Wednesday, 5 December 2018
Treasury Laws Amendment (Prohibiting Energy Market Misconduct) Bill 2018; Second Reading
It's always very pleasing in these debates to follow the member for Port Adelaide, because there are very few members in this place who have the expertise that he does, because he comes from the state of South Australia, where they conducted a grand experiment—this grand experiment that was backed by the member for Port Adelaide from start to finish. That experiment was a 50 per cent renewable energy target. What did it deliver? It delivered that state the highest electricity prices in the world. It takes a special type of incompetence to deliver the highest electricity prices in the world to an Australian state, but that is exactly what they managed to achieve in the member for Port Adelaide's home state.
You would think this would have been a lesson. You would think we would have learned and would say: 'Look at South Australia. Look at the terrible mistakes that they made. Look how they punished South Australian residents. Look how record numbers of South Australians had their electricity disconnected.' You'd think they would have learned. But, no, the official policy of the Australian Labor Party is actually to copy that failed experiment and take it nationwide. Everyone in the country should be terrified of the prospect of a Labor Party getting into office and inflicting that failed experiment on everyone.
Of course, we know that the other expertise that the member for Port Adelaide has goes to his predictions about the outlook for thermal coal. Only last year, the member for Port Adelaide was standing up on the ABC and telling us all about the rapid decline in thermal coal. In fact he said, 'Indeed, the demand for thermal coal exports from Australia is actually in decline.' What a great prediction, because this year we've had record exports of thermal coal! If the member for Port Adelaide told you it was raining outside, you would need to go and check. He should be employed by the bookmakers at Randwick to give them tips, because then they'd know which horses to lay off. He is wrong time after time after time, and here he is, on this bill, completely wrong yet again.
Mr Deputy Speaker, I put it to you that this bill is a litmus test of whose side you are on. On this side, we are on the side of the old-age pensioner who hasn't been able to afford to heat their home in winter and sits in a cold home at some risk to their health. That's whose side we are on. We are on the side of the working family in Western Sydney that struggles and can't afford to turn on the air conditioner on a hot summer's day. We are on the side of the small business owner who has seen their electricity prices increase by 100 per cent under the Labor Party. We're on the side of the tradesmen, the truck drivers and the farmers of this nation.
By their opposition to this bill, we know whose side the Australian Labor Party are on. They are on the side of the large energy companies, giving them aid and comfort to engage in anticompetitive activities, to the detriment of Australian consumers. They are on the side of the inner city Greens that cheer and celebrate every time the price of electricity rises. That's whose side the Labor Party is on. They have form in this, because the last time that they were in office they wilfully increased the price of electricity by 100 per cent. They knew that their carbon tax would almost double the wholesale price of electricity, yet they came in here and they voted for it, and we had to fight tooth and nail every single day to get rid of that carbon tax and take the pressure off wholesale electricity prices. Yet they still persist with an energy policy that the Business Council of Australia has said would put a wrecking ball through the economy. That is the policy that they bring to this House, and that is what they argue for.
I've heard members on the other side during this debate say how terrible a divestiture power is and how much of a sovereign risk it is. Divestiture powers have been part of the competition law or antitrust law in the USA for over 100 years. They go back to the Sherman Antitrust Act of 1890—not 1990; 1890. The home of free-market capitalism, the USA, has divestiture powers. Anyone who comes in here and says that divestiture powers are something you have in a Marxist, Venezuelan economy simply does not know what they're talking about. We have seen members of the Labor Party celebrate that Marxist, Venezuelan economy. Many members of the Labor Party signed an invitation for none other than Hugo Chavez to come to Australia and preach how wonderful his Marxist policies were. That's where the Labor Party stand. We are doing nothing more than taking a divestiture power that has been in the United States of America for over 100 years and applying it to a very narrow section of the economy, our electricity sector.
The idea that a divestiture power somehow or other harms shareholders is not borne out by the historical facts. The most famous case of divestiture in the USA was Standard Oil. In 1911 Standard Oil was broken up into 34 separate companies. What happened? If you were a shareholder, previously you had one share in Standard Oil; after the divestiture, you had 34 shares, one in each of the 34 separate companies. History has shown that, very quickly after Standard Oil was broken up into those 34 different companies, one share in 34 was worth a lot more than just one share in Standard Oil. This idea that it is somehow or other taking away assets or government confiscation of assets is something that shows that people have no idea what they are talking about.
Yet they come in here and wax on about sovereign risk. The greatest sovereign risk that this nation faces is the possible election of a Labor government. The second greatest sovereign risk that this nation faces is internationally uncompetitive electricity prices. Unless we have competitive electricity prices in this nation, manufacturing businesses across the entire economy will not invest, yet we have a Labor Party whose policies deliberately intend to increase the price of electricity.
Divestiture powers are also a feature of UK competition. Why are such powers needed here in Australia? We have seen what happened to electricity prices in South Australia when they chased the Northern Power Station out of town. The result was substantial rises in the wholesale price of electricity. We saw the same thing in Victoria where the Hazelwood Power Station, though being old, was chased out of town by the tripling of coal royalties. When Hazelwood closed down, we saw an 80 per cent increase in the wholesale price of electricity.
Although that was bad for consumers, that was great news for all the big electricity companies. If you are in an industry where the market price for what you are selling, or for the service or goods that you are supplying to that market, increases 80 per cent, it's happy days. While consumers were harmed by the closure of Hazelwood, every other electricity generator in the country was able to make hay and to make record profits at the expense of pensioners, hardworking Australian families and small-business owners.
We have a situation coming up where the Liddell Power Station will quite possibly close in 2022. AGL told us that it has no value. They value it at zero. That's why they need to close it down, because it has no value, yet we find out that they knocked back an offer from a competitor to buy Liddell for $250 million. A quarter-billion-dollar offer was on the table, and they said no, because it's worth more to them to close it down. Why is that?
Because they have such a dominant position in the market. They have such a large market share that by closing Liddell down they can keep the wholesale prices inflated and they can make more profits at the end of the day through higher wholesale prices from their other assets. That, by any definition, is anticompetitive conduct.
If our competition laws are not strong enough to catch that anticompetitive conduct, they need to be amended. I've had long arguments with the chairman of the ACCC. Under our existing competition laws, I thought there was a strong case to take action against the possible shorting of supply that was being proposed. The chairman of the ACCC said he didn't believe the current laws were strong enough. That's why these provisions are needed. They would be no different to the provisions in some other countries. Look at the provisions of the Sherman act in the USA, where a per se violation is a breach of the Sherman act:
… these are violations that meet the strict characterization of Section 1 … A per se violation requires no further inquiry into the practice's actual effect on the market or the intentions of those individuals who engaged in the practice. Conduct characterized as per se unlawful is that which has been found to have a "'pernicious effect on competition' … Such conduct "would always or almost always tend to restrict competition and decrease output."
That is why we need to ensure that we have such provisions. For an essential service like electricity, if a generator decides to decrease their output to raise prices to the detriment of consumers, we need divestiture powers similar to those in the home of free-market capitalism, the USA. What about under the UK competition law? How would such shorting of the market go there? Under section 18(2) of the UK Competition Act, it says conduct may constitute an abuse of a dominant position if it consists of:
(b) limiting production … to the prejudice of consumers.
If we have electricity retailers in this country limiting production to the prejudice of consumers, we need provisions to say that is anticompetitive, and with a threat of divestiture—just as they have in the USA and in the UK.
While we're on the subject of a 45 per cent emissions reduction target, I would hope someone from the Labor Party would explain to us what they are going to do in the transport sector. What are you going to do in the transport sector to get those emissions reductions? What plans do you have that you are not telling the Australian public? What plans do you have that you are hiding? We know what it was last time. We know a carbon tax of $135 was recommended by the Climate Change Authority to reach Labor's target. That would push the price up at the bowser for petrol and diesel by 40c a litre. I hope the member would at least no longer hide and would tell us what the Labor Party are going to do— (Time expired)