Speeches

MPI - THE NEED FOR ENERGY POLICY CERTAINTY

June 14, 2017

This week there is no more important question before the Parliament than the question that I think people across the community—households and businesses—are asking, and that is whether all of us in this parliament will step up to take serious action to deal with a deep energy crisis that is gripping this nation.

The crisis has become very, very deep indeed. As we have heard in the Parliament over the last couple of days, and as households and businesses know only too well, wholesale power prices have doubled in the four years of this government. As we know, across the country retailers are now feeding those wholesale power prices increases into household power bills. AGL, the biggest retailer in New South Wales, for example, is lifting power prices by 16 per cent for households across our largest state. All of that is at a time when wages are flatter than they have ever been. All of that is at a time when hundreds of thousands of workers who work Sunday retail and hospitality shifts will be losing their penalty rate entitlements in the next couple of weeks. And all of that is at a time when this government continues to insist on removing the energy supplement, designed to deal with high energy prices, of about $360 per year for all new pensioners in the country.

The Prime Minister told us yesterday and tried to tell us again today that the only reason that wholesale power prices are going up is because of gas prices, particularly because of moratoria on gas exploration in Victoria—understandably, I guess, from his point of view politically, not wanting to talk about what is happening in New South Wales about gas exploration.

I want to talk more generally about the real reason for household power prices going up. The Energy Council has been very clear, as has every expert body that has looked at this over the last couple of years. Power prices are going up primarily because of policy paralysis—policy uncertainty that has gripped this nation particularly in the four years of this government. You do not need to look any further than a presentation that the Minister made to the Coalition party room yesterday. It was a PowerPoint presentation headed 'Finkel review into the future security of the National Electricity Market.' In that presentation to the Coalition party room the Minister, who is at the table today, included a graph saying 'wholesale prices at record levels'. In the next slide in the PowerPoint, which was helpfully provided to people by the members of the Coalition, the question was posed, 'How did we get here?' The Minister, quite truthfully and admirably, said, 'Policy uncertainty which is holding back new investment'. I do not understand that to be a public document, so I seek leave to table this document as well.

The SPEAKER: Is leave granted? Leave is not granted.

BUTLER: That is a great disappointment. We know exactly what is happening here. Wholesale power prices are going through the roof because this government is gripped by policy paralysis—and has been so for four years. Four years ago it knew what to do to get into government and tear down and dismantle the previous Labor government's energy and climate policy framework. But it had no idea what to do then. It introduced this safeguards mechanism, which is so universally ridiculed that they do not even bother modelling it anymore; the Energy Market Commission said it does not even bother to model that; the existing energy policy this nation has is so ridiculed that it is not even modelled as an alternative anymore.

And, of course, they went after the one energy policy that was supposed to be bipartisan at the 2010 and 2013 election—and that was the renewable energy target, which the former Prime Minister tried to dismantle. That caused investment to plummet by 88 per cent. And according to the ABS, which reported on jobs data in the renewable energy industry a few weeks ago, it led to the loss of one in three jobs in the renewable energy industry over the last three years—some 6,000 jobs.

And the Minister has talked about the gas market. For four years, people have been warning about supply shortages to the LNG export operations in Gladstone. For at least two years the Labor Party has said there should be a national interest test introduced around gas exploration and gas export. And up until the last few weeks, when they suddenly got the idea, this government has said: 'It's all working fine; just leave it up to the market.' Well now, suddenly, they realise there is a seriously deep gas crisis fronting this country.

To the Minister's credit, and to the credit of state and territory governments, the Energy Council tried to break through this last year and appointed the Chief Scientist, Alan Finkel, with a very eminent panel of people working with him. We welcomed that. State and territory governments, Labor and Liberal alike, welcomed it. It is a credit to the Minister that he tried to break through this. It was on the back of a specious campaign by the Prime Minister about the causes of the blackout in South Australia in September; but we will let that be a bygone and talk about the positive aspects of this process.

Last week the Business Council, other business groups, the ACTU, ACOSS and environment groups all had a clear message for this parliament, and it was that all members of this parliament should give full and fair consideration to the Finkel report—not rush to judgement, not do the knee-jerk responses that have too often characterised this parliament's responses to energy and climate policy for at least a decade. And we are committed to giving that full and fair consideration. We have said the market recommendations, the governance recommendations, have a lot to commend them; we want to study them more carefully, we want to engage with stakeholders, but they have a lot to recommend them. The generator reliability obligations are a sensible next step in us considering how we roll out the greater threshold of renewable energy into our electricity system. We want to talk to stakeholders more about how that might be designed.

And we have said we are open to a Clean Energy Target. This is a big shift for Labor. Unlike the Coalition we took a detailed energy policy to the last election that included a commitment to an emissions intensity scheme—a scheme which, since, has been supported by the Business Council, pretty much every business group, every energy company and every expert body from the CSIRO to the Energy Market Commission. Notwithstanding that we actually had an election policy, we have said that we are open to putting aside that policy and talking about a Clean Energy Target instead—not because we think it is the best policy but because the Prime Minister says to the nation it is the only one he is willing to talk about.

There are no red lights for Labor in the Finkel report. We are willing to engage constructively with the government, with state governments and with other stakeholders about it being implemented. But I tell you we will not be party to a sham that seeks to rig the definition of clean energy to include new coal-fired power stations. Let's take a reality check on where the Australian electricity market is up to on coal. More than three-quarters of electricity in the National Electricity Market was generated by coal in the last full year. That is why Australia produces twice as much pollution per megawatt hour as the United States or the OECD. We need to reduce our reliance on coal, not increase it. Fiona Simson, the National Farmers' Federation president, said as much recently in response to Finkel. She said: 'It is inevitable that, as a nation, we will move away from coal fired power generation as assets age.'

The Clean Energy Target sets no impost on existing generators. Unlike an EIS, which was our policy, which imposed a direct price on incumbent coal generators, this Clean Energy Target imposes no impost on even the most heavily polluting coal generators. There is no prohibition in the Finkel report on building new coal-fired power stations. Unlike Canada and the United Kingdom, where you simply cannot build a new generator that emits more than 450 kilograms per megawatt hour, there is no prohibition in Finkel. Now they have a small problem—no-one is willing to invest in it—but there is actually no prohibition.

But apparently members in the Coalition party room want to include unabated coal-fired power in the definition of clean energy. You just cannot rig that definition. It would make a mockery of the Finkel process. As the Chief Scientist himself said yesterday, it would be surprising to include new, unabated coal-fired power as clean energy. The whole scheme would be impacted by a decision like that. It is quite clear the modelling that underpinned the Finkel report did not include unabated coal-fired power being included in the definition of clean energy. You just have to ask the man and the woman on the Clapham omnibus—it does not pass the laugh test to include new, unabated coal as part of clean energy.

I urge members in the Coalition party room to take a deep breath, do what energy groups, business groups, unions and ACOSS have asked and give this report full and fair consideration before you rush into rigging the definition of clean energy.

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