Josh Frydenberg (Kooyong, Liberal Party, Treasurer) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

This bill amends the Competition and Consumer Act 2010 to define energy market misconduct and provide a series of penalties and remedies for companies engaging in misconduct that is prohibited.

The Australian energy market has not been serving consumers well. That's why the Liberal-National government directed the Australian Consumer and Competition Commission to undertake a Retail Electricity Pricing Inquiry in March 2017.

This review identified problems in the retail, wholesale and contract markets, calling the situation 'unacceptable and unsustainable' and noting that energy retailers 'have played a major role in poor outcomes for consumers'.

The ACCC found three key failures.

In the retail market, retailers deliberately confuse customers with their discounting strategy, often using what the ACCC call 'excessively' high benchmarks and complex offer structures.

In the wholesale market, a lack of competition has resulted in higher prices.

In the contract market, a lack of liquidity acts as a barrier to entry, where the dominant position of gentailers can make it harder for smaller retailers to get hedging contracts and therefore to compete.

It is these problems that the government is seeking to address in order to strengthen competition in the market and put downward pressure on electricity prices.

The measures in this bill build on a package of other initiatives that the government has recently announced to ensure that Australians have access to affordable and reliable energy.

The government is acting swiftly to introduce a default market offer, which will act as a price safety net for households and small businesses. A default offer will protect consumers from being exploited while still allowing for the benefits of retail competition. It will prevent retailers from exploiting consumers and small business with inflated standing offers.

The Australian Energy Regulator has started work on cheaper, comparable default prices to be introduced by 30 April 2019, with savings being passed through to families and small businesses by 1 July 2019.

The government is also acting to simplify the confusing array of offers that are currently on the market by requiring retailers to use the new default rate as a reference point for all advertised discounts. This will give customers more clarity when they compare retailers and offers and help ensure that they get the best deal.

The government will also underwrite new firm, low-cost generation, which is particularly important for Australia's commercial and industrial users, whom 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 would 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 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 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.

Kevin Hogan (Page, National Party) Share this | Link to this | Hansard source

The debate is interrupted in accordance with standing order 43. The debate may be resumed at a later hour.

Josh Frydenberg (Kooyong, Liberal Party, Treasurer) Share this | Link to this | Hansard source

I am happy to table the remainder of my speech.

Kevin Hogan (Page, National Party) Share this | Link to this | Hansard source

Thank you, Minister.