House debates

Tuesday, 24 October 2017

Grievance Debate

Energy

6:40 pm

Photo of Rick WilsonRick Wilson (O'Connor, Liberal Party) Share this | | Hansard source

Given that this debate is about grievances, Mr Deputy Speaker Goodenough, and as you come from Western Australia, you will understand where I'm coming from this evening. Back in the good old days, it was often hard to find a grievance debate topic. We had the perennial topic of the GST, but in Western Australia we had a good, stable conservative government. We saw our mining industry left alone to get on and do what it does best: produce the wealth of the state and employ a lot of people on very good wages. We had agriculture going very well, and it still is. We had a regional development regime in Western Australia which provided matching funds for our Commonwealth regional development scheme, and they certainly honoured those commitments.

But that all changed on 13 March. We had a state election that had been fought largely on the privatisation of Western Power. The Western Australia Labor Party, to their credit, ran a very successful scare campaign on the privatisation of Western Power. I'd like to quote from the now Premier, Mark McGowan. On 7 March he said:

Everyone knows that when you privatise State-owned utilities, power prices go up, and services go down. We've seen it time and time again.

Mr McGowan said that less than a week out from the election. We saw a resounding victory to the Western Australia Labor Party, and they formed government. Within weeks of forming government they announced an increase in power bills of 11 per cent, equating to around $169 per household per year.

So we had, just prior to the election, the now Premier assuring Western Australians that prices would go up under a privatised Western Power, and within weeks of him winning government he pushed power prices up by 11 per cent. That will have a big impact on Western Australian families and Western Australian businesses. On top of that, other utility prices, like water and sewerage, went up by six per cent. So there were major hikes to family budgets. And they had previously promised there would be no tax increases—but we'll come to that.

I want to touch on the coalition's energy policy here at Commonwealth level and the National Energy Guarantee, which has been modelled by industry experts. The most well-regarded and well-credentialed people in the industry have modelled that electricity prices would come down by between $100 and $115 a year. This has been ridiculed by the opposition as being insignificant—a hamburger a day or something. But I think most families would appreciate that money in their pockets. You can contrast that with the modelling that we've seen today in The Australian, which indicates that, under the Labor Party's 50 per cent Renewable Energy Target, we would see increases in household energy bills of $200 per annum. If you take the figures on face value, you would say that's a $300-a-year turnaround. But, as we all know, modelling is flawed and modelling over those sorts of time frames rarely gets the numbers right. But what I would say is: have a look at the trajectories. With our policy, the trajectory is down, and that's something that we haven't seen for a long time in household or, indeed, business electricity prices. Under the Labor Party's policy, the trajectory is up. When you're going to subsidise the renewable energy industry by a total of $66 billion between now and 2050, it's just logic that prices must go up, because that $66 billion comes straight out of the pocket of the consumer.

In addition to that, we saw in today's media the remarkable Kevin Rudd gift, the windfall, to renewable energy of between $3.8 billion and $7.5 billion. These were contracts that had already been signed on the basis that the subsidy under the Renewable Energy Target would end in 2020. At the stroke of a pen, then Prime Minister Rudd—who has written a book, and we all look forward to seeing that book in full—gifted those renewable energy companies between $3.8 billion and $7.5 billion. They were contracts that had already been signed; they'd already made the commitment to invest. When I say that the then Prime Minister gifted those energy companies those enormous amounts of money, it was quite easy for him to do because the gift came from individual energy users: everyday families in this country. It was an absolute disgrace. The Labor government can always be guaranteed to deliver higher energy prices for Australian families.

The new Labor government in Western Australia, apart from putting up charges, broke a direct promise in their attempt to increase gold royalties. In 2015, up in Kalgoorlie, now Premier Mark McGowan stated:

It's basically a waste of time to put up the royalty because it impacts employment and jobs and the health of the industry for limited benefit … We're not going to do it.

Admittedly, that was in 2015. But there was no retraction of that promise, or no indication prior to the election that the Labor Party were going to increase the gold royalty. So it came as an enormous surprise and disappointment to the industry that the Labor Party decided in its first budget that it would attempt to raise the gold royalty from 2.5 to 3.75 per cent.

For those people who don't understand the gold industry, although the gold price is quite strong at the moment, there are a lot of projects out there, between 15 per cent and 20 per cent, that are very marginal. They're not making an enormous amount of money at today's price. They're keeping their heads above water, but it wouldn't take much of a move in the gold price for those projects to close down. Industry estimates are that around 4,000 jobs would be directly affected if the gold price moved that small amount of $20 or $30 to $50 an ounce.

In addition to that, it was proposed to cut the exemption to the royalty for small producers on their first 2½ ounces, which is worth about $150,000. Now, there are a lot of small gold producers—two-, three-, four-man shows. They're very important to the industry because they go out prospecting and they spend a lot of time discovering new deposits which they often are lucky enough to then onsell to a larger, more capitalised producer who can exploit that resource. So it's very good news that, in a disallowance motion, the WA Liberal Party, combined with other members of the upper house in Western Australia, have headed off this gold tax which would have destroyed a large portion of the industry, which is mainly concentrated in my electorate of O'Connor, where we produce about 70 per cent of the gold. The 35,000 people that live and work in the goldfields would have carried a very disproportionate burden in the Labor Party's first budget. So I'm very pleased with that.

But I can't talk about the gold tax without touching on the Western Australian Nationals position in this debate and the rank hypocrisy that they showed. The WA Nationals—with due respect to my good friend who's on duty here tonight—went to the last election with, and still have on their books, a $5 per tonne increase in the tax on iron ore. Today's price of US$69 per tonne of iron ore represents around six per cent of the gross value of iron ore. If you applied that to the gold industry, at $1,600 an ounce, a five per cent increase in the royalty or tax would equate to US$96, or A$123, per ounce of gold. So, at the same time the WA Nationals had a policy on their books to tax iron ore at six per cent of its gross value, they were saying they would die in a ditch defending the gold royalty. That is rank hypocrisy, and they should be called out for it.

While we're on the subject of higher taxes, we now see the Labor government increasing payroll tax—the most iniquitous tax of all. It is a tax on employment. I know that they think that, by targeting companies with over $100 million in turnover, they'll hit the big end of town, but I can assure you that those costs will be passed down the line to the contractors and small operators that work in those industries.