Lisa Singh (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary to the Shadow Attorney General) Share this | Hansard source

This Energy Efficiency Opportunities (Repeal) Bill 2014 before us is another example of this government's repealing of a once bipartisan effective piece of legislation introduced by the Howard government to enable Australia to deal with this century's inevitable transformation of energy generation and supply. Its repeal is another irrevocable and incredible indication that this coalition government is more reactionary and owns less foresight than the Howard government, characteristics which many of us might not have thought possible back in 2007. But just like the Renewable Energy Target, the energy efficiency opportunities legislation is being repealed because it was too successful.

Energy efficiency refers to gaining the same or higher level of useful output using less energy input. Increased energy efficiency is a very effective economic driver. It reduces overall demand for energy and delays the need for new energy generation equipment. Energy efficiency is also about productivity. It is about lower inputs and bigger outputs. It is about lower costs and doing things better, doing things smarter and doing things more cost-effectively. Improving Australia's uptake of commercial energy efficiency opportunities has the potential to increase our economic health and lower the rate of growth in greenhouse gas emissions.

In 2004, along with the Labor Party, the Howard government recognised that bipartisan energy policy action was needed. The energy white paper in June 2004 entitled Securing Australia's energy future identified the improvement of Australia's energy-efficiency performance as a key part of the Howard government's energy policy in order to achieve greater prosperity, sustainability and energy security. The Energy Efficiency Opportunities Bill 2005 was to establish the mandatory energy efficiency opportunities assessments announced in that white paper. It was part of a wide-ranging effort to ensure the careful and prudent use of our valuable energy resources by industry and the community.

The Energy Efficiency Opportunities program—the EEO program, as it was known—requires corporations who use more than half a petajoule of energy to identify and assess energy efficiency opportunities and subsequently report the outcomes of those energy assessments, both publicly and to the government. The EEO program was part of a framework. It took its place alongside a range of measures to pursue the benefits of using energy more efficiently: energy market reforms, solar cities, improved appliance and building standards, and targets for reduced energy use in government agencies—all good stuff. It stood alongside energy market reform, important measures that were put in place to help make our national energy market more efficient. And it complemented the Solar Cities program, important ideas to introduce large-scale solar energy into the power supply of our Australian cities. It worked next to improved appliance and building standards at a time when many appliances were transitioning from older technology to newer technology. This program was an industrial counterpart to the domestic measures that had been in place to assist families with their own family budgets to manage more sensibly the electrical goods that they purchased. This broad range of energy efficiency measures had the potential to improve economic health and lower the rate of growth of greenhouse gas emissions. Those measures and this program enjoyed bipartisan support.

And just like the Renewable Energy Target, the EEO has proven to be extremely successful. In its predetermined review of the Renewable Energy Target, the government's hand-picked review panel criticised the RET because it was too successful. The RET has created thousands of jobs, which apparently is too many jobs for this government. The RET has encouraged billions of dollars of investment, which is too much investment it seems for this government. And just like the RET, the EEO has achieved exactly what it was designed to achieve. In fact, let me refer to the review of the EEO program at the end of its first cycle that was completed by ACIL Tasman at the request of the former Department of Resources, Energy and Tourism. 'The EEO program has been successful,' it said. Just like this successful RET, the government is getting rid of the successful EEO program. Go figure.

The 2013 Full Cycle Evaluation of the program found that the EEO has been successful in its objectives of raising awareness and embedding energy efficiency practices in Australian industry since 2006. The program has been effective in driving down emissions and has saved industry approximately $323.2 million per year in power expenses. Corporations found the government's regulation to have been beneficial in providing a structure and framework for companies to embed energy-management systems. It has delivered benefits to participants well in excess of their costs and, extremely importantly, there is still more benefit to be gained by continuing with the EEO program through the second cycle. The program has significantly lifted the energy-management capability and awareness with many corporations reporting the key elements of the program are now standard business practice. These achievements would not have been made possible without government intervention. The independent FCE report showed that corporations found government regulation to have been beneficial in providing a structure and a framework through which information and data were used for energy efficiency.

Despite the benefits still to be gained, the progress still to be made and the energy efficiency improvements yet to be achieved, this Abbott government argues that the program has run its course and is no longer needed. The explanatory memorandum reads:

Through its application businesses have built up a bank of energy efficiency projects which can be considered based on current energy prices and specific circumstances. With energy prices driving companies to use energy more efficiently and the increased capacity to respond embedded in industry, the government considers this program, underpinned by the EEO legislative framework, to be no longer required.

There is no real disagreement about whether the program has been effective. I think we all do agree about the incredible effectiveness of this program. But our argument is that its closure now, by this government, is nothing more than ideological and myopic rather than logical and prescient. Australian companies cannot be too energy efficient in this century. If energy prices rise, the discovery and exploitation of efficiency opportunities will become more necessary, from both a business and an environmental sense.

On what bank of case studies and projects will these businesses rely in the future if this impetus for driving efficiencies as technologies change is undermined?    As the explanatory memorandum makes clear, from now on the government will rely only on high energy prices to drive any efficiencies into the future. 'Let's just put the price up'—it says—'Let's hope the price drives efficiency instead of common sense, discussion, best business practice, and allowing that best business practice to be shared amongst peer companies.'

The FCE report conservatively estimates that, during the first cycle, the EEO program was responsible for about 40 per cent of the energy efficiency improvements in the Australian industrial sector. The evidence suggests that there is still more benefit to be gained by continuing with the EEO program through the second cycle. It has been estimated that it could be responsible for a further 20 per cent of energy efficiency improvements achieved during the second cycle. It is impossible to argue that a 20 per cent efficiency gain is insignificant and unnecessary. How can a government argue against that? A gain of that magnitude is undoubtedly worth pursuing for a further seven-year cycle. But the government claims that they are closing down the program to remove unnecessary regulatory burden, at the same time, I note, as opening up the nightmarishly burdensome regulatory shambles of Direct Action and the Emissions Reduction Fund. It is all right to have that regulatory burden, which is a policy not supported by any economist or scientist out there, but it is a very effective bipartisan policy that has been in place since John Howard's term—that is, use the regulatory burden argument there and get rid of it.

I agree it would be inefficient for a policy to provide further information if the cost of doing so outweighs the benefits that could be expected.    But the review found that this is not the case. The cost of providing further information does not outweigh the expected benefits—in fact, quite the contrary. Let me again refer to ACIL Tasman's review:

Our conservative estimate of the ratio of industry's cumulative benefit to cumulative cost attributable to the EEO Program is 3.67, net of implementation and compliance costs.

That is what it said—a very conservative estimate.    ACIL Tasman did not simply conclude that the benefits of this program outweigh its costs. They concluded that the benefits of this program over the full-cycle analysis had generated savings to industry in power expenses of over $300 million. This government is strangely, today, dismissing $300 million in savings to industry as red-tape. For example, the steel maker Arrium benefited enormously from the EEO program, showing the benefits to job protection and business solvency that energy efficiency brings. Arrium has itself reported:

Since commencement of the EEO program in FY07, Arrium has assessed 340 opportunities and reported implementing 118 projects resulting in a total energy reduction of 4.16 PJ/yr, equating to 508 kt CO2-e/yr. A further 0.88 PJ/yr is expected to be saved through projects committed for future implementation, with an additional 2.17 PJ/yr remaining under investigation …

In its first recommendation the review states:

We find that the EEO Program to date has delivered benefits to participants well in excess of their costs

I think the Arrium example shows that as well. Significant improvements have been seen in the performance of participating corporations against the elements of the assessment framework. Many barriers to improved energy efficiency have been reduced and the identification of opportunities is increasingly integrated into normal business operations.

What does the government do in response to that? It says, 'Let's get rid of this program because it's red tape.' The government is saying, 'We'll just get rid of something that has saved industry over $300 million and is helping the environment because it is red tape. That makes sense to us!'

That is what the Abbott government is telling these corporations. That is what the Abbott government is telling the industry. It is absolutely blind, nonsensical policy to get rid of this effective program. What else are they saying? They are saying, 'We don't break promises; we are the government that doesn't break promises, that doesn't break the bipartisanship that we had for over a decade.' Instead, they try to argue their red-tape, black-is-white justification.

This program has enjoyed bipartisan support. It has provided, as I have outlined, a benefit both to the bottom line of businesses and to the environment—and there is still more benefit which could be derived from continuing this program. As with the potential abolition of its own renewable energy target, this is just another example of this government's misguided ideology overwhelming its understanding of the effective, logical energy policy instituted by the Howard government. The repeal of the program will be unhindered by the opposition, but we will not pretend that this means we support it. We do not support the repeal of good policy that has future life in it, as this policy does, and we do not support the blind, ideological argument put forward by this government—that it is repealing the Energy Efficiency Opportunities Program in order to reduce red tape. This is a policy that has been very good at creating energy efficiency opportunities for industry, for buildings, for consumers, for households, for just about every Australian. I cannot understand this government's stupid, ideological decision to get rid of it.