Simon Birmingham (SA, Liberal Party, Shadow Parliamentary Secretary for the Murray Darling Basin) Share this | Hansard source

I will touch on both the amendment under consideration and the earlier amendment that Senator Milne raised. Yesterday, as Senator Milne highlighted, we had the first parcel of amendments dealt with in the chamber. I am not sure that all of the comments I made at that time were necessarily totally germane to those amendments. The opposition support for them was very real and, as Senator Wong has alluded to, they were a point of negotiation between the government and the opposition.

We strongly endorse the soft-cap approach. In my speech in the second reading debate I spoke about a hope that somehow the government could find a way to limit the liability that liable entities face under the RET using a price mechanism. The RET has always worked on the basis of a variable product. That has been the way it has responded to market demand. The challenge with the SRES as proposed is that it fixes a clearing house price and therefore takes out that capacity, if there is a surge in generation certificates, for the price to drop back. The amendments proposed and accepted by the chamber yesterday in this regard allow the government to respond to those market factors. If there is excessive growth that is going to go well above six million then the government can adjust the price.

That will not necessarily cap at six million the number of certificates generated. It will simply reduce the cost to the liable entities. Yes, it will potentially reduce demand as well, but if that demand is growing because technologies have become more efficient and because of their lower costs in and of themselves then the government will be able to step back the effective subsidy that electricity consumers are paying but allow the certificate generation to continue well above six million, if that is what happens, as long as the price is adjusted in accordance with the terms set out in the amendments made yesterday.

I welcome that. I think it is as close to an elegant solution as you can come to for the problem of the unlimited liabilities that are faced under the SRES by local entities. The coalition had genuine concerns about those unlimited liabilities and wanted to see some means by which they could be if not capped then at least given an element of certainty for the future that they were not going to be ever-increasing. This price mechanism provides for that and we think that is a useful step forward. We do not believe that it should create uncertainty for the generators of small-scale technology certificates. We think that a minister of the day should be able to handle the issue in a way that is consultative enough with industry, takes into account industry concerns enough and provides some certainty for the future so as not to see the type of on-again, off-again incentive, subsidy and rebate type of arrangements that have plagued the sector that Senator Milne and I and many others have spent so much time talking about in this chamber and elsewhere.

We think that the process that is set out forces the minister of the day to consider enough factors and take into account enough factors, and those need to be the ongoing stability of the small-scale technology sectors. I would expect the minister—and take her word—and future ministers to make sure that they did not dramatically alter the certainty around those sectors, but that any price changes to the clearing house price were done in a measured, moderate, considered and consultative fashion. We note that the minister is required to provide not just for changes but reasons outlining the changes to that price under those amendments to the House as well.

We support the Greens’ amendment under debate because we think it adds to and complements the amendments that I was just talking about—the amendments that allow for a change in the clearing house price. We think it will add transparency to any decisions that a future minister makes. We think it will hopefully inform the debate on any future decision a minister makes, and so in that sense having the biennial review, going through that process, will guarantee consultation and engagement. It will guarantee that there is a public statement of the government’s thinking of the day at the end of that. It will guarantee that the future intentions of the clearing house price should be clear to all, and so it is a value add and we welcome the fact that the Greens have proposed this.

I understand there has been some negotiation around the terms of the amendment between the government and the Greens, but we think that overall the principle and the concept is an important one. It will add, I think, to the certainty for the industry but together these amendments will also allow the scheme to be as responsive as it needs to be. As Senator Milne alluded to, we see a dynamic and fast-changing industry sector around all of the renewable technologies. We all hope of course that this entire scheme drives change and advances, lowers costs and makes a dynamic sector even more dynamic, and therefore providing the government with capacity to respond to that in an open, transparent and thoughtful way is important. Together, we think these amendments make eminent sense.