Martin Ferguson (Batman, Australian Labor Party, Minister for Resources and Energy) Share this | Hansard source

I thank the members for Groom, Paterson, Bradfield, Greenway and Chifley for their contributions to this debate. In closing, can I indicate that the Australian Energy Market Amendment (National Energy Retail Law) Bill 2011 sees the Commonwealth play an important role facilitating the implementation of the Council of Australian Governments' cooperative legislative regime for regulating the relationship between energy retailers and their customers. This regime, I am pleased to report, is the final major component of the national energy market reform program agreed by COAG in response to the 2002 report in terms of energy market review entitled Towards a truly national and efficient energy market and as set out in the Australian Energy Market Agreement.

By applying the National Energy Retail Law as Commonwealth law, this bill will help reduce the regulatory burden on energy retailers, open the market to greater competition and provide a strong suite of energy-specific consumer protections. This bill amends three Commonwealth acts. The Australian Energy Market Act 2004 is amended to apply the National Energy Retail Law set out in the schedule to the National Energy Retail Law (South Australia) Act 2011 of South Australia and the rules and regulations made under it as a law of the Commonwealth in Australia's offshore area. 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 that 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 2010 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 Decisions (Judicial Review) Act 1977 to ensure the administrative decisions of the Australian Energy Regulator under the national energy retail law are subject to appropriately 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.

Having dealt with the legislative nature of the bill, which is important, I will deal with some of the issues raised, principally in the contributions from the members for Groom, Paterson and Bradfield, about energy prices. Then I might go to a question raised by the member for Groom about the energy white paper, which is related to these proceedings. Let us be very clear about electricity prices. This is the question that the member for Bradfield refused to answer or acknowledge. The biggest cause of recent prices is increasing network charges, particularly for distribution and, to a lesser extent, transmission, which collectively account for around 50 per cent of a household electricity bill. These problems confront all states and territories, irrespective of who is in government—be it a coalition government in New South Wales or a Labor government in Queensland. The changes are being driven by the substantial investment required in new and ageing network infrastructure. It is a fact of life. The investment is required to ensure the continued reliability of electricity supply that the community has come to expect. In essence, electricity is an essential service and the last thing the Australian community is going to accept from a state government of any political persuasion is shedding or blackouts. The reliability of the electricity supply underpins the operation of the Australian economy. I also indicate that some electricity networks are up to 40 to 55 years of age and are reaching the end of their useful life. There are therefore serious questions of reliability without that investment.

As a growing economy, our community's ever increasing expectations for the use of such things as air conditioners and widescreen televisions et cetera are part of a rising peak demand for electricity. This is largely caused, as I indicated, by the growing use of appliances such as air conditioners, which is placing additional pressure on the network. The size of the investment needed to meet these challenges varies across jurisdictions, but independent regulators recently authorised substantial expenditure by network businesses to carry out these upgrades, which obviously flow through to both industrial and household customer bills.

Let us be clear: these increases would also occur under a coalition government. There is no avoiding these increases in electricity prices. Perhaps the member for Flinders is not prepared to acknowledge that, as was the case on 7.30 on 24 May when he incorrectly and in a most dishonest way said that under a coalition government:

There will be no increase in electricity prices to consumers …

I contrast those comments with those of someone who has some understanding, the former minister for energy, the member for Groom, who understands the challenges faced by the electricity market. I referred earlier, in a question to the member for Bradfield, to comments made by the member for Groom on 20 and 21 August last year, the Friday before the election day and the election day. In the Australian he is reported very clearly as saying that power prices were likely to double in the next five to seven years regardless of who is in government. That represents the harsh reality of the situation before us. And these types of increases are being experienced under coalition premiers.

I refer to a range of comments by the Premier of Western Australia since he was elected only a matter of couple of years ago. He has had to front up to increases in electricity prices. This is reflected, for example, in a report in the West Australian of 9 February in which he said, 'The government has been increasing power prices as it seeks to overcome two decades of officially sanctioned caps on prices at a time when the cost of producing electricity has soared.' He then went on to say this in a statement on 15 February this year:

Some of the hardest decisions have been those that have increased the cost of electricity, water and gas for West Australian households and businesses. ... The reality is that the cost of delivering electricity, gas and water to households and businesses throughout this vast, hot, dry state—

Sounds like Australia, not just Western Australia—

is an expensive business. In the case of electricity, the cost of providing power is still significantly above what people pay for it. The recent increases have been necessary to ‘catch up’, after some poor decisions in the past and years of no price rises.

Decisions made across the political spectrum, I might add. He went on to say:

It is important to note that even with the increases of the past two years, taxpayers still have to contribute to cover the gap.

In his budget speech of 2010, he also said, 'Moving towards ensuring charges reflect the true cost of delivering electricity is what this budget is about.'

It is about time that we had a little bit of honesty about what is driving the increase in electricity prices in Australia at the moment. Past generations built the network. Our responsibility is to maintain and extend the network in accordance with our demands. We have a growing economy. The demand for energy is increasing. We as a community not only expect reliability but we also expect the system to meet our peak energy requirements in a couple of weeks of the year. That effectively means that we need to build a system that is only used for a couple of weeks of the year. Our responsibility is to try and work out how to reduce that peak demand through improvements in energy efficiency. That is clearly part of the responsibility of the Ministerial Council on Energy and Resources. We need to work with industry and the community on those efficiency issues.

There was a serious question raised by the member for Groom. I respect his understanding of the challenges confronting Australia from an energy security point of view. One way or another, the debate about a price on carbon has to be resolved. The record shows that we as a community have lacked baseload investment for some considerable time. There are special challenges coming the way of Queensland and New South Wales. In New South Wales, it is fair to say that the last real baseload investments were under the Wran government. When it was elected on 2 May 1976, it inherited an unstable electricity system, which led to blackouts and real problems for industry and households. That government built ahead of its requirements in terms of the needs of the community at that time, and New South Wales lived off that for many decades.

Because of the uncertainty over a price on carbon, we have not had baseload investments for some time in coal-fired power in Australia. That raises ongoing issues over the next decade about where we go in terms of energy security. We have had growth in wind power. In more recent times, we have had a growth in solar PV, mainly because the price of solar PV manufactured imports has gone down. That growth has been assisted by a range of feed-in tariffs at a state and territory level, by governments of all political persuasions, and the introduction of the RET. In terms of reliability, the only real investment has been in peaking gas capacity. I might also say that in this transition, yes, there will be a growth in wind, a mature form of renewable energy, but there is also going to be a significant reliance on gas. The energy white paper was well underway in the last parliament. What derailed it was our inability as a community, in November 2009, to resolve the issue of a price on carbon. A price on carbon goes to the question of how you price the available energy options for Australia. Once this debate about where we go on a price on carbon is completed in this calendar year the work that is already underway and well advanced on the energy white paper will proceed to conclusion. All being well, a draft energy white paper will be released by Christmas for further debate and consideration by the broader community and finalisation in 2012.

The member for Groom is right to raise the need to resolve the issue of this energy white paper. I wanted to resolve it in the last parliament. You cannot resolve it without bringing to the debate the question of certainty about where we as a community are up to with a price on carbon. That is an important input in enabling us to consider the different energy options for Australia in the decades to come. So I, in a proper way, indicate to the member for Groom that the work is underway and that my desire is, with the support of the department, to conclude this work, which has been done in full consultation with industry, prior to Christmas this year. Then it will be released for public debate. I commend the bill to the House.

Question agreed to.

Bill read a second time.

Ordered that this bill be reported to the House without amendment.

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