Tony Smith (Speaker) Share this | Link to this | Hansard source

The original question was that this bill be now read a second time. To this the member for Port Adelaide has moved as an amendment that all words after 'That' be omitted with a view to substituting other words. The question now is that the amendment be agreed to.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

I am pleased this morning to speak on the Competition and Consumer Amendment (Abolition of Limited Merits Review) Bill 2017. But the first question is: how in the world did we get into this mess? How did a nation that's one of the world's leading exporters of coal, gas and uranium, one of the most energy rich nations in the world, a nation that used to enjoy the world's lowest cost electricity, get into a mess where we now have some of the highest electricity costs in the entire world? In fact, in South Australia, they've actually managed to achieve that proud title. South Australia, as unbelievable as it may seem, actually has higher energy costs than places like Denmark and Germany. The world champion, the gold medal winner for the world's highest electricity prices, is South Australia—and yet, here we are, one of the wealthiest and energy-rich countries in the world. We have average households struggling to pay their power bills. We've had a record number—more than a doubling—of households having their electricity cut off, and no more than in South Australia. Their power has been disconnected totally so when they walk home and try to flick the switches on in their house, they simply have nothing.

We have tens of thousands more on payment plans because of the high cost of electricity. We have many who have had to go back to the good old days. In winter, they wear extra clothes and rely on firewood to keep their homes warm. In summer, we have people who abandon their houses because they can't afford to turn their air-conditioning on and they basically go and camp out in shopping centres during the day—this in the richest country for energy in the world.

In the decades and, in fact, in the centuries to come, how we got into this mess will be studied in economics in universities around the world. They will sit there and they will scratch their heads about how we achieved this. One of the reasons that we've achieved this is something that goes under the name of the Renewable Energy Target. When I say 'goes under the name', that is actually an Orwellian name, because it's not a target. It is a compulsory, enforced government mandate. It is enforced by the threat of a government penalty—an extra fine, an extra tax levied on top of electricity retailers in this nation if they do not acquire the correct number of renewable energy certificates. So it's not a target, nor is it about energy; it is only about electricity.

In our market, electricity only contributes about one-third of our carbon dioxide emissions. The so-called Renewable Energy Target has nothing to do with the energy that drives our trucking fleet, passenger cars, aviation or farm equipment. It has nothing to do with the gas that people use to heat their homes or cook with or that industries use. The so-called Renewable Energy Target is actually only about electricity, and it's not about things being renewable, because renewables certainly ain't renewable.

When you look at the coming problems that we have with wind turbine blade waste, around the world it's estimated there will be millions and millions of tonnes of wind turbine blades—which are made up of composite resins, polyesters and fibres—that simply cannot be recycled. Millions of tonnes worth of these so-called renewables will need to be buried in landfill. It is the same thing with solar panels. Solar panels only have a life of 10 to 15 years—so much for their being called renewable. In the near future, the solar panels that were previously rolled out under generous state government subsidies will start to mount up, broken and disused. We'll have to bury millions of useless, broken solar panels in landfill around the country.

What is the cost of this policy? We've had The Australian, to their great credit, recently add up some of the costs and they came to a sum of $60 billion. By 2030, the Renewable Energy Target and various other schemes that this federal government has implemented on both sides of the House will cost $60 billion. That's around $2,500 for every single man, woman and child in this country. At $2,500 per person, the average household of four is looking at a cost of something around $10,000.

This is only the federal government cost. On top of that, we have the state government costs. We know the cost of their jurisdictional feed-in schemes. Last year they added $772 million to consumers' electricity bills. These schemes are nothing more than a reverse Robin Hood—taking from the poor, forcing up their electricity prices, and giving to the rich, green people. Take the Grattan Institute's report into solar energy titled Sundown, sunrise: how Australia can finally get solar power right. They said:

By the time the subsidies finally run out, households and businesses that have not installed solar PV—

mainly the lowest income earners in this nation—

will have spent more than $14 billion subsidising households that have.

It is a $14 billion reverse Robin Hood. They concluded:

… lavish government subsidies plus the structure of electricity network tariffs means that the cost of solar PV take-up has outweighed the benefits by almost $10 billion.

They are just the costs of the direct subsidies. They're also the costs of the hidden subsidies—the additional costs on the network of hooking all these new wind farms and solar panels up to the grid.

We know that in western Victoria, where there are plans to put more wind farms in, the cost to improve the grid to enable that is over $1 billion. That cost simply goes on to household bills. But the real cost is the cost of the hidden subsidies and the distortion of the market—the distortion that artificially forces dispatchable power out of the market and replaces it, by a forced government mandate, with intermittent and unreliable sources of power. This distorts the entire market. We have seen promises on the cost of wholesale electricity—and if someone comes to you and starts talking about the price of wholesale electricity, either they do not know what they are talking about or they are a spiv that is trying to con you, because the cost of wholesale electricity is only one component. All the experts told us that, if we have this renewable energy target, the cost of wholesale electricity will go down. It hasn't gone down; it's doubled. We have a cost of wholesale electricity at the moment of over $100 a megawatt hour.

What most Australians don't understand is that the renewable energy target ratchets up year after year after year, to 2020. This is because of the requirement we put upon the electricity retailers to purchase renewable energy certificates. Those renewable energy certificates are generated by wind farms, for example. When they generate one megawatt hour of electricity they are entitled to create one renewable energy certificate. A certain quantity of those certificates must be purchased by the electricity retailers. Last year the requirement we had was that over 21 million certificates had to be bought. This year, 2017, it has jumped up to 26 million certificates that need to be bought. The current market price of those certificates is over $80 per megawatt hour each. If you simply do the sums—$80 per megawatt hour for each certificate by 26 million—you come up with something in excess of $2 billion. That is the cost that is added to the price of consumers' electricity. Next year we require the retailers to buy 28 million certificates, and the year after it will be 31 million certificates. By 2021 we will require them to purchase another 33 million certificates. On from there, from 2021 to the year 2030, we will require them to still purchase 33 million renewable energy certificates every single year. So, over the next decade, that is 333 million certificates that must be purchased by the electricity retailers, which will simply push up the price of electricity to consumers in this nation.

The problem that we have in the market is that we do not have enough dispatchable power, but you must have dispatchable power at least in excess of your peak demand. We have seen coal-fired power generators closed down—in fact, not only closed down but blown up by state Labor governments. If you were fighting in a war, the first thing you'd do would be try to target and blow up your enemy's coal-fired power stations. We have Labor governments in Australia that have that as a policy, and that is the reason we're short of dispatchable power. There has simply been no incentive for business to put more money into investment to replace that dispatchable power, because of mad policies like the renewable energy target. So we're left with a shortage.

And why won't business invest? They say, 'Certainty.' Who is going to invest and put their capital into a coal-fire generating power station that needs a return over at least 20, 30 or 40 years? By then they'll know there is a chance of some mad, left-wing, Green-Labor government that potentially could get into office and sit on the this side of the House and pull the rug from underneath them. We see complete and utter confusion from Labor on this point. We look at the amendment moved by the member for Port Adelaide. He talks about a national energy policy causing an investment strike in new electricity generation—an 'investment strike in new electricity generation'! Yet, in the same speech he talks about the renewable energy target underpinning substantial investment in the electricity market. He doesn't seem to know whether he's Arthur or Martha. It shows Labor don't understand it or they're misleading the Australian public.

There is ample investment in more unreliable and intermittent power in this nation—something like $6 billion worth of investment is underway now—but that's not what the market needs. The market needs investment in dispatchable power, which you can turn on with the push of a switch. We have the member for Port Adelaide saying that coal is a legacy technology. Let's pray that this shadow minister is never the minister for energy in this country. He talks about coal as a legacy technology—maybe he should tell that to the Chinese with their 28,000 megawatts of coal-fired generation under construction; or the Indians with 176,000; the Turks with 69,000 megawatts; the Indonesians with 46,000 megawatts under active development; or the Japanese with 43 new coal-fired power stations. (Time expired)

Keith Pitt (Hinkler, National Party, Assistant Minister for Trade, Tourism and Investment) Share this | Link to this | Hansard source

In summing up, I thank all members for their contribution to the debate on the Competition and Consumer Amendment (Abolition of Limited Merits Review) Bill 2017. The legislative package will amend the Competition and Consumer Act 2010 to abolish the limited merits review regime. However, information disclosure decisions made by the Australian Energy Regulator, the Economic Regulation Authority of Western Australia and the Australian Energy Market Operator will not be included in the amendments and will still be subject to the limited merits review to prevent the Australian Competition Tribunal from reviewing certain decisions under the national energy laws and to ensure that decisions made by the Australian Energy Regulator under those laws are not subject to merits review by any state or territory body. This is intended to prevent energy network businesses from using this appeal mechanism to increase their regulated revenue, which results in increasing costs to consumers.

Since it was introduced in 2008, the limited merits review regime has enabled around $6.5 billion more to be passed on to consumers than would have been the case if the Australian energy regulator's decisions had been upheld. Not once has an appeal by a network business delivered lower costs for consumers. A strong regulator is the best way to reduce pressure on network costs, which make up around half of the average electricity bill. We will be providing an additional $67.4 million to the Australian Energy Regulator to empower the regulator to put downward pressure on energy prices. The government is committed to reducing pressure on energy prices through the introduction of this bill. I commend the bill to the House.

Tony Smith (Speaker) Share this | Link to this | Hansard source

The original question was that this bill be now read a second time. To this the honourable member for Port Adelaide has moved as an amendment that all words after 'That' be omitted with a view to substituting other words. The immediate question now is that the amendment be agreed to.

Question negatived.

Original question agreed to.

Bill read a second time.