Adam Bandt (Melbourne, Australian Greens) Share this | Hansard source

There are two big things that you would say we have done wrong with our energy system over the last decade or two. One has been to ignore Australia's amazing advantages. We have so much sun and so much wind. We're surrounded by ocean. You would think that we could be the renewable energy world leader and that we could be providing clean, cheap energy to households. But, also, you would think that we could be the place that industry wants to come to for energy-intensive industry if they want a guaranteed source of clean, cheap energy in the region. There's absolutely no technological reason that we can't be a renewable energy superpower. It has just been that we have had governments who have been so enthralled with the legacy power of coal and gas that they went out of their way to find ways of subsidising and supporting that kind of energy and holding back the new kind of energy that would enable Australia to take its place on the world stage.

The second thing that we have done wrong is not treat energy as an essential service that needs to be managed for the public good and provided at the lowest possible cost, bringing down prices as well as pollution. We have turned the whole thing into a market—an artificial market. Because electrons aren't goods that can be sold or traded like other goods at a supermarket, we have had to create all these laws and systems to pretend that electricity is a market like every other market. What we have found is that it has completely failed. It has driven up the cost of electricity, it has not brought on the investment that we need in new generation and it has not built the network that we need for the 21st century. The mantra of the Labor and Liberal parties for the last two decades has been to deregulate and privatise everything. If you work through the bits of the energy market—and I'll come to the bit that this bill focuses on in a moment—you can see the spectacular failure that privatisation and deregulation has meant for our electricity sector.

In the retail sector, when you think about what an electricity retailer actually does, they pay for a lot of billboards—you see ads for electricity retailers around the place all the time—but they don't actually produce anything. They just take the product—the electricity—that's been generated and transmitted to you down the transmission line and then sell it to you for an inflated profit. As a result, in Victoria, where there has been complete price deregulation, 30 per cent of the power bill for a household is just the retailer's profit margin. Thirty per cent is just the retailer's profit margin!

And when you look over to other states or territories, like the ACT or Tasmania, where they regulate their power prices, we see power prices have stayed substantially lower there. The difference between the regulated and deregulated states is so stark that for the same electricity you could be paying for $1,500 a year for a family in the ACT, where they've got a Greens energy minister and 100 per cent renewables, or up to $4,000 if you go over to South Australia. It's deregulation—allowing electricity retail sector to be treated as a market for profit rather than as an essential service—that has pushed up power bills to the point where many people can't afford them. That's on the retail side.

On the generation side—right at the other end, where our electricity comes from—we've seen this government, under the current Prime Minister and the previous Prime Minister, send such a shudder through the energy industry by repealing the carbon price that was put in place in the last parliament that wholesale electricity prices have doubled under this government's watch. There they were saying, 'Oh, my word, the carbon tax is so bad it might cost you an extra $500 a year.' And what they have done? They repealed it, put nothing in its place, and as a result the industry does not know what's going on and wholesale power prices doubled. They feign that it's somehow the fault of some state governments who are picking up the slack because the federal government is turning a blind eye to climate change. But the highest price rises in wholesale power were in New South Wales, where there were Liberal state governments and Liberal federal governments in power for the last few years. That's where the highest price rises in wholesale power generation have been. This government has done nothing more to the generation side other than push pollution up and push power prices up. These are undeniable facts. That's the retail end and the generation end.

This bill deals with some bits in the middle around the networks: the big lines out from the power stations to the substations, and then the distribution substations that happen in the cities and regional areas. What's been going on there? Because Labor and the Liberals have been so intent on treating what is essentially a natural monopoly that should be run for the public good as an artificial market, what has happened? We have seen enormous expenditure over the last few years in the networks, because the way the system has been set-up is that no-one is sitting back planning the networks for the Australian public interest, saying, 'What lines do we need where?' The way the system is set-up is that it relies on these network companies—some of whom are registered in the Cayman Islands—to front up and say: 'We want to build project X. We'd like you to tick off on it.' And when the regulator ticks off on it, they get a guaranteed rate of return that could be six to 10 per cent, and they then pass that on to consumers. Over the last few years under this crazy faux-market system that Labor and the Liberals have developed, we've had $44 billion of new build between 2009 and 2014, simply because the companies have come along and said, 'We'd like to build it, please,' the regulator has ticked off on it and said, 'Yes, you can charge six to 10 per cent extra,' bearing in mind that if the government did it they could do it at the bond rate of around three per cent. But, no, never mind that. We ticked off on them getting this massive profit—a guaranteed risk-free profit—that then gets passed on to consumers.

And the more that people have dug into the detail you realise that, out of this $44 billion, on some estimates, $20 billion of it was totally unnecessary. That's the gold plating and the other extended overinvestments that we've heard about. And it's the investments that the Australian Energy Regulator told the House Economics Committee about where, over the last few years, they would say that a billion dollars a year has been spent just to deal with about three to five days of high demand, instead of looking at other alternatives like demand management—that is, saying to companies or households, 'Actually, if we paid you just not to turn the power on for a bit, or to run it at a lower rate, would you be prepared to take a payment for that?' The Australian Energy Regulator, when it fronted up and gave evidence at our committee, could not name one instance in which they'd knocked back an application to build new network infrastructure because demand management would have been a better alternative. So we've had this massive investment. Why have we had this massive investment? Well, let's look at who runs it: largely companies; some state-owned companies who have been bolstering their state government balance sheets through a form of indirect taxation but largely private companies.

Over the last four years, according to IBISWorld reports, the private companies that run the networks in this country have made $28 billion in profits—$7 billion a year in distribution and transmission, for these companies that are meant to be running the energy system for the public good. It is no wonder that power bills are so high! At every step of the way, from the generation—where there's an investment strike going on, because of this government—through to networks, through to transmission and distribution, where it's being run on a for-profit basis and we are building not the network that Australia needs, but the network that the power companies want. That's what we're building, and they're making $28 billion over the last four years, $7 billion a year—through to retail—where companies are making billions of dollars a year. At every stage, the energy system in this country is being run for profit and treated as an artificial market—and we're not getting the energy network that we need.

As a result, we have a system where—according to the Clean Energy Finance Corporation under the current rules—if you wanted to build a transmission line in Australia, not to a coal-fired power station, which is where most of them are, but out to where the sun is shining the brightest, you'd actually struggle—according to the evidence that they've given—to make the case under the existing regulatory investment test that it was worthwhile. In other words, if someone now said: 'We want to build a transmission line out to a place where the sun is shining the brightest'—or where the wind is blowing the hardest, because that's where the new renewables would be—it might not pass the test. But what does pass the test is $20 billion worth of excess investment to gold-plate the system, which customers are ultimately going to be paying for. Because governments have handed everything over to the private sector and because the rules don't require pollution reduction to be taken into account, we're building an energy system, which consumers are paying for and which is actually driving pollution up.

This bill, the Competition and Consumer Amendment (Abolition of Limited Merits Review) Bill 2017, addresses one small part of it. This bill says that, when the regulator knocks back some of those applications for funding or for new investment, then it truncates the circumstances in which there can be an appeal against that. What we have found so far is that it has really been a no-lose situation for the energy companies, because every time the regulator knocks it back—they appeal. If they lose the appeal, they still get to make a decent amount of money because the system is rigged in their favour. If they win the appeal, they get to make even more money. So it's a welcome move. But once you've stuck your hand up—as this government has—and said, 'There's a problem with the way that we fund our networks in this country, and there's a problem with the way that we plan them,' you have to take it through to its logical conclusion. And its logical conclusion is this: in a country like Australia, there is absolutely no reason that our transmission and distribution systems—the grid that forms the backbone of our electricity system, and is a natural monopoly—should be such that a company can front up and say, 'I want a guaranteed 6 per cent return'—or even a 5 per cent or a 4 per cent return—'on my money to build a piece of infrastructure, and I want the consumer to pay the difference', when it's essentially a risk-free investment. It is essentially consumers subsidising private companies to make even more profit, when it could be done much more cheaply if the government just treated it like it used to—as an essential service that is there for the public good.

What we ought to be doing, Mr Deputy Speaker, is going further than what's in this bill. We ought to be saying: 'We need to rewrite the rules according to which our energy network is built and funded.' If there's one good thing to come out of skyrocketing power prices, it is that it has forced people to lift the lid on how our energy system has been run for the last couple of decades and, when you lift the lid and look, it is not a pretty sight. There is a very, very good case, regardless of what you think about how generation should be dealt with—there are different views about that—and how retail should be dealt with. I think there's a very good case for full reregulation of the retail market. You just have to look at Victoria and compare it with the ACT to see what benefits you could gain from that. Regardless of what you think about those two ends, for the middle bit—the backbone, the grid, the transmission and distribution networks—there is a very good case for saying, 'We're going to run that as a public good.' As a public, let's build the backbone and then others can come and plonk their generation onto it, and others can sell it at the other end of it, but the natural monopoly that sits in the middle should not be an opportunity for obscene profiteering at the public's expense. Winding back the limited merits review—as this bill does, which is why it's useful and will be supported—is only the first step because, once you put your finger on the problem, you can't then pretend the rest of it doesn't exist.

For too long, big power companies have been getting away with financial murder. They've been getting away with murder by charging what they like to build what they like, even if it's not in the public interest, and consumers have been paying through the nose. It's time to bring it back under public control so that we can bring down pollution, bring down prices and stop Australians having to pay through the nose for high electricity bills and network infrastructure and investment that they don't need. It's time to bring it back under public control because most people in this country think that electricity is an essential service. They don't want a million different power bills and offers; they just want one chance to pay cheap power bills so they can keep the lights on.

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