Kelvin Thomson (Wills, Australian Labor Party) Share this | Link to this | Hansard source

My question is also to the Prime Minister. Would the Prime Minister outline how a carbon price can transform Australia’s electricity sector?

Julia Gillard (Lalor, Australian Labor Party, Prime Minister) Share this | Link to this | Hansard source

I thank the member for Wills for his question and I know he is very concerned about this country’s future, about environmental questions and about the question of pricing carbon. He is also a man who is in touch with his constituents and would understand the pressures that families feel when utility prices rise and that they are asking for explanations as to how this works and what will happen next. I believe that it is important to be honest with the Australian people and thoughtful in your responses. Not for me the three-word slogans of others. When we look at our electricity generation sector, and when we look at the question of investment in electricity, we find that we have had a track record of underinvestment and we need to transform electricity generation for the future so that we are able to meet demand and not face power shortages and power outages and that we are generating our electricity in a cleaner way.

To give some statistics in this regard: in terms of electricity used, around 82 per cent of power in the national electricity market is generated by coal with 10 per cent from natural gas and eight per cent from renewables, but in terms of capacity coal only makes up around 58 per cent of capacity with gas around 20 per cent. That is telling you that despite rising energy demand we still have natural gas fired generation capacity which is underutilised and we need to change that picture. To put it at its most simple, we need to generate power from coal in a cleaner way, we need to reduce the emissions of generating power from coal and we need to increase the competitiveness of energy that is generated from gas and from renewable energy sources like solar to make them a greater part of our energy mix. In order to drive that innovation and that competitiveness, we need to price carbon.

I can see the member for Wentworth concentrating on this. The member for Wentworth is a man who has always understood this and has, over time, advocated pricing carbon because he understands its effects on electricity generation and in the marketplace. Of course, it does mean, as we work through these issues, that we need to make sure we are telling Australians the truth. Often in this debate there is a position painted, particularly by the opposition, that if you price carbon then electricity prices go up but if you do nothing then somehow that does not happen. Can I say to the opposition that at least there is one truth teller on their front bench and that is the member for Groom, who admitted the day before the election when you looked at power prices: ‘Power prices are set to double over the next five to seven years irrespective of who is in government. Lack of planning has led to an investment drought.’ He is a truthful man. As we work our way through investing in energy and increasing supply, we also need to work our way through pricing carbon so that that new investment is directed to the cleanest possible power generation for our nation’s future.