Craig Kelly (Hughes, Liberal Party) Share this | Hansard source

I will concur with the member for Melbourne on that point. If we can agree on some of these issues, that shows there is true hope in this parliament for bipartisan support. There are a few comments I'd like to make on the report, firstly on the introduction:

Like many countries around the world, the electricity system in Australia is undergoing a period of significant transition, driven by the changing mix of electricity generation, the emergence of a range of new technologies, and government policies for emissions reduction.

I think the very important point to make is that this so-called transition is not driven by market principles. It is not driven by ensuring we get the lowest cost electricity. It is being driven by government policies that we mandate unreliable and intermittent electricity into the grid. And we see what that actually does to the electricity system. We have to understand that all electrons aren't equal. When you force intermittent and unreliably generated electricity into the grid—and you force it in through government mandates—it's like infecting the grid with a computer virus. It completely skews the normal workings of the market. It undermines the economic case of the existing generators. That is what we've seen. We've seen that happen here, and we have seen that result in possibly the fastest increasing electricity prices anywhere in the world. Other nations have had big increases in their electricity prices, but I don't think anywhere else in the world has experienced electricity price rises to the same degree as Australia.

We were very fortunate that the committee was able to make a trip to Germany to discuss the German energy policy with German politicians and many experts in their energy generation and distribution sectors. At the beginning, the German policy, Energiewende, was seen to be a bipartisan policy. Everyone in Germany seemed to be onboard with that policy. But now they are starting to see the results of this policy—pushing tens of thousands, if not hundreds of thousands, of German households into energy poverty.

Only recently there's been pushback. Some German politicians are starting to speak out about this. As recently as a week ago, Sandra Weeser from, Germany's Free Democratic Party, gave a speech about the growing green energy capacity being installed—that the effort to reduce CO2 had failed, and what was left was an unpredictable power grid that often produced energy when it's not needed, thus costing Germans unnecessarily hundreds of millions of dollars annually. She went on to say:

…that the expansion of the green energies is totally out of proportion with the existing power infrastructure, and that even the most perfect grid will not be able to handle the volatile wind and solar energies.

There is one big difference between ourselves and Germany. In Germany, they have interconnectors to almost all their surrounding countries. When the wind is not blowing in Germany, they can tap into the nuclear power plants over in France. They can tap into the coal fired generators in Poland. They can tap into the hydrogenerators in Norway and Sweden. We can't do that. We, as a nation, are an island. We're an electricity island; we cannot tap into other countries' electricity supplies. The difficulties we have are far greater than the difficulties the Germans have.

Another recent speech was given by Dr Rainer Kraft, a German politician who is a former doctor of chemistry. He described Germany's Energiewende policy as the policy of 'a fool'. He called it 'eco-populist voodoo' designed to bring about 'an eco-socialist centrally planned economy.' The tide appears to have turned in Germany. Our feel-good policies are coming up against the hard engineering realities of the real world. That is why we must be so careful about what we do here, in this nation, to our electricity policy.

We have conducted an experiment. There's nothing wrong, at times, with conducting experiments, because small-scale experiments are how we advance as a civilisation. It's how businesses advance. They innovate and try something new, and they test the water. They test the market to see if it works or not.

That's what we've seen in South Australia. I often criticise them, but they went out there and they tested the water with a 50 per cent renewable energy target. They described it themselves as a big experiment. The results of that experiment are in. It has been nothing other than an unmitigated failure, a complete disaster, which has seen that state have not only the highest electricity prices in the nation but the highest electricity prices in the entire world. On top of that, in a state with a population of only 1.7 million people, they've had to take half a billion dollars—which could have been invested in schools, hospitals, aged care, kids with disabilities, drug rehabilitation and all the things we like to see money spent on—and put that into diesel generators. It's the big stunt of the big battery, nothing other than a complete stunt. We've seen that in the results over the past month. Half a billion dollars has been spent just to try and keep the lights on.

We've seen the comparisons between the cost of electricity in Australia and in the USA. One of the things we have to be very careful about in this nation is that we remain internationally competitive in everything we do. One of the most important things that we need to be internationally competitive with is the cost of our energy compared to the cost of other nations' energy, especially the USA, which is still the largest economy in the world. We have seen that the cost of electricity in many states in the USA ranges from US10c to US12c a kilowatt hour. That is the equivalent of A13c, A14c or A15c. So our electricity prices are not double those of the USA; they are in many cases triple those of the USA. We cannot continue to grow the wealth of this country if the cost of energy in Australia is double and triple what it is in the USA, when only a decade ago the cost of energy in Australia almost had parity with that in the United States of America. If we look forward, the USA projects that by the year 2050, the middle of this century, its energy costs will still be around the same as current costs.

We have to really think as a nation about what we are going to do. We need to set targets to ensure that our electricity supply price is comparable to that of the USA. Otherwise, how can industry compete? How can we create the wealth that we have in the past with our aluminium industry, our glass industry, our food-processing industry? How can those high-energy-intensive industries compete if the cost of energy in this nation is so much higher than it is elsewhere in the world?

We also need to look at the cost of the transmission lines. Our electricity generators are free-riding. We see that AGL is closing down Liddell power station. There is at least a billion dollars in sunk costs in those transmission lines. If AGL closes down Liddell, that cost is written off, and it's a cost to the national economy. (Time expired)

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