Gary Humphries (ACT, Liberal Party, Shadow Parliamentary Secretary for Defence Materiel) Share this | Link to this | Hansard source

This bill amends legislation to apply the National Energy Retail Law, NERL, the National Energy Retail Rules and the National Energy Retail Regulations as Commonwealth law to facilitate its nationally consistent and effective application. It also provides for conferral of functions and powers on Commonwealth bodies acting within the framework, including the Australian Energy Regulator and the Australian Competition Tribunal, and provides for judicial review of decisions of the Energy Regulator under the National Energy Retail Law. This bill ensures that the Australian Energy Market Act 2004 operates as the Commonwealth's application act for the National Energy Retail Law set out in the schedule to the National Energy Retail Law (South Australia) Act 2011, which received royal assent on 17 March 2011. It also makes necessary consequential changes to other Commonwealth legislation.

The NERL is the final major component of the national energy market reform program agreed by the Council of Australian Governments in response to the 2002 COAG energy market review, Towards a truly national and efficient energy market, and set out in the Australian Energy Market Agreement. The bill gives administrative and legislative effect to part of a reform program agreed by COAG. Participating jurisdictions have committed to commencing legislation applying the NERL by 1 July, 2012. The amendments to Commonwealth legislation in this bill will ensure that relevant Commonwealth bodies which are conferred with functions, powers and duties under the NERL, including the AER, are able to perform those functions and duties and exercise those powers from the commencement date. The coalition is pleased to support this bill which continues the work of the previous coalition government and that of my colleague the Hon. Ian Macfarlane.

Unfortunately, there is every sign that the important work commenced by the coalition in 2002 is being countered by other aspects of this government's energy policy. Since the Labor government came to power, electricity prices across Australia have increased on average by about 50 per cent and gas prices have increased on average by about 30 per cent. It is forecast that electricity prices will double by 2020, even before this government's new policy proposals are taken into account. It is therefore quite amazing that this government is so doggedly pursuing a policy that has as its objective forcing up the price of energy and eroding the benefits Australians have enjoyed as a result of access to affordable, reliable and increasingly competitive supplies of electricity.

This is exactly what the Labor-Greens carbon tax will do: it will force up the price of electricity by another 20 per cent over the increases already in the pipeline. The carbon tax, which will impact on individual Australians at a rate 400 times greater than that of the most comparable scheme—that in Europe—will force a dramatic increase in electricity prices and place our industries at competitive disadvantage.

The carbon tax also launches an assault on the very industry that provides the majority of Australia's base load electricity, the coal industry. It will dramatically downgrade the value of Queensland and New South Wales electricity assets without providing any compensation. The vast majority of the government's $5.5 billion compensation package for electricity generators will go to the highly emitting brown coal generators in Victoria and South Australia. An ACIL Tasman report released by the Baillieu government puts the figure for the Victorian generators at 97 per cent of the compensation package. This leaves Queensland and New South Wales out in the cold when it comes to their black coal fired generators, despite the fact that they are facing multibillion dollar write-downs in the value of their assets because of the tax. The O'Farrell government in New South Wales has estimated that its black coal fired power stations will suffer a loss of value of at least $5 billion because of the Gillard government's carbon tax. Even in Queensland, Labor Premier Anna Bligh has complained about the lack of compensation for Queensland assets, which she claims will be written down by about $1.7 billion. In fact, it will almost certainly be much more than that.

The significant losses in value for generators have important ramifications for energy security and will also drive up electricity prices for consumers. In the context of this bill, which the coalition supports, it must be asked what the value is of ongoing energy market reform when the government is simultaneously engaged in energy market sabotage. And all this is at a time when the government's long promised energy white paper—due in 2009—has still not been delivered.

I would submit that the energy market needs two things. It needs the confidence of knowing where the reforms are headed and the confidence of knowing that its investments are safe. At this point in time, it has neither of those things. What it has is policy chaos and the promise of new taxes. Despite the reforms continued by this bill, we have a government that has shown no commitment to the ethos—a reliable and low-cost energy sector—that has underpinned our competitive advantage for a very long time. The coalition supports this bill because we are committed to keeping energy prices low for industry and for households. Whether any aspect of this is supported by the Gillard government will not become clear until it releases its white paper, for which we continue to wait. However, the evidence, from the debate underway in the other place, is that its commitment is very much against the grain of the subject matter of this bill.

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

The Greens will be supporting the Australian Energy Market Amendment (National Energy Retail Law) Bill 2011. I note with interest that Senator Humphries talked about sabotage of the national electricity market; there is only one group of people sabotaging ongoing reform in the national electricity market, and that is the coalition because of its attitude to renewable energy, to energy efficiency and to bringing about the changes necessary to bring Australia into a competitive position in a low-carbon economy.

National electricity market reform is essential. In fact, it has been way too slow, consistent with the COAG process generally. My main criticism is that the COAG process tends to be a great big black hole where the federal government puts issues that are in the too-hard basket. Issues stay at COAG for an interminable length of time before any real reform comes out the other end. I am very pleased to say that there is strong recognition that the problem we have at the moment with electricity prices rising around the country is because there has been a failure to invest and that that failure to invest has been because of a lack of certainty. We are getting lots and lots of complaints around the country from councils that want to make new, green suburbs but are dissuaded from doing so because the energy market operator, because of the rules of the market, says it is too hard to balance the grid—it is all too difficult, everything is too hard.

The other problem with the way in which the national electricity market works at the moment is that its bias is on the supply side. That cuts out the real potential for energy efficiency in demand side management, which is why, in the course of negotiating the agreement with the government, there were two really critical recommendations: one was that the Australian Energy Market Operator look at planning for 100 per cent renewable energy; the other was that the federal government lead the process through the Ministerial Council on Energy to look at the bias in the national electricity market towards creating more and more supply side and instead enable more demand side management. The reality is that we need intelligence added to the grid. We need a smart grid operating right around Australia so that we can take advantage of what is happening and recognise that consumers want to be prosumers. They want to produce electricity from their own households and businesses, be empowered to consume energy, implement energy efficiency and be able to proactively engage with energy supply. There is a lot of business out there for people who can aggregate energy demand side savings and negotiate in the market on that. We are already seeing significant efforts made to bringing on renewables to shave off the peaks and make all sorts of improvements. Of course, with new battery technology we are going to get to the point where we will be able to avoid building substations as suburbs and businesses will be able to take on storage to go with their renewable energy initiatives and energy efficiency initiatives. That will lead to substantial savings.

Just as we had an enormous revolution in telecommunications, with mobile phones and mobile technology, which has made virtually redundant the idea of having to have a landline, there is going to be a real revolution in the electricity market in years to come. People need to think about what that actually means: what it means for us into the future; what it means when people decide that they will become self sufficient and disconnect themselves from the grid. They also need to think about what it means over time, especially people with large areas of roof space—for example, large warehouses or shopping centres, particularly the large outlets of various commodities. They might decide they can actually benefit by managing their own electricity. We will see substantial changes. We need massive reform to the national electricity market, and I am look forward to seeing that happen.

We also have issues with the renewable energy target and whether that can be fulfilled in the way that the parliament expected it to be, because we have ended up with this perverse outcome of three main retailers who are vertically integrated and are not signing contracts for new renewable energy. There is real concern about what will happen and whether we will end up with sabotage of the renewable energy target. The role of the three energy retailers will become clearer next year, when there will be a review.

We support these reforms, but they are only part of an ongoing process of electricity market reform. We look forward to an accelerated reform process and to the ministerial council's getting its head around the changes taking place in energy right around the world, but particularly here in Australia where fantastic new technologies are being developed not only in renewable technology, but in battery storage technology. Unless we get ahead of the game and think about what it is going to mean, we are going to end up with the national electricity market and the ministerial council scrambling to catch up.

I look forward to the implementation of the agreement that the Greens, the government and the Independents have come to, to see AEMO start planning for 100 per cent renewable energy, to see the Commonwealth take a lead at the ministerial council to bring about the changes to the national electricity market to give greater acknowledgment of demand side management and to see a much more proactive engagement with the future of energy and energy service delivery in this country.

Nick Sherry (Tasmania, Australian Labor Party, Minister Assisting the Minister for Tourism) Share this | Link to this | Hansard source

Firstly, I thank the speakers who have contributed to this debate on the Australian Energy Market Amendment (National Energy Retail Law) Bill 2011. It is an important debate, as Senator Milne has pointed out. The bill sees the Commonwealth play an important facilitating role in implementing the cooperative legislative regime of the Council of Australian Governments—known as COAG—for regulating the relationship between energy retailers and their customers. This regime is the final major component of the national energy market reform program agreed by COAG in response to its 2002 Energy Market Review ‘Towards a Truly National and Efficient Energy Market’ and set out in the Australian Energy Market Agreement.

By way of an important aside, there is also a range of very important reforms under the COAG auspices that I have particular familiarity with and responsibility for in the area of what is known as the seamless national economy deregulation overseen by the Business Regulation and Competition Working Group, which I co-chair with my colleague the Minister for Finance and Deregulation, Senator Wong. It has 27 deregulatory projects across important parts of the economy to reflect national regulation as distinct from a somewhat fragmented and inefficient state and territory regulation. That has been agreed to by state and territory leaders in the Council of Australian Governments. Some important reforms that I have referred to from time to time are also being carried out under the auspices of COAG. In fact, more reform is being done in this area than we have seen in many decades.

By applying the national energy retail law as Commonwealth law the bill will help reduce the regulatory burden on energy retailers, open the market to greater competition and provide a stronger range of specific energy-consumer protections. This bill amends three Commonwealth acts. The Australian Energy Market Act 2004 as amended will apply the new national energy retail law set out in the schedule to the National Energy Retail Law ( South Australia ) Act 2011 (SA), and the rules and regulations made under it, as a law of the Commonwealth in Australia's offshore areas.

The Australian Energy Regulator and the Australian Competition Tribunal will have important roles in overseeing the proper operation of this legislative regime to ensure efficient and competitive outcomes in the energy market to protect the long-term interests of energy consumers. To this end, this bill amends the Australian Energy Market Act 2004 and the Competition and Consumer Act 2011 to explicitly allow the new national energy retail law to confer relevant functions and powers and impose duties on these two Commonwealth bodies. Under the national energy retail law, the regulation of all energy retail businesses, except in Western Australia and the Northern Territory, will be undertaken by the Australian Energy Regulator bringing the whole energy supply chain under national regulation for the first time.

The Australian Energy Regulator will oversee a robust compliance and enforcement regime across all participating jurisdictions in a manner that will contribute to the achievement of the national energy retail objective. It will also have a number of new approval functions. The amendments to the Australian Energy Market Act 2004 contained in this bill provide jurisdiction to the Federal Court to hear proceedings under the national energy retail law. This bill also amends the Administrative Decision ( Judicial Review ) Act 1977 to ensure that the administrative decisions of the Australian Energy Regulator under the national energy retail law are subject to appropriate rigorous judicial review.

In summary, the amendments in this bill represent a significant legislative step towards a truly national energy retail regime under a national energy regulator. This cooperative scheme will ensure that Australia enjoys strong energy customer protections and the benefits of competitive and efficient energy markets while minimising the regulatory burden on industry. I commend the bill to the Senate.

Question agreed to.

Bill read a second time.