Wednesday, 5 December 2018
Treasury Laws Amendment (Prohibiting Energy Market Misconduct) Bill 2018; Second Reading
I'm delighted to stand today to speak in support of the Treasury Laws Amendment (Prohibiting Energy Market Misconduct) Bill 2018, which goes to the heart of the differences between the Liberal-National coalition and the Labor Party. We on this side of the House want to make electricity more affordable and reliable; those on the other side of the House want to introduce a secret electricity tax. We stand by the Australian consumer, small and medium businesses, families, pensioners and students; those opposite stand by big energy companies and big unions. We on this side of the House believe in competition and a fair marketplace; the Labor Party believe in monopoly power and vested interests. We on this side of the House believe in the need to have a balanced energy mix; those on the other side of the House are more than happy to see a catastrophe by taking a wrecking ball to the economy with a 45 per cent emissions reduction target.
This bill comes after a long suite of measures have already been introduced, and actions taken, by the Liberal-National coalition with a view to ensuring energy is affordable and reliable. We have, after all, already cut the carbon tax. We reined in the networks. We put more gas into the system, into the market. We increased transparency. We revisited and reinvested in Snowy. We put downward pressure on wholesale prices. These measures have already delivered a reduction in prices, which is why we are so happy: we've got runs on the board. We already have a strong unity of purpose around ensuring that energy prices come down and we have a reliable system. That is also why we are now embarking on a new set of measures that includes introducing a price safety net, introducing a reliability obligation, backing investment in reliable generation and, of course, this bill before the House today, which is all about introducing a big stick against those who wish to price gouge and those who wish to act improperly in the marketplace.
What this bill is all about is ensuring that we have legislation in place to penalise companies for misconduct. That is why we are looking at penalising where there are problems in retail, in contract liquidity and in wholesale contracts. We need a retail price prohibition, a contract liquidity prohibition and a wholesale conduct prohibition. Where misconduct is found, there is a graduating level of penalties, as any responsible suite of enforcement measures would typically entail. This includes everything from warning notices through to infringement notices, through to civil penalties, through to Treasurer-issued contracting orders and through to, ultimately, that possibility—in extreme cases of fraud, of dishonesty and of bad faith—of a court-ordered divestiture order coming into being.
If that's what this bill represents, it's a fair next question to ask why. Why would we introduce a big stick into this marketplace? Why would we ensure that we can hold those who act improperly to account and penalise them in order to drive their behaviour? All one needs to do is look at how the energy market operates in Queensland, to see how important this piece of legislation is. In Queensland, the Queensland state government generates approximately 70 per cent of all energy in that marketplace. It effectively enjoys a monopoly. We already know that there has been an overinvestment in poles and wires in Queensland. Indicative of a marketplace that risks systemic abuse, there is a guaranteed return—known as weighted average cost of capital, or WACC—of about six per cent on the poles and wires. It is of no surprise, especially given that the Labor Party are in government in Queensland, that there is no state that has had such a dialling up of poles and wires investment as we've seen in Queensland. There is an overinvestment of $7.3 billion.
In other words, there's this inherent incentive for the Labor Party in Queensland to keep investing in poles and wires because the more they invest, the more they can get a return. Do you know who they get the return from? They get the return from everyday Queenslanders who are ripped off through their electricity bills. Not only is there an overinvestment that they are taxing Queenslanders for but they are also enjoying that six per cent guaranteed return. That is too high, but there is absolutely no attempt by the Queensland state government to remedy the situation and accept a lower guaranteed return.
Furthermore, in Queensland, yet again, there is an act of absolute dishonesty where there is a secret tax. We've seen a drop in wholesale prices in Queensland. Between October and October, one-year wholesale prices went down by 40 per cent, yet that wholesale reduction has not been passed through to the consumer. We have had an enormous heatwave for the last couple of weeks in Queensland, and we have had pensioners who have not been able to put on the air-conditioning units. We have had families who are forgoing certain things in life that most families can enjoy. We have Christmas coming to us, and families are hesitating about putting on the Christmas ham because of the price of electricity. That reduction in wholesale prices has not been passed through to consumers.
Lastly, let me make this point about how the Queensland government run their electricity system. They have this inherent scam going on. You would be forgiven for thinking it's a laundering activity, because what they do is say to their state utility, 'State utility, you take on debt.' Then they turn around to the state utility and say, 'Now give me back that debt and call it a special dividend.' All they're doing is funnelling money. They put the debt in the state-owned entity and take it back as a special dividend—but, wait for it; it's not over yet. They also put a 4.8 per cent interest charge on that debt. It's all recovered, of course, through their electricity prices. Who pays for this mismanagement? Who pays for it? It's the average consumer, the average family, the average Queenslander. All it is is a sophisticated scam where the state government enjoy an opaque, complex system, because they believe that they can con the everyday Queenslander. Well, that scam has been broken. The game is up. But it is indicative of the poor behaviour in this system. It is indicative of the type of behaviour that we need to root out, because, if we are going to ensure that the consumer, the Australian, comes first, we can't tolerate this.
Of course, big unions are a part of the game. If you look at the unions involved in the Queensland energy sector, collectively, in the 2015-16 financial year, they donated over a million dollars to the Labor Party. It should come as no surprise that the protection racket continues from the Queensland Labor government. Furthermore, you do wonder, whether it be through enterprise bargaining agreements or others, how much they have rorted. And thus I support this bill and look at Queensland as an example for its need.