Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Energy and Resources) Share this | Link to this | Hansard source

Can I firstly say that the coalition supports the Australian Energy Market Amendment (AEMO and Other Measures) Bill 2009. It is a continuing part of the energy market reform process which was started by my predecessor in the portfolio, Nick Minchin, which I continued, and which is now being undertaken by the current Minister for Resources and Energy. The purpose of the bill is to make minor changes to Commonwealth legislation which will allow the establishment of a single national market operator for electricity and gas. This market operator will replace an existing operator, NEMMCO. The significant difference is that this new body, AEMO, will cover both electricity and gas, where NEMMCO covered only electricity. That in itself is a very significant final step as we move towards encompassing all energy sources under the one umbrella.

The bill also amends legislation to reflect a name change in Western Australian gas legislation as a consequence of the proposed AEMO taking on NEMMCO’s function. The bill provides for minor amendments to the Renewable Energy (Electricity) Act 2000 and the Trade Practices Act 1974. Whilst these may be minor changes to the legislation, they are an important reform for the energy sector and one which I can say the energy sector supports wholeheartedly.

The Australian Energy Market Amendment (AEMO and Other Measures) Bill 2009 seeks, firstly, to ensure more efficient investment in energy infrastructure; secondly, to continue the process of promoting competitive energy markets with the aim of lower prices for consumers; and, thirdly, to enable the commencement of a single national energy market operator for both the electricity and gas sectors. The operator will be known as the Australian Energy Market Operator, or AEMO for short. It is anticipated that operation will commence on 1 July 2009.

The Ministerial Council on Energy, also known as the MCE, was established by COAG, the Council of Australian Governments, in 2001. The MCE is the national policy and governance body for the Australian energy market, including for electricity and gas, as outlined in the COAG Australian Energy Market Agreement, or AEMA, of June 2004. The MCE’s task is to provide national leadership so that convergence issues are fully considered in the energy sector decision-making process. During my time as minister, often in the face of fierce opposition from individual states but in the main supported by the majority of state ministers—all of whom were Labor—the MCE provided that sort of leadership in the energy market.

New South Wales was one of the last states to get on board when it finally decided to do the right thing and sell off its energy assets—energy assets which have no place being owned by government and run by bureaucrats to the advantage of the state treasuries and the detriment of the consumer. It was somewhat saddening, but I have to say not surprising, to see that the Prime Minister of this country did not have the courage to back the then Premier of New South Wales, Morris Iemma, in that state’s endeavour to put the final brick in the wall in ensuring that energy assets and the energy market itself were reformed.

It highlights the lack of leadership provided by the Prime Minister, not just in this area but in a whole range of areas, and the fact that he is constantly unwilling to make unpopular but necessary decisions. I lost a lot of skin and hair—and had a lot of fun, I have to say—in pushing these energy market reforms forward, but I did not enjoy seeing a situation where the current federal minister for energy was left high and dry by continuing to promote, quite rightly, much needed reforms. That the Prime Minister did not have the courage to stand behind not only his own minister or the reforms which he had signed up to as Prime Minister but also a state Labor Premier highlights a failing of this Prime Minister which I do not have time in this speech to further expand on, but it is one which I think bodes badly for this country.

The MCE comprises ministers with responsibility for energy matters, from the Australian government as well as from all states and territories. The development of this bill has been overseen by the ministerial council and had its genesis from the reforms to the energy sector made during the time when our party were in government. Those reforms were, as I said in my opening comments, initiated by Nick Minchin, pursued with passion and determination during the six years I was minister and they are now being pursued quite capably by the current federal minister for energy. During that time we saw an enormous turnover in state energy ministers and some colourful characters. It is with some satisfaction that I now see the MCE comprised of ministers who are committed to the reform of the energy market. They do, in some instances, unfortunately still take their riding instructions from state treasuries but, in the main, compare favourably to those wild days when former Minister Yeadon, who is perhaps the best example, tried to tear apart the MCE at his first meeting. I wonder what happened to Kim Yeadon. He is certainly not a political force any longer. His attempts to derail this process were unsuccessful.

There have been state Labor ministers who have provided some wonderful support on this, and I have would have to single out the minister from South Australia, Pat Conlon, who has made an enormous contribution and was the only minister to be there from go to whoa over the six years I was there. Also, more recently, people like Minister Batchelor from Victoria have made this issue something that they want to continue to pursue and on which they are supporting the current federal minister. So the MCE is a body that is now functioning very well. We are seeing some real vision and some real determination coming from it. The development of this bill was overseen by the ministerial council.

AEMO will assume the responsibilities and functions of existing gas and electricity market operators, including the National Electricity Market Management Company, NEMMCO. We certainly welcome AEMO taking on the transmission-planning functions of the energy market. It is obvious—and it is an area which needs addressing—that there are failings or gaps, particularly in the transmission-planning function and in the transmission system. We need to ensure that electricity is able to be supplied, as far as is practicable, from any source in the network. This is obviously an energy security issue, in case a power station has an outage or, as we saw in the bushfires two years ago, a powerline fails. But it is primarily there to ensure that there is competition—that is, that this generator has to compete against that generator. If we get a proper transmission system going, we get a situation where state boundaries are completely broken down and where state treasuries can no longer control the price of electricity in their state. Thus new entrants—and this is a key area—can come in and build power stations confident that they will be able to compete on an equal footing with government owned power stations while they still exist.

This transmission-planning function, which will highlight gaps in the transmission system and move to address them, is something we certainly welcome. But we do have a minor concern in that regard—I hope it is only ever minor—which is that it does present government, the federal government in particular, with the opportunity to step in and take equity in those transmission lines. AEMO needs to stick to its knitting. It needs to be sure that, in planning these transmission lines, it does its function but at no stage creates an opportunity for governments, state or federal, to take up equity. It is simply no longer appropriate. It has been highlighted again and again, and agreed to by this government and the previous government—we will leave the Prime Minister aside in supporting it—and agreed to and supported by ministers at both state and federal level that the future of the energy market sector relies on private sector involvement and a continued diminishment of government ownership. There is no place for any government ownership, least of all Commonwealth government ownership, in energy infrastructure.

We are also concerned that, in its enthusiasm—for want of a better word; some would say wild panic—the Rudd government not use the Building Australia Fund to put money into energy infrastructure. We need to see a situation where that money is preserved for the reasons for which it was set aside—particularly construction of roads, railways and the like. We have, given the right set of rules, enough companies willing to invest in energy infrastructure in Australia, provided they are sure that the government is going to set the rules fairly. We have enough companies interested in investing to negate the need for any Commonwealth funding of these projects. This is for equity and to avoid draining the very meagre funds which are available to infrastructure in general.

I guess, as we go forward on this, the opposition—reluctantly, but with no other option—has to rely on the minister for energy to be the whistleblower if the government starts to vary or to waver in its policy approach to this. I hope we do not have to see a situation where the minister has to get chastised again for saying it like it is, as he did on Fuelwatch where he knew, right from the start, that that scheme was a dud. He knew from the start that that scheme was a farce. He knew it was a political fix that was never going to work. He had the courage to put that in writing and, unfortunately, someone leaked it on him. Having to rely on a minister for energy again having that sort of courage to ensure that the Commonwealth government does the right thing on energy infrastructure investment is something that the opposition is worried about. I am sure the minister will do it if he has to, but I think it is a funny way to run a government.

I have spoken a little about the energy market but I think that, in a bill as significant as this, it is worth recapping the history of this. I have said it was established in 2001. When I became minister later that year, the then Howard government commissioned what is known as the Parer review, looking at the long-term future and sustainability of energy in Australia. The Australian energy market reform legislation—based on that review but also on state ministerial input and input from energy consumers, producers and retailers, all of which assisted in forming the legislation—overhauled the structure of the national electricity market. It was an extraordinarily quiet revolution. ‘Revolution’ is the only word: it was a dramatic change from what were decades of state based energy systems which were designed, yes, to provide electricity to consumers but which, as always, ended up being used by state treasuries to prop up their failings in other areas.

This overhaul had, at the heart of it, the establishment of two new bodies, one of which was a single national regulator. I am a bit rusty on the figures, but I think there were 23 all up. Certainly, in terms of electricity, it replaced 13 different but overlapping regulatory bodies in various states. Each state had a number of regulators, in some cases a gas regulator and an electricity regulator, and even though both gas and electricity were travelling from one state to another they were then regulated by two separate bodies. So that was an enormous step, and I remember full well, as one does, the enormous fight that went on in the ministerial council—not over the good that this was going to bring to Australia, not over how the energy market would operate, but over who would actually get these two new bodies in their state: where would the new head office be? The fight, which I was not part of because no-one wanted it in Canberra—

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

Mr Perrett interjecting

Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Energy and Resources) Share this | Link to this | Hansard source

The Queensland minister actually did not want it either, but that is another story. What happened in the end was that we established these new bodies, the AER and the Australian Energy Market Commission, the AEMC, and their head offices were established in Melbourne and Sydney. The winners went away smiling, the losers went away unhappy, but in the end it made absolutely no difference at all. So those two bodies were established and positioned. They replaced an absolute labyrinth of regulation in the sector and were desperately needed in the energy industry.

I mentioned that there are private companies, private enterprise, looking to invest in the Australian energy market, at a time when state governments everywhere are short of cash. No-one is as short of cash as Queensland, of course, who have managed to rack up a $74 billion debt. What a figure; how did they do it? It is just mind blowing. I guess in the next few days the voters will ask them how they did that as well. But at a time when the state treasuries are not—

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

Mr Perrett interjecting

Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Energy and Resources) Share this | Link to this | Hansard source

National Party? He is wrong on both counts, Madam Deputy Speaker; I am actually a Liberal-National Party person.

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

Mr Perrett interjecting

Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Energy and Resources) Share this | Link to this | Hansard source

Third attempt and he gets it right—sounds familiar. To get back to the point, though, it is estimated that an investment in the energy sector of $37 billion needs to be spent on baseload power over the next decade, and that is needed simply to guarantee that the lights stay on. When I first stated that figure, I know there were those who thought I was being quite alarmist. I remember saying that there was a risk that the lights would go out during the Commonwealth Games and, in fact, that risk was almost realised. Of course, since then, we have seen that risk realised on a number of occasions, particularly in heatwave conditions where the electricity generation sector simply cannot keep up. So these reforms are certainly needed, and the investment that will come from the private sector is desperately needed.

The good news, though, is that, through all this toil by state ministers and by the Commonwealth, Australia has been recognised as having the model for other countries in terms of energy market reform. It can be said quite categorically, irrefutably, that Australia leads the world on energy market reform. They are not my words; they are in fact the words of the International Energy Agency, the IEA, who looked at what we had achieved here—I say ‘we’ and I genuinely give credit to my state ministerial colleagues, because it was a team effort. Australia has set a course that has really turned out to be the envy of the world.

In saying that, I should also pay credit to the departments involved. I cannot remember the correct name of the department; its name has been changed so many times. It used to be the Department of Industry, Tourism and Resources, but I think it is now called the department of energy, tourism and resources. That is probably in the wrong order. I know that I wanted to call it DIRT. I thought, ‘What a great name for a department—the department of industry, resources and tourism, DIRT,’ but I could never get that past the bureaucrats. Whatever their name is now, I pay them credit. The people there both now and in the past have done an enormous amount of work on this. They provided guidance and sometimes counselling to their then minister and I am sure they do so now. They certainly provided some guidance and counselling to their state departmental colleagues. I think they have a lot to be proud of.

If we look at the whole area of energy market reform, there are a few final areas that I would like to briefly touch on. The ministerial council has called for a review of energy market frameworks in the light of climate change policy. The purpose of the review is to determine if energy market frameworks should be amended to accommodate the Carbon Pollution Reduction Scheme, or the CPRS as it is known—

Patrick Secker (Barker, Liberal Party) Share this | Link to this | Hansard source

It should be the C-R-A-P.

Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Energy and Resources) Share this | Link to this | Hansard source

There are all sorts of acronyms we could be using. The review will also look at whether they should also accommodate the expanded renewable energy targets. This review is probably appropriate, providing it is not done on a political basis. I guess that is where our concerns rest: that in fact it may be just another review. We have seen this government set up a review through a House standing committee to look at the CPRS and then get such a fright that it might in fact say things that it does not want said that it killed off the review. The government established a review and then killed it off. In my time in parliament I do not ever recall a government killing off a review that it had established. What information was going to come out of that review that the Prime Minister, the Treasurer and the Minister for Climate Change and Water did not want made public? What was going to come out of that review? So has this review being done by the ministerial council been sanitised as well? Is it going to do a true inquiry into the energy market impacts of the CPRS and RET, or is it going to be another review which this government either chokes or manipulates to get the right outcome?

This government is creating problems with both the CPRS and its renewable energy policy—and not only in the manufacturing sector, which I could speak for hours on having been the minister for industry and knowing the impact that the CPRS is going to have on jobs in Australia, knowing how difficult it is for industry in Australia to be competitive and knowing the disadvantages we already have. Energy intensive and/or trade exposed industries cover pretty much every industry in Australia. Anyone who makes something is competing against other exports when they go into the international market or other imports in their domestic market. I know how difficult it is, and the CPRS is simply going to make that job more difficult for industry and cost jobs here in Australia. We know that, and the Senate inquiry into this matter will no doubt reveal it further. We also know that if we do not set sustainable renewable energy targets, we will not only increase the price of energy so much that, again, it will cost jobs in industry but also have situations like we had during the heatwaves in South Australia this year, where the renewable energy sector provided a certain percentage of the energy requirement. As everyone knows, on a hot day in Adelaide, the wind is not blowing—and, when the wind stops blowing, that means there is no electricity from the wind turbines.

We support renewable energy. We have done more than this government has done on renewable energy. We are the ones who spent all the money. We are the ones who went out with dollars to get renewable energy projects up. While this government talks about it, we did it. But it needs to be done in a balanced and responsible way so that it ensures that the energy supply market is sustainable and that industry is not left with an unfair burden.

I say in conclusion that this is one of the last bricks in the wall. The AEMO legislation is not the final chapter but is certainly one of the concluding chapters in a story which at some stages I thought would never be written. I remember being thrust into the first meeting as minister and coming out and saying to the then Deputy Secretary of DITR John Ryan, ‘What the hell is going on?’ because basically everyone just wanted to fight about energy market reform. The Commonwealth had a vision and the states were supposedly signed up to it but there was no way that state treasuries in particular were going to let go of it.

Seven years on, the process which, as I said, was identified by the IEA as the world leader in energy market reform is approaching a conclusion. It is something that we in opposition support and it is something we worked hard on in government. I congratulate the minister for his legislation. I look forward to his ongoing commitment. I hope the Prime Minister has the courage to support him.

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

There is an electricity company that runs an advertisement along the lines of ‘we’re excited by electricity even if you’re not’. As a parliament and a nation we need to get more excited about electricity markets even though that may cause people’s eyes to glaze over as a natural reaction. Before I go to the body of the Australian Energy Market Amendment (AEMO and Other Measures) Bill 2009 I feel the need to comment on the member for Groom’s observation that it was the previous government that did it in relation to renewable energy. When they started out renewable energy as a share of this nation’s energy was at around 10 per cent. When they finished renewable energy as a share was also at around 10 per cent. In other words, it flatlined. The renewable energy target they established, firstly, was too modest at two per cent in the first place and, secondly, was converted into gigawatt hours and was consequently swallowed by rising electricity demand. The Clean Energy Council and other bodies in the renewable energy field are quite scathing about the stop-go nature of the previous government’s policies and the way in which they did not genuinely seek to achieve renewable energy growth in this country.

This bill makes minor amendments to a number of Commonwealth acts to facilitate a nationally consistent approach to energy market regulation. The amendments are required for the establishment of the Australian Energy Market Operator, which the Council of Australian Governments at a meeting in April 2007 requested be established by 1 July this year. The Energy Market Operator will take over the functions that are currently performed by the National Electricity Market Management Company, NEMMCO, along with the retail and wholesale gas market operation functions performed in various jurisdictions except the Northern Territory and Western Australia. The Energy Market Operator will also undertake a number of significant new functions to enhance investment decision making on the need for and location of new infrastructure in the energy sector—the most significant of these being the National Transmission Planner function and the production of an annual gas statement of opportunities.

There are only minor amendments required to the Commonwealth legislation but they are critical in ensuring the ongoing operation of the national electricity market, which uses a cooperative legislative model with South Australia as the lead legislator. Amendments are also required to correct references to Western Australian legislation, which will enable key elements of the national gas access regime to apply to parts of the Commonwealth’s offshore area. The amended name and year of enactment of the Western Australian legislation were made necessary by delays associated with the proroguing of the Western Australian state parliament in 2008.

In order to strengthen the national character of energy market governance the Council of Australian Governments has agreed to establish this national energy market operator. The operator will be a company limited by guarantee. It is proposed that statutory functions will be conferred on it by way of amendments to the National Electricity Law through a schedule to the National Electricity (South Australia) Act 1988 and the National Gas Law through a schedule to the National Gas (South Australia) Act 2008. Throughout legislation the references to the former NEMMCO—for example, in the Renewable Energy (Electricity) Act 2000 and the Trade Practices Act 1974—are going to be replaced by references to the Australian Energy Market Operator.

I think it is excellent that we see a spirit of cooperation in the COAG process concerning energy markets and the move towards this national energy market governance. That spirit of cooperation was present at the public meeting in Canberra on 29 November last year. I want to point out to the House that it reached agreement on national principles for feed-in tariff schemes. In that agreement, governments indicated that microrenewable generation should receive fair and reasonable value for exported energy. It was also agreed that feed-in tariff policy should be consistent with previous Council of Australian Governments agreements, particularly the Australian Energy Market Agreement. This included arrangements and jurisdictions for PV consumers by the Ministerial Council on Energy, and there was a further undertaking from the Ministerial Council on Energy to advance fair treatment of small renewables by continuing to implement the regulatory arrangements for small renewable customers. That meeting followed an earlier COAG meeting in March 2008, where it was agreed that Australia should have a harmonised approach to feed-in tariffs.

I want to say a few things about feed-in tariffs. They encourage individual homes, factories, schools and building sites to become minipower plants, meeting their own power needs through the production of renewable energy, which does not emit global warming emissions. Feed-in tariffs can reflect the real cost of carbon: they can be based on either so-called avoided costs of nonrenewable power producers or the electricity price charged to the end user, supplemented by a bonus or premium in order to account for the social and environmental benefits of renewable energy. It is quite possible to make a feed-in tariff apply across all technologies, but the best-known one is solar photovoltaic—that is, solar PV. Feed-in tariffs build community awareness as individual households feel empowered in making a contribution to the mitigation of climate change. The potential of increased renewable energy power production has the obvious benefit of reducing carbon emissions and atmospheric pollution. Furthermore, by decentralising alternative power generation, you minimise the problems of the geographic concentration of such facilities. That will provide a security dividend. Small on-site generation makes the electricity system less vulnerable, for example, to terrorist attacks because it reduces the number and degree of high-value targets where a single strike could cut power to many users, it reduces the grid instability that can result from the loss of a large power generator or transmission line and, finally, it reduces the use of dangerous fuels that create additional potential hazards.

The feed-in tariff is intended to drive the cost of solar PV down. Solar PV generates power when it is most needed. It evens out the power load and reduces the extreme peaks of the hot summers. The supply of energy will ordinarily be highest in the warmer periods, and of course that closely matches the increased demand to electricity that you get in the form of significant airconditioning use. PV output over summer peak load weeks has been shown to correspond well to system loaded regional nodes in Victoria, South Australia and New South Wales. It avoids transmission losses; it avoids the need for poles and wires infrastructure; it offers job creation in production, distribution and installation. Personally, I think the job creation potential of renewable energy is not adequately realised. For example, a little over a decade ago Germany had a solar PV industry on a similar scale to Australia’s. Germany now has an industry of 110,000 jobs generating 15,000 megawatts of solar PV. Australia has fallen behind. It was estimated in 2005 that our solar PV industry was responsible for just 1,300 jobs.

There is, quite naturally, concern about the cost to consumers resulting from feed-in tariff schemes. As the Alternative Technology Association has noted in a document, Cost to Victorian consumers of a gross metered feed-in tariff:

With increasing electricity prices resulting from the drought (with hydro power declining), increasing demand, mandatory renewable energy targets and the impending cost of an emissions trading scheme, it is understandable that governments are wary of what may be seen as an increased cost burden on consumers.

So, when we are thinking about setting a fair price for the feed-in of electricity, we need to be mindful of the impact on consumers. I think we also need to be mindful of the benefits of grid-connected solar PV in reducing global heating emissions, reducing the growth in peak demand, avoiding the need for expensive network infrastructure augmentation, industry development and employment creation. We need to be mindful that a fair price sees the homeowner rewarded for the value of the electricity at the retail rate at the time of production and for the benefits I have just referred to. According to the Alternative Technology Association:

An effective feed-in tariff scheme needs a fair price paid for a guaranteed period of time on total generation, in order to create the certainty required to drive increased investment.

The document goes on to say:

Funding a feed-in tariff would be recovered from all electricity consumers on a consumption basis via a small increase in electricity tariffs. However, due to the broad base of consumers in the state, the final cost to average consumers is quite low.

The ATA did some calculations about costs in relation to Victoria and concluded that, ‘Victoria would achieve a 100-fold increase in solar capacity, or 250MW,’ on an average of a little over $9 per year over the life of the scheme. That equates to a price increase of less than $1.50 per month.

These calculations include an exemption for cost recovery for low-income households (those eligible for energy concessions), as well as large electricity users connected directly to the electricity transmission network. Even with these exemptions which effectively concentrate costs to typical domestic and commercial consumers, typical increases in electricity bills resulting from the feed-in tariff will be in the order of less than 0.6%.

The Alternative Technology Association adds:

Whilst the greenhouse benefits are often touted, the benefits of grid-connected solar PV are far greater than just greenhouse gas reductions.

In addition to being a clean source of electricity generation, widespread adoption of solar will result in significant economic savings to all consumers through:

• Reduced wholesale electricity prices, as output of solar PV systems corresponds closely to peak demand when the wholesale electricity price reaches its maximum; and
• Avoided network augmentation (new power stations and transmission infrastructure) by generating electricity close to the point of consumption, and at times of greatest stress on the network.

Australian electricity networks are committed to spending in the order of $24 billion dollars over the next 5 years on network upgrades, and with network charges accounting for around 45% of consumers’ retail electricity bills … this represents a significant cost impost to retail customers in the National Electricity Market.

Ultimately, much of this network augmentation is being driven by peak demand. As such, there is a strong case for the adoption of electricity generation which is both close to the point of consumption and matches the demand of the network. Solar PV fits this bill.

The other advantages, which I have talked about, include:

• Increased supply diversity and security, as renewable energy is inherently lower risk in the long term than traditional fossil fuel fired generation;
• More jobs per MWh as solar PV generates at least 30 jobs per installed MW …
• Development of a high-tech solar industry in Australia, with significant export potential; and
• Greater economies of scale from the expansion of the solar industry locally and reduced real costs, eventually enabling solar PV to reach parity in the Australian market.

I come back to the German example:

… reports from Germany’s environment ministry, the BMU, have estimated that the savings achieved from the adoption of feed-in tariffs—reductions in the wholesale electricity prices, reduced energy imports, and savings resulting from reduced greenhouse gas emission—outweigh the costs of the feed-in tariff by a factor of three to one …

The savings achieved from reduced wholesale electricity prices alone exceed the costs of the feed-in tariff to consumers, resulting in a net benefit to consumers from the laws …

Whilst it is acknowledged that Germany’s feed-in tariff applies to all renewable energy, and different rates apply for different technologies, the economic benefits to arise from reduced peak demand is greatest for solar where generation closely matches these peaks.

The German feed-in tariff scheme is by far the best established and most successful. Germany has installed 300 times Australia’s total solar capacity at a cost to consumers before factoring in these economic savings of less than half a euro per month. In Germany, renewable sources of energy are nearly 11.5 per cent of German electricity generation, and the German renewable energy target has increased from 20 per cent by 2020 to 27 per cent by 2020. This shows what is possible. It shows that we can change the way we do things. I hope that more people become interested in the national energy market and the Australian Energy Market Operator and do not just allow their eyes to glaze over every time this topic is mentioned. It is great that the Australian government and the state governments, through the Council of Australian Governments, have turned their minds and their energies to this issue. This bill is a further component in the broader energy market reform agenda. It highlights the benefits of cooperative reforms between the states and the Commonwealth, and I commend it to the House.

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

I am pleased to speak in support of the Australian Energy Market Amendment (AEMO and Other Measures) Bill 2009. I will not speak at length on this bill, as it contains only relatively minor amendments to bring legislation up to date with the establishment of the Australian Energy Market Operator. The Australian Energy Market Operator will replace the previous body, the National Electricity Market Management Company, and assume the retail and wholesale gas market operation performed by the states and territories. In such operations, it is always very important right from the word go to correctly pronounce the acronyms. We have the ‘NEM’ and now we have the ‘AEMO’. I commend the department on its choice of pronunciation there. With ‘emo’ in the title it is a very modern title! It embraces generation Y! For those older people here—

Patrick Secker (Barker, Liberal Party) Share this | Link to this | Hansard source

We know what emos are.

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

Emo is the gen Y version of goths. That is my understanding. Obviously, in Queensland, having a warmer climate, we do not have as many goths as there are in the UK or somewhere like that—although you still see a lot of capes in the middle of summer in some parts of Brisbane. I was hoping for a combination of the ‘NEM’ and ‘AEMO’ for the sake of my younger children—perhaps the ‘Nemo’—but we did not come up with that, unfortunately. We are stuck with AEMO.

The references in legislation to the old body must be updated. This will apply to two separate acts, including the Renewable Energy (Electricity) Act 2000 and the Trade Practices Act 1974. COAG agreed to establish the Australian Energy Market Operator to strengthen the governance of the energy market and to help achieve a more consistent national approach to energy sector regulation. I must admit, as someone who is very supportive of free markets to a certain extent, the national electricity market is a great example of it. Anyone with a computer can have a look at the NEM on their screens and see the price changes in operation. It can be right in front of their eyes. They can see the decisions made by people in power stations on whether to press buttons to start up some of the peakers to create electricity. I am sure those opposite would be very supportive of the NEM and how it operates. In my previous job as an adviser at the Department of Mines and Energy, outside the office of the Director-General, Dan Hunt, one could see the NEM on television screens. People would always be quite amazed to see how it was operating all around the country, apart from Western Australia.

Back to the topic before the House. The new Australian Energy Market Operator reflects a convergence of regulatory frameworks for gas and electricity. It makes good business sense for the energy industry to deal with one body, as AEMO will assume the functions that are currently undertaken by mostly state based energy market operators. I also understand that it will undertake new functions for electricity as a national transmission planner and for gas it will produce an annual gas statement of opportunities. That is very important for Queensland, because we have so many great coal seam gas and other gas opportunities. I am sure many of the constituents of the member for Dawson would work in these projects.

James Bidgood (Dawson, Australian Labor Party) Share this | Link to this | Hansard source

Absolutely.

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

These additional functions will help the energy sector plan ahead for new investments in infrastructure.

This is all part of COAG’s national reform agenda, put in place by the Prime Minister. The Rudd government is all about ensuring that we work together harmoniously—and I am going to say something that might upset the member for Oxley—as one nation. I use that term deliberately because I wish to reclaim it for the Australian Labor Party. Could I just say as an aside that hopefully the election that is taking place in Queensland will be the last election in which we hear from that failed businesswoman from Ipswich.

COAG’s national reform agenda is about bringing leaders together through COAG to remove the duplication that exists between Commonwealth and state regulation and service delivery. This has heralded a new era of Commonwealth-state cooperation that has ensured greater consistency across the board on health, education, banking and environmental issues. The new era of cooperation has also put an end to the blame game. The Rudd government believes that it is simply not an effective way to govern a country to point the finger at state governments, be they Labor, Liberal or Liberal National. The blame game is not the way to go. It is far better for citizens and much more productive to get around the table, thrash out the issues with a bit of give and take and come up with a solution that works for everybody. Of course, there are not as many short-term political points to be scored, but it is better for the country in the long run. After all, that is what our constituents put us in this place for—to look after the long-term interests of the country.

The bill also amends the Australian Energy Market Act 2004 and the Administrative Decisions (Judicial Review) Act 1977 to reflect a change in the name of the Western Australian gas legislation. As Western Australia has already adopted elements of the National Gas Law, Commonwealth legislation needs to correctly reference WA legislation. The Western Australian legislation will enable parts of the national gas access regime to apply to parts of the Commonwealth’s offshore area.

I understand that there are some time constraints with this legislation. The Australian Energy Market Operator, AEMO, is scheduled to commence operations on 1 July, and the Western Australian legislation, intended for the end of this month, requires immediate consequential amendments from the Commonwealth. Obviously, as a cooperative Commonwealth government, we are always happy to help our good friends in the Liberal Party in Western Australia and look after their concerns.

Since the election of the Rudd government, we have seen a lot more cooperation between the states. The Western Australian government understands this. Unfortunately, there is still a rump, in Queensland particularly, that just does not get it. The Liberal National Party are all about kicking the Commonwealth. Just the other day I noticed that the leader of the Liberal National Party, Lawrence Springborg, had announced a change to an intersection in my electorate. The traffic engineers had recommended that Kessels Road go underneath Mains Road, but he spontaneously announced that the recommendation by the traffic engineers would be reversed. It is good to see that very early on in the election campaign he was happy to start the blame game.

Today he said that he is very much a climate change sceptic. He was speaking with the authority of the fact that he is a farmer and therefore—he was almost paraphrasing Bob Dylan—‘you don’t need a weatherman to know which way the wind blows’. Fortunately, the world has moved on a little bit since then—

Steve Georganas (Hindmarsh, Australian Labor Party) Share this | Link to this | Hansard source

Order! It would be remiss of me if I did not ask you to come back to the legislation that is being debated.

Graham Perrett (Moreton, Australian Labor Party) Share this | Link to this | Hansard source

Certainly, Mr Deputy Speaker, but you do need a scientist to know the way the wind is not blowing. As I said at the outset, this bill is minor but it ensures that the Commonwealth legislation is in synergy with that of other jurisdictions. I commend the bill to the House.

Bernie Ripoll (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

Before speaking on the Australian Energy Market Amendment (AEMO and Other Measures) Bill 2009, I want to thank the other speakers for their contributions on the bill. They have made some very good points about how important the Australian energy market is and how important even some minor consequential amendments, the measures contained in this bill, are to the proper governance of energy markets across Australia.

This bill is part of a range of measures and, very importantly, is part of a great policy direction about providing uniform policy and regulation across all states in Australia in line with the Commonwealth to ensure that we get the right characteristics of proper market governance—in this case, energy market governance. So, while these amendments before us are termed ‘minor consequential amendments’, and that may be the case, they also have an important role to play in the broader policy direction for energy generation, especially the future of energy generation in Australia.

This bill makes a number of small amendments to existing Commonwealth legislation, particularly as a result of the cooperative energy reform legislation that is being passed in other jurisdictions across the country. The bill amends the Renewable Energy (Electricity) Act 2000 and the Trade Practices Act 1974, replacing specific references to the National Electricity Market Management Company Ltd, NEMMCO, with the Australian Energy Market Operator Ltd. It is expected that the AEMO will commence operations, replacing NEMMCO, as of 1 July this year. So, while it may be just a case of a simple name change and some other amendments in those areas, it is, as I said, part of a broader policy direction in aligning energy markets, energy policy and the way forward for energy generation across Australia.

The bill also amends the Administrative Decisions (Judicial Review) Act 1977, the Australian Energy Market Act 2004 and the Trade Practices Act to reflect the change in the name of the Western Australian gas legislation. In terms of Western Australia, as we heard from the previous speaker, we certainly make no bones about our willingness and our capacity to work with all Australian states, regardless of their political persuasion. My view has always been that there are certain matters in the national interest that go far beyond pure political ideology or political directives and are about trying to set Australia on the right path for the future, and energy generation is one of them. So it is very good that the Liberal government of Western Australia have worked closely with us. They have been willing and able and had the capacity to make the right sorts of changes and amendments that we needed to provide—

James Bidgood (Dawson, Australian Labor Party) Share this | Link to this | Hansard source

In the national interest.

Bernie Ripoll (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

Absolutely; in the national interest—to provide a more consistent, better governance model for energy markets across the country. That truly is good news.

This bill is here for two basic reasons. The first is the changes in relation to the Australian Energy Market Operator, scheduled to commence operations in July this year, as I said, and the legislative changes necessary for AEMO’s establishment. They will also need to be in force on that date, so there is an alignment of a number of policies that need to take place and therefore some timing issues for enactment of this bill. As we heard from opposition members, there is no opposition to this bill. It is widely supported, for good reason: it is a good bill that does the right things. The second is that Western Australia also intends to pass legislation by 31 March which will require consequential Commonwealth amendments to be enacted.

So, across the country, from state to state, we are now seeing the right sort of national character of energy market governance, and we have done that through the right process, and that is through the Coalition of Australian Governments with an agreed platform to establish a national market energy operator, the AEMO. Before I turn to other parts of the national gas law and also the national electricity law, I want to take the opportunity to make a number of comments about how important these new directions are because of the great changes taking place not just here but across the world, particularly in the area of renewable energy.

While solar PV energy has been around for many decades, it is really only now that we see it coming into force and becoming a significant energy provider across Australia. That is happening at the same time as wind energy comes into play in Australia as well as a range of other energy sources, including wave energy, which is being developed in Western Australia, geothermal, solar thermal and a range of other thermal-type energy generation systems. There are others systems that may not seem at first glance to be able to provide baseload power, but I have heard of some recent fuel cell technologies that can provide baseload power. In fact, in the United States a company has developed some very sophisticated stand-alone fuel cell units that can power complete hospitals, villages or small towns. There are some real opportunities for Australia to look at how these systems work.

Being a Queenslander I will play at being parochial here. As we heard, gas, coal seam energy and, of course, coal still play significant roles. I am keen to see government policies continually looking at ways to improve the way we use energy and the way that we encourage new energies to come on line. The Rudd government has already made a substantial move in the right direction in terms of solar energy with the Solar Schools program and with getting solar PVs on people’s roofs. By 1 July this year we will see some more amendments coming into place that will provide a different mechanism for people to receive a rebate for installing solar PVs in their homes. Gone will be the means tested one kilowatt type mechanism for a rebate—

Patrick Secker (Barker, Liberal Party) Share this | Link to this | Hansard source

Which we always said was stupid.

Bernie Ripoll (Oxley, Australian Labor Party) Share this | Link to this | Hansard source

which has provided a really sound policy basis for initially getting people to come into the market. I heard the comment from the opposition that they always thought that that was stupid. Well, it is interesting that they say that because when they were in government their rebate system led to a very tiny take-up of solar PV systems on people’s roofs. In fact, it was miniscule. When we came to government and introduced our policies, we saw a massive take-up. People actually engaged for the first time in a real way. In fact, so successful was our program that you could say it was overheated and overrun. It is always easy for the opposition to say that they thought it was stupid, but the reality is they did not have a better idea. If it was so stupid, why did so many ordinary Australians take it up? I will answer that rhetorical question: they took it up because it was actually a really good idea and provided some real benefits.

But we have moved on. You do not need to keep policies static, particularly in the area of renewable energy. We have moved on, we have tweaked our policy, we have improved the policy direction and made it a much more sophisticated and better policy and we have removed the means-testing mechanism and linked it to the output that is generated and a type of feed-in tariff to actually measure the rebate. We are certainly travelling in the right direction, but there is more to be done. Our work does not end there. We need to have a closer look at a national scheme for feed-in tariffs more broadly that is complementary to the sorts of national characteristics we are providing through this legislative change. We also need to look at schemes that acknowledge that solar PV is not the only method of alternative energy in Australia, particularly for those micro, home based systems. There is the potential for wind energy generation on a micro level and there is also the potential for people to use fuel cells in the not too distant future. Perhaps in a matter of just a few short years these systems will be available in Australia. There is a real opportunity for us to look at this more deeply, and I have great confidence in our policy direction. We will continue to improve, advance and change our policy direction and legislation to meet people’s requirements.

We heard from other speakers the importance of feed-in tariffs. I will not speak a lot on this but concur with them that feed-in tariffs are exceptionally important for proper pricing, particularly for greenhouse gas reduction. If we are going to give people the proper access they need then I think feed-in tariffs are the way to do it. We need to provide real incentives through that mechanism and do it on a national basis. I think we have the framework right here in front of us with this policy. With the alignment of national energy markets and the proper governance, we can do that.

Talk about national energy markets tends to glaze the eyes over a little bit for most ordinary people. I kind of agree with that. I do not know that I have talked about this at too many barbecues, though occasionally I venture into this area. But there are two particular areas where people’s eyes do not glaze over, and the first is when you start talking to them about the cost of energy. People are very conscious about cost today and cost in the future. There is a generally accepted view that energy will be much more expensive in the future, so we have to be very conscious of how we best manage the efficiency of energy markets and make sure that at the very least as a starting point our policy direction is aligned across the country and that we provide the efficient networks and the right frameworks to make the cost of energy as cheap as possible for consumers.

The other area is that of demand, which links back to what I was talking about on renewable energy. Demand in peak periods at particular times of the day or week, or for that matter during different seasons, summer and winter, varies greatly. This causes a range of either brownouts or blackouts or extra stress and extra maintenance needs on our energy providers. It is important that we look at ways of alleviating that particular demand. It can be done in a number of ways, such as educating people and providing the right incentives in different areas to make sure people consume the least possible energy and providing the right products to give people the incentive to buy the right types of products for their homes, such as energy-saving fridges and freezers, and understanding how to save energy in the home. There is an even more important way that people can save a great deal of energy and actually had a positive benefit to the market, and that is through solar photovoltaic on their roof, wind energy, whatever it might be, but whatever they can do at home at a micro level, in becoming a mini power provider themselves. It helps if people can imagine the benefits to the broader community, not just to your own home, your own pocket, but the benefits to the environment and the benefits to the energy markets themselves, if more and more people can come online by reducing the amount of energy they use and then producing energy as well. I think that is a really important way forward for us to have a future-proof energy market in this country.

In conclusion, I say that I am really pleased to see important bills such as this, important legislative change that is very much in line with the broader policy direction of the Rudd government of working through COAG, working with the states with some uniform regulatory mechanisms across the country which produce efficiency and better transparency, better governance. That all the states are working hand in hand through the COAG process with the federal government is commendable. We are prepared to have the policies in place and also to put the money on the table to ensure that ordinary consumers can be a part of our policy direction, and they could save money in the process. I commend the bill to the House.

James Bidgood (Dawson, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Australian Energy Market Amendment (AEMO and Other Measures) Bill 2009. This bill makes amendments to a number of Commonwealth acts to facilitate a nationally consistent approach to energy market regulation, as it is in the national interest to have a standardisation, a universal approach. Obviously this is efficient, avoids duplication, avoids unnecessary administration and promotes good service. The amendments are required for the establishment of the Australian Energy Market Operator, which the Council of Australian Governments at its meeting on 13 April 2007 requested be established by 1 July 2009.

Although the AEMO will be a company limited by guarantee, it is proposed that statutory functions will be conferred on it by way of amendments to the National Electricity Law, a schedule to the National Electricity (South Australia) Act 1996, or the NEL, and a schedule to the National Gas (South Australia) Act 2008, known as the NGL. The NEL and the NGL form part of a complementary scheme of regulation in which they are templates enacted by South Australian law and adopted and applied, as amended, from time to time by South Australia and other participating jurisdictions.

Upon its establishment, the AEMO will assume the responsibilities and functions of existing electricity and gas market operators, including the National Electricity Market Management Company Ltd ACN 072 101 327, known as NEMMCO, along with the retail and wholesale gas market operation functions performed in the various jurisdictions, except the Northern Territory and Western Australia. The AEMO will also undertake a number of significant new functions to enhance investment decision making on the need for and location of new infrastructure in the energy section. The most significant are the National Transmission Planner function and the production of an annual gas statement of opportunities.

Although only minor amendments are required to Commonwealth legislation, they are critical to the ongoing operation of the national electricity market, which uses a cooperative legislative model, with South Australia as the lead legislator. Amendments are also required to correct references to Western Australian legislation, which will enable key elements of the national gas access regime to apply to parts of the Commonwealth’s offshore area.

Following on from the comments made previously by the member for Oxley, I do concur that once we have a national approach, a united approach and a national standard of regulation across the whole country, it will create huge efficiencies in regulating and monitoring what is happening with our energy sources. Also, there are issues such as cleaner coal, which we are actively supporting. We had an agreement between industry and government that we would put in half a billion dollars and industry would put in $1 billion in order to create cleaner coal. I think that is a more accurate description. ‘Clean’ coal does not sound quite right. What we are doing is achieving cleaner coal, which, when it is burned, releases less carbon into the atmosphere. We know full well that the coal industry is absolutely vital to our economy.

To its credit, the Rudd Labor government has put forward a stimulus package of $42 billion. It has been absolutely welcomed by the community. It was particularly welcomed by the green section of the community when they saw the investment in insulation in 2.2 million homes. We are going to help every home across the nation that does not have insulation to be more energy efficient. This energy efficiency means that between now and 2020 we are going to reduce the carbon going into the atmosphere by 49 million tonnes. That is efficiency. That is a good investment. Perhaps the other side of politics do not realise that this is going to reduce 49 million tonnes of carbon in the atmosphere, which fulfils our obligation under the Kyoto agreement to reduce the amount of carbon in the atmosphere. That is absolutely vital.

We are going to be producing cleaner coal from Western Australia, from the coalfields of the Bowen Basin and various other areas of Australia, along with gas and thermal coal. We need to be conscious that we have efficient regulation and no duplication. These amendments just tidy things up to make a more streamlined, efficient system. As the member for Oxley said earlier, not only do we have cleaner coal, with the research that has been done on it, and the investment in insulation in every home across the nation—2.2 million homes—also we have a commitment to solar hot water systems and photovoltaic research. So there are lots of things going on, particularly with thermal coal and the thermal mining possibilities which I am conscious of, particularly in Queensland. It does annoy me that the other side of politics does not seem to get it that this is all about jobs—in this case, it is about creating thousands of green jobs. When we, with our political determination, put forward our policies on an emissions trading scheme—and how we are going to cost that and what efficiencies it will bring—we will be seen as making clear, decisive decisions in bringing forward a system which will account for carbon escaping into the atmosphere. That is the responsible but not the popular thing to do. It is very difficult to get the balance right between the green lobby groups and the business lobby groups, but someone somewhere has to stand up to be counted.

Greg Hunt (Flinders, Liberal Party, Shadow Minister for Climate Change, Environment and Water) Share this | Link to this | Hansard source

Mr Deputy Speaker, I seek to intervene.

Steve Georganas (Hindmarsh, Australian Labor Party) Share this | Link to this | Hansard source

Is the member for Dawson willing to give way?

James Bidgood (Dawson, Australian Labor Party) Share this | Link to this | Hansard source

Thank you for the opportunity but no, thank you. I see that this is all part of having an efficient system of administration with no duplication. The overall scheme of the Rudd Labor government is to invest in insulation, create thousands of green jobs and bring in a trading scheme—to at least make a decision to start and get the system on the boards so that we can work with it. There has been extensive and wide consultation, and I have to commend Senator Penny Wong for an excellent, thorough and exhaustive job in preparing this. She has covered every single base, she has given wide opportunity to many groups to come on board and she has given full consultation so that no-one can say that they have not had their say. This is going to be the most important economic decision this country will make for decades to come—bigger than the GST, bigger than any other tax reform. This is so big that it will create millions and billions of dollars of money flowing through the economy. How we manage this, how we legislate for this and how we handle accountability is very important. In that respect the role of an independent national auditor to look into it is absolutely vital.

In conclusion, I commend this bill to the House. These amendments are required to correct references to Western Australian legislation which will enable key elements of the national gas access regime to apply to parts of the Commonwealth’s offshore area. It is comforting to see Minister for Resources and Energy sitting beside me, because I know he is passionate about having an energy efficient country which is going to lead the world in all our new technologies and in creating thousands of green jobs—and I know this minister is passionate about jobs. The opposition do not realise that it is all about j-o-b-s—jobs, jobs, jobs—green jobs. I commend the bill to the House.

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

in reply—I seek to make a few comments in response to the issues raised by the members for Groom, Wills, Moreton, Oxley and Dawson during this debate. In doing so, I also express my appreciation for their contributions to a very significant and ongoing process of reform in the operation of the national electricity market in Australia. By way of background, I brought this bill to the parliament with the support of my colleagues on the Ministerial Council on Energy, representing all state and territory ministers in association with the Commonwealth, for the purpose of continuing our progress towards the creation of an efficient and effective national energy market. At this stage, I would also like to table some corrections to the explanatory memorandum which have been circulated and conveyed to the member for Groom, the shadow minister for industry and energy, Mr Macfarlane. I thank the House for its cooperation on that front.

In passing the Australian Energy Market Amendment (AEMO and Other Measures) Bill 2009, the House will play an important role in facilitating the cooperative approach by the Ministerial Council on Energy to national energy reform. Lead legislation to be enacted in South Australia will see essential functions conferred on the Australian Energy Market Operator. This lead legislation will amend the National Electricity Law and the National Gas Law, and it will then be applied in all remaining jurisdictions, excluding the Northern Territory and Western Australia, through legislation to be known as the application acts. AEMO will assume the functions carried out by the Gas Market Co. in New South Wales, the National Electricity Market Management Co., the Victorian Energy Networks Corporation, the Gas Retail Market Operator in Queensland and the Retail Energy Market Co. in South Australia. The Australian Energy Market Operator legislative package is itself currently the subject of a rigorous consultation process engaging all relevant stakeholders. The Australian Energy Market Operator Implementation Steering Committee of the Ministerial Council on Energy has sought stakeholder comment and will be finalising legislation in the near future, taking into account this input.

The bill that the House has been debating amends the Renewable Energy (Electricity) Act 2000 and the Trade Practices Act 1974 to replace references to the National Energy Market Management Co. Ltd with the Australian Energy Market Operator Ltd. The bill also makes minor amendments to the Australian Energy Market Act 2004, the Administrative Decisions (Judicial Review) Act 1977 and the Trade Practices Act 1974 to ensure that those acts correctly reference Western Australian legislation which will apply to the Commonwealth’s offshore area, with Western Australia adopting elements of the National Gas Law.

In summary, passage of this bill, which makes minor technical amendments to Commonwealth legislation, will allow for the smooth implementation of the cooperative energy reform agenda. This bill has the full support of all my state and territory colleagues on the Ministerial Council on Energy. For the purposes of the record, I will also comment on a couple of issues raised in the contributions of a range of members, including the members for Groom, Wills and Dawson. I firstly express my appreciation for the support for this bill of the opposition and of the member for Groom in his role as the shadow minister and as a former energy minister and member of the Ministerial Council on Energy. More generally, I acknowledge the role played by all other state and territory ministers in progressing energy market reform. In doing so, can I say that the member for Groom correctly identified the role that the Ministerial Council on Energy has played over many years in pursuing energy market reform, with the creation of AEMO being an important reform. On that note, with respect to the issue of the Australian Energy Market Commission’s Review of energy market frameworks in light of climate change policies, I want to assure the House and the Australian community that this is not a politicised review but a serious look at the impact that climate change policies will have on the energy market. It is a matter of serious concern to the Ministerial Council on Energy and it is being taken seriously through the AEMC’s market review.

I also note the comments of the member for Groom about the failed privatisation process in New South Wales. For the purpose of the record I want to clearly indicate that the Commonwealth, through comments made not only by me as the Minister for Resources and Energy but also by the Treasurer and the Prime Minister, gave full support to then Premier, Morris Iemma, in his endeavour to bring the New South Wales electricity market into the 21st century. I think it is appropriate that for historical purposes the position of the government across the board be placed on the record in response to the remarks made by the member for Groom, which were far from correct or accurate in the context of that very tough and serious debate.

I also note the contribution to the debate of the member for Wills. Can I say that often when residents are, as he said, ‘excited’ by electricity it is because supply is interrupted. We saw that with the recent difficulties in both South Australia and Victoria following the heatwave earlier this year, with load shedding put in place for the purpose of the integrity and security of the national energy market. I simply say that, as the minister for energy, I am quite happy to take that excitement out of the equation, provided electricity is supplied to households in a reliable, efficient and cost-effective manner.

In the context of a cost-effective manner, I refer to the comments of the member for Wills on feed-in tariffs. The government’s policy—and the member for Wills is a member of the government—is to encourage the rollout of: renewable energy through our 20 per cent renewable energy target, which is quite an ambitious target; the $500 million Renewable Energy Fund, which is now out for competitive bids; and the $150 million Energy Innovation Fund. That also includes the Solar Institute that opened in January this year in Newcastle, representing cooperation between CSIRO and a number of universities, including the University of New South Wales and the ANU.

With respect to those renewable energy grants, I encourage all those who are interested in competing to actually establish commercially demonstrable opportunities and to have discussions with the department for the purposes of trying to make sure that they are part of the process, and then on merit we have a capacity to select the best possible demonstration opportunities from a renewable energy point of view for the foreseeable future. But, having said that, can I say on behalf of the Commonwealth government that it is not our position to introduce a national feed-in tariff, with the mandatory renewable energy target achieving renewable rollout at a lower cost than prescriptive feed-in tariff schemes.

Reference was made to Germany’s solar subsidy, but let us deal with a few facts. That scheme is not cheap. That scheme saw around half of one per cent of Germany’s gross electricity consumption come from solar PV in 2007. As to the cost—and this is where consumers actually get excited—it is interesting to note that German consumers that year paid more than €1 billion in additional power bills to cover the cost of that excessive German government policy. That is more than $2.5 billion in one year. Feed-in tariffs, so far as the Commonwealth government is concerned, have a number of unintended consequences, and the position that we have advanced with our renewable energy target of 20 per cent, in association with Commonwealth dollars to encourage the development of the renewable energy industry, is a far more comprehensive and well-thought-out position than the ill-thought-out position of the German system.

I simply say that artificially pricing one source of energy 300 or 400 per cent higher than others—including other renewables, I note—could divert investment from technologies that might in fact produce better environmental outcomes at lower cost. Solar PV is interesting but I must say that potentially more interesting from a baseload point of view are solar thermal and geothermal industry developments because they are about reliability and the question of consumers not getting excited because of a lack of reliability in the functioning of the national energy market. So let us focus on a real, practical debate rather than ill-thought-out policies pursued by some minor parties in Australia.

Steve Georganas (Hindmarsh, Australian Labor Party) Share this | Link to this | Hansard source

Is the member wishing to ask a question?

Andrew Laming (Bowman, Liberal Party) Share this | Link to this | Hansard source

If the minister has not concluded, would he take a question? Would you take a question under 66(a)?

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

No. It is not normal practice during a minister’s concluding remarks.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The minister will resume his speech.

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

It is therefore the Australian government’s objective to deliver renewable energy to Australian consumers at the lowest possible cost by allowing a wide range of renewable technologies to compete in the race to commercialisation and market. That is our endeavour, and I think that is the right way forward not only for the operation of the national energy market but also in terms of doing the right thing by Australian consumers and by our environment.

I note the good support given by the member for Dawson to the coal industry and the fact that he is very supportive of the Australian government’s low-emission coal endeavours, which also have the support of state and territory governments and industry generally. We are absolutely committed to this process because 83 per cent of Australia’s energy actually comes from coal fired power stations. One of our priorities is to improve the capacity of carbon capture and storage. The Prime Minister is to be commended for the international leadership role he has taken in establishing the Global Carbon Capture and Storage Institute.

I am also pleased to advise the House that, in the very near future, as a result of the parliament’s support of our offshore carbon capture and storage legislation, we will be in a position to release the first round of potential offshore storage areas for commercial consideration, which is a further step forward because that legislation, aimed at the capacity to store carbon, is a world first. I commend the bill to the House and thank all those members who have participated in a constructive and cooperative way in the facilitation of the passage of this bill.

Question agreed to.

Bill read a second time.

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