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

Mr Deputy Speaker, I thought there was only one speaker allowed at a time. As I was saying, in the end, there were some ministers who actually understood how important this process was. The ministers from Queensland, in the main, did just that. Minister Conlon, from South Australia, continued to push ahead, despite occasionally being buffeted by his colleagues. I have to say that, when Minister Batchelor, from Victoria, under the then Labor government, arrived on the scene, a breath of fresh air came with him. As a result of that, we are where we are now—almost at the end of this process.

I congratulate all those ministers who took a positive attitude to this, all those ministers who assisted in processes undertaken by both me and my successor, the current Minister for Resources and Energy and Tourism, because in the end this is an incredibly important set of reforms. Energy market reform, if you get it right, will help your economy grow. If you get it wrong and if you allow the instances of parochialism and state Treasury interference to derail the process, then what you do is cut your economy's growth. So it is pleasing to see this has finally arrived at this point.

The reform of the national energy market, though, is an ongoing process. In this instance, I am glad that the government is continuing the work of its coalition predecessor in moving forward with these reforms, albeit at a significantly slower place. Energy reform is a necessary process, despite the fact that in most instances it has been completed with little or no fanfare. It is only a shame that this government is so badly failing to uphold its reform responsibilities in other areas and failing to build on the previous work that had been so painstakingly completed. In particular, I am thinking of the government's repeated failure to deliver on the energy white paper and I will have more to say about that later in my speech.

This is an important bill because, as I have noted in this place and before many other groups in the community, questions about Australia's energy supply and energy security have greater prominence now than they ever had in the past. If you were to ask Australians about the most pressing issues facing their households and their budgets, in most cases you would find the mention of electricity prices very close to the top of any list. While it is important that this final piece of reform, which started in 2002, is put in place, Australians cannot afford to become complacent. Unfortunately, there is every sign from this government that it intends to undo all the hard work that has been completed in the area of energy market reform with the disastrous policies that it is inflicting on other parts of the energy sector. In the 3½ years since this government has come to power, Australians have been forced to fork out more and more to pay for their electricity and other energy bills. Since 2007, electricity prices across Australia have increased on average by 50 per cent and gas prices have increased on average by 30 per cent. It is forecast that electricity prices will double by 2020, and that is before you take into account any of this government's policies that are guaranteed to cause further spikes in the price of electricity. In every state and territory of Australia, energy prices are putting greater stresses on household and business budgets.

A few weeks ago, I spoke in this place about the disastrous consequences of the South Australian government's decision to slash support for its remote area energy scheme, which subsidises off-grid generation for isolated communities. It is almost incomprehensible that, against this backdrop, we have a federal government that is so doggedly pursuing a policy that is squarely aimed at forcing up the price of electricity and eroding the benefits Australians have enjoyed as a result of access to affordable and reliable electricity. Because that is exactly what this government's carbon tax will do: it will force the price of electricity up by another 20 per cent, over and above the increases that are already in the pipeline. Over and above the predicted doubling of electricity prices, we will see a further 20 per cent added on top by this government's carbon tax. The problem with the carbon tax in Australia which other countries do not have to face is that this tax puts our industries at a greater competitive disadvantage, whether it is the steel industry, the motor industry, the aluminium industry, the coal industry—the list goes on. In fact, this tax will impact on individual Australians at a rate 400 times greater than that of the next comparable scheme, which is in Europe. The most significant way in which it creates this disadvantage is that it forces such a dramatic increase in the price of electricity. I know some raise their eyebrows when we mention the 20 per cent figure, but of course it is not our figure. It is the government's figure. Their direct goal is to lift the price of electricity by 20 per cent.

I have spent a great deal of time in the community of late, talking to householders, small business and the largest and smallest of Australia's companies, from the big miners to the corner shop. One thread that brings all of these groups together is that they are already doing everything they can to reduce their energy usage and thus their electricity costs. It is therefore patronising in the extreme for this government to suggest that the way to avoid this punitive tax is to be more energy efficient; these companies already are. At least that is a more sensible suggestion relative to others that have been made, such as not having a shower before bed, or sleeping with a pet. That is some of the information currently available from the government on how to cut your household electricity bill! I really do wonder where we are getting to with this. Yes, we have been able to prosper because of our ready access to affordable and reliable energy, but I can assure the House that this is not an advantage that most Australians take for granted.

The other enormous problem with the Gillard government's carbon tax is that it launches an assault on the very industry that provides the majority of Australia's baseload electricity, the coal industry. The government's carbon tax will dramatically downgrade the value of Queensland's and New South Wales's 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 high-emitting brown coal generators in Victoria and South Australia. An ACIL Tasman report released by the Baillieu government put the figure for the Victorian based 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 electricity assets because of the tax. The O'Farrell government in New South Wales has made it clear 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, Anna Bligh has made some strong statements about the lack of compensation for Queensland assets, which she claims will be written down by $1.7 billion. But I can assure you, Mr Deputy Speaker Sidebottom, as anyone who knows anything about the industry knows—and I know a little, but others I have spoken to know a great deal more—$1.7 billion will not be the write-down figure; it will be significantly higher than that, double that or perhaps even more. We know from the past that Labor leaders tend to get their numbers wrong and make statements that they are not able to back up.

Given this is the only thing that the Queensland Labor government has had to say about the carbon tax, it is certainly not for us to come out and applaud it. We can discern the truth of just how unpopular this tax is with members of the public and state governments across the political spectrum.

The significant losses in value for generators have important ramifications for energy security and will also drive up electricity prices for consumers. A drastic reduction in the value of an asset or a reduction in the viability of an asset makes it very difficult, given that the owners of the power stations are now or soon will be looking to refinance their loans. I am sorry to say that the Gillard government's destructive carbon tax casts a long shadow over the subject matter of this bill before the House today. What good is an ongoing energy market reform when the government is simultaneously engaged in energy market sabotage?

Earlier I mentioned the failure of this government to deliver the long overdue energy white paper. This is an astounding failure of government responsibilities given that, under the normal five yearly cycle, an updated energy white paper was due two years ago, in 2009. I know this all too well because I was the minister who actually delivered the last white paper, on time, in 2004. It is important not to underestimate the significance of the failure of the Labor Party to deliver in this area. While we all know the Labor Party loves a good review and cannot resist the temptation to set up another committee to compile another report, the energy white paper is a profoundly significant document. It is not just a piece of paper and it is not just a review; it is a framework for the direction of Australia's entire suite of energy policies.

Given how reliant our economy is on the energy industry and how fundamental questions of energy security are for every single home and business in Australia, the significance of the energy white paper cannot be overstated. At the moment, this government is forcing energy companies, investors, generators and suppliers to make long-term investment decisions in the absence of any updated guiding principles.

What the Labor Party has not been short on is excuses as to why the white paper has yet to materialise. We have had claims that the CPRS process had to be completed, then there was the uncertainty created by the previous Prime Minister, Kevin Rudd, aided and abetted by the current Prime Minister, to back down on the then ETS proposal. That was followed by the current Prime Minister's ironclad assertion that there would be no carbon tax under a government she leads. Now we have an increasingly desperate sales pitch for a toxic carbon tax, which I understand from members opposite is creating some real nightmares for them in their constituencies.

The energy industry cannot wait for the Labor Party to get its policy chaos in order. We need an energy white paper now. I know the Minister for Resources and Energy will have heard this time and time again from industry representatives but, that said, I implore him once again to do all in his power to get the government's house in order and to release the energy white paper.

In conclusion, the coalition supports this largely procedural bill to complete the process of energy market reform, which began in 2002. It is now the Labor government's clear responsibility to continue to take this policy area seriously.

The Rudd and Gillard governments have a very chequered history when it comes to dealing with the energy and resources sector. The carbon tax, the mineral tax, the lack of a white paper, their comprehensive list of policy missteps and letdowns, new taxes and changes of direction have shaken investor confidence to the absolute core.

The energy industry needs two things. It needs the confidence of knowing where the reforms are going and the confidence of knowing that its investments are safe. At the moment, it has neither. All it sees, almost at every turn, is policy chaos and new taxes which affect parts of the sector. In 2008, it saw changes to the condensate rules in Western Australia, then the CPRS, then the MRRT, then not the CPRS and now the carbon tax. All these send a message to overseas investors that Australia is not the investment place it used to be. That will have one consequence: despite these reforms, which the coalition are supporting, there will be a reluctance to make the big, long-term investments in Australia which we need to ensure that not only do we have reliable electricity and a supply that industry can rely on but we have a long-term prospect of lower than world average electricity prices, because that has been our competitive edge. That has been the reason that we have seen so many high-energy investments in Australia.

Whether it is the smelter in Bell Bay—close to Deputy Speaker Sidebottom's electorate—nickel refineries, aluminium refineries, copper refineries, the heavy industry that backs up the resource sector or the manufacturing sector, they all rely on one thing: an internationally competitive energy price. These reforms are there to try to provide that. The carbon tax, in particular, will destroy it. It will catapult our electricity prices into a region that simply makes us uncompetitive.

The reason the coalition are keen to support these reforms is that we want to do everything we can—in the face of the disaster, chaos and policy coming from the government—to keep energy prices down for industry. We want to keep energy prices down for households. We want people to be able to afford basic energy needs. We will wait and see what will happen as a result of these reforms and whether this government has the courage to commit itself to a white paper and continue the process. We hope so.

We hope in that haze that the government can give a modicum of confidence not only for to the refinancing process that the energy sector has to go through, particularly in the next two years, but also for the investment in the energy sector that we all need. Until that chaos ends and until that confidence is restored, we will not have significant confidence in Australia's future economic growth—and the energy sector with it. Until that chaos ends the true gains of energy market reform will not be realised.

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