Anne Urquhart (Tasmania, Australian Labor Party) Share this | Hansard source

A lot of this debate has been consumed by the notion that, by simply removing the carbon price, it will cut power prices. It is a simple proposition—

Senator Cormann interjecting—

No, I am going to get to a question in a moment, so if you would just hold on. The proposition is that if you impose a tax, prices go up, and then if you remove that then prices go down. But taxes, particularly the carbon price mechanism, are designed to change that behaviour. We have seen there have been fewer emissions in the electricity sector as a result of carbon pricing, which has been a positive behaviour change. I want to ask the minister about the negative impacts of this government's rhetoric on carbon pricing. How has this government in fact created incentives for various bodies to maximise their benefits, while the carbon price remains in existence?

In this instance, I am specifically talking about Hydro Tasmania and the potential negative impact for Tasmanian consumers from both the constant negative rhetoric from the government about the carbon price and its upcoming repeal. On The Conversation website, it was reported by Professor Mike Sandiford, Professor of Geology and Director of Melbourne Energy Institute at the University of Melbourne, that Hydro Tasmania have sought to produce significantly more amounts of electricity while the carbon price has been in place than they would have, given the levels in their dams.

Of course, Hydro Tasmania produces hydroelectric power. It is wholly reliant on rainfall and that rainfall gets collected in its dams. So while there has been a course of strong dividends for the Tasmanian government, as the shareholder of Hydro Tasmania, it may be that these were in fact short-term profits from shorting the carbon price. So the carbon price's imminent repeal has provided an incentive for the hydro to drain its dams to realise the windfall gains wherever it could.

Mr Abbott's promise that, through repealing the carbon tax, household costs will fall $550 per year on average may, if rainfall in Tasmania declines below average over the coming years, turn out to be the inverse with increases in wholesale electricity prices in Tasmania. Because Tasmania will be importing large amounts of power from Victoria and the national electricity market at a premium, I want to know if the minister, the Tasmanian Liberal MPs in the other place and the Tasmanian Liberal senators have considered this issue.

It has also been reported that Tasmanian hydro generators have been selling electricity into the mainland market at unprecedented rates, drawing down storage levels dramatically since the carbon price was implemented in July 2012. Levels in the Gordon dam, which has almost one-third the total storage capacity, are down to nearly 20 per cent—levels not seen since the millennium drought despite significantly above average catchment rainfalls over the last year. In the last years of the millennium drought up to late 2009, hydro supply in Tasmania was so limited that it could not supply Tasmanian demand so Basslink flowed mainly south with the export and import of mostly Latrobe Valley supplied electricity. Reservoir levels were then at less than 30 per cent capacity. So according to the AEMO in 2008-09, when the Basslink flow was 90 per cent southward, Tasmanian wholesale prices were around 25 per cent higher than in Victoria.

The situation changed with the start of carbon pricing, with storage averaging above 50 per cent from three good years of rain and from a doubling of Victorian prices to almost $60 per megawatt hour. Hydro power was sent northwards across Bass Strait at unprecedented rates. Then according to AMEO in 2012-13, the flow direction was a reverse of the four years previous with 90 per cent of flow northwards. The impact of this increase in supply was that the July storage levels have fallen to around 25 per cent. So without the carbon price, it was reported that Victorian prices will drop to around $30 per megawatt hour and that will see no price signal, no net export, no benefit for Tasmania. The concern I have is that the draw-down of storage has risked future supply in the event of a return to below-average rainfall conditions. If reserves prove insufficient and Tasmania again needs to import, Tasmanian wholesale prices could soar to at least 25 per cent of Victoria's.

Before posing my final question to the minister, I want to remind the chamber that the coalition government has sought to frame this debate about the utility bills paid by households and business. We heard the minister talk about the figure of $550 a moment ago. So in seeking to repeal the carbon price, the main purpose seems to be the miraculous reduction in utility bills and in overall costs on households and businesses. Never mind that the rise in electricity has overwhelmingly been the fault of infrastructure upgrades to distribution networks. And never mind that there are different prices and usages in every state.

The Prime Minister was unambiguous in stating the reductions that Australia could expect if these repeals bills passed.

The first impact of this Bill will be on households whose overall costs will fall by about $550 a year on average.

The minister talked about that a moment ago.

Because of this Bill, household electricity bills will be around $200 lower next financial year without the carbon tax.

They were some nice weasel words by the Prime Minister in the use of the term 'next financial year'. He reflects that Labor's emissions trading scheme will have reduced power prices significantly. But to state that 'household costs will fall $550 per year on average' when power is obviously only going to increase in the first year is completely naive and dishonest. The new evidence raised on the Conversation website by Professor Sandiford shows that repealing the carbon price and the uncertainty for the past four years may actually see power prices rise considerably in Tasmania. Minister, can you guarantee that the average Tasmanian household costs will drop by $550 each year and every year after as guaranteed by the Prime Minister?