Wednesday, 5 December 2018
Treasury Laws Amendment (Prohibiting Energy Market Misconduct) Bill 2018; Second Reading
I'm just going to continue where I left off earlier today.
The government will also underwrite new firm, low-cost generation, which is particularly important for Australia's commercial and industrial users, who the ACCC found were struggling to get medium- to long-term contracts. This program will be technology neutral, as recommended by the ACCC.
The bill we introduce today is an essential part of this package and will address energy market misconduct, improve competition and bring down energy prices for Australian consumers.
The government has directed the ACCC to monitor retail prices, wholesale bids and contract market liquidity in the National Electricity Market between 2018 and 2025 and announced that this will be backed up by a series of remedies where the ACCC identifies misconduct by electricity market participants.
This bill will establish the misconduct to be prohibited and the targeted, proportionate remedies to apply in respect of misconduct in three key areas.
First, the retail market: in the event of a 'sustained and substantial' reduction in supply chain costs, retailers will be required to 'make reasonable adjustments' to their retail price offers, including to households and small businesses.
The explanatory memorandum makes clear that retailers will not be required to pass on small or short-term cost variations that might last a week or a month. Rather, if they enjoyed a sustained and substantial cost reduction, they need to pass it on.
Second, the wholesale market: generators will be prohibited from gaming the spot market. This can occur in a number of ways—for example, by scheduling discretionary maintenance at high summer demand periods with the specific purpose of causing a spike in prices for their other generators or by making low bids that were designed to discourage other companies from bidding into the market and only then, at the last minute, increasing the price of their bids.
The ACCC has specifically recommended that rules around false and misleading bids be strengthened, and our legislation does exactly this by prohibiting bids that are fraudulent, dishonest or in bad faith for the purposes of distorting or manipulating prices.
Third, the contract market: energy companies will be prevented from withholding hedge contracts for the purpose of substantially lessening competition, which draws on existing concepts of section 46 of the Competition and Consumer Act.
Unlike gentailers, smaller retailers are unable to manage the risk of volatile spot prices without a hedge contract.
The measures in this legislation are designed to ensure financial market liquidity and facilitate competition in the energy market. The ACCC has already recommended a liquidity measure for South Australia. This will complement it and apply nationally.
In each of these markets—retail, wholesale and contract—the ACCC will be actively monitoring behaviour. Where companies are in breach, they will act.
The legislation sets out a graduated set of penalties that can apply in the event of misconduct. The ACCC will be able to issue a warning notice, accept an enforceable undertaking or seek a financial penalty of up to the greatest of $10 million; three times the value of the total benefit attributable to the conduct; or 10 per cent of the annual turnover of the corporation in the 12 months before the conduct occurred.
For the most egregious conduct, the ACCC will be able to recommend that the Treasurer either issue a contracting order or pursue a divestiture order in the courts.
A contracting order will be able to be made only following a breach of either the contract liquidity or wholesale conduct prohibitions.
A divestiture order will be able to be made only following a breach of the wholesale conduct prohibition.
Both are sanctions of last resort.
In respect of these orders, companies will be given a chance to explain their conduct before such an order is made. A contracting order would require generators to make reasonable offers in the contract market, and the divestiture order could see companies required to sell an asset, allowing them at least 12 months to do so.
The Treasurer may apply to the Federal Court for a divestiture order only when the ACCC and the Treasurer are satisfied that the order has a net public benefit and that it is proportionate to the breach, namely that it is necessary to prevent such conduct occurring in the future and that no other remedy would achieve the same outcome.
These laws apply to government owned and privately owned corporations. In the case of a government owned corporation, a divestiture order would not prevent the relevant asset from being divested to another government owned corporation, provided that the two were in genuine competition with each other. This would allow the relevant asset to remain in government ownership while still addressing the misconduct in question and promoting competition.
The government will implement the default market offer and reference bill, to be set by the AER each year, through separate legislation. The legislation will also provide for the AER to make the necessary instruments as a part of the price determination process. The AER will be able to share this information with Commonwealth agencies.
Full details of the measure are contained in the explanatory memorandum.
No, I was watching the tail end, and I just want to clarify that the Manager of Opposition Business moved that the debate be adjourned. The Leader of the House is quite right. The standing orders ensure that the debate is automatically adjourned after the second reading speech.
To the point of order, Mr Speaker: after the second reading speech from the minister on every bill, the chair asks for someone to move the adjournment, someone stands there and moves that the debate be adjourned, and that question is then put to the House.
What the Leader of the House is suggesting is that on every piece of legislation that has gone through this House we have followed the wrong procedure. I put it to you we have not, and what is unusual on this occasion is that the government is dividing against that standard motion.
Certainly what I saw, and some preliminary advice I've had, is that this division should not be taking place, because the debate will be automatically adjourned. I don't want to waste the time of members. I really don't. I won't. Obviously I can't be in the chair at every instance, but this division, from what I can see, should not be taking place.
Mr Speaker, to the point of order, if I may: the easiest way to solve this problem is to call the vote for the ayes, in which case, of course, we won't insist on a division, because we're happy for it to be adjourned, because I have a motion to move.
Well, if the point is that those who called 'no' no longer want a division, there is no point in proceeding.
Honourable members interjecting—
No, I tell you what: you're here now, but you won't be here in 10 seconds. So, if those who called 'no' are no longer calling for a division, I'll call the division off, and the question is resolved with the ayes.
That so much of the standing orders be suspended as would prevent the resumption of debate on the motion that the Treasury Laws Amendment (Prohibiting Energy Market Misconduct) Bill 2018 be read a second time being made an order of the day for a later hour.
I'm introducing the suspension of standing orders through a contingent motion, which means of course it doesn't require an absolute majority, because this government is absolutely committed to passing this divestment legislation at the earliest possible opportunity in order to get it into the Senate so that the Senate can receive its committee report and pass legislation in the February sittings of the parliament. If we do not pass this divestment legislation in the next 48 hours or less, we won't be able to pass it until February next year and the Senate won't pass it until the budget session next year. So, the longer this takes to pass, the more the energy companies will be able to keep thumbing their noses at consumers around Australia. We would like to see the bill passed so it can go into the Senate, and then it can be debated in the Senate in February and be passed in February, and then the energy companies will be required to listen to the consumers and to the government, directing them to reduce their electricity prices. So everyone who votes against the suspension of standing orders is essentially saying that they want to delay this legislation until at least April next year, and everyone voting in favour of this suspension of standing orders is saying, 'Let's get on with it as soon as we can and pass legislation through the Senate and the House of Representatives by February next year and start taking the big stick to the energy companies.'
This stunt shows just how low this government has sunk when it comes to its credibility, just how pathetic and desperate this once proud government was. This is a government which doesn't have an energy policy and now has thrown out all conventions of this House as a stunt. I move:
That the words 'for a later hour' be deleted and replaced with 'on the first sitting day of 2019'.
I do so because that's the proper process of this parliament. That's how good policy is made. That is the proper process that the Australian people expect of the government.
Let's be clear about what's happened here and what this government is trying to do. Let's run through this pathetic attempt by this government to distract from its complete failure when it comes to energy policy. This is a government for whom every energy plan has collapsed; every energy policy has been destroyed by its own side. It's come up with a pathetic alibi of a policy called divestment. It had to be rewritten overnight in the Treasury because the government didn't have confidence in the Treasurer's drafting of the proposal. It had to be completely reframed to make it constitutional, to make it comply with the Constitution. I pay tribute to the officials in the Treasury who had to work so hard to rewrite this legislation.
But I say with all due respect: the House has not yet seen the legislation properly. The Treasurer rose to his feet just before question time to introduce the legislation. He didn't even finish his introduction before question time. He had to finish it off a moment ago, just then. So the legislation is not the legislation that was issued for consultation; it is completely different. Nobody has seen this legislation. The industry hasn't seen the legislation, the opposition hasn't seen the legislation and—guess what?—the Liberal and National party rooms haven't seen the legislation either. They can't have, because it was introduced about three minutes ago. So these Liberal and National lemmings are going to vote to bring on legislation they have not seen, and they are going to vote for that legislation that they have not seen.
The amount of trust I have in this government to get this right hovers roughly around the level of zero, given its incompetence thus far. Frankly, this is also about good process—good, rigorous government process. We can argue about divestment and whether it's a good thing or a bad thing. We'll have that debate; we welcome that. But I'll tell you what I want to know: when will good government start in Australia? The now Leader of the House once used to believe in good government. I suggest the Leader of the House has a listen to these words, because he might find that they are words he would agree with! He has said:
Parliament shouldn't be about racing through legislation. Debate on important legislation like the Budget should not be shoved aside, it should take place in the Main Chamber.
He then said:
The Australian people expect Parliament to sit a full time schedule and consider all items diligently. A Coalition Government will not rush its Parliamentary agenda …
He was full of good ideas when he was on this side of the House, wasn't he? But it has all evaporated to nothing, just like their economic credibility.
We will have no part of this very poor process, and we will have no part of this very poor legislation either. We're not going to engage in your pathetic little stunts. If you want to debate this, we will debate it. But let the Australian people be clear: this is a low point for this government. This government has hit a nadir today. This Abbott-Turnbull-Morrison government has done some pretty pathetic things over the last five years, but this one takes the cake: bringing on this legislation which is an excuse for inaction and which will make electricity more expensive. This legislation will chill investment and will make energy more expensive.
Where is the economic modelling? This government likes to ask other people for economic modelling. The legislation has only just been laid on the table of the House. I know that nobody has been through it. I know that the Treasury has just completely rewritten it, because the Treasurer had to make policy on the run because the Liberal Party and National Party backbenchers were in revolt. I dare say, if somebody goes through this legislation, they will find errors, and those errors will be on the heads of those opposite, because there will be no opportunity for the House to review the legislation. There will be no opportunity for industry and economists and experts to go through the legislation and point out unintended consequences. There will be no opportunity for people to have their say. The government wishes this legislation to be voted on today. It wants this House to just vote for it, sight unseen.
The Leader of the House says, 'What about the committee process?' I didn't know he was proposing that the bill be referred to a House of Representative committee. We're the ones voting on it today. We don't sit in the other house; we have no opportunity to send it to a Senate committee. All we have is the opportunity to vote yes or no on this legislation.
This is a government falling apart at the seams—I see the Treasurer has joined the energy minister at the crossbench; anything could happen with this government! I wouldn't put it past them. Anything is possible. We've got to Wednesday and they haven't lost one yet. That's an achievement for this government. It's better than last week, but anything could happen. As this government falls apart, it should not throw out the Westminster conventions and the traditions of good government in this House, which have stood this country well for more than a century. It should not throw those out.
They used to be the conservative party, which used to actually believe in parliamentary traditions and conventions. Guess what? Some parliamentary traditions and conventions are symbolic; they are simply for show—important symbolism, but nevertheless symbolism. This one is actually a convention of substance. It means the House should be able to consider legislation properly, carefully and in a methodical fashion. That's what this convention is about. That's why the standing orders say that the debate must be automatically adjourned—as the Leader of the House acknowledged earlier, after his little error of calling a division he didn't mean to call. As far as the Leader of the House's mistakes go today, that is one of the smaller ones. He's having a shocker of a day. He has lost control of the parliament, but the government should not lose control of the process.
It is nothing short of a disgrace to bring this legislation on like this, in this rushed fashion. What happened to stable government? What happened to the promise that if you voted for the Liberal and National parties you'd have proper, stable government with a Prime Minister for a term, and proper cabinet processes?
We don't know if these rushed changes, rewriting the legislation, have been to cabinet overnight. We would have no way of knowing. The Treasurer is simply flailing at the job as he goes about making up for his errors, forced by a delegation of backbenchers to rewrite the legislation on the run. The member for Curtin has called them out, pointing out that it was an affront to Liberal traditions, the principles of free enterprise and everything this once great party stood for, but I'll tell you what else it's an affront to: all those consumers battling high energy prices. This government, for a stunt, wants to make it worse for them. They want to chill investment and put upward pressure on power prices as they pathetically flail around and politically fail in their task.