well as their fondness for sitting back in the cheap seats and blaming everyone else. They are taking no responsibility as the nation's government.
We know that it is not just in gas. You see this approach as well in the electricity sector, where there is a supply crisis emerging too. You ask: why is there a supply crisis? Essentially, it is for one reason. Three-quarters of our existing coal- and gas-fired generators are already operating beyond their design life. As we will see only next week, the Hazelwood power station—a 50-year-old power station—is closing.
It is 50 years old! Do you know anything about the electricity sector? The problem is, with 4,000 megawatts closing under this government, there are no replacements because there is no policy framework.
Mr Hawke interjecting—
Everyone agrees what the policy framework should be—everyone except this government. The member for Mitchell says, 'Rubbish.' Well, the Business Council of Australia, BHP Billiton, AGL Energy, EnergyAustralia, the National Farmers' Federation, Origin Energy, the Australian Energy Market Commission, CSIRO, Energy Networks Australia, the Chief Scientist, the Climate Change Authority, the Clean Energy Finance Corporation, the Prime Minister's former energy adviser Danny Price, Labor and Liberal state governments alike—we hear from the New South Wales government—and many other energy stakeholders agree. We look to find who is opposed to an emissions intensity scheme. We know this government is. We suspect, probably, One Nation is. Everyone else knows the solution to this supply crisis. It is just that this government, particularly this minister, is not able to deliver his party room.
Honourable members interjecting—
Danny Price nailed it in December when this minister was overridden because of a revolution from Cory Bernardi. That worked really well. Placating Cory worked really, really well. There was a bit of a revolution from the former Prime Minister, the member for Warringah, and this minister got overridden in just 36 hours. Danny Price nailed it when he said, because of that terrible decision in December, 'This party of government will be the party of reduced electricity security and increased prices.' That is what Danny Price said.
Prices have already been an issue in this country for more than 10 years because of the gold plating of the networks that goes back to the Howard era. Gold plating of the networks, which has seen, particularly, the coal-fired states of the eastern seaboard see the largest price rises, as The Australian newspaper helpfully pointed out a couple of months ago. The largest price rises are in Queensland, then Victoria and then New South Wales. But now we see wholesale prices spiking under this government. They have doubled under this government. Wholesale prices have doubled under this government because of their inability to deal with the supply crisis.
Over the last summer period, the NEM average wholesale price was $134 per megawatt-hour—$134. That is more than twice the wholesale price in the two summers during the carbon price mechanism. In Queensland, it is almost triple the price it was during the carbon price mechanism. There was a wholesale price over the summer just finished of $200 per megawatt-hour. That is one-third higher than the South Australian wholesale price over the course of this summer.
Dick Warburton, who chaired a review for the former Prime Minister, said, 'There is a good way to put downward pressure on wholesale power prices—expand renewable energy.' But this government has done nothing but attack renewables, which is hurting prices, the ABS told us on Friday, and killing one in three jobs in the renewable energy industry. Those jobs are gone under this government. While around the world there is 45 per cent growth in renewable energy jobs, this government has lost thousands upon thousands.
To be fair, this government does have one plan, or at least the Minister for Resources and Northern Australia, Senator Canavan, has a plan: build new coal-fired power stations.
Honourable members interjecting—
The Prime Minister announced it at the Press Club and waited for the clamour. There was deafening silence until one person said they would be willing to take the taxpayers' dime to build coal-fired power stations, and that was Clive Palmer. Clive Palmer said he would partner with the Minister for the Environment and Energy and build coal-fired power stations. This is the bloke whose last brilliant idea was to build Titanic II. That is the great supporter of this government's energy plan. All this government can do is rest on tired ideology framed by tired old scare campaigns.
Before I call the Minister for the Environment and Energy, I will remind members that, although this is a team event, one on the field at a time is appropriate. I will ask members to restrain themselves. I will not be throwing anyone out because it is Thursday afternoon and that is what everyone wants.
The Labor Party must think that offence is the best form of defence because they must have written this MPI for us. We are happy to talk about energy policy and we are happy to talk about the legacy that we inherited from the Labor Party and our plans for getting it right, because Australians deserve better energy outcomes than the Labor Party ever delivered for them.
During the time that we had the Rudd-Gillard-Rudd years, we had electricity prices increase by more than 100 per cent. There were some one dozen different policies. My colleagues may remember the 'cash for clunkers' and the citizens' assembly—whether it is a CPRS, an ETS or, indeed, the carbon tax. A $15 billion hit on households was the legacy of the Labor Party when they were in office.
Of course, we have seen this headlong pursuit of a 50 per cent renewable energy target by Labor governments, including the great big experiment gone wrong in South Australia under Jay Weatherill's leadership. What we saw from the Labor Party there was denial of a problem until for the first time 1.7 million people across the whole state of South Australia last their power. This was devastating. It was devastating for households. It was devastating for business confidence. It was devastating for those high-energy users such as Nyrstar at their Port Pirie smelter, BHP at Olympic Dam and Arrium at Whyalla. Obviously they are trying to sell that asset. This could not have come at a worse time. That is what happens when you put ideology ahead of practical policy focused on energy security and energy affordability.
Let us turn to Victoria where the Andrews government and a minister described the continued operation of Hazelwood as 'disgraceful'. It is no wonder, then, that the Andrews Labor government tripled the coal royalties on those operating in the Latrobe Valley, putting extra pressure on the balance sheet of the owners of Hazelwood—namely, Engie and Mitsui. They pursued the 40 per cent renewable energy target which again made it more difficult for the thermal generators in that state.
Then there were those mad moratoriums on conventional and unconventional gas extraction in Victoria. To think that Geoscience Australia tells us that Victoria has some 40 years worth of reserves and in the Northern Territory there may be up to 180 years worth of reserves. In other parts of the country governments have been putting in place these moratoriums on conventional and unconventional gas extraction.
That is the legacy that we inherited and those are the wrongs we are now trying to get right. We are pursuing important reforms through the COAG Energy Council, particularly to get lower prices for the transportation of gas. These are some historic reforms, the most significant in some two decades, bringing the pipeline operators together with their customers and avoiding the unequal bargaining situation.
The meeting that the Prime Minister called with the LNG suppliers focused on getting more gas out of the ground and more gas into the domestic market by getting a commitment from those big players that they will meet future shortfalls in the domestic market. This was critical because we have heard from the Australian Energy Market Operator that there would be shortfalls ranging from 10 to 54 petajoules from the summer of 2018-19 hitting the states of Victoria, South Australia, New South Wales and, later on, Queensland.
They are practical results. We are now reining in the network costs that make up to 50 per cent of a household bill by getting a significant agreement through the COAG Energy Council to prevent the limited merits review process operating in the scope and on the scale that it has to date.
There has also been the record investment in storage through the Clean Energy Finance Corporation, ARENA, Kidston in Queensland, Cultana in South Australia and Snowy Hydro 2.0, which has the potential to boost the output of the snowy scheme by some 50 per cent—2,000 megawatts—creating more than 500 jobs and empowering 500,000 homes using renewable energy power and pumped storage. This is absolutely critical for the future stability of our grid.
I am interrupted by the question, 'How do you get it up the hill?' This is like three projects we currently have in Australia with pumped hydro. You have a reservoir up the top, a reservoir down the bottom, and you pump it up. When the power is cheap you send it down the hill to create the power when you need it most. It is important to meet the peak demand.
We have also commissioned the Finkel review. The Finkel review, commissioned by COAG, will look at energy security with our Chief Scientist and an independent panel. We look forward to seeing their recommendations.
They are all the positive reforms that we now have underway to get energy security and energy affordability as we transition to a low-emissions future. It is worth pointing out to those opposite that we not only met our first met Kyoto target but we are on track to exceed our second 2020 target by some 224 million tonnes. We have halved the ask over the last year as to what we need to do to meet our 2030 target.
So we are absolutely serious about meeting our emissions reduction targets. We are doing that through the national energy productivity plan, the Emissions Reduction Fund, the 23.5 per cent RET and a whole range of processes. But we will not compromise energy security and affordability. We will not at a federal level see the mistake of Jay Weatherill repeated and writ large.
Those opposite have a quadrella of disastrous energy policies. First and foremost, they have their 50 per cent RET. Depending on the day, they say it will be legislated or that it will not be legislated. Depending on the day, they say it will cost $48 billion or that it will cost nothing. Depending on the day, it might be an ambition, goal, objective or task. We knows what it might be? It depends on how you ask opposite. What we do know is that they have a 50 per cent renewable energy target locked into the election commitment that they took to the last election.
They also have a 45 per cent emissions reduction target. Why is that important? It is because it is nearly double what we have at26 to 28 per cent and we know that there is no hope in hell that they are going to meet a 45 per cent target. The member for Port Adelaide has this wry smile on his face. He knows what is coming next. He talks about an emissions intensity scheme and he talks about the Australian Energy Market Commission modelling an emissions intensity scheme, but he fails to tell you that that was modelled on a target of 26 to 28 per cent, not a 45 per cent target. We would love to see the numbers it would produce on a 45 per cent target. We would love to see how much it is going to cost the Australian economy to get to a 45 per cent emissions reduction target by 2030, which is the opposition's policy. It is no wonder that we on this side of the House are pointing to the words of the BCA, who said that the opposition's policy is risky and could jeopardise future economic growth. That is what we hear from the BCA about Labor's 45 per cent emissions reduction target.
I have not even finished on their quadrella of policies. I mentioned the emissions intensity scheme. That is the third one. What about their forced closure of coal-fired power plants? We cannot afford to lose that baseload power which provides frequency control ancillary services and the inertia that you need that you get from coal, gas and hydro but do not get from intermittent sources of power like wind and solar. That is why people like AEMO and the AEMC have been warning about this rise of intermittent power and the impact that it would have on the stability of the grid if you do not plan or prepare, which is what we actually saw play out in South Australia.
Mr Husic interjecting—
They have a plan to close coal-fired power stations like Yallourn in Victoria. They want to close Yallourn, not only Hazelwood. The member for Port Adelaide talked about kickstarting the closure of coal-fired power stations. They want to close Yallourn. They want to close Hazelwood. They want to close Muja A and B. They want to close Vales Point in the member for Shortland's electorate. They want to close that. They want to close a whole series of coal-fired power stations. And who do they partner with? Who do the Labor Party partner with in the Senate to pass a motion for the closure of coal-fired power stations?
The Greens. You want to out-green the Greens. That is what the real fixer, Graham Richardson, said: you 'cannot out-green the Greens'. But that is what the Labor Party wants to do. It has become embarrassing and now it is becoming dangerous.
It has become embarrassing and now it is becoming dangerous, because the Labor Party and the member for Port Adelaide are leading this charge. They want to win Green votes in the city and, in the process, sell out the blue-collar jobs in the regions. We will not do that. We will promote energy affordability and energy security as we transition to a low-emissions future.
of this government than the energy policy demonstrated by those in charge of the portfolio, as my friend the member for Chifley correctly points out.
This is also an embrace of post-truth politics par excellence. We have had the key factors in this energy issue outlined by my colleague the shadow minister. He has talked about the gas issue. Of course, we can also hark back to the gas contracts executed under the Howard and Costello regime, which failed to provide a national interest test in developing our gas resources and gas reserves, which has created the cost dynamic that has had a large effect on this energy market and to the privatisation dynamic created by the coalition.
We talk about Hazelwood. This is a business decision that has been made in France and Japan based on purely business factors. That is what you have surrendered. You have surrendered the national control. The secret here is that we have a National Energy Market. The clue is in the title: a National Energy Market requires national responsibility being taken and supported by national leadership, which has been completely absent. We have had nearly four years now of this government sitting back—fat, dumb and happy and sitting on its hands—taking no action to manage the transition we all knew was coming and was happening.
No less of a factor in that transition was the Renewable Energy Target, agreed upon and set by this government. The truth about the wind farm capacity in South Australia is that that wind farm capacity was built pursuant to that Renewable Energy Target. That is the truth of it. That is what Mr Price, your former adviser, has advised. He has revealed the truth to the public. The other factor has been this policy uncertainty vacuum that you have created. You tore up a national framework that we put in place that has been a model that conservative governments around the world have embraced. David Cameron, Angela Merkel and Arnold Schwarzenegger were happy to do it, but not you. We were the ones who had to embrace the forces of the market and you were the ones who embraced the command economy approach—happily taking the North Korean path down the track to national ruin on energy policy. What is also missing is a plan for grid management and transition of that grid. If you want to know what a plan looks like, this here is a plan of 41 pages of detailed substance and thought, which deals with that exact issue of grid management, spelt out the electricity modernisation review process that we intended to put in place.
What also amazes me in this post-truth politics is the Prime Minister turning up to the Snowy Hydro scheme. Suddenly, after months we have had months of vilification of renewable energy, the Prime Minister is standing in front of the granddaddy of renewable energy projects in the country. Suddenly, he has embraced this as a solution to our power problems after vilifying all this year. The incredible irony of this is that the Snowy Hydro scheme was a great Labor project, instituted by Prime Minister Ben Chifley. I am very proud that my great-grandfather, who stood for the seat of Eden-Monaro in 1940, in a speech in September 1940 advocated for the Snowy Hydro scheme and said, 'Why is this government doing nothing about it?' That was in 1940. Why? Because there were national security implications around that as well while we were in the midst of the Second World War. It is instructive that the Chifley government used the defence power to kick off the Snowy Hydro scheme, taking national security responsibility for a national energy issue.
The other irony about that was not only that we had to do that but that the coalition at the time—the Country Party as it then was and the Liberal Party—opposed the scheme when it was announced in 1949 and boycotted the launch ceremony at Adaminaby that year. Nobody was there. Who was there? Governor-General McKell, a Labor appointee; Prime Minister Ben Chifley; the Labor member for Eden-Monaro of the time, Allan Fraser; and the Labor member for the state seat of Monaro, John Seiffert—not a Liberal or Country Party politician to be seen. The irony also is that the Snowy Hydro scheme pumping operations now at the Tumut 3 station are powered by contracted power from South Australian wind farms—the ultimate irony. Of course, that is how they would move forward with the grander pumping operation once it is completed, contracting renewable energy sources in off-peak periods to pump that water.
This is a scheme worth getting behind. Of course, we have to see real money being put behind it. But you need to give up your hypocrisy. You need to come up with a plan. You need to serve the interests of this nation instead of lying to the public. (Time expired)
I have to say I was originally a little bit confused when I read the wording of the topic for the matter of public importance today: 'The government's continued failure to address the national energy crisis'. It just seemed like a free kick for the coalition. Maybe the Labor Party is admitting that the state Labor government in South Australia is responsible for the recent blackouts, with a RET of 50 per cent. There is no jurisdiction in the world that has more intermittent renewables per capita than South Australia. I cannot think for the life of me of any jurisdiction in the developed world that is experiencing more blackouts than South Australia.
A government member: There is a connection.
Indeed there is a connection and indeed that government needs to be held to account. Or maybe the Labor Party are talking about the Victorian Labor government, where the Renewable Energy Target is 40 per cent, a state where they are going to see the closure of the Hazelwood power plant, a state that despite wanting to close coal is determined to maintain a moratorium against the exploration of gas. Or maybe it is not actually the South Australia or Victorian governments to which this topic relates but in fact the Queensland state government.
The Queensland Labor government currently govern a state that has only four per cent renewables. Guess what their energy target is? It is 50 per cent. It has gone from four per cent up to a whopping 50 per cent. Imagine what will happen to the state of Queensland if they actually seek to pursue that. South Australia's is indeed an example. The previous speaker referred to North Korea of all places. Maybe that is indeed the beacon of hope for the South Australian government.
But let's get back to Queensland. It is four per cent and the state government wants to raise it up to 50 per cent. Do you know that will cost $27 billion from the Queensland state government? This is a state government that is dragging its heels on trying to invest in infrastructure. The Queensland state government is a state government that is refusing to complete studies that would enable a joint Commonwealth and state investment in major infrastructure. It is not interested in roads, not interested in rail but, I tell you what, is more than happy to look at more than $30 billion to try to match South Australians energy disaster. Maybe therein lies the insight as to what the topic is all about today.
You might ask the question: what if the Labor Party actually won federal government? Guess what, federal Labor have 50 per cent renewable energy targets so they are doing the same. They have a 45 per cent emissions reduction target, double that of the coalition's. There will be forced closure of coal-fired power plants and of course they do want a revised carbon tax. The major instrument that has reduced electricity prices around this country in recent years has actually been the coalition's abolition—taking away Labor's carbon tax.
How much would this cost, this Labor plan that basically closes coal and stops gas? It would be $48 billion. That is right. That would be $5,000 per household under Labor's plan. Whereas what you see from the coalition side is action in trying to fix Labor's mess at the state level, action with the Snowy Hydro scheme that will deliver the largest storage capacity has this country has ever seen, action by ensuring that we get a commitment from the gas players to make gas available for peak demand, and a plan for the future with Alan Finkel yet to deliver his report.
What we have from Labor is an 'ism'. It is an ideology; that is all it is. We have pragmatism here; they have ideologues on the other side. We believe in security and affordability; they believe in getting preferences from the Greens. We take an agnostic approach; they take a religious zealotry approach. We believe in economics and engineering, and they just believe in false gods.
I rise in this place to stand for North Queensland and to speak out against the Turnbull government's complete inaction in addressing our energy crisis. When I woke to hear the news announcement about the Snowy Mountains hydro, I was livid. Do not get me wrong; I think it is great the Prime Minister has finally seen the light and sees the great value and purpose of ARENA—something created by Labor and saved by Labor after three years of the Turnbull government trying to abolish it. But the fact is the Prime Minister made a rushed announcement to address South Australia's energy crisis and has kept very quiet on the north.
Well, I am here to warn this government that I will not be quiet. In North Queensland, we are experiencing sky-rocketing electricity prices and nothing from the Turnbull government. The cost of electricity keeps rising, and the increasing pressure on families from the cost of living is growing. Just yesterday, I had a local business owner, Kelly Bacon, owner of the Organic Pantry, call my office in tears. Kelly's business is a small business that employs three staff. Yesterday, she received her electricity bill of $8,000. Of course Kelly is devastated and she believes that the increasing costs of electricity will force her to close her shop.
But it is not just small business this affects; it is large corporations as well. Sun Metals is one of Queensland's biggest electricity consumers and a key Townsville employer. In the last two years, the electricity bill for the Sun Metals zinc refinery has increased over 72 per cent. Their electricity bill has increased from $50 million in 2015 to more than $70 million last year. Here is the best part, and I particularly want the Minister for Energy to listen to this point: electricity prices in Queensland were more expensive than South Australia in 2015 and 2016, despite the fact that Queensland has coal-fired generation.
Here is a direct quote from CEO of Sun Metals, Mr Choi, who stated at the end of last year:
Considering that the generation profile in Queensland is dominated by stable base-load coal-fired generation, profoundly different from that of South Australia, this is a very surprising fact.
What is not surprising is the Turnbull government's complete lack of understanding on energy issues in the north and its lack of action. But where the Turnbull government fails, Sun Metals will pick up having secured a 115 megawatt solar farm at its Stuart property, signalling the start of a $182 million project which is expected to create many jobs. The irony of all of this is that North Queensland has had a plan to address both our energy and water crises for decades. We can kill two birds with one stone with the Burdekin Falls dam.
I hold here a report from 1977 that outlines a three-stage progression plan for securing both water and energy for North Queensland, allowing my glorious region to grow and prosper. Stage 1 was to build the Burdekin Falls Dam—a dam five times the size of Sydney Harbour. This was completed in the early 1990s, thanks to the last Labor member for Herbert, Ted Lindsay, and former Prime Minister Bob Hawke. Stage 2 is to build a gravity pipeline directly from the Burdekin Dam—update: we are still waiting. Stage 3 is to raise the Burdekin Dam walls—update: still waiting. Stage 4 is the hydropower plant—current status: still waiting.
For the Turnbull government to make their Snowy hydro announcement whilst reports for hydro in the north have been around since 1977 is a slap in the face for all North Queenslanders. The north has the answer, it has been sitting there since Hawke, and now we just need this government to listen and deliver. It astounds me that one of our greatest resources in the north is the Burdekin Falls Dam, and there is no mention from this government on leveraging its power.
If the Prime Minister called me and said, 'Cathy, I have finally heard your calls and North Queensland's calls, and we are going to address the water and energy crisis by building the hydro on the Burdekin Falls Dam,' I would roll out the red carpet. But with the government's focus on the south—and nothing for the north—it looks like I will be holding on to that red carpet for quite some time. And businesses like Sun Metals and The Organic Pantry will have to keep waiting for any action from the government. The government are completely out of touch with North Queensland. I demand that the Turnbull government lift their heads a little higher and start looking towards the north and start addressing our energy and water crises. Quite frankly, it will be very difficult for our area and region to grow, flourish and prosper without electricity and water security.
We must be in the post-truth world right now. I can understand why the shadow minister, the member for Port Adelaide, might want to turn this debate on the MPI on energy around. But as he, the member for Boothby and I all know—as do South Australians—we are hostages, as are our constituents. We are now hostage to a failed experiment that is being rolled out in South Australia. Why is that? It is because we have rushed towards renewables. We have rushed towards a technology that provides intermittent power. We have turned our back on baseload generators. In fact, in South Australia, they wanted, on the altar of ideology, to send such a strong message on this that they blew the power stations up. They were not happy with decommissioning them; they had to put gelignite in the boiler and go 'bang'.
And what did we get? We got electricity prices on the spot market in South Australia that are just nonsensical. During this month, there have been times when the spot electricity price in South Australia has been $14,000. You can buy the same unit of power from Victoria for $122. It is coming out of the same power station. It does not make any sense at all.
I thought I might give a few examples of the hostages that have been taken in my state. I can speak of the irrigators in the Riverland, who lived through the millennium drought but who, very shortly, will live through an energy drought. This is because, although the water is, thankfully, running and flowing strongly down the river, they will not be able to afford to lift it. They cannot pump it. They will see their permanent plantings die and wither because they literally cannot afford to take the water from the river to their farms. They are hostage No. 1.
Hostage No. 2 is a very significant manufacturing plant in my electorate. They have been forced to go on to the spot electricity price, despite spending tens of thousands—indeed tens of millions—of dollars on cogeneration plants. They have someone who sits in a room and watches the spot electricity price on an app a bit like the PocketNEM that we have all become familiar with in recent times. This person sits in a room, and, effectively, they press a button, an alarm goes off, and they down tools. The machines are all turned off. I am told they literally pick up the brooms and start sweeping until the electricity price drops again. What does that say about productivity and the need for us to keep driving it? That is hostage No. 2. This is an employer of hundreds of my constituents.
Hostage No. 3 is a restaurant in my electorate, of all things. The restauranteur rang me and said: 'You won't believe it, but I've just assessed my electricity price of January 2016 versus January 2017. I've got the bills side-by-side, Tony—
What an excellent question you ask. What is the difference? The difference was $18,000. He said to me, 'I'm now dividing that by how much it costs me to employ someone for a month, and that will be the number of people I have to sack.' That is hostage No. 3.
I will give you what is perhaps the fourth hostage. He came to my electorate, saw a disused industrial facility and thought he could breathe life into it. The member for Wandin knows this man well. He is a significant investor in his electorate as well. He thought: 'I can breathe life into this facility. I can employ people in Tony's electorate.' So he set about building this facility, which is export focused. It will take products from my electorate, it will process them, and we will export them to the world. The mistake he made was that he entered into all of these arrangements—and he is proceeding with this development; all credit to him—before he worked out the cost of electricity in South Australia. He told me that the cost is nearly $2.5 million a year more than if the facility had been built in Victoria. I think we could comfortably say that is hostage No. 4.
I say to those opposite and to the shadow minister and member for Port Adelaide: if you really cared about South Australians, if you really cared about the future of South Australia, you would junk your 50 per cent target and you would tell your state mates to do the same.
I am proud to rise to speak on this MPI about the energy crisis created by this government. The previous speaker seemed to ignore the fact that the 'hostages' are hostage to four years of this hopeless government's energy policy vacuum. The government have abandoned any pretence of economic competence when it comes to energy policy. Instead, they are being driven by right-wing, fossil fuel, dinosaur ideology around 'renewables bad, coal good'. They are hopeless on this. They have abandoned any pretence of economic credibility.
This vacuum is actually impacting on workers and firms around this country right now. The Australian Energy Council, which is the peak group for generators and energy retailers, has estimated that the policy paralysis created by this government is the equivalent of a carbon price in excess of $50. Let me repeat that: this government's incompetence is the equivalent of levying a carbon price of $50 on the energy sector. This is the price of their incompetence. We are all paying this price, and urgent action is needed.
Our generator fleet is very, very old. The average age of a generator in Victoria is 40. In New South Wales it is 34. My home region of the Hunter produces one-third of the coal-fired power in this country, and I am very proud of that, but all four of those power stations have use-by dates set by the companies: Liddell, 2022; Vales Point, probably 2028; Eraring, 2024; and Bayswater, 2035. Those are the expiry dates set by the companies, not any government policy. We need urgent action to replace these generators.
The real question here is: how do we replace them at the least possible cost to Australian consumers? I am happy to say that the government commissioned modelling that very clearly recommended the way forward: an emissions intensity scheme. That is Labor's policy and it has been endorsed by a group of people that you would not consider to be friends of Labor. We have got the Business Council of Australia, BHP, AGL, EnergyAustralia, the National Farmers' Federation, Origin Energy, the Australian Energy Market Commission, CSIRO, Energy Networks Australia, the Chief Scientist, the Climate Change Authority, the CEFC, Danny Price—Malcolm Turnbull's old energy adviser—state governments and many more energy stakeholders.
And who stands in the way? Two groups stand in the way: One Nation and this government, which is hostage to One Nation. And what is the impact of this? The impact of this is: they are the party that is arguing for a policy that will cost $15 billion more for Australian consumers—and that is the government's own modelling. They do not like it when I throw back to them the government's own modelling, which says that Labor's policy will result in power prices up to $15 billion cheaper than what this joke of a government stands for.
This is a great pity, because we need an honest debate in this area. We need a debate amongst adults. But all we get from them is tired old rhetoric. We have got that joke of a Treasurer bringing a lump of coal into this place and pretending that is an answer. Well, I am proud to represent a coal community. My neighbours are coalminers. My friends are coalminers. And the worst thing you can do to workers is to lie to them, and every single member over there is lying to them by saying: 'Nothing needs to change. You can keep your head in the sand and you don't have to worry about anything.' That is a joke. It is a farce. It is disrespectful to those workers in the communities like mine that depend upon them.
On this side, Labor stands for a concrete plan that will deliver certainty to investors, to allow them to invest in the next generation of power production, whether it is gas, whether it is renewable, which will provide certainty to our consumers and will deliver power prices at an affordable level and employ more Australians. Those on the other side are betraying future generations. They will not be able to look their kids and their grandkids in the eyes, because they are betraying them for low-rent cheap political tricks. I feel sorry for them, because in 10 years time, if they are still in this place—and not many will be—they will have to recant their ridiculous 19th century views based on a profound cynicism and a disrespect for Australian workers. I proudly stand for the future. Those on the other side stand for the past.
I thank the opposition for the opportunity to discuss and debate the merits or otherwise of the 50 per cent renewable energy target which they intend to take to the next election. We had the member for Shortland just reel off a number of bodies and reports, as other speakers have talked about—
Facts? Well, modelling is not necessarily facts. But what we do know is that we have a 50 per cent renewable energy target in South Australia and we have got to 41 per cent of that renewable energy target in South Australia. So, rather than relying on modelling or a report from the renewable energy council or the Climate Council or whatever, we have actually got a living experiment happening in South Australia—Jay Weatherill has quite proudly called it an experiment. And we know how that is working out. I really do not need to work over that old ground.
Then we can look at Victoria. Victoria is heading down the same path, with a 40 per cent renewable energy target. The Hazelwood power plant is due to close down. Let us have a look at what they are saying about that. Josh Gordon, on the front page of today's Age, reports:
Australia's electricity grid operator has warned that the looming shutdown of the ageing plant, which supplies up to a quarter of the state's power, could lead to breaches of the minimum energy reliability benchmark next summer.
Its data shows 72 days of potential "power shortfall".
That is over the next two years. The Australian Energy Council chief executive, Mr Matthew Warren, is reported as saying that:
… Victoria's energy security was looking increasingly fragile. He said the prediction of 72 days of possible reserve shortfall was unprecedented in recent history.
So we have got the example in South Australia—the living experiment, as Jay Weatherill so proudly proclaimed—and we have got Victoria moving down the same path, and we will see how that pans out over the next couple of years.
I want to take the debate to Western Australia. I am glad that the member for Brand is still here. The member for Burt was here but he has slipped out. We have had a change of government in WA, so we are in a brave new world. There is no doubt about that. When we look around Australia and we look at South Australia and Victoria, we are definitely in a brave new world. When we look at the current Western Australian energy mix, on the AEMO website at the moment it says that Western Australia is generating six per cent of its electricity through wind power. The other day it was up to 13 per cent, and the day before that it was zero per cent. But 57 per cent of Western Australia's power, at this point in time, is being generated by coal-fired electricity from the town of Collie, in my electorate of O'Connor. I am very proud of that. I am very proud of those hardworking coalminers in the town of Collie.
The electorate of Collie is represented by a good hardworking Labor member, Mick Murray. In the election just held, during the campaign, Labor abandoned, apparently, the plans by energy minister Bill Johnston for a 50 per cent renewable energy target in Western Australia. Why did he abandon that? Let's have a listen. This is from Andrew Burrellin The Australian:
Labor abandoned plans to unveil a 50 per cent renewable energy target in Western Australia after Mick Murray—the party's veteran MP in the coalmining town of Collie—threatened to quit his marginal seat before next week's state election.
Member for Shortland, you could take a leaf out of Mick Murray's book, mate.
After the recording—
of Mr Johnston's 50 per cent renewable energy target—
But what did he say? He said:
There will be no renewable energy target, at a state level, under any government I lead.
Have we heard that before? I want to conclude with something for you, member for Shortland. Mr Murray said he would quit politics rather than take such a policy to voters who rely on coalmining and power generation for their jobs. That is a member of parliament I can really respect. He comes from the other side of politics, but I can really respect him, because he knows that a 50 per cent renewable energy target is going to damage jobs and damage Western Australia, and he is prepared to put his job ahead of the Labor Party's 50 per cent renewable energy target. I say to Mick Murray: I am looking forward to working with you— (Time expired)
The Australian energy crisis is close to the single public policy issue that causes my constituents the greatest frustration. It really is one of those issues that causes people outside of this building to scratch their head and ask whether this institution is truly broken. It is an issue that directly impacts on all Australians in ways both big and small.
At the micro level, increasing electricity bills are a growing burden on household budgets. At the macro level, the very future of our planet rests on our ability to reduce emissions from our energy sector to mitigate the impacts of climate change. Yet for the past four years, Australia has managed to have both increasing power bills and increasing carbon emissions. The Australian public desperately want this issue fixed. The good news is that there are solutions that are widely supported by business, energy companies, regulators and state governments. Indeed, an emissions intensity scheme—a market mechanism that would give investors in the electricity sector the certainty that they need to invest—has been estimated, by the government's own modelling, to reduce Australian power bills by up to $15 billion over the next decade. It would allow the investments that our ageing energy infrastructure needs, and it would do it in a way that will reduce our emissions and help us respond to the challenge of climate change.
It is supported by: the Business Council of Australia, BHP, AGL, EnergyAustralia, the National Farmers' Federation, Origin Energy, the Australian Energy Markets Commission, CSIRO, the Chief Scientist, the Climate Change Authority, the Clean Energy Finance Corporation, Danny Price—Malcolm Turnbull's former energy adviser—state governments, Labor and Liberal alike, and many other energy stakeholders. Yet this government is utterly paralysed in the face of this effective and widely supported policy response. Indeed, in December of last year, when the Minister for the Environment and Energy merely floated the idea of considering the adoption of this popular, effective policy to reduce both power bills and carbon emissions, it was shot down by the Turnbull government in hours.
Why? The problem is that this policy is supported by the Australian Labor Party. After nearly a decade of politically motivated sabotage on energy policy, those opposite have been left unable to even think about energy policy as anything other than a short-term political tactic. Indeed, when the 'convoy of no confidence' arrived in Canberra in 2011, it brought with it a convoy of incompetence to coalition energy policy. We saw claims that the previous government's carbon price would result in hundred-dollar roasts and would result in the Whyalla wipe-out—both wrong. We saw promises that power bills would fall by $200 when the Abbott government got rid of the carbon price—also completely wrong.
I take that interjection. Power prices reduced by $200, according to the member for Gilmore. I am sure she will be informing her constituents about this very good news. An optimist might have hoped that this would end after the ascension of the member for Wentworth to the top job. After all, the then opposition leader told the nation in 2009 that:
I will not lead a party that is not as committed to effective action on climate change as I am.
But the short-term, politically driven nonsense on energy policy has continued. We have seen ministers waving hunks of coal in the chamber while promising to use taxpayer funding to build new coal-fired power generators that the private sector call uninvestable and will not touch with a barge pole. We have seen a thought bubble, delivered via a feasibility study, to investigate a pumped-storage plant in the Snowy Hydro scheme that at best could become a reality in five to seven years.
And still they completely ignore the solution that is right before their face. As the Australian Energy Council stated in its submission to the Finkel review:
… the lack of national policy certainty is now the single biggest driver of higher electricity prices.
In a world awash with capital, where investors are looking for safe long-term investments, in a world where we are seeing a tidal wave of investment in renewable energy around the world—more than $260 billion of it in 2015, twice the volume of investment in coal or gas generation—in this world, the failure of our political system, the failure of leadership within the coalition, is sabotaging the Australian energy sector.
Under the Turnbull government, Australia is currently drifting towards 'becoming a banana republic' status again: a nation whose government is incapable of confronting the biggest challenge facing our households, our economy and our environment. In contrast, the Australian Labor Party is up to the challenge, and at the next federal election the Australia people will be able to make a choice about the future of this country, a choice about who will tackle this challenge head-on. (Time expired)
I began the day talking about suicide and the 'black dog ride' and I will end the day talking about energy ignorance and the 'blackout slide'. Energy, which to most of us involves electricity and gas for heating or cooling, cooking or entertainment, is more than just a domestic supply issue. We also have businesses that process, pasteurise and refrigerate food and get people to work on trains. In fact I don't believe there is a single part of our lives that is not touched by our energy needs. Consequently a responsible government will make sure that energy supply is guaranteed, which is energy security, and then work on keeping the price at a level we can all afford, not just for domestic use but for every level of our vital businesses and manufacturing. This of course means not just convenience of lifestyle; it also means jobs.
So, first, we called on the Chief Scientist, Dr Alan Finkel, to deliver a blueprint for the future security of the National Electricity Market. Then we announced a massive expansion to the Snowy Hydro Scheme, called Snowy 2.0, increasing capacity by 50 per cent. Then we fund feasibility studies into a pumped hydro energy storage project at Cultana, in South Australia, which will help to stabilise that state's energy supply so that the incidence of blackouts is reduced. AGL is about to connect 1,000 batteries and households that will operate as a 5 megawatt solar power plant.
We are still working towards the agreed national renewable energy target, which will see 23.5 per cent of electricity generation come from renewables by 2020. ARENA, the Australian Renewable Energy Agency, will deliver large-scale solar with 12 new large-scale solar photovoltaic projects that will triple the amount of energy produced from big solar in Australia. We have initiated the National Energy Productivity Plan (NEPP), which will increase our energy productivity by 40 per cent by 2030. Finally, we secured the commitment of major gas producers to make more gas available to the domestic market and guarantee that gas will be available to meet peak demand, which has been worrying people for some time. I dare say that there were six years of Labor when not very much was done then, either.
The blackouts in South Australia act as a wake-up call to get our energy house in order. A lower emissions future is our national aim, but not at the loss of energy security and affordability as we transition. One of the most important aspects of renewable energy is the need for base load storage. Investment into this research is critical, so there will be support for variable renewables like wind and solar. This means the feed into the grid will be more reliable.
It is absolutely essential that in the process of meeting our emissions reduction targets we do not compromise energy security, which is why we are taking a technology-neutral, sensible approach where coal and gas as base load power sources have a big role. That includes investigating the potential of carbon capture and storage. These could provide reliable base load power at 90 per cent lower emissions. Through the environmental agencies we have invested a record $220 million in storage and pumped hydro-electricity projects to respond to the challenges posed by variable supply.
Those opposite have referred to the 'apparent' energy policy development over the past four years. I would counter that by saying that they had six years to develop a policy and all we got was the carbon tax. We are calling on the states and the Northern Territory to drop their counterproductive gas bans and moratoriums. Gas is an important transition fuel, with at least half the emissions of coal. We are calling on Labor states to abandon their RETs, which drive up prices. Australia's emissions per capita are currently at their lowest level in 27 years. We have a strong track record of meeting and beating our emissions reduction targets. We simply cannot keep prices down for everyone in Australia if we even think about a 50 per cent target for renewable energy by 2030.
We began the debate today by discussing gas shortages, which is still a relative of fossil fuels. Labor is not talking about that at the end of the debate. Is it because they finally realise that this would blow the Aussie household budget, or that it will encourage businesses to leave our country? I seriously cannot believe the black hole of knowledge regarding energy. While Labor subsidises the development of the renewable sector, the essential investments in more traditional sources of electricity were ignored, and now we are seeing the results.
Using a balanced approach, we are going to avoid the big national energy blackout that is looming in front of us. Labor should put more energy into being positive about Australia rather than creating a blackout for Australians.