David Feeney (Victoria, Australian Labor Party) Share this | Hansard source

I am pleased to make a contribution to this MPI debate on a gross national feed-in tariff. I certainly acknowledge the good intentions of Senator Milne in leading the debate in the parliament today. The fact is that Australia is a federation and feed-in tariffs are not a matter on which the Commonwealth can or should be riding roughshod over the states or, for that matter, the territories. That is why it is the government’s view that the correct way to approach the issue of feed-in tariffs is through the COAG process.

It is important to note that COAG decided in November 2008 not to implement a national feed-in tariff but agreed to principles for jurisdictions that implement feed-in tariff schemes of their own volition, on their own initiative, including whether these feed-in tariff schemes would be funded on budget. I think it is worth noting that the principles developed by COAG include actions to ensure small renewable energy generators, including households using solar photovoltaic technologies, are fairly treated under the National Energy Customer Framework.

Several states have already legislated in the area of feed-in tariffs. In my own state of Victoria since we last discussed this subject in November 2008 the Brumby government has introduced the electricity industry feed-in tariff bill 2009. Under this bill, Victorians who put solar panels on their roofs will receive 60c credit per kilowatt hour for the energy they feed into the electricity grid. These amounts will be deducted from their electricity bill and will help make solar panels more affordable. I commend the Brumby government for taking this measure, a measure that will help many Victorians make a contribution to reducing our consumption of electricity derived from coal-fired power stations.

But the Victorian scheme does highlight the challenge that we have in this policy arena. The average retail price for electricity in Victoria is presently at 18c per kilowatt hour, so paying households 60c for every kilowatt hour of electricity that they generate with solar panels does involve a subsidy of around 42c per kilowatt hour. Victorian taxpayers will be paying for this electricity and they will be paying at more than three times the market rate. It is argued by Senator Milne and others that this is still worth doing because it helps reduce our overall CO2 emissions, and I accept that argument and obviously the Victorian government accepts it too.

At the very small scale currently contemplated, this is a sustainable scheme, but we cannot apply that principle across the whole of the economy and indeed the whole of the nation without sharply increasing the price of energy to all consumers. We must pursue technologies that will enable Victoria’s coal and electricity industries to reduce their emissions. This is realistic and achievable, and we are spending a lot of money to help the industry achieve this.

Senator Boswell said in his contribution that renewable energy ‘will not work unless it is heavily subsidised’. Frankly, having the government invest in new industries, in new research and development and in fostering and nurturing the environments for new industries to develop is not a proposition that appals me. I am astonished to hear that it is a proposition that appals Senator Boswell. The National Party are not known, generally speaking, as a political party that loathes subsidies. Of course, there is the old adage about the National Party: they are a party that likes to socialise their losses but privatise their profits.

This is why this debate is so important. I guess the views of Senator Boswell bring into sharp relief the fact that this really important public policy debate around feed-in tariffs is happening in the context of one of the major political parties in the debate, the Liberal-National Party coalition, not even coming to the baseline. They have not yet even accepted that climate change is real. They have not accepted that action on climate change is necessary. That is the great shame of the debate on feed-in tariffs: that Senator Milne, the Greens and ourselves are having this debate on our own while across the road there is a major political force in this country that has not yet got its head out of the sand. This is why it is so important that the Senate pass the Rudd government’s Carbon Pollution Reduction Scheme, and does so without delay. By placing a cap on carbon emissions it puts a price on carbon and provides the most critical economic incentive for carbon-intensive industries to invest in abatement technologies. Both the federal and Victorian governments understand this. I think Senator Milne understands this too, which is why I hope she and her colleagues will get behind the Rudd government and the CPRS bills. Those opposite do not understand this. But it is my firm view that actions such as feed-in tariffs being debated in isolation, without there being a CPRS scheme, is frankly missing the main game. As long as the CPRS bills are not passed there remain fewer incentives for carbon-intensive industries to reduce their emissions. That is why it is so important that the opposition get their act together on this issue. That is why we must continue to debate climate change. The fact is that we have those on the other side, such as Mr Robb, who continue to insist this is all a left-wing plot. We have Mr Turnbull, who, when he was environment minister used to think that climate change was real and that an ETS was warranted, but now appears to have changed his mind.

Coming back to the question of feed-in tariffs, we can see the problems inherent in this issue when we look at Germany, the country which has gone furthest down the road in terms of implementing feed-in tariffs and which is frequently pointed to by advocates of feed-in tariffs as their role model. Germany’s feed-in tariff has led to a grand total of one-half of one percent of its gross electricity consumption coming from domestic solar panels in 2007. Yet even that very modest contribution to the national electricity grid has to be so heavily subsidised that it is costing German consumers €1 billion a year in higher power bills to cover the cost. That is A$1.76 billion. Germany has about four times Australia’s population, so the equivalent cost here would be something in the vicinity of $440 million a year—and that’s for one-half of one percent of our electricity consumption coming from solar panels. Obviously, we have to aim for a much higher target than that. That is nonetheless an important contribution to the abatement of carbon and the kind of initiative that needs to be weighed in a considered public policy process when considering how we can foster a photovoltaic industry in this country. Equally obviously, it is small beer when we consider the size of the challenge and when we look at an instrument like the CPRS, which will do so very much to deal with climate change, to deal with this country’s responsibility to take action on climate change.

The fact is that feed-in tariffs must be seen as part of a broader strategy, rather than being a strategy in their own right. This government has a comprehensive strategy for delivering renewable energy to consumers at the lowest possible price by allowing a wide range of renewable energy technologies to compete in the race to commercialise these technologies. That market based approach sits at the heart of the CPRS and sits at the heart of the government’s policy. And I think that is far superior to any prescriptive approach such as that contained in the motion we are debating today, which would in effect mean that the government would decide what the most effective renewable energy source is and then subsidise it, which in turn involves the taxpayers picking up a very heavy tab. It is one thing for the government to pick winners. It is another thing for the government to create opportunities for all of these various technologies, to try to be part of the solution.

An important part of the present government’s strategy is an expanded renewable energy target. This is something that Germany does not have. The renewable energy target will ensure the proportion of Australia’s energy coming from renewable energy sources is 20 per cent by 2020. This is more than four times the previous government’s target. The renewable energy target, together with the CPRS, is the key to accelerating the deployment of renewable energy in this country. This is a greatly preferable strategy to relying too heavily on feed-in tariffs, too heavily on a single technology, which will pass an unacceptably high burden to the taxpayers. Labor’s philosophy is to help the whole Australian community move towards more efficient energy use and not to allow the minority who can afford to have solar panels on their roofs to benefit while the rest of the community foots the bill. That is why the Rudd government has brought in a series of household assistance measures which will assist people in their homes and their communities to become more energy efficient and to have better access to affordable renewable energy sources. (Time expired)