Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

My question is to the Minister for Climate Change and Water, Senator Wong. Does the government’s economic modelling show an increase or a decrease in wholesale electricity prices due to the expanded renewable energy target, and what is the rationale?

Penny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | Link to this | Hansard source

I thank Senator Milne for the question. I am not sure what the senator means by the second half of the question: ‘What is the rationale?’ If she is asking what the rationale is for the renewable energy target—

Eric Abetz (Tasmania, Liberal Party, Deputy Leader of the Opposition in the Senate) Share this | Link to this | Hansard source

The government never has a rationale.

Penny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | Link to this | Hansard source

I will take that interjection, Senator Abetz, because I understood from the member for Flinders previously that you were supporting this legislation. But you appear to be so divided now that you are opposing it or delaying it. As I recall, he came out saying you were supporting it. The rationale for the renewable energy target—and I think Senator Milne and the Greens are well aware of this—is that we want to provide an incentive that brings forward investment in the range of renewable energy opportunities that Australia has, such as solar, wind, wave and geothermal. Unlike those opposite—and I note that they are very quiet—who presided over a reduction in the amount of renewable energy used in this country as a proportion of electricity—

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Mr President, on a point of order: it was a very straightforward question about whether the government believes that the wholesale electricity price would increase or decrease under the RET, and the rationale for that.

Penny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | Link to this | Hansard source

The rationale for the renewable energy target is clearly to bring forward investment in renewable energy. It is the case—and I think the Greens would know this—that most forms of renewable energy are currently more expensive than conventional forms of electricity. The reality is that coal fired power generation is still cheaper than renewable energy. So we do require government policy to bring forward investment in renewables to start to reduce the cost gap between conventional and renewable power. (Time expired)

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I assume from the second part of the minister’s answer that she was arguing that there would be an increase in wholesale electricity prices due to the expanded RET, so I ask a supplementary question. Since three out of the four consultancy reports that have analysed the impact of the RET on electricity prices all disagree with the government’s assumption that there would be an increase in price, and studies by CRA International, ACIL Tasman and ROAM Consulting all conclude that electricity prices will fall, what is the government’s basis for rejecting the conclusions of those modellers in favour of the special pleading from the big polluters?

Penny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | Link to this | Hansard source

I appreciate that the Greens have a view about this. The fact is that as a result of the failure by previous governments to invest in renewable energy there is still a cost gap between renewables and conventional forms of energy. That means that we do have to put in place policies which create investment, which bring forward investment and which give an incentive for people to use and to generate renewable energy. We need to put in place incentives for business to develop wave resources, geothermal resources, solar and so forth.

Bob Brown (Tasmania, Australian Greens) Share this | Link to this | Hansard source

Mr President, I rise on a point of order. The question was to get directly from the minister the rationale for rejecting three reports on this matter. The minister is not addressing that question at all.

John Hogg (President) Share this | Link to this | Hansard source

Senator Wong, you have 22 seconds left to answer the question. I draw your attention to the question.

Penny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | Link to this | Hansard source

It is the case also, and it might be useful to be aware of this, that the government’s estimates are that the renewable energy target, together with the Carbon Pollution Reduction Scheme, will drive around $19 billion in renewable investment out to 2020. That is the nature of the investment that this government’s policies will pump into that sector. On the question about exemptions, I appreciate the Greens have a different view on this issue—(Time expired)

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I ask a further supplementary question. Can the minister explain why the government rejected advice by CRA International, ACIL Tasman and ROAM Consulting regarding electricity prices falling and instead just went with the McLennan Magasanik Associates advice when those consultancy firms all concluded that electricity pool prices would be reduced by a five per cent margin if those low-cost, short-run marginal cost renewables came into the generation mix? Why did the government not look at those other reports and instead just accept the view that the old polluters had to be sandbagged under this legislation?

Penny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | Link to this | Hansard source

The government does not accept the way in which the senator has constructed this argument. It is the case that we have provided some exemptions to industries under the renewable energy target and that is in recognition of the likelihood of higher electricity prices. The government have made it clear that that is the rationale for these exemptions. As the senator knows, we have not provided 100 per cent. We have provided assistance on the same basis as is provided under the CPRS. It is very simply this: aluminium and other sectors will bear potentially higher costs and we believe it is our responsibility to support jobs through this transition—jobs in existing industries—whilst driving the investment in the clean technologies of the future. It is a transition. We are not simply going to avoid or duck the issue of supporting current—(Time expired)