Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Energy and Resources) Share this | Hansard source

Can I firstly say that the coalition supports the Australian Energy Market Amendment (AEMO and Other Measures) Bill 2009. It is a continuing part of the energy market reform process which was started by my predecessor in the portfolio, Nick Minchin, which I continued, and which is now being undertaken by the current Minister for Resources and Energy. The purpose of the bill is to make minor changes to Commonwealth legislation which will allow the establishment of a single national market operator for electricity and gas. This market operator will replace an existing operator, NEMMCO. The significant difference is that this new body, AEMO, will cover both electricity and gas, where NEMMCO covered only electricity. That in itself is a very significant final step as we move towards encompassing all energy sources under the one umbrella.

The bill also amends legislation to reflect a name change in Western Australian gas legislation as a consequence of the proposed AEMO taking on NEMMCO’s function. The bill provides for minor amendments to the Renewable Energy (Electricity) Act 2000 and the Trade Practices Act 1974. Whilst these may be minor changes to the legislation, they are an important reform for the energy sector and one which I can say the energy sector supports wholeheartedly.

The Australian Energy Market Amendment (AEMO and Other Measures) Bill 2009 seeks, firstly, to ensure more efficient investment in energy infrastructure; secondly, to continue the process of promoting competitive energy markets with the aim of lower prices for consumers; and, thirdly, to enable the commencement of a single national energy market operator for both the electricity and gas sectors. The operator will be known as the Australian Energy Market Operator, or AEMO for short. It is anticipated that operation will commence on 1 July 2009.

The Ministerial Council on Energy, also known as the MCE, was established by COAG, the Council of Australian Governments, in 2001. The MCE is the national policy and governance body for the Australian energy market, including for electricity and gas, as outlined in the COAG Australian Energy Market Agreement, or AEMA, of June 2004. The MCE’s task is to provide national leadership so that convergence issues are fully considered in the energy sector decision-making process. During my time as minister, often in the face of fierce opposition from individual states but in the main supported by the majority of state ministers—all of whom were Labor—the MCE provided that sort of leadership in the energy market.

New South Wales was one of the last states to get on board when it finally decided to do the right thing and sell off its energy assets—energy assets which have no place being owned by government and run by bureaucrats to the advantage of the state treasuries and the detriment of the consumer. It was somewhat saddening, but I have to say not surprising, to see that the Prime Minister of this country did not have the courage to back the then Premier of New South Wales, Morris Iemma, in that state’s endeavour to put the final brick in the wall in ensuring that energy assets and the energy market itself were reformed.

It highlights the lack of leadership provided by the Prime Minister, not just in this area but in a whole range of areas, and the fact that he is constantly unwilling to make unpopular but necessary decisions. I lost a lot of skin and hair—and had a lot of fun, I have to say—in pushing these energy market reforms forward, but I did not enjoy seeing a situation where the current federal minister for energy was left high and dry by continuing to promote, quite rightly, much needed reforms. That the Prime Minister did not have the courage to stand behind not only his own minister or the reforms which he had signed up to as Prime Minister but also a state Labor Premier highlights a failing of this Prime Minister which I do not have time in this speech to further expand on, but it is one which I think bodes badly for this country.

The MCE comprises ministers with responsibility for energy matters, from the Australian government as well as from all states and territories. The development of this bill has been overseen by the ministerial council and had its genesis from the reforms to the energy sector made during the time when our party were in government. Those reforms were, as I said in my opening comments, initiated by Nick Minchin, pursued with passion and determination during the six years I was minister and they are now being pursued quite capably by the current federal minister for energy. During that time we saw an enormous turnover in state energy ministers and some colourful characters. It is with some satisfaction that I now see the MCE comprised of ministers who are committed to the reform of the energy market. They do, in some instances, unfortunately still take their riding instructions from state treasuries but, in the main, compare favourably to those wild days when former Minister Yeadon, who is perhaps the best example, tried to tear apart the MCE at his first meeting. I wonder what happened to Kim Yeadon. He is certainly not a political force any longer. His attempts to derail this process were unsuccessful.

There have been state Labor ministers who have provided some wonderful support on this, and I have would have to single out the minister from South Australia, Pat Conlon, who has made an enormous contribution and was the only minister to be there from go to whoa over the six years I was there. Also, more recently, people like Minister Batchelor from Victoria have made this issue something that they want to continue to pursue and on which they are supporting the current federal minister. So the MCE is a body that is now functioning very well. We are seeing some real vision and some real determination coming from it. The development of this bill was overseen by the ministerial council.

AEMO will assume the responsibilities and functions of existing gas and electricity market operators, including the National Electricity Market Management Company, NEMMCO. We certainly welcome AEMO taking on the transmission-planning functions of the energy market. It is obvious—and it is an area which needs addressing—that there are failings or gaps, particularly in the transmission-planning function and in the transmission system. We need to ensure that electricity is able to be supplied, as far as is practicable, from any source in the network. This is obviously an energy security issue, in case a power station has an outage or, as we saw in the bushfires two years ago, a powerline fails. But it is primarily there to ensure that there is competition—that is, that this generator has to compete against that generator. If we get a proper transmission system going, we get a situation where state boundaries are completely broken down and where state treasuries can no longer control the price of electricity in their state. Thus new entrants—and this is a key area—can come in and build power stations confident that they will be able to compete on an equal footing with government owned power stations while they still exist.

This transmission-planning function, which will highlight gaps in the transmission system and move to address them, is something we certainly welcome. But we do have a minor concern in that regard—I hope it is only ever minor—which is that it does present government, the federal government in particular, with the opportunity to step in and take equity in those transmission lines. AEMO needs to stick to its knitting. It needs to be sure that, in planning these transmission lines, it does its function but at no stage creates an opportunity for governments, state or federal, to take up equity. It is simply no longer appropriate. It has been highlighted again and again, and agreed to by this government and the previous government—we will leave the Prime Minister aside in supporting it—and agreed to and supported by ministers at both state and federal level that the future of the energy market sector relies on private sector involvement and a continued diminishment of government ownership. There is no place for any government ownership, least of all Commonwealth government ownership, in energy infrastructure.

We are also concerned that, in its enthusiasm—for want of a better word; some would say wild panic—the Rudd government not use the Building Australia Fund to put money into energy infrastructure. We need to see a situation where that money is preserved for the reasons for which it was set aside—particularly construction of roads, railways and the like. We have, given the right set of rules, enough companies willing to invest in energy infrastructure in Australia, provided they are sure that the government is going to set the rules fairly. We have enough companies interested in investing to negate the need for any Commonwealth funding of these projects. This is for equity and to avoid draining the very meagre funds which are available to infrastructure in general.

I guess, as we go forward on this, the opposition—reluctantly, but with no other option—has to rely on the minister for energy to be the whistleblower if the government starts to vary or to waver in its policy approach to this. I hope we do not have to see a situation where the minister has to get chastised again for saying it like it is, as he did on Fuelwatch where he knew, right from the start, that that scheme was a dud. He knew from the start that that scheme was a farce. He knew it was a political fix that was never going to work. He had the courage to put that in writing and, unfortunately, someone leaked it on him. Having to rely on a minister for energy again having that sort of courage to ensure that the Commonwealth government does the right thing on energy infrastructure investment is something that the opposition is worried about. I am sure the minister will do it if he has to, but I think it is a funny way to run a government.

I have spoken a little about the energy market but I think that, in a bill as significant as this, it is worth recapping the history of this. I have said it was established in 2001. When I became minister later that year, the then Howard government commissioned what is known as the Parer review, looking at the long-term future and sustainability of energy in Australia. The Australian energy market reform legislation—based on that review but also on state ministerial input and input from energy consumers, producers and retailers, all of which assisted in forming the legislation—overhauled the structure of the national electricity market. It was an extraordinarily quiet revolution. ‘Revolution’ is the only word: it was a dramatic change from what were decades of state based energy systems which were designed, yes, to provide electricity to consumers but which, as always, ended up being used by state treasuries to prop up their failings in other areas.

This overhaul had, at the heart of it, the establishment of two new bodies, one of which was a single national regulator. I am a bit rusty on the figures, but I think there were 23 all up. Certainly, in terms of electricity, it replaced 13 different but overlapping regulatory bodies in various states. Each state had a number of regulators, in some cases a gas regulator and an electricity regulator, and even though both gas and electricity were travelling from one state to another they were then regulated by two separate bodies. So that was an enormous step, and I remember full well, as one does, the enormous fight that went on in the ministerial council—not over the good that this was going to bring to Australia, not over how the energy market would operate, but over who would actually get these two new bodies in their state: where would the new head office be? The fight, which I was not part of because no-one wanted it in Canberra—

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