Thursday, 15 December 2022
Treasury Laws Amendment (Energy Price Relief Plan) Bill 2022; Second Reading
That this bill be now read a second time.
This bill and this government recognises that Australian households and businesses are confronting unsustainable, unacceptable energy price rises.
We respond today with urgent, targeted, meaningful action—to take some of the sting out of these price rises, and to provide direct energy bill relief.
And in doing so, we reject the fib that a functional and fair gas market must also mean the hollowing out of our manufacturing industries, or the destruction of jobs, or the sacrifice of living standards.
It cannot mean that. We will not let it mean that.
The government respects the important role that the gas industry plays in our economy—and the role it's playing in our transition to net zero.
We support a strong industry that delivers returns on investment and an economic dividend to the Australian people—because it is an Australian resource.
Gas companies have the right to make a profit, and we want them to.
They have a job to do, and we have a job to do as well.
It's our job to find a reasonable and balanced, commonsense solution to these extraordinary events.
To defend our national economic interests.
And to protect the welfare of the Australian people.
Australians are paying a hefty price for more than nine months of Russian aggression in Ukraine.
And nearly nine preceding years of energy policy chaos here at home.
The costs are very clear.
Electricity prices are rising by 20 per cent this year—something the previous government knew about but kept hidden from the people.
Without intervention, next financial year retail gas prices are expected to increase by a further 20 per cent, and electricity prices by a further 36 per cent.
That's why urgent action is needed—including through this legislation.
And when we vote today, every member of this place will make a choice.
To help Australians with rising energy bills—or to make it even harder for them.
To save Australian jobs—or to surrender them.
To support Australian manufacturing—or send it to the wall.
Today, in this place, the opposition will be voting for higher energy prices and for no assistance for households and small businesses.
The Albanese government has made a different choice.
We choose to protect households and small businesses.
We choose to defend our local industries.
And we choose to save local jobs.
That's why we must pass this bill, and pass it today.
The bill contains two schedules.
One directly addresses gas prices.
The other provides direct assistance to struggling households and small businesses.
Schedule 1 amends the Competition and Consumer Act 2010 to create an enabling framework for two new instruments—to be implemented through regulation.
The first will enable the Treasurer to make an emergency order for a 12-month price cap on new contract sales of gas by producers, sourced from developed fields in the east coast wholesale market.
This is designed to provide short-term relief from the current energy crisis.
The legislation contains a sunset clause so that the power to make these orders ends 12 months after the commencement of any order made—or, if no order is made, 12 months after the commencement of the bill.
Through this instrument, the government intends to implement a temporary price cap of $12 per gigajoule.
The ACCC has identified this price based on the costs of production and a reasonable return on capital.
And it is still a high domestic price by historical standards.
In 2021, the ACCC found that there were 289 domestic offers made by producers and retailers.
With 96 per cent of offers below $12 per gigajoule, and the average price $9.20 per gigajoule.
The bill also includes measures to detect, deter and address any noncompliance with the price cap.
For transactions that fall under the scope of the emergency price order, prices above the cap will be subject to enforcement action.
The price cap will be reviewed in mid-2023, to ensure it is having the intended effect and to consider whether adjustments are needed.
The second instrument allows for a mandatory gas market code to be prescribed to address systemic issues in the market.
The purpose is to ensure that a fair and transparent process applies in the negotiation of gas contracts.
A code can prescribe matters including negotiations between suppliers and buyers, as well as addressing and resolving disputes.
Through this instrument, the government will introduce a mandatory code of conduct for the wholesale gas market—as we said we would.
The code will be an enhanced version of the existing voluntary code, based on the advice of the ACCC.
This includes strengthening requirements for transparency and reporting, pricing, negotiation timeframes, and dispute resolution.
The code will include a longer-term reasonable pricing provision, again on the advice of the ACCC.
And this is based on the clear expectation that the price of Australian gas for Australian customers should have a connection to the cost of producing it, allowing for a reasonable return on capital, rather than being solely subject to the war-time whims of the international market.
For the first 12 months of the code, while the emergency temporary price cap is in place, the reasonable pricing provision will only apply to gas outside the scope of the price cap: gas contracted for delivery later than 2023, or from currently undeveloped fields.
After this, the reasonable pricing provision will apply more broadly to the types of contracts previously covered by the cap.
It will remain in place until the ACCC advises the government that domestic gas prices better reflect the cost of production, and that there is adequate supply at these prices.
Importantly, the code will include a dispute resolution framework, including binding arbitration.
The government will consult on the mandatory code in the coming months ahead of its commencement in early 2023, including on the most appropriate way to define reasonable pricing.
Schedule 2 amends the Federal Financial Relations Act 2009 to introduce a new type of payment to the states and territories, in order to provide temporary and targeted relief on energy bills for eligible households and small businesses.
The bill provides for an appropriation of $1.5 billion to be paid to the states and territories for this purpose.
The states and territories will jointly fund the bill relief, and they will administer the payments through the new funding agreement.
The relief will be applied to energy bills, rather than as direct cash payments to households.
It's written in black and white—this legislation will take some of the pressure off power bills.
The measures in this bill are crucial components of the government's broader Energy Price Relief Plan—which also includes action to limit coal prices, and investments in cleaner, cheaper, more reliable, increasingly renewable energy for the future.
This is a plan agreed by National Cabinet—endorsed by every Premier and Chief Minister, from both sides of politics, and we thank them genuinely for their cooperation.
They, like us, know that action is needed now.
Our collective measures to address gas and coal prices are estimated to reduce the impact of forecast electricity prices next financial year by 13 percentage points and reduce expected inflation in 2023-24 by around an estimated half a percentage point.
And our direct assistance will provide hundreds of dollars of energy bill relief in addition to these measures.
And that's what this choice—this coming vote—really comes down to.
Higher power prices or lower power prices?
Relief on energy bills, or no relief for energy bills?
Protecting Australian industry and jobs, or leaving Australian industries and jobs swinging in the breeze?
On this side of the House we believe that Australian households and small businesses deserve this support.
We believe that Australian manufacturing deserves a future.
And that's what this legislation is all about—support for them, certainty, security for families and pensioners, for small businesses and for big manufacturers.
This bill is in the national interest—for all Australians. And that's why we commend it to the House.
We're here today because, at the last election, on 97 occasions, the Prime Minister looked the Australian public in the eye and said that he would reduce power prices by $275. There was no asterisk. There was no fine print. There was no qualification. It was a clear and fundamental commitment and promise made to the Australian public.
Mr Speaker, it wasn't made just as a throwaway comment or on a whim; it was made deliberately to mislead the Australian people. That's the reality. The problem is that the Prime Minister, since the election, has not mentioned that figure on one occasion—not on one occasion. Australians who voted for this Prime Minister at the last election did so believing that he was going to honour his word. They did so because they knew the pressures that existed in their own household budgets. They knew the pressure on all of the elements to their small business budget. They thought that they could believe and trust this Prime Minister.
As it turns out, the government now have had six months since the election in May to outline their plan, in the budget in October and in the six weeks since the budget. There is no plan. Let's be very clear about it: the government have no plan. There is no plan that has been worked on over the course of the period since they won the election. And they need to be honest with the Australian people. They've thrown around this figure of $230, a new figure that they've created. They've walked away from that within only a matter of days, because the modelling hasn't been done. As it turns out, what they're actually promising, what they're saying to you—and this is quite cute, when you analyse what the government are proposing here—is that your bills will go up but not by quite as much. So there's no promise that bills will go down by $275 or, indeed, by $230. The government predicted in their October budget that your electricity prices would go up by 56 per cent and your gas prices would go up by 44 per cent. As it turns out, they're going to deliver that and more.
And it's not as a result of what's happened, tragically, in Ukraine. The Prime Minister made the promise to reduce power prices by $275 on 27 occasions after Russia went into Ukraine. The opposition at the time, the now government, were fully aware of the prevailing conditions. They can't say they were blindsided by the war in Ukraine and the broader turmoil in Europe. They can't say that they weren't aware of the predictions around energy and economic policy in broader Europe, North America and Asia. The Prime Minister knew exactly what he was saying but he had no intention of delivering on it. What he was after was your vote. What happened was that he got your vote and now he has left you and your family behind. That, Mr Speaker, is something that people can reconcile and they can deal with over the course of the next 2½ years.
But what's happening now is that the government have flown every kite over the course of the last couple of weeks. They've spoken about increasing taxes, a super profits tax, weighing into the markets and imposing other draconian measures. They quickly cobbled this together because they had a deadline of last Friday, when the premiers and chief ministers were coming together. They had to thrust something before the chief ministers and premiers. They were essentially putting this plane together on the runway. There was no forethought and consideration that could give us any faith in the model they were proposing.
The Prime Minister said, as has been pointed out in this debate already, that he wanted a new approach to this parliament. In fact, he was very clear in his own language on 25 March this year, when he said:
In terms of legislation that comes before the Parliament, quite often, it's just aimed at dividing people and being tricky. And I call it 'wedgislation' rather than putting the national interest first … I want proper processes. I want to consult people.
Well, we received, and the crossbenchers received, the bill that's before the House today at 8.45 last night, 12 hours before this debate. They still can't tell us who will be targeted in the $1.5 billion package. They can't tell us the definition of small business. They can't tell us whether the money will be inflationary, so that people will end up paying more in their interest rates as a result of putting this money into the economy. They can't provide any modelling, because the modelling hasn't yet been done. How does the Prime Minister reconcile his statement on 25 March and his conduct this very day in the parliament?
The fact is that it can't be reconciled, and the Australian public understand that the reckless approach of this Prime Minister is at odds with his statements and the commitments that he made to the Australian public only this year. He should be marked down for it.
I have been in this parliament for a few years. It's obvious I wasn't here during the Whitlam period in the 1970s. I was only born in 1970. I might look much older, but I wasn't here during the Whitlam period. But I have read a lot about the Whitlam period—the uncertainty, the dysfunction, the difficult approach to legislation, the lack of consultation and the intervention in markets—and we know how that ended. But I was here during the Rudd-Gillard-Rudd years. That is seared in my memory, and it is seared in the memory of many Australians. I can tell you that what we're seeing play out here smacks of the Rudd-Gillard-Rudd years of dysfunction.
It was difficult to take the title of the worst minister during the Rudd-Gillard-Rudd years. This was a contested space. I have to say that this was a contested space. It was a contested space because there was a great deal of dysfunction not just from Kevin Rudd and Julia Gillard, not just from the then Deputy Prime Minister, Anthony Albanese, but from many ministers. None were worse, Mr Speaker, than this man over here, the member for McMahon, the shadow energy minister. He presided over Fuel Watch and Grocery Watch. He was the shadow Assistant Treasurer. Mr Speaker, he is taking this government and our country down a dead end. Mr Speaker, that's the—
Leader of the Opposition, I am just going to interrupt you. You continue to call me 'Mr Speaker', and I've given it a long rein. You need to use my correct title, and you need to use correct titles when referring to other members of this place.
That is a very valid point, Madam Deputy Speaker. I am sorry that I haven't addressed you with the correct title. Madam Deputy Speaker, the reality is that he took the title as the worst minister in the Rudd-Gillard-Rudd years. It's a badge of honour, too—I understand that—because he has completely zero self-awareness.
The fact is, Mr Speaker, that there is a broader issue taking place here. An intervention into the markets has already seen companies withdraw effort. If we restrict supply of gas into the market then we're going to see prices increase. That's what this government is sowing the seeds of. They don't realise it yet. They are excited about their win. They have the support of the Greens. When the Labor Party and the Greens come together on economic policy, you know that trouble is on the horizon, Mr Speaker. You know that power prices under this government will continue to go up and up. You know, Mr Speaker, that the uncertainty that they are creating in the marketplace will mean a reduction in investment. You know that, Mr Speaker.
Madam Deputy Speaker, we don't want there to be a lack of energy in the system that drives manufacturers offshore. We don't want that. But I can tell you that this government is taking our country down that path. If you switch off the old system before the new system is ready, you are going to have a situation as was experienced in California, Germany and elsewhere long before the Ukraine war was a reality. We have to recognise that this is a half-baked policy by the government.
I move the amendment standing in my name in relation to this bill:
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:
(1) notes the Prime Minister’s failure to deliver on his promise to reduce electricity prices by $275;
(2) notes that Prime Minister has instead delivered the most expensive average wholesale electricity prices on record, with electricity prices set to rise by more than 63 per cent and gas prices to rise by 40 per cent over the next two years;
(3) notes that after six months of doing nothing to bring down power prices and provide cost of living relief, the Government is attempting to rush through legislation without any consultation;
(4) notes the Government continues to ignore expert advice that this bill will destroy investment confidence in Australia’s energy sector, leading to higher prices, job losses and blackouts;
(5) criticises the Prime Minister and the Government for putting the energy security and economic prosperity of Australia at risk; and
(6) criticises the Prime Minister and the Government for the contempt that they have shown the Australian Parliament during this legislative process".
I want to thank members and senators for returning to parliament today to vote on our plan for energy price relief for Australian industry and business, for Australian manufacturing, for Australian jobs and for Australian families. The Treasury Laws Amendment (Energy Price Relief Plan) Bill 2022 is important and it is urgent, because after a wasted decade of denial and delay; after a wasted decade of neglecting the national energy grid and attacking renewables; after a wasted decade that cost Australian jobs, robbed us of investment, damaged our international reputation and left us vulnerable to global shocks, there is not a day to waste when it comes to securing more affordable and reliable energy for Australia.
Last Friday at the National Cabinet, every premier and chief minister signed up to the four key measures in this relief plan, including the New South Wales Premier, Dominic Perrottet, and Premier Rockliff of Tasmania. I thank all of the premiers for their support. The four key measures are: (1) a temporary cap on the price of uncontracted gas at $12 per gigajoule for 12 months; (2) a 12-month price ceiling on domestic coal of $125 per tonne in New South Wales and Queensland, and Premier Perrottet, when I spoke to him last night, indicated that New South Wales will be recalling their parliament next week to legislate it; (3) $1½ billion in targeted bill relief for businesses and households most in need, delivered through reduce measures in bills in order to put downward pressure on inflation; and (4) long-term action to secure our energy future, including the new Capacity Investment Scheme, and the continuing rollout of projects under our Rewiring the Nation fund.
This plan is a combination of immediate action and future reform. It recognises the challenge of here and now as a result of Russia's illegal invasion of Ukraine. We need to act now, though, to deal with this crisis, to keep Australians in work, to support families, but also to look to the medium term to make sure we do secure our energy future. That's what we'll be doing—making sure that the cheapest and cleanest form of new energy, renewables, are able to power into the grid through the projects that we announced and will continue to announce around Rewiring the Nation. Together with the National Reconstruction Fund, this is also about making sure that we can make things here again—advanced manufacturing.
Apparently, those opposite want us to have acted quicker but also to be slower at the same time. Having had 22 policies in government but not landing one of them, they now want us to have no policy also. They were addicted to power, but they were hopeless on energy. They rushed around, passing in a day legislation about strawberries that was never used, but they did nothing to help people with their power bills. The only time they acted with urgency was to cover up the 20 per cent increase in power prices and to keep it a secret until after the election. Now they're seeking to stand in the way of this urgent action because they imagine that somehow it serves their political agenda.
Well, the choice for this parliament today is very clear: you can vote for this plan and vote for lower power prices, or you can vote against it and vote for higher prices. You can vote for this plan and stand up for jobs, for industry, and for households, or you can vote against it and stand with companies banking record profits and sending them offshore. That's the choice. Vote for this plan and be part of the solution, or vote against it and be part of the problem. The opposition will be held to account for their decision. We know where we stand. We stand for Australian manufacturing and we stand for Australian households, and this legislation will support both. That is what this bill will do.
In government those opposite failed over a decade to deliver a coherent energy policy. We on this side of the House are acting with urgency to deal with the challenge which is there, and that is why it has the support of every premier across the country and the Labor Party. I also thank those in the crossbench who are providing— (Time expired)
Honourable members interjecting—
There is a very simple test for this legislation, the Treasury Laws Amendment (Energy Price Relief Plan) Bill 2022: will Australians' bills in the coming months and years go up or down? That's the test. There is no other test. The energy minister himself has admitted that bills are going up. The Treasurer himself has admitted in his budget that they're going up by 56 per cent. We now learn that he thinks that they're going to go up even more. The Prime Minister himself, having committed 96 times before the election that he was going to—
An honourable member: Ninety-seven times.
Ninety-seven times—I stand corrected. I'll take that interjection. The Prime Minister said 97 times before the election that the $275 decrease in electricity prices was going to happen. Having said that all those times, he hasn't said it since being elected—not once. Those opposite are going to fail their own test.
This legislation fails every test of good government and good policy. It's been a shambolic process with shambolic legislation and will deliver shambolic outcomes. It defies the basic laws of economics. The process itself, as I said, has been shambolic. After promising not to waste a day in office—that's what they promised—over six months they've been floating a thought bubble on a daily basis. A new thought bubble even came out in the last two days from the Prime Minister, and he had to pull back from it. He was running around the press gallery, making sure that he was corrected on what he had said himself.
This is poorly thought through with no consultation and, sadly, we only received the legislation at 8.45 pm last night. This is a diabolical intervention in the gas market. It's one of the largest and most significant government interventions we've seen in a market in decades. We've seen it in other countries like Venezuela and elsewhere in this sort of time frame, but not here. They present the bill at 9.45 pm the night before, expecting the parliament to support it the very next day. The hypocrisy is astounding. I think it's important that this place here note what the Leader of the House had to say in 2019, when he was Manager of Opposition Business, about how this place should work:
There is a process that happens with legislation that I have to say does matter. It does matter that members have the opportunity to read legislation …
That came from those opposite. That's what they said. The Prime Minister had a lot to say about this sort of thing before the election as well. On 25 March, on Tasmania Talks, the Prime Minister said: 'I want proper processes. I want to consult people.' But, six months in, this is just another one of the long list of broken promises from those opposite.
So flawed is this bill that even government ministers are confused about it. Yesterday, in a press conference, the minister for energy made a bit of a blunder. In answer to a journalist, he said:
You don't have a Code and a cap at the same time, right.
But we know this is wrong. Do you know how we know this is wrong? Because the government was calling around the press gallery moments later to correct the minister. If even the ministers who are supposed to be responsible for this bill don't understand it, how can it possibly be a good piece of legislation?
The government's legislation will give unprecedented powers to control the Australian energy sector—the great confidence that we have in the Treasurer that he is going to be able to deliver the gas at a price that all Australians can afford, because he will be the Hugo Chavez of this government, delivering the gas for the Australian people. But it extends well beyond the 12-month price gap. It extends well beyond that. For years we can expect this. We've heard the industry experts say things like—this is Credit Suisse—'The damage has already started: nearly all gas contracting has shrivelled up in the last few days.' Supply matters, you know. Energy analyst Mark Samter—very highly respected—said this is 'the single worst piece of energy policy I have seen anywhere in the world in almost 20 years looking at global energy markets'. That was about this policy, from this minister. The reality is: this bill fails on every test of good policy and good government. (Time expired)
Every time a member of parliament walks into this chamber to vote, they make a choice and they indicate their priorities. Today government members and other members who'll be voting for the Treasury Laws Amendment (Energy Price Relief Plan) Bill 2022 make their priorities and choices clear. We stand for electricity prices not being elevated by the war in Ukraine. We stand for gas companies being able to make a fair profit but not an unfair, elevated profit off the back of the war in Ukraine. This bill will cap gas prices at $12 a gigajoule. Ninety-six per cent of gas in 2021 was sold for less than $12 a gigajoule. The average price was $9.20. That was a fair price. The gas companies were not complaining. They were making decent profits. Since then we have seen those prices skyrocket.
This is Australian gas, under Australian soil and Australian seas, and Australians have a right to it at a fair price. That is the fundamental principle that the House has to decide today. The government's position is clear. The crossbench's position is clear. And, frankly, the opposition's position is clear as well. Their talking points could have fallen off the back of a truck from a gas company. It is their right to do that, but we have a different job. We respect the job of gas companies to maximise their profits. It's our job to protect the Australian people and act in the national interest, and that's what we are doing today.
We will not stand by and see manufacturers in Western Sydney, or anywhere across Australia, pay the price of Putin's war in Ukraine. We will not do that. And, from this day forward, whenever the opposition say they stand for jobs or stand for industry, their hypocrisy will be called out. Whenever they talk about energy prices, their hypocrisy will be called out. Today the opposition will vote against lower energy prices. They will vote against the impact of the price rises being mitigated by this bill. They will vote against that, and they will be reminded of it constantly, because their priorities are clear. They do not regard this as a situation where the parliament should come together and act in the best interests of the nation. We've just been through a health pandemic, and the Labor Party, as the opposition, acted constructively. We engaged. We even supported things we didn't 100 per cent agree with, because it was the right thing to do for the nation. We are now facing an energy pandemic, and the culprits of 10 years of denial and delay are not interested in engaging.
We've heard a lot about the bill and when the opposition got the bill. The Leader of the Opposition came out and said this plan was a catastrophe before he'd seen a press release, let alone a bill. When the Prime Minister and the premiers reached agreement, the Leader of the Opposition came out and said that this was a catastrophe—before he'd seen a bill, before he'd seen a press release. The shadow minister, on Sunday, said, 'I've been through the bill, and it's a monster and a disaster.' The Leader of the Opposition said yesterday, 'I haven't seen the bill,' and 'I'm against it.' They're either against it because they've seen it and they don't like it or they're against it because they haven't seen it. Just pick an alibi and stick to it. That's my advice to the opposition. Pick a lane and stick in the lane. They can't do that. They're not up to the job. The government's position and priorities are clear, and so are the opposition's. I commend the bill to the House.
It was at about this time last year, in December, in the lead-up to Christmas, that we had the now Prime Minister and the now minister do the big reveal to the Australian people about Labor's energy policy in government. What they promised ahead of Christmas last year was a reduction in household power bills of $275. But there was a catch to that: you had to vote for the Labor Party. If the Labor Party were to come to power, they would deliver a reduction in household power bills of $275. It's no surprise, therefore, that, here we are, one year later, in the lead-up to Christmas—again, it is December—and they have a big, grand announcement: yes, they're going to reduce your power bills again. The difference is that the Australian people now know that this government is inept and is incapable of delivering on its promise of lower power bills.
The opposition will absolutely disassociate itself from the energy plan that Labor seeks to enshrine in law today with the Treasury Laws Amendment (Energy Price Relief Plan) Bill 2022. We will only stand by the households of Australia and the businesses of Australia. We have done that in government. We've done that in opposition.
What the government seeks to do today in this plan is to put in law a justification for increasing household power bills. By their own numbers, the plan behind this legislation will increase power bills for Australian households by up to $700 by next financial year. Be very clear about this: behind all of their sales messaging, the numbers they themselves produce say that this plan will increase Australian household power bills by up to $700. That's the substance of what they propose. Now, add that to the promise of a $275 reduction and you have a nearly $1,000 difference between what the Australian people expected from this Labor government and what, in fact, they are delivering. Australian households will be nearly $1,000 worse off because of this government and their legislation today.
Now, if we stick to facts, they know very well that on this side of the House, the coalition side, prices came down. In the last term of government alone, household prices came down by eight per cent. For businesses it was 10 per cent. For industry it was 12 per cent. And what's happening under the Labor Party, this inept party that pretends the invasion of Ukraine happened only under their watch? Prices are going up. And what's their plan moving forward? Does any Labor Party MP really believe power prices are coming down? I'm looking now at the minister. Minister, are power prices coming down? I can't hear you, Minister. You know the truth. Your plan is going to see household power bills go up by nearly $800—at least $700—by the next financial year. This is your plan. We disassociate ourselves from it.
It's also a plan that seeks to kill off an Australian industry, the gas industry—an industry one of whose major projects, the Kurri Kurri project, this minister decided to call BS. The minister is trying to take gas away from that project. This is a government that has taken out of its budget $50 million for exploration for gas and another $50 million for pipeline infrastructure for gas. It is a parliament that's discrediting carbon capture and storage that would assist gas. It is a government that has taken gas out of the capacity mechanism. This is a government that is on the attack against the very transitional fuel that the ACCC says we need more of, the very fuel that the Energy Security Board says we need more of, the very fuel of which the market operator says: 'It's the only way to get to net zero. You need it.' But they're trying to kill it off because they have an ideological zeal to kill off this industry, and they do so with the greatest overreach of government power we have seen.
This is all about ensuring that the government themselves can intervene in a marketplace and can say exactly who should trade with whom. They will have the ability to tell one company to turn down its energy to save energy, because they know that by putting a price cap on this they are going to decrease supply and increase demand, and their way of solving that problem is a mandatory code that would give them the power to instruct an industry at the micro level. It sets a dangerous precedent for what is otherwise a liberal democracy.
Coal and gas corporations are driving the cost-of-living crisis, they are driving the climate crisis and it is time to stop them. In just one year, 27 gas corporations made $77 billion in revenue and paid not one dollar of tax. Coal exporters have made $45 billion in profit; meanwhile, everyday people's power bills keep going up. It is time to hold these greedy coal and gas corporations to account. Today is the beginning of the end for gas. Greedy gas corporations have been taking this country for a ride, making record profits, often getting their gas for free and putting people through enormous cost-of-living pain. Gas is expensive, it is unhealthy and it is polluting. Gas is as dirty as coal. Gas is not something to transition to; it is something we need to move away from.
I thank the government for committing to a significant package next year that will make it easier for people on low incomes, people in public housing, renters, to do the things that will cut their power bills and give them healthier, cheaper, more affordable homes to live in. If we do this package right, it will make a big difference to people on low incomes and it will mean that they not only have a few hundred dollars extra in their pocket to deal with the cost-of-living crisis this year but they will have it year after year after year into the future, and that's what this is about.
What is also clear is that, under the legislation that we are passing today, the government now has the power to freeze power bills. The Greens have been pushing for a freeze on power bills at precrisis levels for two years. This legislation will give the government the power to freeze power bills. It is not good enough to watch forecasts that power bills might go up by 47 per cent over the next couple of years. We know now that we can stop it. Government can step in and stop those price rises. If we are going to be giving compensation to ensure that people's power bills don't go up, which we support and were the first ones out there calling for it, let's freeze power bills at precrisis levels and put a windfall tax on those greedy coal and gas corporations to pay for it. It is crystal clear from now on that power prices do not need to rise by $1. We can use the powers in this bill to make sure that happens.
I move the following amendment to the second reading amendment moved by the Leader of the Opposition:
That all words after "the House" be omitted with a view to substituting the following words:
"agrees to give the bill a second reading and:
(1) notes that this legislation gives the government the power to stop power bills rising at all and to freeze electricity bills at pre-crisis levels;
(2) calls on the government to immediately use those powers and address the urgent cost of living crisis by freezing electricity bills;
(3) does not consider it acceptable that electricity bills are set to rise by over 20% while coal and gas corporations keep getting subsidies and don't pay their fair share of tax; and
(4) considers that any price rise from here on in is squarely the government’s responsibility".
This bill is a con. What Australians were promised 97 times was that they would have lower power bills; $275 lower was what they were promised. But what the government has now brought forward, after more than six months of dithering and delay, is a bill that does not deliver on its promise. On its face, even if you take at face value what this bill claims to deliver, all it will do is mean that the big price increases in gas and electricity, which the government itself has projected in its budget papers—44 per cent increase in gas prices, 56 per cent increase in electricity prices—will be slightly less big. That's it. They promised—they took to the Australian people a promise—that power prices would go down. They put a specific number on it. They repeated it 97 times.
And now they bring forward a bill which doesn't say that power prices are going down. It doesn't say that power prices are going down at all. If you take it at face value, all it does is to say that the very big increases in power prices which this government has projected in its budget might be slightly less big. They promised $275 down, and now they say: 'Great news, Australian people. It's not going down; it's going up. But celebrate, rejoice, because it's going up by slightly less than the unbelievably big increase it would have gone up by otherwise, according to our own budget papers.' That is the great plan from this government.
But of course, embedded within this is a price cap mechanism which would win the Jim Cairns award for best economic policy—Jim Cairns, Treasurer in the Whitlam government. This is Whitlamite economics. It will harm investment. It will constrain supply. It will mean, over time, therefore, higher prices and lower supply. That is the great risk of what is being done here. Even if we take the government at face value, even if we assume that they genuinely want to deliver an outcome, the big problem here is that the policy tool, the policy mechanism, they are using is one that will have the opposite impact of what it is they want to achieve, because these measures, which will deter investment and raise concerns about sovereign risk, will mean, in the future, lower supply and, therefore, higher prices. The economics of this are very, very clear.
Of course, concerns about this are only compounded by the truly appalling process that has been used, with a bill—that, in its final form, was released to the opposition at 8.45 last night—being rammed through this House and a vote to be called on at midday. This is entirely at odds with good public policy making.
I saw the Minister for Industry and Science trying to draw an analogy with the news media bargaining code—a very successful piece of policy delivered by the previous government. But let me remind the House what exactly happened and the process we went through. We commissioned a detailed report from the ACCC, the digital platforms review. We accepted the recommendations at the end of 2019. We announced in 2020 that it would be a mandatory code. We released a detailed exposure draft in the second half of 2020. There was a parliamentary committee over the summer of 2020-21. And, only after that detailed and good process, legislation was introduced on 9 December 2020, and we had the parliamentary debate in February 2021, only after going through a proper process: an exposure draft; a bill introduced; a parliamentary committee. That is the way that a responsible government deals with significant interventions in the market. It is precisely the opposite of what this ramshackle mess of a government is doing today.
I support the government's energy package. In fact, I go so far as to applaud the government for standing up to the petulant, greedy and selfish coal, gas and oil companies that want business as usual. But I regret to say that there is one glaring omission in the government's energy package, and that is some sort of windfall tax or super profits tax to do something about the outrageous profits being posted by the coal, gas and some oil companies on account of the war in Ukraine—because that's right: these companies, including Australian companies, are shamelessly profiteering off a war in Ukraine at the expense of Australian consumers. And let's not forget who owns the oil, the gas and the coal. Australians own that resource—it's our resource. It's not the private property of BHP or Woodside or Shell or Santos or Exxon. It's our property. Sure, we want these companies to make a reasonable return on investment, but we cannot continue to accept them gouging and profiteering off the misery of the Ukrainian people.
To give you a sense of the scale of this, Santos's global 2022 half-year results show an underlying profit of $1.267 billion, up 300 per cent. And Australia's Santos stated last week that third quarter revenue jumped over 88 per cent to a record high, with reported revenue of $2.2 billion. Moreover, it said its average realised LNG price rose 61.8 per cent from the previous quarter. Shell has adjusted global earnings of $9.5 billion in the third quarter—more than double from the same period last year. Woodside's production for the third quarter increased 131 per cent, to 51.2 million barrels. And, due to higher gas prices, its revenue jumped 272 per cent, to A$9.3 billion. Exxon has experienced its highest global quarterly refining since 2008, and earnings jumped from $17.9 billion in the second quarter to $19.7 billion in the third quarter. And BHP's June financial report states:
BHP delivered strong operational performance and disciplined cost control to realise record underlying earnings of US$40.6 billion and record free cash flow of US$24.3 billion.
How much more evidence do we need that the coal, gas and oil companies are making a fortune out of the suffering in Ukraine and using the war in Ukraine shamelessly as an excuse to gouge Australian consumers and to virtually steal from Australian consumers the resources that they own?
I call again on the government to introduce a windfall tax or a superprofits tax—call it what you want—a tax on companies in this country that earn a super-return on their investment and to use that increased revenue to pay back to the community, to pay to disadvantaged people, people on low incomes, the very people in my community who are turning off their heaters, not cooking on their gas cooktop, turning all their lights out at seven o'clock at night. I'm sick of hearing stories of people in one of the richest countries in the world who are going without food to pay their power bills, who are going without their prescription drugs to pay their power bills, who are going to bed at dark wrapped up in two doonas because they can't afford to turn their heating on. That is in one of the richest countries in the world, when these oil, gas and coal companies are making profits like this, and governments aren't doing anything about it. That's what's needed. Everything that the government is currently doing is good, but they've got to go much further and tax any Australian company—or, more importantly, any company operating in Australia, including foreign companies. When they are making a record return on their investment, make them pay the tax that they owe the Australian people.
I feel a bit like I'm in the twilight zone. I've only been here for six months. I haven't got the experience of some in this chamber, but I never thought I'd see the day when the federal government would seek to legislate to enable price ceilings that will lead to supply shortfalls or run roughshod over parliamentary scrutiny in this manner. This bill will do nothing to resolve the central issues which are resulting in higher energy prices. At best, it is a bandaid solution. But the true intention, I believe, is absolutely clear. This legislation is designed to kill Australia's gas industry.
On Monday, the Prime Minister said the legislation would be available well in advance of this debate. The opposition—and I know the crossbenchers as well—only received this bill at 8.45 pm last night. This morning, the government has restricted debate. The expectation that the bill is going to be released, passed in this chamber, passed in the other chamber and be back here for amendments, I'm sure, within 24 hours, is absolutely ridiculous. The government has provided stakeholders with just five days to provide feedback on the imposition of a gas price cap. No real consultation has taken place on this bill. This bill is dripping with constitutional concerns, and I can absolutely predict that the High Court will be taking a very close look at this rushed legislation before too long.
The government's decision to recall parliament is a very costly exercise. If they had their act together, we could have definitely dealt with this matter in the last sitting week when we had to return to the address-in-reply because we'd run out of things to do in this chamber. This is an absolutely cynical move from the government to staple the relief measures to one of the most radical market interventions in Australia's economic history. The coalition support targeted and temporary cost-of-living relief. We want the bill split to stop this reckless intervention going forward while allowing struggling Australians to get the support that they need.
We've been here every sitting day since the election calling the government to account for their solemn promise to reduce household energy bills by $275. This wasn't a fleeting promise. This wasn't something the Prime Minister said in error when under the pump at a press conference. This was a promise made 97 times prior to the election. But then, after the election, we got the truth. In the October budget Labor predicted that after two years of their policies, electricity prices would go up by 56 per cent and gas up by 44 per cent. Having now seen their policy, their approach to this issue, I think that these predictions will be woefully underdone.
The provisions in this bill reach far beyond a 12-month price cap. The government's legislation will give it unprecedented powers to control the Australian energy sector. It delegates power to the Treasurer to make broad ranging regulations to control pricing, contracting and purchasing activities in the gas market. Any economics student could tell you what the impacts of price ceilings are. It is one of the most fundamental principles of economics. Every school of economic thought holds that price controls affect supply: price floors lead to a surplus; price caps lead to shortages. Only the Albanese government could come up with a solution to gas shortages that makes the shortage worse. Therein lies the inherent public policy challenge here: the government don't understand the problem, so how can we expect them to develop a solution? They've had six months. They've promised it. They said it was coming. It was coming and so was Christmas. Hence the rushed, panicked, eleventh-hour response that we are seeing from the government today.
The gas industry is of critical importance to the people in my electorate. Queensland has a strong gas industry that employs many people within my electorate of Bowman. This industry is already reviewing its current and future investment in gas projects. The headlines over the last week from different gas companies outlining their expected response to these changes are quite staggering. MST Marquee analyst Mark Samter described this move as the 'single worst piece of energy policy I've seen anywhere in the world in almost 20 years looking at global energy markets'.
At a time when the government should be supporting new supply, they are doing the exact opposite. They are cutting funding to develop new gas basins and upgrade critical infrastructure that will get the gas to where it is needed. The legislation is rushed for what amounts to one of the largest interventions in the Australian economy. In fact, Australia hasn't legislated a price ceiling on a mineral commodity since 1944, back when we chose to partake in a global effort to stabilise the gold price. Mark my words: this will lead to a gas supply crisis in Australia, and those who've introduced this legislation and those who vote for it will be held responsible.
I welcome the relief provided to energy consumers through the Treasury Laws Amendment (Energy Price Relief Plan) Bill 2022. The war in Ukraine has generated an energy crisis that the government does need to address, and I do find the self-righteous indignation of the coalition speakers before me about government intervention in the private market slightly ironic. It is something to behold. The war in Ukraine commenced before the election, and no step was taken by the previous government to ensure some kind of insurance against volatile energy prices. But also, during the last parliament, there was no hesitation to intervene in the market with policies such as the big stick legislation to threaten energy producers if they switched to clean energy.
I think what's also really important to remember is that we have an energy crisis that is the result of 10 years of failure to accelerate a transition to renewable energy. Previous coalition governments did everything they could to put a handbrake on Australia's transition, and we are paying the price. It failed to put any protections in place to protect domestic prices and Australians from variable international energy price rises. Australians should not be paying international prices in domestic markets for their own resources. As a result, Australian households and businesses have already been left exposed to this year's 20 per cent energy price rise, and there are predictions of a further 36 per cent energy increase next year. So I support the government intervening.
The bill will cap gas prices to $12 a gigajoule in the domestic market for new gas contracts for the next 12 months. It gives the government the ability to implement a mandatory gas industry code of conduct, which I would say is well overdue. It provides for $1.5 billion of assistance to those on income support and other tax benefits as well as to small business to assist with power costs. I urge the government to come forward with the detail in relation to that as soon as possible.
The bill does not touch coal prices. The $125-a-tonne cap on coal prices will be implemented by state governments. Whilst the bill does not provide for compensation to fossil fuel companies directly for any loss or damage as a result of the intervention directly, I question whether state governments will later be compensated by the federal government. We must ensure a sensible transition away from fossil fuels. I don't support any further subsidies or compensation to coal. We must use this crisis to accelerate the transition to being energy independent, using energy sources that are price stable—that is, solar and wind.
The goal of this bill, to keep electricity prices down or to avoid the further increase that is anticipated, is important. The 20 per cent rise already this year has put so many households and businesses to the edge. We also need to be mindful not to create a policy that creates further inflationary pressure. It is a very complex and difficult balance that needs to be reached. Providing direct assistance to those who need it most by providing relief for power bill shock without adding to inflation has to be the goal.
Is it the best way to achieve that objective? I'm sure, with hindsight, we'd be able to see that other things could have been done or done better. I would question whether a direct price cap is the most effective solution. A windfall profit tax, raised already in this chamber, would be a neater solution more aligned with free market economics and would increase government revenue. Our exports of coal have declined during this period due to high prices, while the value of our exports has almost tripled. The tax revenue has not been commensurate to that rise. Many other countries, including the UK, have imposed windfall profit taxes on fossil fuel exports at this time. Australia should follow suit and get the compensation we deserve from our resources to assist with the transition away from fossil fuels. We must improve the state of the budget and provide greater levels of relief for cost of living.
I question some of the assumptions underpinning the 12-month sunset. This assumes that the global energy market will return to a more stable position as a result of the war in Ukraine ending in the next 12 months. I would be curious to know who has that crystal ball. Does that mean trade with Russia will automatically return to normal at the end of hostilities? There are a lot of questions.
But, overwhelmingly, on balance, it is important that we intervene. I commend the government for intervening to ensure that the price rises anticipated for next year do not occur. That is why I will support this bill. But I urge the government to undertake ongoing consultation and to commit greater resources to accelerating the transition to cleaner forms of energy.
I rise to speak on the Treasury Laws Amendment (Energy Price Relief Plan) Bill 2022. My first message is to my constituents. We will see in coming weeks that whoever the delegated Labor senator is will claim that I voted against support for those people who can't pay their bills. But the reality is I am voting against the Australian taxpayer subsidising the biggest gouger and the biggest profiteer in the electricity network in this country—that is, the Queensland Labor government under Premier Annastacia Palaszczuk. Even the Fin Review has said they are taking $5 billion in profits out of the electricity network. They own 70 per cent of the generators—nearly all the transmission. Where I come from, they set the price. The easiest way to get prices down for the people I represent is for Queensland Labor to stop taking so much money out of what should be a service provided by them to people who cannot pay their bills.
Like many other members, I have people who are living in their cars. They cannot pay their power bills now. We don't use a lot of gas where I come from; it's relatively limited compared to other parts of the country. But the idea that the state government would take so much money from the network and now be propped up by a decision in this place, by the Australian taxpayer, is, in comparative terms, equal only to the crazy policies of Victoria's Labor government, where they haven't developed any gas. The Australian taxpayer will now be propping up those policy decisions by Premier Andrews in Victoria, because they are running out of gas. Even Labor's own consultation documents say that this will not apply to the Victorian spot market or the Sydney and Brisbane spot markets because it will, in bureaucrat-speak, 'impact the availability and supply' and they may well run out.
Mr Deputy Speaker, how is it possible in this country that we could even be in this position? It is because of the very poor decisions of the states, who have constitutional responsibility for onshore resources. I come back to the coal proposal in Queensland. Guess what? The Queensland Labor government own most of the mines. In fact, the forecast price, if you take an estimate, is under $30 a tonne. That is how they can make so much money out of the network.
I'll come to some quotes. Here's one from 31 October:
It would have been the easiest thing in the world to borrow more money and spray more cash around but that wouldn't have been right or responsible. My job is always to prioritise what's right and responsible and affordable, and not just what's popular.
Guess who that was, Mr Deputy Speaker? That was the Treasurer, on 31 October.
Last year, Mr Deputy Speaker—as much as I hate to quote myself in this place—in answer to a question from the member for O'Connor on 23 November, I said:
If we look at what has been put forward by the Labor Environment Action Network, they want to get rid of gas stoves and gas heaters. They want to get rid of gas water heaters …
In a point of order, what did the member for Watson, in his previous role, say? He said:
He is not going to alternative policies at all. He is going to wild fantasies that he is making up.
Well guess what's happened this week, Mr Deputy Speaker? The wild fantasies have come true. The wild fantasies are reality. The wild fantasies are Labor policy. They are saying to the Australian people, 'You will have to retrofit your kitchen if you have a gas stove or a gas hot water system.' This is the crazy policy of a green Labor government. They have no idea what it costs for an individual in an existing house to do this. It is tens of thousands of dollars. Not only that; it will drive up demand on the electricity network. If it's driven high enough—if you combine it with Labor's policy for EVs, where the forecast is a potential 60 per cent increase in demand—you then have to upgrade the entire network, in subdivisions, in local substations and in transmission. It is tens of billions of dollars!
Not only that, but in one fell swoop, in six months, this Labor government has destroyed Australia's reputation as a safe place for investment. We have had tens of billions of dollars worth of investment in the resources sector. They made decisions based on the playing field at the time. Not only have those in government shifted the goalposts; they've shifted the entire stadium and put it somewhere else. These are companies that have finance agreements and contracts. They have shareholders. They have to report, in terms of their requirements, to the ASX and ASIC, along with everything else they have to do. That is now in tatters. The federal Labor government are worse than the Whitlam government. In fact, what we now see in Australia is that we simply won't get gas anymore. We will not be using gas, because of the decisions of this government.
The high prices for gas in this country have been attributed to the effects of Russia's invasion of Ukraine. The government proposes a temporary price cap on uncontracted gas in the wholesale market from the currently operational fields. We know that this is a really small part of our total gas market. The government is also proposing a much-needed mandatory code of conduct in relation to the market.
The reality is that Australians are struggling with record electricity prices despite the fact that this country is swimming in gas. We have no shortage of gas; we have a shortage of decent regulation. Since 2006, the Western Australian domestic gas reservation policy has delivered gas for $5 to $7 a gigajoule. We in the eastern states are being suckered. We allow more than 70 per cent of our east coast gas to be exported, and then we pay inflated prices for the residuum. Since 2015, the ACCC has repeatedly, in report after report, documented the high level of market concentration through direct interests, joint ventures and exclusivity arrangements. We're the world's third-biggest exporter of fossil fuels, but our small businesses are going to the wall.
Separate to the Treasury Laws Amendment (Energy Price Relief Plan) Bill 2022, the government hasn't ruled out compensation to coal producers over the proposed capping of coal prices at $125 a tonne—this on top of the $11 billion a year that we already spend to support fossil fuel companies. This bill will take $1.5 billion of our taxpayers' money and give it to other taxpayers to help them pay their crippling electricity bills. We're still propping up fossil fuel producers at taxpayers' expense rather than imposing export caps or higher taxes on export revenues to compensate the domestic users.
In this bill, we're committing to pay up to $12 a gigajoule for gas despite 90 per cent of our contracts for gas in 2021 having been less than that. The industry was happy to sell at $9.20 per gigajoule just over a year ago. The price of extraction and production of gas has not increased in that period. We would pay less for our gas if we had an appropriate reservation system for our domestic demands. We should be taxing what are effectively war profits for gas exporters, not Australians already struggling with inflation and cost-of-living pressures.
Let's not forget that through this legislation we will still be paying too much for our own gas, and our taxes will be going to help other taxpayers and probably to prop up the coal industry as well. This is an imperfect intervention. We still need to have the courage and the vision to take control of our own future. This bill is only a very small step in the right direction. We are still paying too much for gas. We do not have clarity and transparency on the basis for this gas pricing cap. So I move the amendment circulated in my name in the interests of greater transparency around this very important issue:
That the following words be added after paragraph (4):
(5) calls on the Government to produce the ACCC report and any other supporting evidence which the Government cites as the basis for establishing this domestic gas price cap of $12/gigajoule".
As the member for Petrie, do I think that this bill from the Albanese Labor government, the Treasury Laws Amendment (Energy Price Relief Plan) Bill 2022, will lower gas prices or electricity prices for the people of Petrie? Not a hope in hell. There is no way that this will lower prices for those people struggling with the increased inflation and increased cost of living since the Albanese Labor government came to power. We've seen prices go through the roof. We have seen eight interest rate rises, with mortgage payments absolutely doubling and in some cases tripling. So people are struggling, and this government here and this Prime Minister have come in at the last moment and just recalled the parliament, which won't help people at all.
The fact that we're here today so this bill can be rushed through with barely any oversight or any chance for the opposition to actually read the bill is a disgrace. It's a little bit like a child who comes in to their parents with an assignment the night before it's due, trying to sticky-tape something together to submit the next day. This is not good legislation—not to mention it's costing over $1 million to recall the parliament for this one day. Actually, it's not even one day; it's less than three hours between nine and 12 before they do it. The Treasurer obviously delivered a budget in October. We were down here just two weeks ago with 151 members in this House and 76 senators. They could have done that then. They could have done something in the budget. But no. They recall the parliament at a cost of over $1 million and allow less than three hours debate. So I have no faith at all that what this government, the Albanese government, is doing will help the people of Petrie—no faith whatsoever.
The other thing is that this is really all about saving the Prime Minister's face. The Prime Minister promised 97 times before the last election, in May of this year, that he and his government would reduce power prices by $275. Ninety-seven times he promised that. It wasn't a slip of the tongue. On 5 December 2021, Mr Albanese promised that an Albanese government would reduce power bills by $275. On 17 February 2022, it was promised that an Albanese government would reduce power bills by $275. The current Prime Minister, on 3 April 2022, promised again that he would reduce power prices by $275. On 18 May, only three days before the election this year, he promised that he would reduce power prices by $275. And since he was elected in May? He can't mention it once. Not once can he mention that he will reduce power prices. The Treasurer delivered a budget in October, and that budget said prices would go up by over 50 per cent in the next two years. What that means is that, for people back in Queensland, back in our electorates around the country, their power bills are increasing; their gas prices are increasing. When they're throwing a shrimp on the barbie this Christmas and they go down and grab a SWAP'n'GO cylinder, the prices are going up.
Not according to Hogan—it was 'throw another shrimp on the barbie'—but thanks, Treasurer. It would be nice if you could lower power prices and do something about it in the budget, rather than recall parliament, at a cost of over a million bucks.
This is a big issue, because what it shows is that the Prime Minister can't be trusted. This is a broken election promise, and the Albanese government cannot be trusted, and the people of Queensland need to know that. The other thing is that, if you reduce power prices for 10 million households by $275, that is a $2.75 billion reduction. But, instead, we're getting increases in power prices by 50 per cent. And now the government is bringing in some package that we know nothing about that will invest $1½ billion—so less than $2.90 a household per week—and we don't even know where it's going. Is it going to the states? Is it going to all households? How will that actually reduce power prices? The reality is that it won't. What will happen is that power prices will increase by 50 per cent in the next two years, and do we really believe that somehow they will then decrease by 50 per cent because of this legislation that will be passed today, with the support of the Greens? No. Labor need the support of the Greens in the Senate, and they have done a midnight-hour deal with the Greens to actually get this legislation through.
This is not good for the people of Petrie at all. I'm concerned that what you'll see for the people of Petrie, the people of Queensland and the people of Australia is increased power prices despite this bill being rushed through, recalling the parliament at a cost of over a million dollars.
Prosperity is defined as economic wellbeing for everyone, not just a handful of greedy multinational gas companies who are exploiting both an Australian resource and a war for profit. That is why we are here today—because Australian consumers need people to fight for them in this House, to ensure that households and businesses can keep the lights on and keep people employed. To those householders in Goldstein, small business operators and manufacturers who I have spoken to about this over the last few months, you have brought us here today. These multinational companies could have read the room and come to the table in good faith. Instead, they chose to profiteer while Australians struggle with energy prices dictated not by the ample supply here in Australia but by international markets under Russian influence.
I first raised the need for action last June, advocating for a windfall tax. Multinational fossil fuel companies operating in Australia will make a gross profit of up to $140 billion this year from Australian gas and coal. Still, today, the gas companies shriek about how unfair it is that gas prices will be capped at a reasonable level, and yet, at $12 a gigajoule, the profit across the spectrum of Australia's gas fields will sit at somewhere between $4 and $8.
In Western Australia, gas companies have continued to make a handy profit since 2006, when that state introduced its gas reservation policy, even with prices in the $5 to $7 range. So spare me the performative histrionics. Arguably, setting a price at $12 is too high and will slow down our transition away from gas, because it will artificially make it too profitable, just like the war. Indeed, 70 per cent of east coast gas is exported, and there's much continuing export profit to be made. Allowing Australian manufacturers to access energy at a reasonable price will not break these companies, which operate in an anti-competitive way as an effective cartel in the way that they control production and fix prices. The game is up. These companies should be careful of crying wolf, as they continue to make windfall profits from their export product and pay next to no corporate tax.
It may be the week before Christmas, but I am pleased to be here to represent my community on this issue. As the Australian Industry Group told me in a letter:
The combination of actions chosen by the Federal Government, while far from perfect, is likely to be helpful overall in reducing energy affordability pressures on industry and households over the next few years and improving the long-term position of energy users.
I agree: this is imperfect and will, at best, stop prices from skyrocketing further rather than bringing them down. It's time to get as many households as possible off gas. I look forward to discussions with the government to revolutionise household energy use so our communities are not beholden to global companies who have shown little care for the Australian people, the Australian economy or the Australian environment. I will support this bill.
Where is the $275 reduction in household electricity accounts promised by Labor on 97 occasions leading up to the federal election? Since Labor being elected, this has not been mentioned once. Now, with a looming energy crisis, electricity costs are set to rise more than 56 per cent. Labor's appalling solution has rightfully received an outcry from our community. This is why some have labelled their set of measures and rhetoric a 'declaration of war' on the coal and gas industry. The industry groups they are combating are the same bodies that have helped Australia narrowly miss out on blackouts. Their cooperation and their input is vital.
The Prime Minister and his government have repeatedly ignored warnings from energy operators, doubling down on this rushed policy that we are debating today. Their approach is anything that doesn't mess with their renewables pipedream. Mark Samter of MST Marquee, who has been analysing global energy markets for over 20 years, described it as the 'single worst piece of energy policy'.
Let's go to the root cause of the issue. This is a supply-and-demand issue. If there is an oversupply, the price goes down. If there is an undersupply, the price goes up. We have an undersupply. We need more energy put into the grid, not market intervention that destabilises the entire industry and casts further doubt over Aussies' household bills and the certainty of even keeping their lights on. We don't want to end up in a situation where we are rationing gas because of the shortages that will occur when there is not enough gas being produced.
In Australia, we live in a market based economy. No matter its ideology, the government simply must respect the market influences that drive profit and generate national wealth. This market based economy also produces the products that we need. In this case, it's gas. The Labor government are more concerned with demonising the coal and gas industry and the companies that generate great wealth for our nation. I am urging the government to set its focus on energy solutions that actually work. Credit Suisse energy analyst Saul Kavonic puts it perfectly:
Now that Labor has violated industry trust, they are going to see how hard it is to keep the lights on without industry cooperation.
He goes on:
Any collapse of the heads of agreement is a sign that industry cooperation cannot be assumed any longer, raising the prospect of a 'Bowen blackout' before the next election.
With Labor, there is no certainty for business or for future investment. If we do not have energy at the right price in Australia, we're going to drive industry offshore. We don't want to do that. It's not right for the Australian people. The risk to Australia is enormous. If manufacturing industries decide to move offshore because it is easier to do business or if companies decide not to invest in Australia then we will have a situation where we lose jobs, and people will lose their incomes. That is not something that can easily be undone if it can be undone at all. But the economic uncertainty continues. Already energy shares are declining. People are not willing to put their money behind the government's decision. Our major producers are forced into a position where they have to reassure their investors that it is still a good idea to invest. Since the Prime Minister announced he would introduce price caps, nearly all gas investment has dried up. Investors have withdrawn their funding on new developments. Without these new developments, the country will be left without long-term supply.
The Labor government are messing around with free enterprise by imposing price controls. We should heed the lessons of history. Price controls have been enforced numerous times and have only proved to be detrimental to the economy. Australians deserve a long-term plan, not a panic reaction that is laced with nice sounding words but, beneath the surface, lie very dark consequences. Labor is about to get a major lesson in how free markets work and, unfortunately, Australians will be the collateral damage, paying the price for their ignorance. (Time expired)
Power bills make up a big part of household budgets in Indi. Our weekly median income is just $736, almost $70 less than the Australian average. That is why I welcome a cap on gas prices at $12 a gigajoule for 12 months. I welcome this bill. But make no mistake, this is still a very high price to pay for gas, arguably too high. But we know that, without this intervention, gas prices will continue to increase. It is not just households; local manufacturing is particularly hard hit by these costs.
VitaSoy has operated for 21 years in Wodonga and recently experienced massive sales increases. It employs well over 100 people. To meet this demand, it expanded the workforce, but the high gas prices have caused serious concern for this important manufacturer. VitaSoy tell me a cap on gas prices is a positive for Australian manufacturers like them. This bill also establishes a mandatory code of conduct, which may set a reasonable pricing framework for gas, and I strongly support this. I look forward to seeing the detail once the consultation is complete.
Importantly, today we are legislating appropriations for $1.5 billion of targeted relief for households receiving Commonwealth social service payments and some small businesses, and this will be very welcome to many of my constituents. I am very encouraged by the government agreeing to develop a package for the next budget that will assist households and businesses move towards electrification, with the focus on low-income households through no-interest loans. For some time, I have been calling for exactly this policy.
But the government must also make it cheaper and easier for everyday Australians to buy a home battery. In the last parliament, I introduced the cheaper home batteries bill, which would bring home batteries into the already existing Small-scale Renewable Energy Incentive Scheme. Independent modelling showed this could triple the number of batteries in Australian households within three years. The government must get on and do this.
Likewise, the time is now for the Commonwealth to scale up support for community owned renewable energy. Across regional Australia, there are incredible examples of communities working together to own and share renewable energy, and there is genuine opportunity right now for government to review how ARENA can assist these groups. I welcomed the conversation I had with the Minister for Climate Change and Energy about exactly this not long after the election, and I remind him of that now. Let's scale up community energy.
I support this bill today, but we all know that this is a temporary measure in a time of crisis. The recently announced Capacity Investment Scheme is encouraging, because the real work now is the rapid scaling-up of renewable generation, storage and distribution. In doing that, we must maximise the opportunity for investment that creates new skills and new jobs, especially in regional Australia, where most of this energy generation will occur. I commend this bill to the House.
The people of Townsville, in my electorate of Herbert, are doing it tough, with cost-of-living pressures that have continued to rise. I support targeted, appropriate cost-of-living relief, but this policy and this bit of legislation, the Treasury Laws Amendment (Energy Price Relief Pain) Bill 2022, have everything mashed in together. Six months into this new government's first term, the lack of action on issues that affect the money in people's bank accounts, their grocery shop, their fuel bill and their power bill is having an impact on their everyday life.
The very fact that we are here today on an unscheduled sitting of parliament to solve such an important problem is an example of this government's chaotic approach. There have been weeks and weeks of parliamentary sittings since the election, and days when we ran out of things to debate, and suddenly we're back here, on a whim, to sort out a problem that has been developing for months. I don't have any problem with travelling to Canberra to debate important issues. That's what we're elected to do. And, as has been said this morning, the opposition absolutely supports targeted and temporary cost-of-living relief. We always have. But it's this chaotic, knee-jerk, thought-bubble approach that needs to stop.
This unprecedented market intervention is going to mean long-term pain for the people of Australia. Power prices are to increase. The Australian Energy Regulator released its State of the energy market report for 2022 in September this year, three months ago now. The report noted that wholesale electricity prices across much of the NEM remained relatively low and rose rapidly, to record highs, in all regions in May, June and July 2022. We've seen this government be asleep at the wheel. This issue is not a new one, and this solution that we're debating today is rushed and not considered. The legislation was only provided to the opposition at 8.45 last night. But the Labor Party already had support from the Greens, who had not seen the legislation—sight-unseen support from the Greens—because that's their coalition, the Labor and the Greens government.
As the Reserve Bank governor, the Secretary of Treasury, energy market experts and others have made clear, the answer to Labor's energy crisis is more supply. Getting more gas into Australia's domestic market will reduce electricity prices and inflation. Instead, we have a situation where we're talking about not just short-term price caps, which will give long-term powers to control the Australian energy sector; the government says the bill aims to create an overarching framework to enable the government to regulate the gas market. It delegates powers to the executive, including public servants, to apparently enable regulation of most aspects of the gas market—for example, wholesale and retail activities, domestic sales and exports, and both the prices and the amount, timing and location of gas to be supplied and other contract terms. These powers would be relied upon to introduce a yet to be developed mandatory gas industry code of conduct.
This is a move that has been labelled reckless, free market intervention and destructive legislation, with the stakeholders saying that the only thing this policy will achieve, if implemented, is less Australian gas production in 2023 and beyond. That sounds a lot like less supply to the market, not more. And the criticism doesn't stop there. Another expert has stated: 'We are concerned that the interventions—
It being 11.15 am, the debate is interrupted in accordance with the resolution agreed to today. The original question was that this bill be now read a second time, to which the honourable member for Dickson moved as an amendment that all words after 'That' be omitted with a view to substituting other words. Subsequent amendments have been moved by honourable members. So the immediate question is that the amendment moved by the honourable member for Kooyong be disagreed to.
Question agreed to.
The question is that the amendment moved by the honourable member for Melbourne be disagreed to.