Wednesday, 5 December 2018
Treasury Laws Amendment (Prohibiting Energy Market Misconduct) Bill 2018; Second Reading
I'll take that interjection—under the EPBC. They're going to have to explain to the transport sector what's going to happen. At the last election, they committed—it was a very sneaky commitment; they thought they got away with this one—to light vehicle emissions standards of 105 grams per kilometre. That is absolutely unrealistic for hardworking Australians and small businesses. The two favourite vehicles of farmers and tradies are the Toyota HiLux and the Ford Ranger. The Toyota HiLux creates 200 grams per kilometre. They're going to have to chop it in half! And the Ford Ranger is worse, at 234. They're going to have to take 60 per cent out of it! I don't know which part they are going to cut; they are going to have to cut it one way or another. Should they switch to a Prius?
I look forward to the opposition leader swapping his and his shadow ministers' Comcars for Ford Fiestas—and even the Ford Fiesta doesn't fall under Labor's reckless target. I don't know how they're going to do this, but one thing is clear: they need higher prices in order to achieve it. We have seen from the Climate Change Authority, that, in order to get to the sort of outcomes they're talking about here, you need a carbon price of five times the last one. It is absolutely apparent that in order to achieve that they're going to have to raise the price of electricity, which is what they want to do.
We on this side of the House want to see lower electricity prices. That is our policy. We want to see lower electricity prices while we keep the lights on. What a sound objective that is for every Australian family and for those hardworking small businesses that use so much energy. Whether they're abattoirs, cafes or delicatessens—you name it—right across regional, urban and suburban Australia there are businesses that need lower electricity prices in order to be able to employ and invest and do all those things that we want Australian businesses to do. A million new jobs have been created in the time that we've been in parliament as a result of our good policies. Here is another good policy that will continue to add to that job creation.
This legislation is part of a broader package of the price safety net where we're seeing half a million families and small businesses get a better deal: those who need it most; those who don't have the time to get on the phone and negotiate with call centres for hours on end. We'll see households get an advantage from this. In New South Wales, households will be, on average, $200 better off; in Victoria, $313; in South Australia, $270; and, in South-East Queensland, $175.
We're bringing low-cost, reliable power into the market because we do have an enormous investment. We have a $15 billion investment in solar and wind happening right now, but we've got to keep enough dispatchable reliable power in the system to keep the lights on and keep the prices down. That's why we're working to a short list of projects in the new year. Meanwhile, we're imposing the retailer reliability obligation through COAG, with my state and territory colleagues, to ensure that years ahead of time the retailers invest in the capacity necessary to keep prices down and keep the lights on.
Labor, ultimately, need to decide here whether they are on the side of Australians or the big energy companies. These are essential services bought by every Australian business and every Australian family, and that is why it is so crucial that we treat this as an essential service, where having a fair deal is important for all Australians. That's why, given the behaviour, the conduct and the structure of the market that we've seen in recent years, we need to act. It turns out that Labor is satisfied with the status quo that the ACCC described as 'unacceptable and unsustainable'. Here are your experts: 'unacceptable and unsustainable' from the ACCC. Labor rejected legislation before they had even seen it. This bill complements the ACCC's ongoing electricity monitoring inquiry, which will run until 2025. Our legislation will also sunset in 2025. We see this as a transition for the industry, where there needs to be culture change, conduct change and a change in outcomes.
There are three markets which this legislation is focused on. In the retail markets, we have seen retailers deliberately confusing customers with their discounting strategy, using what the ACCC has called excessively high benchmarks and complex offer structures. That needs to change, and we need to see retail prices tracking more closely with wholesale prices. That's what we need to see. Those opposite are against that. They want to see retail prices going up despite wholesale prices coming down. That's what they want to see. It's extraordinary for a Labor Party to think that was a good outcome. This legislation addresses that issue fair and square. In the wholesale market, a lack of competition has resulted in higher prices. The ACCC itself has said:
This lack of competitive pressure is of concern to the ACCC, particularly given the critical need for a sufficient level of competition in this market to drive affordable electricity prices.
The ACCC said:
In all NEM regions, a single generation business accounted for more than 30 per cent of dispatched energy in the year to April 2018.
They go on to say that three players make up over 80 per cent of dispatched capacity.
We have seen, sadly, price gouging in the market. We saw that after Hazelwood closed. The ACCC found in their report that AGL and Origin shifted capacity previously bid at less than $30 to up to $150 a megawatt hour. They took advantage of that withdrawal of supply. We won't put up with that. That is clearly anticompetitive behaviour, and it's anticompetitive behaviour that those opposite are defending. What an extraordinary situation! They upped the bidding from 30 bucks to 150 bucks because of a withdrawal of supply, and those opposite are defending the practice.
The contract market—this is the hedge market; it's caps and swaps and all those means of managing risk in the market—is absolutely crucial. If you're an independent generator or an independent retailer in the market, you have to get access to this contract market. We know that in some markets—particularly in South Australia, and the shadow minister would be aware of this—that contract market has been shut down by the big players that are acting in a way that has made it extremely difficult for new entrants and small players to come into the market. We won't stand for that. The ACCC itself said that in certain regions and in particularly South Australia:
… the level of liquidity and the advantages enjoyed by vertically integrated retailers make it difficult for new entrants and smaller retailers to compete effectively in the retail market.
What are those opposite going to do about it? You are not supporting this legislation. You think it's okay to shut it down to the big players, like big unions and big business—it doesn't matter; you love it big. We saw the spectre of them in recent days defending big tech. That's where Labor have come to.
The legislation provides a graduated series of remedies to this misconduct, starting with ACCC-issued warning notices and infringement notices and moving up to court-ordered civil penalties that can go up to either $10 million—three times the value of the total benefit attributable to the conduct—or 10 per cent of the annual turnover of the corporation in the previous 12 months. It then moves up to, on the recommendation of the ACCC, Treasurer-issued contracting orders that will permit the Treasurer to require companies to offer electricity financial contracts to third parties. Finally, on the recommendation of the ACCC, as a last resort and following an application by the Treasurer, there are Federal Court-issued divestiture orders relating to misconduct in the wholesale market.
We do see asset divestment powers in other countries, such as in the US with the Sherman act and in the UK with their Enterprise Act. They have been used as a last resort. They are court ordered. We are making this more restrictive. It is restricted to an industry for a certain period of time because of the poor conduct, the poor outcomes and the poor structure of the industry that we have seen in recent times. It is targeted, it is proportionate, it is time limited and it is court ordered. Those opposite talk about investment and sovereign risk. In my time in the business community, I spent a lot of time in the UK and the US, looking at UK and US businesses. Despite the fact that they have the Sherman act and the Enterprise Act, not once did I ever hear an investor say: 'You know what? We're not going to invest in the US or UK because of the Sherman act or the Enterprise Act. We're not going to do that.' It simply doesn't happen.
As a last resort, asset divestment—particularly in this case, when it is time limited and industry specific—is a reasonable and proportionate response to what, in this case, has been an industry that is not delivering to its customers. We stand for those customers. We stand for those hardworking small businesses, like the aluminium smelters. We stand for those hardworking businesses in electorates like those of the two opposite members. There will be many cafes and manufacturing businesses—
Ms Stanley interjecting—
I will take that interjection. The aluminium industry needs lower electricity prices. That's what it needs. We stand for the jobs of those hardworking Australians in energy-intensive businesses. We stand for the small businesses that need lower electricity prices. We stand for the households who deserve a better deal from energy companies who have doubled their profits in recent years, and those opposite want to block this legislation.