John Murphy (Reid, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Climate Change and Energy Efficiency. Will the minister update the House on the current debate surrounding increases in electricity prices and how uncertainty over a carbon price relates to that debate?

Greg Combet (Charlton, Australian Labor Party, Minister for Climate Change and Energy Efficiency) Share this | Link to this | Hansard source

I thank the member for Reid for his question. In a speech last night, the Prime Minister outlined a number of reasons for the increases in the price of electricity over the last few years which have impacted of course on households. Principal amongst those reasons has been the need for significant investment in our network infrastructure—that being the more 850,000 kilometres of poles and wires which deliver electricity across the country. The House will be interested to learn that it is now estimated that $42 billion of network investment will be required over the next five years just to maintain reliable electricity supply and to meet growing demand for electricity. This is the main driver of the higher electricity prices that households are now facing.

Greg Hunt (Flinders, Liberal Party, Shadow Minister for Climate Action, Environment and Heritage) Share this | Link to this | Hansard source

Hang on. Demand is going up even though prices have gone up.

14:36:48

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

Hang on, member for Flinders. Have you read standing order 65(b)? Read it now or, if you do not wish to read it, you can leave for one hour under 94(a). But I suggest you just read the standing order. The minister has the call.

Greg Combet (Charlton, Australian Labor Party, Minister for Climate Change and Energy Efficiency) Share this | Link to this | Hansard source

He’s reaching for the standing orders, so that is encouraging.

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

The minister will get back to the answer.

Greg Combet (Charlton, Australian Labor Party, Minister for Climate Change and Energy Efficiency) Share this | Link to this | Hansard source

However, with the pressures that are already in the system putting pressure on electricity prices, the uncertainty over carbon pricing is creating a new pressure in itself. That is because the uncertainty over the pricing of carbon is causing investment decisions, particularly in the generation sector, to be put off. It means that investment in low-pollution baseload power is being put off in favour of suboptimal forms of generation investment that are cheaper to build but less efficient and incapable of providing baseload power generation over the longer term.

The CEO of the Energy Supply Association of Australia, Mr Brad Page, has indicated this in some recent figures. For example, in 2009 the estimated capital expenditure for existing and new electricity generation plant over the next five years was $18 billion. However, in 2010 that figure for planned investments fell to $8.2 billion, and Mr Page cited the uncertainty over carbon pricing as one of the reasons that had occurred.

Simply put, the delay in investment due to the lack of a carbon price threatens to put up electricity prices in the future because suboptimal investment decisions will be made. The fact of the matter is this: a carbon price will provide certainty to investors, allowing them to make the most efficient long-term investments in baseload generation capacity in our energy sector, and that investment, based upon certainty in the sector with a carbon price, will in fact reduce the impact of price increases that need to be made in the energy generation sector. So, to be clear about it: without a price on carbon, investment in low-emissions baseload generation will be put off and prices will rise because less efficient investments will be made. For that reason, the responsible economic position for the opposition to take is to support this important economic reform, because in fact one of the greatest economic risks we have now is the negative, carping, opportunistic policy slogans that are put forward by the opposition.

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

Order! The minister should not debate his answer.