Angus Taylor (Hume, Liberal Party, Minister for Energy and Emissions Reduction) Share this | Hansard source

This bill, theTreasury Laws Amendment (Prohibiting Energy Market Misconduct) Bill 2019, delivers on our commitment to the Australian people to bring down power prices and stop dodgy conduct. It puts them back in control of their power bills. This bill once again shows that the Liberal-National government is on the side of hardworking Australians by ensuring energy savings are passed through to customers, introducing real penalties to stop the unacceptable and unsustainable conduct called out by the ACCC in their report last year and ensuring that big businesses can't manipulate the market to drive up prices.

The bill, importantly, complements the work since the election. From 1 July, we implemented a price cap on the highest standing offers, which is bringing and has brought down power prices by as much as $663 for some households. This comes on top of the government's work to stop dodgy discounting and charges from the big energy companies, including sneaky late-payment fees that were crippling those who could least afford it. From 1 July, we have also delivered the Retailer Reliability Obligation, which requires retailers to guarantee their energy supply three years in advance. It will keep prices down and ensure that the lights stay on. Whilst there is still more to do, I'm pleased that the most recent data shows that Australian power prices are dropping in the CPI.

Looking forward, the government's Underwriting New Generation Investments program will deliver new reliable generation into the market, putting downward pressure on prices and ensuring, importantly, the security of the grid. Further, we've introduced legislation to ensure that lower power prices are passed on to customers by the big energy companies.

I turn now to the bill. The bill will amend the Competition and Consumer Act 2010, introducing a new legislative framework to support the ACCC's electricity price monitoring inquiry. The bill is a targeted and time-limited intervention that aims to act as a deterrent to electricity businesses from engaging in the kinds of behaviour that, in the current energy market, could result in poorer outcomes for consumers. The ACCC's inquiry will monitor retail prices, contract liquidity and wholesale bids and conduct in the National Energy Market between 2018 and 2025.

The ACCC's new inquiry is framed around three key issues identified in the retail price inquiry final report, which was publicly released on 11 July 2018: first, retail pricing structures are confusing and make it difficult for consumers to compare and switch offers; second, new electricity retailers can face a barrier to entering the market due to liquidity issues in electricity contract markets; and, third, there is a general lack of competitive constraint in the wholesale electricity markets. The legislative framework complements the ACCC's inquiry with three new prohibitions designed to address the specific electricity market conduct that's detrimental to competition and consumer welfare. The retail pricing limb will target retailers that take unfair advantage of consumers' confusion around electricity offers and the difficulty of identifying and switching to better deals. It will require that supply chain cost savings are passed on to consumers on market offers, rather than increase retailer profits.

The contract liquidity limb and the wholesale bids conduct limb target anticompetitive behaviour in the markets which can lead to price increases that flow through to consumers. There are prohibitions on conduct that threatens the effective and efficient operation of electricity markets and leads to poor outcomes for consumers. These prohibitions are specifically designed to neither interfere with how our electricity markets are supposed to operate nor impact on genuine, efficient operational decisions by electricity market participants. Failure to offer a financial contract because of the plant being unavailable due to mothballing or closure would not be considered prohibited behaviour.

To ensure effective enforcement of the prohibitions, the bill will equip the ACCC with a graduated set of remedies, including ACCC-issued public warning notices, ACCC-issued infringement notices and court-ordered civil penalties. For the most serious breaches of the new prohibitions, the legislation contains a notice, response and recommendation process, leading to the potential imposition of the strongest sanctions: Treasurer-issued contracting orders and court-ordered divestiture orders.

Where the ACCC identifies a potential serious breach, it will notify the relevant company. The company will be given an opportunity to respond by explaining and rectifying their conduct. If the ACCC is not satisfied with this response, the legislation provides a process for the Treasurer to make a contracting order or apply to the Federal Court for a divestiture order on a recommendation from the ACCC. Contracting orders will only be available for breaches of the contract liquidity prohibition as well as aggravated breaches of the wholesale conduct prohibition. Divestiture orders will only be available for aggravated breaches of the wholesale conduct prohibition. Both the ACCC and the Treasurer must consider the remedy proportionate and targeted to the conduct and, in the case of a divestiture order, that the order would result in a net public benefit.

In the case of a government-owned corporation, a divestiture order can only require divestiture to another government-owned corporation. The bill does not empower the court to order divestiture to a private purchaser. This ensures that the relevant asset remains in government ownership, while still addressing the misconduct in question and promoting competition. The appropriateness of seeking a divestiture order or contracting order will be assessed on a case-by-case basis. But divestiture will be considered a last-resort response, reserved for the most egregious breaches for which other remedies are not sufficient to address the conduct. These are significant remedies, and I do not expect to have to pursue them, but we will do so if required.

The government is confident, particularly given the international experience, that divestiture orders, as a measure of last resort, will not act as a deterrent to investment in Australia. Indeed, the real deterrent to investment in Australia is anticompetitive conduct. While evidence may clearly establish that a corporation has engaged in the proscribed activity for the purposes of substantially lessening competition or to distort or manipulate spot-market prices, the bill follows precedent in the Competition and Consumer Act to allow the purpose of the corporation to be ascertained by inference from the conduct of the corporation, the conduct of other people or the circumstances relevant to the conduct. Provisions of this type already exist in the CCA in relation to hindering access to declared services, exclusive dealing and hindering a standard access obligation. The drafting of this provision reflects the existing law and the long-held understanding of the provision at law by all parties to provide clarity and certainty.

These laws will commence six months after royal assent, allowing a transitional period for the ACCC to develop guidelines and make its enforcement approach clear to industry. The amendments circulated by the opposition simply replicate what will already be the effect of the bill. That said, to give complete comfort to the chamber, the government is willing to support these amendments. I thank the opposition for working with the government to ensure that these amendments do not have any unintended consequences.

Finally, this bill also amends the CCA to provide additional information-gathering powers to the Australian Energy Regulator. This will support their functions under the default market offer and the reference bill.

This bill is a key part of our policy platform—a policy platform that has no shortage of endorsements. The Western Australian state Labor government has said, 'The government won the election and has a mandate to follow its policies through.' The member for Hunter has backed our policies in a ruthless and unsparing review of the member for Hindmarsh, and the Australian Workers Union, which produced many of those opposite, now endorses the government's policy. While I welcome the constructive way that the opposition has now come to support this bill, I call on those opposite to back our policies on energy and emissions reduction across the board, as some already have. I commend this bill to the House.

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