House debates

Monday, 27 May 2013


National Electricity Bill 2012; Second Reading

11:42 am

Photo of Robert OakeshottRobert Oakeshott (Lyne, Independent) Share this | | Hansard source

I move:

That this bill be now read a second time.

This is a bill that invites the parliament to end the greatest market failure in Australia today, a regulatory rort that has cost electricity consumers $3 billion since 2009. Of this $3 billion, $1.9 billion has been transferred from the pockets of New South Wales electricity consumers to the pocket of the state government—costing the average customer somewhere around $100 extra each year. This is not spending on new poles or wires or better reliability; it is just extra dividends alone to a state government. In my view, that definitely a rip-off and a rort.

The concept of gold plating came from my region. One resident, a Burrell Creek farmer, took on a local electricity company on this issue and was successful despite, on the way through, being challenged legally to prove his case. He did so, the state government tentacle backed off and the term 'gold plating' is now part of the language of public policy. Unfortunately, part of the mythology that we have a national electricity law that can be changed or altered by this parliament remains to be corrected. We cannot in this parliament at this moment do anything to amend the laws known as the national electricity law. This tries to address it. Currently, the national electricity law is what is known as a 'uniform' national law, but it is only so by virtue of the adoption of a South Australian act of parliament by all other state governments and territories. The National Electricity (South Australia) Act 1996 has been adopted by other states and territories forming what is known as the national electricity market. The purpose of this bill is to adopt, as far as practicable, the existing National Electricity Law and to make the National Electricity Law actually an act of the Commonwealth—one set of laws that can be amended by agreement to the benefit of all consumers rather than being blocked to the benefit of one state government.

This bill would incorporate as far as possible the existing Australian Energy Market Act 2004. The bill would adopt, in as far as possible, the Australian Energy Market Commission Establishment Act 2004, which is also a South Australian act, to make the commission a statutory body of the Commonwealth. I have brought this bill before the House because there is widespread consensus that the electricity sector has experienced a profound regulatory failure when it comes to network prices. Electricity network prices are determined by the Australian Energy Regulator under the National Electricity Rules subject to review by the Australian Competition Tribunal under the National Electricity Law.

The national electricity objective seeks to balance investment with price. But in recent years that balance has been utterly lost. In a further red herring, governments are failing to deliver the national electricity objective. Some state energy ministers are now blaming the Australian Energy Regulator despite detailed independent reviews that prove them wrong. This has been acknowledged in the Council of Australian Governments communique of 25 July 2012. It was acknowledged by the Prime Minister herself in a speech on 7 August. This issue has been picked up by the Liberal National Party. Wrongly, the Leader of the Opposition on 8 August 2012 was asked: do you think there has been gold plating of the wires and cables in some states? Effectively the response was: it is a federal government regulator. It is Julia Gillard's own regulator so if there is a problem it is her fault. That is wrong. That has been proven wrong by detailed independent reviews.

The Productivity Commission's report titled Electricity Network Regulatory Frameworks, which was released on 18 August, is one such example that I would encourage the opposition to consider when making further statements in this area. The key fact that we need to fix is that the National Electricity Law is a creature of state parliaments. State parliaments are reaping dividends from this market failure. We need to address it and get a uniform national set of laws. It is not a take over. It is trying to get a fair and balanced playing field in the interests of consumers, not in the interests of state governments.

Photo of Josh FrydenbergJosh Frydenberg (Kooyong, Liberal Party) Share this | | Hansard source

Hear hear.

11:48 am

Photo of Ed HusicEd Husic (Chifley, Australian Labor Party) Share this | | Hansard source

Keep it down, member for Kooyong. I am trying to concentrate on a very important issue. The government and a lot of people recognise the need to make reforms to the electricity sector, particularly with the objective of reducing the pressure on household budgets. I have no doubt this is what has motivated the member for Lyne. A lot of what he said in the House back in October—having read his speech—I have some sympathy with. That said, however, the government has indicated it cannot provide support for the bill. The reason for this is—

Photo of Robert OakeshottRobert Oakeshott (Lyne, Independent) Share this | | Hansard source

A big stick.

Photo of Ed HusicEd Husic (Chifley, Australian Labor Party) Share this | | Hansard source

You keep talking about that big stick, member for Lyne. Keep it away. Through the standing Council on Energy and Resources, an energy reform agenda is being progressed, as it has for many decades, cooperatively with other jurisdictions and it has been endorsed by COAG. There are many factors contributing to rising electricity prices across Australia, particularly in my home state. The member for McMahon, who is here in the chamber with me, and also the member for Lyne hail from New South Wales.

Most notably there have been concerns about what is regarded as an over investment in electricity infrastructure, the so-called gold plating of the network. In the shadows of this claim there has also been a lot of focus on the New South Wales government continuing to draw a dividend from their state owned corporations in the generation and transmission space. What has been interesting is there has no doubt been a significant shift in household usage of electricity. You can see that over a number of decades. This has been driven by air-conditioners in particular being a lot more available, and by the use of electricity for hot water heating and for pool pumps. These are the big three drivers of jumps in demand, plus the fact that the size of households has increased. This has meant that networks based on previous demand profiles have been unable to keep pace with changes in demand.

Since 2000, electricity generators and transmission agencies and distributors have been investing in dealing with this issue—bearing in mind that in greenfield sites households already pay for new investment to match predicted demand. A December 2010 report from the New South Wales Department of Industry and Investment, titled NSW Electricity Network and Prices Inquiry found that prices in New South Wales have increased by 43 per cent over the last three years, and they are expected to rise by about the same amount over the next three. The report went on to conclude that there are two main drivers for this. The biggest driver of network costs, as I suggested earlier—with the more than doubling of the annual capital expenditure and increased operating expenditure for New South Wales transmission and distribution businesses since 2004, driven by a growth in demand for electricity, replacing ageing networks, enhance reliability and performance standards—is the escalation of opex. This rapid rate of growth is set to continue for the remainder of the current price period. It is noted in this report that there is an 80 per cent increase in the IPART 2010 determination of regulated retail tariffs attributable to network charges.

The second important driver, which has received a lot of focus recently, is the introduction and expansion of state and national government schemes that encourage the development of renewable energy sources, and the cost of these schemes being recovered from customers through electricity bills, and not funded by taxpayers. These costs are expected to jump sharply in 2011 because of the recovery aims of New South Wales government's solar bonus scheme.

Just to give you a suggestion of the impact, those, as they are passed from the retail customers in Country Energy's areas, may add 10 per cent from 1 July. In the EnergyAustralia and Integral Energy footprints, you can expect price increases of between five per cent and six per cent respectively. So, it is clear we need to have reforms to bring down prices, and we need to do this in cooperation with states and territories. Not having that cooperation would lead to further uncertainty in the market because states have their own energy laws, which I understand the member for Lyne was trying to deal with in the legislation that has been put forward to the House.

I do not have as much time to speak on this issue as I would have liked, but certainly priority needs to be given to ensuring the delivery of agreed market reforms. We do not want to hinder further progress by adding another layer to the mix. We have seen new rules for the regulation of networks, and we would hope that new ways of reducing these prices can be developed.

11:53 am

Photo of Jane PrenticeJane Prentice (Ryan, Liberal Party) Share this | | Hansard source

I rise to speak on the member for Lyne's private member's bill, the National Electricity Bill 2012. Australians want to see real action to reverse the huge increases in electricity prices seen across our nation since 2007. Unfortunately, this bill from the member for Lyne does nothing to address those concerns, and fails to address the real underlying issues that have caused electricity prices to rise. Prices began to rise significantly in 2007 as a result of rising charges for our energy networks, including over-investment in infrastructure such as poles and wires, increases in wholesale energy costs, and other government policies—most notably the carbon tax.

First and foremost, the member for Lyne voted to pass the world's only economy-wide carbon tax. So I do question his genuine commitment towards lowering the cost of electricity for Australians. The carbon tax is expressly designed to make electricity more expensive, and to hurt the hip pocket of Australians. We know that higher electricity prices as a result of the carbon tax are already having a significant impact on Australians. In March a major energy company revealed that 65,000 customers a month are seeking extensions to pay their rising electricity and gas bills. In addition, there is the 14.5 per cent average increase in electricity costs for our manufacturing sector, which only adds to the pressure on jobs. Worse than that, Australia's carbon tax does nothing to help the environment. Instead of making any real difference in Australia, we have to buy almost 100,000,000 tonnes of emissions reduction from overseas at an annual cost to Australia by 2020 of approximately $3.7 billion per year, each year, rising to $57 billion per year by 2050. The Prime Minister promised last December to reduce power bills by $250 a year and to date has done nothing to further that goal. The Prime Minister noted that there had been significant overinvestment in poles and wires, but failed to point out that all of this occurred under decades of state Labor governments and has been noticeably silent on the situation in Queensland. We know that in Queensland in the five years to 2012 capital expenditure on poles and wires increased to more than $11 billion, resulting in an increased debt of more than $6 billion. This debt and consequent interest repayments are passed on to consumers.

As the Newman government noted in its submission to the Senate Select Committee on the Electricity Prices, these costs have been the key driver of electricity price rises over this period of time. The federal Labor government only made this pain worse by imposing the carbon tax. While the vast majority of regulatory responsibility was transferred to the Australian Energy Regulator from 1 July 2010, this is only in relation to investment in electricity distribution. That change, therefore, does not address the many other important policies which have driven up electricity prices. Ultimately I understand that significant work is being undertaken across all levels of government in Australia to address what reforms can be implemented, a process not significantly addressed by the member for Lyne's private member's bill today, nor is that process assisted with the introduction of new taxes such as the carbon tax and the mining tax.

Australians do not currently have a government that is looking after their interests. As the Leader of the Opposition highlighted in his reply to the budget, the Prime Minister guaranteed that there would be no carbon tax under a government she leads, but there is. The Prime Minister guaranteed more than 165 times that there would be a surplus, but there is not, and there never will be under this Labor government. Australia is instead now faced with seven deficits totalling $220 billion. On day one of an incoming coalition government, we will begin the process of removing the carbon tax. Legislation to scrap the carbon tax will be the first legislation to be introduced in the new parliament. The coalition will abolish the carbon tax because that is the quickest way to reduce power prices and to take pressure off the cost of living and job security. The coalition will offer hope, reward and opportunity.

11:57 am

Photo of Michael McCormackMichael McCormack (Riverina, National Party) Share this | | Hansard source

The member for Lyne, who presented this private member's bill, the National Electricity Bill 2012, just asked me, as we were sitting here, how long it would take me to get to the real crux of this. I said that I have it in my introductory paragraph. Make no mistake: the carbon tax is the biggest driver of electricity prices. The member of Lyne knows it, the member opposite knows it, as does everyone else in this chamber. There can be no doubt that the reason electricity prices have started to climb so dramatically is the carbon pricing mechanism.

Honourable member interjecting

I said 'carbon pricing'. The member opposite knows that it is a tax. The member for Lyne, who is sitting beside me, knows that it is a tax and certainly the public know it is a tax. The coalition signalled this before the carbon tax was implemented by the Labor government and since it came into effect on 1 July 2012 we have seen the impact it has had on power pricing.

Honourable member interjecting

There are certainly price rises in your electorate and Labor members who are honest with their constituents—and I am sure they are all honest—if they are absolutely upfront and frank with their constituents, would be telling them that the reason their electricity prices are rising is the carbon tax. The consumer price index figures for the first quarter in which the carbon tax was applied confirmed the impact it had on the cost of electricity and on the cost of day-to-day living. Electricity prices had a 15.3 per cent rise and household gas and miscellaneous fuels had a 14.2 per cent rise. These were the largest quarterly increases on record. How the government can consider such a rise a modest increase is, quite frankly, unbelievable. How rose tinted are the glasses they are wearing?

However, this bill, which seeks to make the national electricity law an act of parliament, has so far received no support from either side of the parliament. The Minister for Energy and Resources at the time this bill was introduced, the Hon. Martin Ferguson, stated:

The states do not control the regulatory authorities that set prices and any suggestion that they do has no basis in fact and is a cheap shot … it is a complex reform that won't be solved by cheap front page headlines.

Mr Ferguson is not the minister anymore—because the Prime Minister is running out of loyal lieutenants, quite frankly, and all the ministers are getting lumped with portfolio after portfolio. There is another one sitting opposite.

The shadow minister for energy and resources, the Hon. Ian Macfarlane, has said that the coalition understands energy market reform is a long-term process and 'fragmented or political attempts to address the issue of rising power prices will have no meaningful impact on the energy sector.'

In my electorate of Riverina, I have been contacted by a number of constituents, on a daily basis, about their ever-increasing power bills and especially the note printed on these power bills stating:

NSW Govt estimates that the Federal carbon tax and green energy schemes add about $316 a year to a typical 7MWh household bill …

Just consider that: households who are already overburdened by rising grocery and fuel costs now are copping $316 in additional costs due to the carbon tax.

In December last year the Prime Minister promised to reduce power bills by $250 a year, and yet, as the member for Kooyong knows, nothing has happened. There was certainly nothing in the budget recently which would assist in bringing power bills down. Indeed, in the budget we see even further costs imposed upon families who are already struggling with household costs. A simple way to reduce power bills to some extent would be to scrap the carbon tax. It is going to be the first order, the first bill, the first priority, of, hopefully, an incoming coalition government to do just that. The coalition has promised that, should we have the good fortune to be given the faith of the Australian people to form government after 14 September.

Mr Oakeshott interjecting

I hear the member for Lyne calling out, and I know he is worried that Dr David Gillespie is breathing down his neck. I know he is worried about the fact that the Nationals are going to take the seat of Lyne, which they will after 14 September. I know how keen David Gillespie is to deal with the carbon tax, the tax that we were promised would never come in but which did, thanks to the government that the member for Lyne keeps maintaining a protection racket for, thanks to the cobbled-together government that he gave power to. That carbon tax will go, thanks to David Gillespie, who will be the next member for Lyne, and thanks to the Tony Abbott-Warren Truss government which will form after the next election.

Debate adjourned.