Kelvin Thomson (Wills, Australian Labor Party) Share this | Hansard source

Since we have been on racing metaphors this afternoon: the Liberal Party and the Nationals are certainly late entrants when it comes to expressing concern about electricity price rises. This is an issue which I raised in the House two years ago. Let me quote from that speech:

Over the past 10 years, electricity prices have almost doubled across Australia’s eight capital cities. The most populated cities, Melbourne and Sydney, have seen the highest price rises, and prices have more than doubled in the past 10 years. In real terms, across Australia, electricity prices have increased by over 40 per cent over the 10 years. Melbourne prices have risen by over 50 per cent in real terms—52 per cent. So have Sydney’s—51 per cent. In Brisbane, real electricity prices have gone up by over 38 per cent, and in Adelaide real electricity prices have gone up by over 26 per cent.

All of those things happened over the course of the 10 years well prior to the introduction of the carbon price.

You might think that more people, a growing population, would lead to economies of scale and to lower electricity prices, but you would be wrong. Rising electricity prices do not just show up on the household bills; they show up in the rising cost of electricity per kilowatt hour. Across Australia the average cost of electricity per kilowatt hour rose, in the decade prior to 2010, from 12.69c in 2002-03 to 19.65c in 2009-10, which was a massive jump in just seven years; and Victoria, the most densely populated state, had the highest cost of electricity per kilowatt hour at 22.54c, a rise on 18.72c in 2010 prices back in 2002-03. So, instead of rising population causing lower prices, it leads to a need for extra infrastructure and therefore higher prices. And the more crowded a city becomes, the higher the cost of doing business, congestion costs kick in, and just maintaining electricity infrastructure becomes more expensive. In Victoria, electricity and water bills were up between 45 and 60 per cent from 2005, gas was 20 per cent higher; and from 2005 to 2010, prices in Sydney jumped over 60 per cent; and in Brisbane by over 50 per cent.

The significance of those remarks I gave in 2010 is that none of that had anything to do with the carbon price, and the Liberals and Nationals had nothing to say about the issue at the time; they are completely missing in action on the question of electricity prices, except when it might serve a political purpose—that is, to attack a Labor initiative.

Last year I pointed out that, in South-East Queensland, the then population of 2.9 million was projected to grow to 4.4 million in just 20 years, and that the electricity company Energex has a five-year funding proposal to meet this forecast growth, which includes $5.78 billion for capital investment and a further $1.63 billion to maintain and operate the network over the next five years. So the outlook for electricity prices with that growing population in South-East Queensland is clear: they are heading up. And the opposition seeks to use rising electricity prices for their own agenda, to blame the carbon price, but it is untrue—and mischievously untrue—to assert that rising electricity prices are a consequence of the carbon price. The recent CPI result reflects otherwise.

The modelling published by the government estimated that electricity price rises attributable to the carbon price would be 0.3 percentage points to headline inflation in 2012-13. In the September quarter results, the increase in electricity prices, both from the carbon price and from price increases from state regulators, that are unrelated to carbon pricing, contributed 0.3 percentage points to quarterly inflation, which indicates that the impact of the carbon price was well within the Treasury estimate.

So we conclude from this that the major driver of electricity price rises has been investment—and, let me say, sometimes over-investment—in electricity networks, the poles and wires, much of which benefit state governments through regulated rates of return on their assets. The Productivity Commission stated in its draft report on electricity regulatory frameworks on 18 October, just a few days ago, that 'spiralling network costs are the main contributor to these increases, partly driven by inefficiencies in the industry and flaws in the regulatory environment.' Those inefficiencies have meant that increases of around 50 per cent have occurred in the last four year—well before the carbon price was introduced on 1 July.

Given that, Mr Deputy Speaker, I welcome recent statements by the Prime Minister on the causes of rising electricity prices and the debate that we are now having about the gold-plating of electricity networks. An example of that occurred in my own electorate at the Brunswick terminal station, where the cost of the upgrade has blown out far beyond what was reasonable or initially possible.

The fact is that pensioners and household consumers foot the bill. The more that power companies spend, the more money the power companies receive. I want to urge the electricity pricing regulatory authorities to consider the hardship that the rises over the past decade have caused and to think about pensioners who are struggling to make ends meet when they consider applications for price rises.

The recent CPI September quarter figures showed a 1.4 per cent increase from the carbon price compared to a 3.8 per cent increase when the coalition's GST came into effect in the September quarter of 2000. That is a much reduced impact compared with the price effects of the GST. The CPI figures confirm Treasury modelling. The Commonwealth Bank economist Michael Blythe said that the CPI figure showed Treasury's modelling may in fact be an overestimate rather than underestimate. All along the government has been upfront about the carbon price and electricity prices. The Treasury modelling was that the carbon price would increase household electricity prices by 10 per cent, $3.30 a week on average. Electricity regulator determinations have confirmed this. In some cases, the carbon impact has been less than Treasury's estimate. To meet this impact, the government has provided $10.10 per week on average to households, so it is not just a question of the impact on electricity prices. We have been up front about that, but there is also the household assistance package, including the trebling the income-tax-free threshold and the like.

It is regrettable that earlier this month the opposition leader made misleading claims about the electricity bill of a Western Australian pensioner. He told the House that there was 'an $800 increase in just one bill, of which 70 per cent is due to the carbon tax'. But when we examined the bill it was clear that the proportion of the increase of the bill due to the carbon price was a fraction of the claimed 70 per cent. Frankly, this treats pensioners disrespectfully as nothing but fodder for a political scare campaign. The Chair of the ACCC has made it clear that the massive increase in electricity costs has been driven by electricity networks and not carbon pricing. He and the Productivity Commission have made it clear that the regulatory framework for controlling the prices on the electricity networks has increased prices by more than should have been the case.

In conclusion, the opposition holds out a series of pipedreams to the Australian people that if elected they will get rid of the carbon price and that they have alternative ways of cutting carbon emissions. They do not. What they really plan to do is to kick the carbon can the road and leave it for future generations to deal with. They want to wish climate change away. Yet just this week we have seen a stark and brutal reminder that we do not have the luxury of sitting on our hands. Hurricane Sandy has caused terrible devastation in the Caribbean and along the east coast of the United States and loss of life. There has been flooding of coastal communities. New York's subway is out of action. Manhattan and New Jersey have been devastated and brought to a standstill by the worst storm in memory in that part of the world.

Climate scientists are very clear in telling us that this is not a coincidence. They are clear in telling us that if global greenhouse gas emissions continue to rise we will bequeath to our children and our grandchildren a world of Hurricane Katrinas and Hurricane Sandys, of Cyclone Yasis, of Lockyer Valley floods and Black Saturdays. Those opposite are prepared to take that kind of risk rather than put a price on carbon—a price offset by a household assistance package that has tripled the tax-free threshold and fully compensates the majority of households. (Time expired)

See this speech in context