Wednesday, 5 December 2018
Treasury Laws Amendment (Prohibiting Energy Market Misconduct) Bill 2018; Second Reading
I'm not going to rule; I'm just going to try to explain something. There has been a contingent motion moved and passed and the standing orders have been suspended to allow this to occur. We're now on the second reading. That's exactly what the House has been deciding.
The contingent notice of motion suspended standing orders to allow a motion to be moved that the second reading would be made an order of the day for a later hour. That suspension allowed the Leader of the House to then move the motion that it be made an order of the day for a later hour. That then happened, and the House has resolved that it be made an order of the day for a later hour. The Clerk has then, in terms of order of government business, said that this is, in fact, not at a later hour but immediately the next item of business. Now that it's the next item of business—
I'm not claiming the Clerk has done anything inappropriate. This is the first moment that the debate has been resumed. The suspension had nothing to do with whether or not the debate would be called on immediately. It was simply whether or not that was going to be allowed to be done at a later hour, rather than having to wait for tomorrow. Now that we've commenced, I will move that the debate be adjourned.
The purpose of the contingency motions and suspensions of standing orders is to allow the House to take an action. The correct motion to effect that action is the motion that the second reading be made an order of the day for a later hour. That is not anticipated to be a later hour during the day or the next day. It's to be the next item of business. So, if the Manager of Opposition Business were correct, then there would be no point in moving the contingency motions. There'd never be able to be a suspension of standing orders to allow an immediate debate because somebody in the House could keep consistently moving the debate be adjourned. So it would actually negate the whole purpose of a suspension of standing orders, and that wasn't the intention, of course, of the standing orders—
Honourable members interjecting—
The Leader of the House is referring to a motion that he did not move. He did not move that the next item of business would be the second reading motion. He did not move that. He simply moved that the resumption on the motion that the bill be read a second time would be made an order of the day for a later hour, and that was carried. That gave the government the flexibility to decide whether this would be the next bill or whether it would be a later bill or whenever it would happen. Whenever they bring on any bill, at that moment we are allowed to move that the House be adjourned, and I am moving that.
I'll address the matter in this way. Certainly, it hasn't been the practice for this to occur with other contingent motions, and I think the Manager of Opposition Business would need to concede that. I understand the point he's making about 'a later hour'. He's conceded that it has now been called on and we're now into the debate, and what he's seeking to do is adjourn the debate straightaway now that we're into it. Clearly, it would be unworkable, and I certainly would not allow this motion to be moved continuously, otherwise no work would be done. So I'll allow this motion to be moved, but it'll be decided and decided once.
This is the legislation that the House is being asked to vote on. I assume that every member opposite, by which I mean the government, has read this legislation, 33 pages long. This is the explanatory memorandum for the legislation, 109 pages long. If government members are doing their job, they've all read it and they're all aware of what's in it. It has been lifting the standards of those opposite, I note. If those members opposite have read it, they'd be aware of the interventionist nature of the legislation they are not only proposing to vote for but also proposing to ram through the House in breach of all protocols, conventions and understandings. That's what this so-called conservative government is doing: throwing out years of convention and years of understanding of conventional economics.
It was bad enough before this afternoon, when the government was simply proposing to introduce legislation different to that which was consulted upon. The government released draft legislation. It was out for a very short period of time, a few days, for consultation. Business and those affected had around three days to provide their response to the legislation. Three days is tight, but I tell you what: it is better than zero minutes, which is the chance for consultation that the government has now given the industry
I have an advantage. As a member of parliament, I have the legislation. I went up to the table to get it. I confess to the House that I've not yet read it. It was only introduced a short time ago. I've had a chance to skim through it. Nobody outside this building has read it. Nobody outside this building has had the chance to analyse it. The truth is neither have government members opposite. They haven't read it. It hasn't been to the Liberal and National party rooms. It hasn't been through their normal, proper processes. This legislation has not been to the party room because they didn't have it. Was this legislation tabled before the Liberal and National party rooms? Did they have the chance to go through the 109 pages of the explanatory memorandum? Did they have the chance to go through this legislation clause by clause? The fact of the matter is they did not. They know it. That's the fact. They didn't have the chance to go through it. This was bad enough. Industry and business were concerned enough about this before this charlatan excuse for a government did this stunt of trying to force it through the parliament this afternoon.
A couple of days ago there was a joint statement from the Australian Energy Council, the Australian Industry Group, the Australian Petroleum Production & Exploration Association, the Business Council of Australia, the Energy Networks Australia and the Energy Users Association of Australia. They said:
Australia's business community and the energy sector urge the Australian Government to abandon proposed legislation that will impede the broader investment environment in Australia and specifically discourage badly needed investment in the energy sector.
Let's have another look at those people who co-signed this statement. The government, and this poor excuse for an energy minister, will say, 'It's just big business—those evil people in big business.' The Energy Users Association are the people who represent the big consumers of energy. I would have thought that if this legislation was going to put downward pressure on prices the Energy Users Association might be rather in favour of that. The big energy users across the country probably think that's a good idea. The fact of the matter is that the Energy Users Association aren't stupid. They know that this legislation will, in fact, put upward pressure on prices because it will crimp investment.
When you've got a coalition of the energy generators and the energy users saying that this government has got it terribly wrong, you would think it would give this government pause for thought. It might give them a moments reflection. What does this government do? They say: 'No, we're going to double-down. We're going to make it worse by completely rewriting the legislation overnight in the Treasury—pulling an all-nighter down at the Treasury rewriting the legislation—at the government's behest.' I have every confidence in the Treasury, but with the best will in the world there may well be mistakes in this legislation. Who would know? Nobody has seen it before today. They have made a bad situation very much worse.
The signatories to the statement go on to point out just how bad this legislation is, and I hazard a guess that they continue to have very significant concerns with the legislation as it has been redrafted. A short time ago, the Australian Energy Council noted:
We are disappointed the Government has introduced this Bill into the Parliament, not only because it represents unprecedented market intervention, but also because of the secretive way the Bill has been developed without any reasonable consultation or consideration of its impacts.
They went on to say:
This Bill, if passed, will have far-reaching consequences beyond the energy industry. And yet, despite these ramifications and without the support of any industry body, consumer group or even its own regulator, the Government is pressing on regardless.
The ACCC concluded there was no need for these intrusive powers in the already heavily regulated energy market. It is disappointing that we are not focusing on implementing the positive recommendations in the ACCC Report which would actually improve market transparency and price outcomes for customers.
Instead the ACCC's recommendations have been pushed aside in favour of heavy-handed and poorly drafted market interventions.
This is all the Energy Council—
There remain constitutional issues with the Bill and it is devoid of detail, uncertain and vague to the extent that market participants could not be confident about how to comply with it.
Given the Government says it wants to lower prices and encourage investment it is hard to understand why this Bill, that would achieve the precise opposite, is necessary.
The Bill if passed would only raise risk and costs, leading to higher prices for Australian homes and businesses.
We urge the Government to reconsider the Bill and instead return to negotiations with industry to deliver better outcomes for customers.
That was issued at 4.40 pm today. Perhaps the Energy Council did not realise at that point—and why would they have?—that the government was virtually, as that statement was being released, doubling down and not listening to the Energy Council, not returning to consultations but seeking to ram the legislation through this House.
I've said before that this legislation is more in keeping with what you would see in Venezuela than what you would expect in Australia.
I don't think the Venezuelans would have adopted this process. This process is more like that in dictatorships we see around the world where sham legislation is rammed through a parliament. This is sham legislation from a ramshackle government—a government falling apart before our eyes. But this legislation has very significant ramifications for consumers.
If this were a good idea, you would think it might have been recommended to the government by somebody—in fact, anybody might have recommended this to the government. We know that the ACCC didn't recommend it to the government, and the Prime Minister was disingenuous and, frankly, dishonest when talking about the ACCC's role in this before. The chairman of the ACCC said before the Senate that the ACCC had considered divestment powers and had rejected them. That's not how the Prime Minister characterised the ACCC's view before—that's not an accurate reflection of what the ACCC was doing. The ACCC explicitly rejected divestment powers as an option.
I'm a former minister for competition policy. Competition policy has been regularly reviewed in Australia. There have been eminent Australians reviewing competition policy, making recommendations for its updating. There was the Hilmer review, the Dawson review and, most recently, the Harper review. Did any of those reports recommend divestiture powers for the government or for the ACCC? Did the Hilmer report recommend that? Did the Dawson report recommend divestiture powers? Did the Harper review recommend divestiture powers? No. Silence from those opposite is the answer, because they know that none of those reports recommended those divestiture powers be implemented. The case is that this is a government which makes it up as it goes along.
It's not only the fact that the experts have rejected divestiture powers—economists and lawyers, who point out that this still has problems with the Constitution. I'm not a constitutional lawyer; I'm not a lawyer at all, for that matter. But, when constitutional lawyers identify a problem, it should, you would think, give the government pause for concern, reflection, that maybe complying with the Constitution would be beneficial and would be a superior way of doing things, and that being in breach of the Constitution would be a problem for a government. No, it doesn't make these guys slow down. They double down and move faster.
What we've got is industry group after industry group pointing out that this will do nothing to reduce power prices and will, in fact, make them higher. We saw Jennifer Westacott in The Australian Financial Review yesterday saying:
The principle that governments can misuse their power to break up companies sets a dangerous precedent that will deter investment across the economy.
This will do nothing to solve high power prices for families and businesses struggling to pay their bills today.
Ms Westacott confirmed and strengthened that view today in The Daily Telegraph. The Ai Group chief executive, Innes Willox, after the rewriting, said that industry still held grave concerns about the powers, despite the changes, and he implored the government to instead re-embrace the National Energy Guarantee to give industry the investment framework that it craved and that would, in time, bring down power prices. He said that energy and climate policy had been 'the worst piece of policy in a couple of generations'. We certainly agree with that in relation to the last five years. He said, 'The NEG at least gives us a pathway out.' That is right.
The Leader of the Opposition has made it clear that we are happy to support a National Energy Guarantee. We're happy to sit down and negotiate with you. We'll just have none of this nonsense, this drivel that we had from the minister at the table, that it's about a 45 per cent target. A National Energy Guarantee—as the minister should know—is a framework; it's a mechanism. The target can be set by the government of the day—and, as we stand, they are still the government, although they don't behave like it. This mob opposite are still technically the government of Australia, even though they have given up governing. Even though they are imploding before our eyes, they still hold their commission as the government. They haven't had the courage to hand it in, even though they probably should. The fact of the matter is that the government of the day set the target, and the National Energy Guarantee could be a framework for which the government of the day could set the target. If they want a lower target than the Labor Party does, they could set it. Then, if there were a change of government, after the election, it could be reviewed as part of the National Energy Guarantee. But no: the government are against the National Energy Guarantee, when just a few months ago they were telling us that it was absolutely vital to put downward pressure on prices.
I doubt that the government is going to provide many speakers on this bill, because why would any 'true Liberal', to coin a phrase, want to associate themselves with this piece of interventionist nonsense? So, I doubt that we'll get many government members. But if there were a government member willing to put their name to this piece of nonsense that the House has before it, this legislation that was hastily drafted and is not in keeping with good and proper government, they might explain to us who recommended this. Did the ACCC recommend it? Did the Dawson, Harper or Hilmer review recommend it? Did any review of competition policy or energy policy over the past two decades recommend it? Did anybody recommend it? The minister at the table is welcome to elucidate and share with the House where this idea came from. Who recommended it to the government? I accept that the government can come up with its own ideas. It doesn't need them to be recommended. But wouldn't you think that at some point, with all the discussion there's been about energy policy in Australia—with all the debate, with all the views that have been expressed—somebody somewhere who's sensible would have said: 'Do you know what we need? We need a big stick. That's what we need. We need a slogan, and we need the government of the day to be able to force the divestiture of the energy companies.'
The fact of the matter is that this is poor policy made up by a government and a minister, who's at the table, who's completely out of his depth when it comes to this.
He's an L-plate minister who's simply not up to the job, and neither is the Treasurer. We've got a government that is pathologically incapable of giving the country an energy policy and will chill investment. It will have a chilling effect on investment, which is the worst we have.
The Sherman act is not an energy-specific act. This government seems to think that a principle established in the competition law of another country which is not industry specific and is reserved for the most grievous breaches of anti-trust law and has been implemented only in relation to Standard Oil and AT&T—the most grievous breaches of anti-trust in the United States. Divestiture policy has not been part of the Australian competition policy landscape. It simply has not. But, if it wanted to have a debate about making it part of the Australian competition policy landscape, then we could have that debate. We could discuss the pros and cons. We could have a proper review. We could look at the way it should be done. It's telling that the government has only done this for energy companies—
'There's a reason for that,' says the minister. Well, the reason is that this is the thin end of the wedge. Next time there's a little bit of a political problem with supermarkets, let's have the Coles and Woolworths divestment power! Then it'll be the banks. That'll be next. The minister claims that energy companies are making too much profit. Well, banks are pretty profitable. Coles and Woolworths are pretty profitable. Why don't we have divestment powers for them?
They're pretty concentrated markets, as my honourable friend points out. They're pretty profitable markets. By the logic of the minister, it should apply to them. I mean, the minister's entitled to come to the despatch box and explain why it doesn't—because the government have made it up as they go. The fact of the matter is that this particular piece of policy flim-flammery has no support from any serious or credible economist, commentator or industry participant—none. The government are out like a shag on a rock on this one—zero support. They look behind them for support and there's none there, because there are sensible people in this debate. There are actually people who know what we need in energy policy in Australia, and it's a bit of investment certainty. That would be nice. A bit of a framework for renewable energy would be good—a bit of an understanding that the government understand the needs of industry for investment. But what we have instead is a government that actually make it worse by engaging in an effort to make it basically impossible for people to invest, because the sword of divestment hangs over those investments.
In the various economic portfolios I've held over the years I've come to understand that foreign investors, in particular, pay close attention to the legislative framework. They are always on the lookout for sovereign risk. It's often the case—it has been the case—that good intentions by governments have been misunderstood by investors overseas, who don't necessarily follow our debates as closely as we do. Changes like this create grave concern for investors, whether they be domestic or foreign—grave concern when it comes to engaging in the need to provide a framework where investors, whether they be domestic or foreign, can put their money into renewable energy, and into energy more broadly, and know what the rules are and know that their investment is not going to be taken off them. It is the case that the government has just completely flummoxed this issue from beginning to end.
We are here today as a result of the clean energy target collapsing and then the National Energy Guarantee collapsing—collapsing under the weight of internal opposition from climate change deniers opposite who don't believe in climate change and don't believe we should participate in policies to deal with climate change. Now, as a new Prime Minister comes to office—the third in five years—he says: 'Quick, we need at least a semblance of a policy. We need an excuse for a policy. We need an alibi of a policy. I need to have something to go to the election with. I need at least something to take to the people to say that this is how I'm going to reduce power prices.' The little coterie opposite comes up with the idea of divestment powers. That's what they come up with. That is about the worst piece of public policy development I've seen in my time here.
Mr Conroy interjecting—
It's a low bar, as my honourable friend points out. I do think that this is a strong contender, and I think it is by far the worst piece of competition policy I've seen, and I've seen some shockers from the other side on competition policy. The effects test was pretty bad, and the Birdsville amendment was pretty bad, but this is the worst. This has real-life consequences. It means that there will be people paying more for electricity than they otherwise should. Big power users, big industry in Australia, will be paying more, and that will flow through to consumers more broadly, who will be paying more, directly, as well.
Several members opposite have pointed out in the privacy of the Liberal party room—such that it is—that this offends Liberal principles, that it offends Liberal traditions, and they had the courage to stand up for that. I hope they have the courage to stand up for it in this House as well, and not just in the Liberal party room. It's true that they forced a backdown from the Treasurer, to remove the power from the Treasurer to the ACCC, and a legal process. That is true. That they got that climb-down is something. But, as the commentators who I quoted before pointed out, this still causes grave concern.
There is a better way than what the government has engaged in. You could invest in the Clean Energy Finance Corporation, as we are proposing to do. You could create an energy security modernisation fund, as we are proposing to do. You could create an energy productivity agenda, as we are proposing to do. You could engage in a process to do with just transition, as the member for Shortland and the member for Port Adelaide have designed for the Labor Party, a policy we're very proud of, to help workers adjust.
The minister opposite doesn't care about those affected by inevitable change in the economy. Instead we have this crazy, Venezuelan approach from those opposite, who once used to believe in something. I don't know what the government believe in now. I don't know what the government stand for now. They clearly don't stand for good economics and they clearly don't stand for good policy; they clearly, by their actions, stand for higher power prices and stand for making the situation worse. I move:
That all words after "That" be omitted with a view to substituting the following words: "the House declines to give the bill a second reading, and notes:
(1) this unprecedented intervention into markets which will result in higher prices for families and businesses;
(2) the Government has abandoned all pretence at being the party of free enterprise and open markets; and
(3) the Government has abandoned all proper processes, scrutiny and consultation.
The House should express the view that this government has completely lost the plot when it comes to energy policy. There's a very significant price to be paid for that. That is the stark difference between this side of the House and the other side of the House. I'm happy to have our energy policies debated in the lead-up to the next election. The shadow minister, the member for Port Adelaide, is more than happy to debate the minister.
He's impatient for a debate. I hope that the minister at the table accepts the opportunity to have several debates with the member for Port Adelaide during the election campaign. We'll be watching very closely, and the member for Port Adelaide will towel up the Minister for Energy, because the Minister for Energy doesn't have an energy policy apart from this piece of ridiculous, interventionist nonsense. What the member for Port Adelaide will bring to that debate is a well-designed, holistic, comprehensive approach to energy policy. What we will provide to the Australian people and investors is the certainty required for investment. What we will put forward is a plan for proper investment, for engagement with the industry and for certainty to be supplied to investors to get power prices down.
The government are entitled to quibble with elements of the plan if they wish. They can put alternative points of view. They can argue with it. The difference is that we have one. We have a plan. We have a policy to debate. We have policies that we are happy to put out for scrutiny. Apart from this piece of nonsense, which may well be unconstitutional, which clearly is counterproductive and which is being rushed through the parliament in this most reprehensible and shameful fashion, those opposite have nothing. Everything they have tried, everything they have touched, has turned to dirt. Everything they have embraced has failed when it comes to energy policy. Every single thing the government have attempted to do has failed, and they deserve to have their policies condemned by industry, condemned by experts, condemned by lawyers who think it may well be unconstitutional and condemned by consumers who think it will put up the pressure on prices, because that is exactly what it will do.
We on this side of the House stand for good policy. We stand for proper, robust, well-designed policy. We also stand for good processes. Processes in this House are designed for a reason: to stop bad law, to stop bad legislation with unintended consequences and to allow proper scrutiny. If the government had nothing to hide then they would be happy to have this debate in the normal, proper fashion, which would allow scrutiny of their legislation and would allow experts to provide their views on draft legislation and then legislation before the House.
This government is cutting and running from scrutiny and from the normal proper processes of good government. It is a government that should be ashamed of its actions, in all seriousness. This government should be ashamed of itself: throwing out years of Liberal Party legacy, throwing out good and proper policy development, throwing out the previously bipartisan understanding about sovereign risk and throwing out good and proper processes in this House by this shameful stunt today. This Treasurer, this Prime Minister and this energy minister should be ashamed of their roles in this stunt today. This is a stunt. They are using their numbers in government to ram this legislation, which has significant ramifications for Australian consumers, through this House without the normal processes and without the normal scrutiny. They should be ashamed. Liberals around the country would be ashamed of their party tonight. They'll be watching and listening to this and saying: 'This is not what I signed up for. I didn't join this Liberal Party to have these interventionist powers and to be running from the proper processes and scrutiny.' I would understand good, proper and decent Liberals being ashamed of their party this evening.
Mr Butler interjecting—
Yes, former long-serving Treasurer Peter Costello would never have done this. He wouldn't have done this, and the Fraser government wouldn't have done this. The government have sold out on everything they ever believed in. They have sold out on everything the Liberal Party ever stood for. They have sold out on everything that this parliament ever stood for when it comes to proper processes. I want to know: when does good government start? What's the date on which good government starts in this country? When are we going to see a decent government with a proper policy approach that is prepared to seek a mandate for what it does, prepared to implement a good policy and prepared to have it debated by this parliament?
The poor excuse for a cabinet that sit opposite us are incapable of delivering for Australia. They have had plenty of opportunities over five years. We've given them plenty of goes. They've had the opportunity to deliver an energy policy. We've been willing to engage each time—on the clean energy target and on the National Energy Guarantee. Every single time we've been willing to engage with those opposite on a bipartisan project, and every single time they have failed. We are not willing to engage on this. We've had enough. We've drawn the line. We're not going to engage with the government. We're not going to parry with this sort of bad policy. We have our limits when it comes to giving in to the demands of those opposite just for the sake of bipartisanship.
We will not provide bipartisanship for this poor policy. We've been prepared to back policies that we haven't designed and we've been prepared to back policies that we think are imperfect but are an improvement on the current situation, but we're not going to back bad policies. We're not going to back policies that are detrimental to the interests of Australian consumers, that throw out years of understanding of what is necessary for investment certainty and that have been condemned by those who know what they're talking about. The Minister for Energy, who is at the table, doesn't know what he's talking about. The government don't know what they're talking about. They're just looking for something—anything—to get them through the next six months.
The problem is that there is a price to be paid. There are ramifications of bad policy, and that price is increased power prices, and it is paid by those who can least afford it. Australian households are doing it tough. Australian industry have dealt with an increase in wholesale power prices on this government's watch, and more increases have been predicted by the market, as this government has failed. The Labor Party stand ready with an alternative policy. We will oppose this legislation every step of the way.
What we are seeing from the other side on the Treasury Laws Amendment (Prohibiting Energy Market Misconduct) Bill 2018 is confusion because they don't know whether they're in favour of a big stick, a small stick or no stick at all. There is one thing that they are not confused about one little bit, and that is that they stand for the profits of the big energy companies. What an extraordinary turnaround by Labor! The industry has malfunctioned. The ACCC made it very clear—it's all laid out—that three players in this market have 80 per cent of the dispatchable generation across each state. It's clear from the ACCC report—there is no ambiguity whatsoever—that that is resulting in a bad deal for consumers, and the government needs to act.
Those opposite have said they will sit with the big energy companies in protecting their profits. This is puzzling to me because Labor used to be the party of the workers. It used to be a party of the sorts of people who work in steel mills and aluminium smelters and of the middle Australians who struggle to pay their energy bills. But they've given them away; they're not interested in those people at all. There's a reason for this: they actually want higher electricity prices. Don't take it from me; take it from the Labor Environment Action Network. They are strongly praised by the shadow minister over there; he thinks they're a wonderful group; he said so himself. They have talked about higher electricity prices as 'the market working well'. The shadow minister wants to see higher electricity prices.
In fact, last time they were in government, they doubled the prices. They added a carbon tax; they doubled the prices. There is a reason why they want higher prices: they need higher prices because they have committed to a 45 per cent emission reduction target, which the Business Council has said will be a wrecking ball for the economy. The only way they're going to achieve that is by getting Australian businesses small and large, and Australian households, to buy less electricity. They need that. They have got to have that or else they're never going to reach their targets. That's what they're absolutely committed to.
It's not the only thing they're going to do with the 45 per cent emission reduction target. They're also going to have to hit agriculture hard. They haven't explained to us yet what they're going to do in controlling farmers' land. They are going to tighten native title legislation for all the farmers who get out there every day in a drought, like right now, and bust themselves to make a buck. They're going to have to explain the tightening of the native title laws that they're going to bring in.
I'll take that interjection—under the EPBC. They're going to have to explain to the transport sector what's going to happen. At the last election, they committed—it was a very sneaky commitment; they thought they got away with this one—to light vehicle emissions standards of 105 grams per kilometre. That is absolutely unrealistic for hardworking Australians and small businesses. The two favourite vehicles of farmers and tradies are the Toyota HiLux and the Ford Ranger. The Toyota HiLux creates 200 grams per kilometre. They're going to have to chop it in half! And the Ford Ranger is worse, at 234. They're going to have to take 60 per cent out of it! I don't know which part they are going to cut; they are going to have to cut it one way or another. Should they switch to a Prius?
I look forward to the opposition leader swapping his and his shadow ministers' Comcars for Ford Fiestas—and even the Ford Fiesta doesn't fall under Labor's reckless target. I don't know how they're going to do this, but one thing is clear: they need higher prices in order to achieve it. We have seen from the Climate Change Authority, that, in order to get to the sort of outcomes they're talking about here, you need a carbon price of five times the last one. It is absolutely apparent that in order to achieve that they're going to have to raise the price of electricity, which is what they want to do.
We on this side of the House want to see lower electricity prices. That is our policy. We want to see lower electricity prices while we keep the lights on. What a sound objective that is for every Australian family and for those hardworking small businesses that use so much energy. Whether they're abattoirs, cafes or delicatessens—you name it—right across regional, urban and suburban Australia there are businesses that need lower electricity prices in order to be able to employ and invest and do all those things that we want Australian businesses to do. A million new jobs have been created in the time that we've been in parliament as a result of our good policies. Here is another good policy that will continue to add to that job creation.
This legislation is part of a broader package of the price safety net where we're seeing half a million families and small businesses get a better deal: those who need it most; those who don't have the time to get on the phone and negotiate with call centres for hours on end. We'll see households get an advantage from this. In New South Wales, households will be, on average, $200 better off; in Victoria, $313; in South Australia, $270; and, in South-East Queensland, $175.
We're bringing low-cost, reliable power into the market because we do have an enormous investment. We have a $15 billion investment in solar and wind happening right now, but we've got to keep enough dispatchable reliable power in the system to keep the lights on and keep the prices down. That's why we're working to a short list of projects in the new year. Meanwhile, we're imposing the retailer reliability obligation through COAG, with my state and territory colleagues, to ensure that years ahead of time the retailers invest in the capacity necessary to keep prices down and keep the lights on.
Labor, ultimately, need to decide here whether they are on the side of Australians or the big energy companies. These are essential services bought by every Australian business and every Australian family, and that is why it is so crucial that we treat this as an essential service, where having a fair deal is important for all Australians. That's why, given the behaviour, the conduct and the structure of the market that we've seen in recent years, we need to act. It turns out that Labor is satisfied with the status quo that the ACCC described as 'unacceptable and unsustainable'. Here are your experts: 'unacceptable and unsustainable' from the ACCC. Labor rejected legislation before they had even seen it. This bill complements the ACCC's ongoing electricity monitoring inquiry, which will run until 2025. Our legislation will also sunset in 2025. We see this as a transition for the industry, where there needs to be culture change, conduct change and a change in outcomes.
There are three markets which this legislation is focused on. In the retail markets, we have seen retailers deliberately confusing customers with their discounting strategy, using what the ACCC has called excessively high benchmarks and complex offer structures. That needs to change, and we need to see retail prices tracking more closely with wholesale prices. That's what we need to see. Those opposite are against that. They want to see retail prices going up despite wholesale prices coming down. That's what they want to see. It's extraordinary for a Labor Party to think that was a good outcome. This legislation addresses that issue fair and square. In the wholesale market, a lack of competition has resulted in higher prices. The ACCC itself has said:
This lack of competitive pressure is of concern to the ACCC, particularly given the critical need for a sufficient level of competition in this market to drive affordable electricity prices.
The ACCC said:
In all NEM regions, a single generation business accounted for more than 30 per cent of dispatched energy in the year to April 2018.
They go on to say that three players make up over 80 per cent of dispatched capacity.
We have seen, sadly, price gouging in the market. We saw that after Hazelwood closed. The ACCC found in their report that AGL and Origin shifted capacity previously bid at less than $30 to up to $150 a megawatt hour. They took advantage of that withdrawal of supply. We won't put up with that. That is clearly anticompetitive behaviour, and it's anticompetitive behaviour that those opposite are defending. What an extraordinary situation! They upped the bidding from 30 bucks to 150 bucks because of a withdrawal of supply, and those opposite are defending the practice.
The contract market—this is the hedge market; it's caps and swaps and all those means of managing risk in the market—is absolutely crucial. If you're an independent generator or an independent retailer in the market, you have to get access to this contract market. We know that in some markets—particularly in South Australia, and the shadow minister would be aware of this—that contract market has been shut down by the big players that are acting in a way that has made it extremely difficult for new entrants and small players to come into the market. We won't stand for that. The ACCC itself said that in certain regions and in particularly South Australia:
… the level of liquidity and the advantages enjoyed by vertically integrated retailers make it difficult for new entrants and smaller retailers to compete effectively in the retail market.
What are those opposite going to do about it? You are not supporting this legislation. You think it's okay to shut it down to the big players, like big unions and big business—it doesn't matter; you love it big. We saw the spectre of them in recent days defending big tech. That's where Labor have come to.
The legislation provides a graduated series of remedies to this misconduct, starting with ACCC-issued warning notices and infringement notices and moving up to court-ordered civil penalties that can go up to either $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 previous 12 months. It then moves up to, on the recommendation of the ACCC, Treasurer-issued contracting orders that will permit the Treasurer to require companies to offer electricity financial contracts to third parties. Finally, on the recommendation of the ACCC, as a last resort and following an application by the Treasurer, there are Federal Court-issued divestiture orders relating to misconduct in the wholesale market.
We do see asset divestment powers in other countries, such as in the US with the Sherman act and in the UK with their Enterprise Act. They have been used as a last resort. They are court ordered. We are making this more restrictive. It is restricted to an industry for a certain period of time because of the poor conduct, the poor outcomes and the poor structure of the industry that we have seen in recent times. It is targeted, it is proportionate, it is time limited and it is court ordered. Those opposite talk about investment and sovereign risk. In my time in the business community, I spent a lot of time in the UK and the US, looking at UK and US businesses. Despite the fact that they have the Sherman act and the Enterprise Act, not once did I ever hear an investor say: 'You know what? We're not going to invest in the US or UK because of the Sherman act or the Enterprise Act. We're not going to do that.' It simply doesn't happen.
As a last resort, asset divestment—particularly in this case, when it is time limited and industry specific—is a reasonable and proportionate response to what, in this case, has been an industry that is not delivering to its customers. We stand for those customers. We stand for those hardworking small businesses, like the aluminium smelters. We stand for those hardworking businesses in electorates like those of the two opposite members. There will be many cafes and manufacturing businesses—
Ms Stanley interjecting—
I will take that interjection. The aluminium industry needs lower electricity prices. That's what it needs. We stand for the jobs of those hardworking Australians in energy-intensive businesses. We stand for the small businesses that need lower electricity prices. We stand for the households who deserve a better deal from energy companies who have doubled their profits in recent years, and those opposite want to block this legislation.
What a shambles. I've said before that this minister and his factional colleagues on the back bench—the member for Hughes; the member for Warringah, the former Prime Minister; and various others—worked so assiduously at tearing down any attempt by former Prime Minister Turnbull to develop an energy policy that had the support of business groups, had the support of state governments and had the potential for support from federal Labor to be a bipartisan solution to the energy crisis. They worked so assiduously at tearing everything down: the emissions intensity scheme; the clean energy target that was recommended by Alan Finkel, the Chief Scientist, in response to a request from this government; and the National Energy Guarantee, a policy that the now Prime Minister said had a broader level of support than any other measure he had seen in his 10 years in this parliament. They were absolutely assiduous in tearing those down. You have to recognise their level of determination and hard work to tear down those policies.
The problem for the new minister is that he is like the dog that caught the car. They've given him responsibility for fixing the mess that he, the member for Warringah, the member for Hughes and their hard Right factional colleagues have all created, and he has absolutely no idea how to do it. This fellow who comes in and continues to boast about his business experience, his education and the amount of modelling he's done actually has no idea how to come to grips with this deep energy crisis that is gripping and challenging the viability of businesses across the nation and household budgets across the nation.
This is what he's got. He's got two policies. The first is this Venezuelan style neo-Marxist intervention into the market, into the NEM—this legislation we're debating today. The second is the idea of chucking literally billions of dollars of taxpayer funds to build new coal-fired power stations that private investors will not touch with a barge pole, with the exception, of course, of Clive Palmer—the only private investor who said he will partner with this government in building new coal-fired power stations, just after he's finished building Titanic II. Not only are they throwing money at getting the thing built, but this minister has said he is willing to grant a taxpayer funded indemnity against future carbon risk to any of those operators of new coal-fired power stations. The Australian Industry Group—not Greenpeace—has estimated that that indemnity would be worth $17 billion just for one coal-fired power station. They want to build more than that. We see reports in newspapers. Just for one coal-fired power station, which private investors won't touch, this minister is willing to write a cheque of $17 billion of taxpayer funds—not his own—to indemnify that operator against future carbon risk. This is not a policy. This is an embarrassment—as the shadow Treasurer said, 'an embarrassment to this parliament'. It is an embarrassment to what on this side we recognise as a proud legacy of the Liberal Party, over seven decades or so, of respecting free markets. What we have is this shambles of policy after policy after policy.
My colleague the assistant shadow minister for climate change and energy has pointed out that in the dying days of Malcolm Turnbull's prime ministership—in large part due to the constructive intervention by my friend the member for Hughes—there were four energy policies from this government in just 14 days. This week we've had two energy policies from this government. It's still only Wednesday evening, so we might have more than two. As far as we can count, this government is now up to 10 energy policies just in this term of parliament. They are all characterised by internal division, ideological disputation and a bit of personal ambition thrown in—like the member for Hume, who is now the energy minister.
Now this government wants this House to deal with one of the most sweeping changes to the investor climate in this country's history in less than 24 hours. We asked for a briefing on this legislation last Monday, 10 days ago, and we heard nothing from the Treasurer or his office, or from the energy minister or his office.
The Queensland energy minister has made clear, in a number of pieces of correspondence, that since this policy was announced he wanted some detail. As a member of the COAG Energy Council, as effectively the shareholder owner of substantial electricity assets in Queensland, he wanted some detail about how this would impact Queensland electricity assets and Queensland consumers, and he has heard nothing from this government. Business hasn't seen this. Other stakeholders haven't seen this legislation. The crossbench and the opposition haven't seen this legislation, until a few hours ago. This is legislation that has extraordinary implications, runs to several dozen pages and is supported by an explanatory memorandum that runs to more than 100 pages.
As a process this has been a shambles, but the more serious concern is a matter of substance, because what we know this policy or this legislation would do if it were passed by this parliament is to smash what remains of investor confidence in a sector that is already reeling from this coalition party room's decision to kill the National Energy Guarantee. The NEG was a policy that was supported by every single business organisation in this country, energy companies and, more importantly, energy users. It was supported by every state government, Labor and Liberal alike, and would have been supported by an overwhelming majority of this House of Representatives if the former Prime Minister, Malcolm Turnbull, had had the confidence—as the member for Leichhardt pointed out this morning, had had the courage—to put the matter to a vote.
We know that investor certainty and confidence in this industry are already at record lows. Pushing them further down will have only one consequence for consumers, and that is to push power prices up even further than they've reached under this government. The first question that the reasonable, objective observer who's perhaps new to the energy policy debate in this county—lucky them—might ask is: where did this idea come from? Did it come from the consumer watchdog, the ACCC, a body empowered by this parliament specifically to look after the interests of consumers? And, coincidently, it is a body that has spent the last 18 to 24 months involved in an exhaustive inquiry into the operation of the electricity market. If this idea of divestment was in the interests of consumers, you'd think perhaps that the consumer watchdog, after that inquiry, might have recommended it among the 56 recommendations it made to government about how to reduce power prices for consumers, households and businesses. Well, it didn't.
I heard the Prime Minister quote selectively from the ACCC report—this very extensive report, an excellent report—apparently to support the legislation that we're now debating. He selectively didn't include this quote from the ACCC:
Requiring the divestiture of privately owned assets is an extreme measure to take in any market, including the electricity market.
… … …
… the ACCC does not believe it would be appropriate to intervene to unwind the way in which the market has evolved across the NEM—
the National Electricity Market. Maybe the Prime Minister thought the ACCC had changed its mind, that Rod Sims had changed his mind about this. After the announcement by the Prime Minister, and I think the Treasurer, of this divestiture policy, which came out of nowhere—not supported by the Harper competition policy review of several years ago, not recommended by the ACCC—perhaps he thought that Rod Sims might have changed his mind. On the morning of that announcement Rod Sims was in a Senate estimates hearing and he was asked whether he'd been consulted about this announcement. He said in Senate estimates:
I think I can confidently say I found out about it when everybody else did: when I read about it in the newspaper.
… … …
And I guess, divestiture is such an extreme step that we felt that judgement would be very hard to reach.
… … …
But that was the judgement we reached, and our view hasn't changed.
So the ACCC certainly didn't recommend it, and it remains, it would appear, of the same view.
Perhaps business groups that use a lot of energy, that have the biggest energy bills in this country and perhaps the best understanding of the way in which energy markets are bearing upon consumers, would have thought this would be a good idea for them and would help bring power bills down. Well, no, they don't. All the business user groups of energy have said that this—to use their language—involves a deep and genuine sovereign risk, one that will further undermine investor confidence and push power prices up, not push them down. Indeed, the head of the Business Council of Australia, Jennifer Westacott, wrote in The Daily Telegraph today:
It is surprising to see this legislation proposed by a Liberal Government. This is the kind of intrusive, heavy-handed intervention into the market you would expect from the Greens.
The shadow Treasurer says perhaps neo-Marxist Venezuela. The Greens, Venezuela—I think you get the picture. She described it as 'ill-conceived and rushed policy' that won't achieve what is desperately needed—lower electricity bills for families and for businesses.
Clearly the ACCC hasn't recommended it. Business doesn't want it—and I'm not talking about the energy companies. Of course they don't want it; you'd expect that. I'm interested in what businesses that use energy, not supply energy, want: the Energy Users Association, the Australian Industry Group, the Australian Business Council, APPEA. Those are the business organisations that understand this industry and have rejected this legislation as dangerous, as reckless and as something that will only exacerbate the deep energy crisis that has emerged under this government.
But today we've also learned that there is an even more sinister motivation behind this legislation, and that was when the Minister for Energy confirmed that the state of Queensland was, to use his words, on notice that this power would be used to privatise publicly owned Queensland power assets. We know that privatisation as a general proposition, but particularly in relation to this essential service of electricity, is in the coalition's DNA. Indeed, in 2015, when New South Wales was pondering privatisation of electricity assets, the now Prime Minister promised the people of New South Wales that privatisation would lead to lower prices. Well, I think New South Wales households understand whether or not that promise came to pass. Their household power bills have been going up and up and up under this Prime Minister—both as Prime Minister and as Treasurer—and under the Berejiklian government.
Privatisation has not delivered for consumers. We said it never would and, unfortunately, we've been shown to be right. This, of course, is the supreme irony in this debate—that they're seeking to look like they're going after the big energy companies. These are the companies to whom the Liberal Party in South Australia, in Victoria and in New South Wales handed control over this essential service. This is the party that told them: 'We want you to run the market. We know this is an essential service, it's a public good, but we want the private companies to make a profit out of it instead of having it run by state governments.' The supreme irony: the coalition complaining about the behaviour of private companies that you gave control of this essential service to. They're not content with privatisation in South Australia, Victoria and New South Wales. It's quite clear that they now have Queensland in their sights. They have Tasmania in their sights. They have Western Australia in their sights, a matter that will be of particular interest to you, I'm sure, Deputy Speaker Goodenough. They have Snowy Hydro in their sights, after John Howard wanted to privatise it in 2006. They have the electricity assets of the Northern Territory in their sights as well.
Don't take my word for it; it's all over the media now. On The Australian's website there is an article, published only an hour or so ago, 'State-owned energy giants in fed sights', which might have elicited a bit of interest in the state of Queensland, which has had a few debates about privatisation of electricity in recent elections. There is an article in The Courier Mail, published only about half an hour ago, headed 'Queensland political parties united in opposition to the PM's new electricity asset sales threat'. The opposition leader Deb Frecklington—she is from the Liberal Party, I think—has also dismissed the federal government's divestiture threat. She said:
I don't support the Federal Government's plan. The people of Queensland have spoken in relation to the sale of assets and there is no appetite for that.
The PM's plan is out of touch.
It is not just the member for Curtin and a whole range of other members on the coalition backbench who didn't like divestiture version 1 last week or divestiture version 2 this week. People are starting to understand what this is all about. This is legislation that will push up power prices and it's legislation that will continue the agenda that this coalition ideologically has pushed for 25 years: to hand control of this essential service from government into private hands—in Queensland, Western Australia, Tasmania and the Northern Territory, where they haven't been able to do it at the state level, and also in relation to that great national asset Snowy Hydro.
This is a stunt by a government that has no energy plan. Three months ago there was this feeding frenzy in the coalition party room by the member for Hughes, by the energy minister, to get rid of Prime Minister Malcolm Turnbull and to dump the National Energy Guarantee. When they finally succeeded—maybe they didn't think they would—they woke up the next morning and thought, 'What do we do now?' The dog that caught the car. 'What do we do now?' And they've come up with this. Really, Bob Menzies would be rolling in his grave. That proud Liberal legacy of market economics is lying absolutely dead after this legislation was proposed.
It's always very pleasing in these debates to follow the member for Port Adelaide, because there are very few members in this place who have the expertise that he does, because he comes from the state of South Australia, where they conducted a grand experiment—this grand experiment that was backed by the member for Port Adelaide from start to finish. That experiment was a 50 per cent renewable energy target. What did it deliver? It delivered that state the highest electricity prices in the world. It takes a special type of incompetence to deliver the highest electricity prices in the world to an Australian state, but that is exactly what they managed to achieve in the member for Port Adelaide's home state.
You would think this would have been a lesson. You would think we would have learned and would say: 'Look at South Australia. Look at the terrible mistakes that they made. Look how they punished South Australian residents. Look how record numbers of South Australians had their electricity disconnected.' You'd think they would have learned. But, no, the official policy of the Australian Labor Party is actually to copy that failed experiment and take it nationwide. Everyone in the country should be terrified of the prospect of a Labor Party getting into office and inflicting that failed experiment on everyone.
Of course, we know that the other expertise that the member for Port Adelaide has goes to his predictions about the outlook for thermal coal. Only last year, the member for Port Adelaide was standing up on the ABC and telling us all about the rapid decline in thermal coal. In fact he said, 'Indeed, the demand for thermal coal exports from Australia is actually in decline.' What a great prediction, because this year we've had record exports of thermal coal! If the member for Port Adelaide told you it was raining outside, you would need to go and check. He should be employed by the bookmakers at Randwick to give them tips, because then they'd know which horses to lay off. He is wrong time after time after time, and here he is, on this bill, completely wrong yet again.
Mr Deputy Speaker, I put it to you that this bill is a litmus test of whose side you are on. On this side, we are on the side of the old-age pensioner who hasn't been able to afford to heat their home in winter and sits in a cold home at some risk to their health. That's whose side we are on. We are on the side of the working family in Western Sydney that struggles and can't afford to turn on the air conditioner on a hot summer's day. We are on the side of the small business owner who has seen their electricity prices increase by 100 per cent under the Labor Party. We're on the side of the tradesmen, the truck drivers and the farmers of this nation.
By their opposition to this bill, we know whose side the Australian Labor Party are on. They are on the side of the large energy companies, giving them aid and comfort to engage in anticompetitive activities, to the detriment of Australian consumers. They are on the side of the inner city Greens that cheer and celebrate every time the price of electricity rises. That's whose side the Labor Party is on. They have form in this, because the last time that they were in office they wilfully increased the price of electricity by 100 per cent. They knew that their carbon tax would almost double the wholesale price of electricity, yet they came in here and they voted for it, and we had to fight tooth and nail every single day to get rid of that carbon tax and take the pressure off wholesale electricity prices. Yet they still persist with an energy policy that the Business Council of Australia has said would put a wrecking ball through the economy. That is the policy that they bring to this House, and that is what they argue for.
I've heard members on the other side during this debate say how terrible a divestiture power is and how much of a sovereign risk it is. Divestiture powers have been part of the competition law or antitrust law in the USA for over 100 years. They go back to the Sherman Antitrust Act of 1890—not 1990; 1890. The home of free-market capitalism, the USA, has divestiture powers. Anyone who comes in here and says that divestiture powers are something you have in a Marxist, Venezuelan economy simply does not know what they're talking about. We have seen members of the Labor Party celebrate that Marxist, Venezuelan economy. Many members of the Labor Party signed an invitation for none other than Hugo Chavez to come to Australia and preach how wonderful his Marxist policies were. That's where the Labor Party stand. We are doing nothing more than taking a divestiture power that has been in the United States of America for over 100 years and applying it to a very narrow section of the economy, our electricity sector.
The idea that a divestiture power somehow or other harms shareholders is not borne out by the historical facts. The most famous case of divestiture in the USA was Standard Oil. In 1911 Standard Oil was broken up into 34 separate companies. What happened? If you were a shareholder, previously you had one share in Standard Oil; after the divestiture, you had 34 shares, one in each of the 34 separate companies. History has shown that, very quickly after Standard Oil was broken up into those 34 different companies, one share in 34 was worth a lot more than just one share in Standard Oil. This idea that it is somehow or other taking away assets or government confiscation of assets is something that shows that people have no idea what they are talking about.
Yet they come in here and wax on about sovereign risk. The greatest sovereign risk that this nation faces is the possible election of a Labor government. The second greatest sovereign risk that this nation faces is internationally uncompetitive electricity prices. Unless we have competitive electricity prices in this nation, manufacturing businesses across the entire economy will not invest, yet we have a Labor Party whose policies deliberately intend to increase the price of electricity.
Divestiture powers are also a feature of UK competition. Why are such powers needed here in Australia? We have seen what happened to electricity prices in South Australia when they chased the Northern Power Station out of town. The result was substantial rises in the wholesale price of electricity. We saw the same thing in Victoria where the Hazelwood Power Station, though being old, was chased out of town by the tripling of coal royalties. When Hazelwood closed down, we saw an 80 per cent increase in the wholesale price of electricity.
Although that was bad for consumers, that was great news for all the big electricity companies. If you are in an industry where the market price for what you are selling, or for the service or goods that you are supplying to that market, increases 80 per cent, it's happy days. While consumers were harmed by the closure of Hazelwood, every other electricity generator in the country was able to make hay and to make record profits at the expense of pensioners, hardworking Australian families and small-business owners.
We have a situation coming up where the Liddell Power Station will quite possibly close in 2022. AGL told us that it has no value. They value it at zero. That's why they need to close it down, because it has no value, yet we find out that they knocked back an offer from a competitor to buy Liddell for $250 million. A quarter-billion-dollar offer was on the table, and they said no, because it's worth more to them to close it down. Why is that?
Because they have such a dominant position in the market. They have such a large market share that by closing Liddell down they can keep the wholesale prices inflated and they can make more profits at the end of the day through higher wholesale prices from their other assets. That, by any definition, is anticompetitive conduct.
If our competition laws are not strong enough to catch that anticompetitive conduct, they need to be amended. I've had long arguments with the chairman of the ACCC. Under our existing competition laws, I thought there was a strong case to take action against the possible shorting of supply that was being proposed. The chairman of the ACCC said he didn't believe the current laws were strong enough. That's why these provisions are needed. They would be no different to the provisions in some other countries. Look at the provisions of the Sherman act in the USA, where a per se violation is a breach of the Sherman act:
… these are violations that meet the strict characterization of Section 1 … A per se violation requires no further inquiry into the practice's actual effect on the market or the intentions of those individuals who engaged in the practice. Conduct characterized as per se unlawful is that which has been found to have a "'pernicious effect on competition' … Such conduct "would always or almost always tend to restrict competition and decrease output."
That is why we need to ensure that we have such provisions. For an essential service like electricity, if a generator decides to decrease their output to raise prices to the detriment of consumers, we need divestiture powers similar to those in the home of free-market capitalism, the USA. What about under the UK competition law? How would such shorting of the market go there? Under section 18(2) of the UK Competition Act, it says conduct may constitute an abuse of a dominant position if it consists of:
(b) limiting production … to the prejudice of consumers.
If we have electricity retailers in this country limiting production to the prejudice of consumers, we need provisions to say that is anticompetitive, and with a threat of divestiture—just as they have in the USA and in the UK.
While we're on the subject of a 45 per cent emissions reduction target, I would hope someone from the Labor Party would explain to us what they are going to do in the transport sector. What are you going to do in the transport sector to get those emissions reductions? What plans do you have that you are not telling the Australian public? What plans do you have that you are hiding? We know what it was last time. We know a carbon tax of $135 was recommended by the Climate Change Authority to reach Labor's target. That would push the price up at the bowser for petrol and diesel by 40c a litre. I hope the member would at least no longer hide and would tell us what the Labor Party are going to do— (Time expired)
Ladies and gentlemen, we just saw the future of the Liberal Party: the member for Hughes, the model of a modern Liberal; the man that the moderates in New South Wales saved; a man who his own branches clearly don't want and haven't wanted for the last two elections—otherwise they wouldn't have needed intervention. I like the man personally; he's always been very civil to me and my family, and I appreciate that. Unfortunately, I repudiate everything he stands for, because he stands for climate change denialism and he stands for reactionary politics of the worst sort. That would be fine if he were just an eccentric member of the crossbench, maybe in the Senate with the hodgepodge over there, but he's driving climate change and energy policy in this country. The member for Hughes, the member for Warringah and the rest of their allies in the Liberal Party have dictated so much policy in this country around energy and climate change, and that is a great tragedy, because that is a betrayal of future generations.
It is not a force for good, as the member for Paterson so eloquently put it. This is a litmus test, as the member for Hughes put it. The energy and climate change debate is a litmus test in this country, and it's a litmus test that the coalition have failed for 10 years. I can't work out who's worse in the Liberal Party party room, the 50 per cent who deny the science of climate change or those of the 50 per cent who accept it but just give in to the climate change deniers, who aid and abet those people who have set the course of Australia back so much over the last 10 years, who have betrayed our nation's future. I don't use that word lightly.
I rise to support the Treasury Laws Amendment (Prohibiting Energy Market Misconduct) Bill 2018, which will amend the Competition and Consumer Act 2010 to define what energy market misconduct is. It defines prohibited misconduct by creating prohibitions in three areas: retail pricing, contract liquidity and wholesale bids and conduct.
There is a common thread running through all of Australia, all households and all businesses large and small. They include dairy farmers; primary producers; processing factories in flour, milk and beef; irrigators; timber mills; hotels; restaurants; hairdressers—any small business, you name it—smelters; sugar mills; and flour mills. It is the whole spectrum of Australian industry. They are all crying out for lower electricity costs because we have a high-cost economy; we have high wages; and the prohibitively high cost for electricity is driving people and families out of business.
The ACCC inquiry into retail pricing of electricity has identified that the market is misfiring; it's malfunctioning; it's broken. They identified that retailers are taking advantage of a lot of customers who are confused and disengaged. They have so many complex offers on the table that they don't know which one is best. Competition is also being restricted. Dominant players choose not to offer financial contracts in some instances, which stops new entrants into the retail market. The ACCC say there is conduct that is undermining the operation of the wholesale market as well.
To put things in perspective, the Australian Energy Regulator has identified a massive difference in the lowest market price available in different areas. They are much, much lower than standing offers, which are offers that people are on and which they just roll over and over. For instance, in New South Wales, there could be a difference of $411 per year between the lowest household market offer and the standing offer; for a business, it could be a difference of $2,582 between a standing offer and the best market offer. In South Australia, it's even worse. There could be a difference of up to $832 between a household standing offer and the best market offer, and for businesses it could be $3,500. That's why we need to address this misconduct. There is a crying need to correct the energy market's behaviour.
This bill creates several initiatives. It creates three prohibitions, as I mentioned. In the retail pricing market, there's a prohibition against retailers who fail to reasonably pass through sustained and substantial supply chain cost savings. For instance, if the wholesale price goes down substantially, it should be passed on by the retailer. In the contract liquidity part of the market when entrants are trying to enter new markets, like in South Australia, where 80 per cent of the market is controlled by three operators, they can't get swaps and cap contracts so that they can go in there and be competitive in the retail market. They are denied it by the energy retailers who are also energy producers. This prohibition will make that not possible. There will be systems in place to correct that. In the wholesale market, the ACCC has also identified misbehaviour. In the bidding market, in the short-term market and in the spot market, generators are restricting supply by not bidding or only popping in later in the bidding so that they get a better return overall for other parts of their asset profile.
This bill also introduces a graduated and tailored set of remedies, which are in a structured fashion. It allows the ACCC to get better access to records and pricing so that it can analyse them. Once the ACCC gets access to this information it can see if misconduct or prohibited conduct is happening and then issue notices. If that behaviour is confirmed, the producer of the energy or the retailer in the contracting section has in the first instance 21 days when a notice is issued, and then it steps up to 45 days notice. If there is no response, they can move on to the so-called big stick, which is divestment.
A lot of people on the other side made out that this is a pattern of behaviour that is against the principles of a free market. I reassure the House that that comment is based in ignorance, because other free market economies, like the United States of America, the United Kingdom, the European Union and Canada, have divestiture powers in their legislation. In fact, in Australia there are divestiture powers that the ACCC can enforce, but that is usually in mergers and acquisitions.
In the EU there are definitely divestiture powers in article 7 of the Treaty on the European Union. In the USA we have the Sherman act and the Clayton Antitrust Act, which have been there since 1890 and 1914 respectively. It was these powers that they used to break up the monopoly of AT&T in the 1980s and allow other companies to enter the telecommunications market in the USA. In the UK they have the Competition Act and the Enterprise Act. They were used to split Gatwick Airport from Heathrow Airport, because there was a monopoly in the airport market of the biggest city in Europe. It was a great boon to competition and it made airport fees much more affordable.
So, as I said, there are stepped increases in the process before we arrive at divestiture orders. I will take you through some of that process. Basically, the ACCC has to make a determination and issue a notice. The corporate involved has a chance to analyse. It has 45 days. There is toing and froing for another 45 days and then there's a decision by the ACCC and a recommendation to the minister. Then it goes off to a federal court for judicial review and enforcement. But it can't just be a willy-nilly referral. As I said, they have to meet certain criteria. There has to be more than just high prices; there has to be intent. There has to be quite obvious malfeasance with the intent to restrict competition and to mislead, and it has to be proven. People who are saying that divestiture is anticompetitive and draconian are really out of step with reality. As I said, many of the advanced economies in the rest of the liberal, democratic world have had these powers for years and years. They use them sparingly, but it acts as a big deterrent for anticompetitive behaviour.
We're all familiar with the closure of Hazelwood and Liddell. The situation, for those that understand the market, was that there was a massive shortage of supply, which drove prices up. The wholesale price went up in Victoria dramatically on the closure of Hazelwood. A lot of the big market operators in this country are both generators and retailers. By manipulating the market rules, they can get away with shorting the market. Over the whole market where they have other assets, they will get a better return from them by shorting the market. That's the sort of behaviour that the ACCC and the regulator will be looking at. It's only then that they will be taking that stepwise function.
There are financial penalties as well, well before you get to the major, big-stick option of divestment: the ACCC issues warning notices; there's an infringement notice; and there are then civil penalties that can be up to $10 million, three times the value of the total benefit attributable to the conduct or—a rather large one—10 per cent of the annual turnover of the corporation in the 12 months before the conduct occurred. It will allow the ACCC to issue injunctions. If they see behaviour that is anticompetitive, restricting supply to the detriment of customers downstream or the eventual retail customer, they can issue injunctions. Corporations must contract with other entrants who are trying to get into the market so that the swaps and caps part of the market can't be closed down to new entrants. There has to be evidence of gaming the system for all of these measures to be enacted. It's not based on market share. The divestment big stick is only the last and the most serious way to control bad market behaviour. Some other countries do have divestment based on market share alone. But through this legislation there has to be evidence and that graduated, stepwise process through contract orders, remedial action and fines and then—and only then, if it's more than just a basic prohibition order and it's an aggravated order—you can move on to divestiture.
Here we are, trying to get prices down. We have done this because there is evidence for it; the ACCC inquiry is rock solid in its recommendations. We also want to do what we have said we will do—and we're getting responses already—and that is to get a default price. Regarding market offers and standing offers, there are major discrepancies. But, due to the work of the coalition government, we have pointed out this evidence that the Australian Energy Regulator has identified, and many of the energy companies have already announced a drop in their standing offer prices. We are working on that. It's not a grant; it's an initiative so that people will invest in base-load power.
We can't have targets of 50 per cent renewable energy, as the international energy organisation has pointed out in its publications recently. The head of the organisation in Australia, on the front page of The Australian, is talking about the integration of renewables. Having an energy mix for renewables is all well and good, but you've got to realise you've got to almost reverse-engineer the whole grid and distribution network if you're going to have that much renewable coming in intermittently, and rewiring the grid is going to cost an absolute fortune too. So we have to have this legislation so that we can correct the energy market. If it were working in a truly competitive sense, if it were transparent and there weren't gaming of the system or shorting of supply to the detriment of the whole market, or delayed bidding and then coming in late and trying to work the short-term spot market so that cheaper assets get a better return, none of this would be necessary. But it is necessary because it is dysfunctional.
There are irrigation complexes that are about to shut down because they can't get people to buy the irrigation— (Time expired)