Rowan Ramsey (Grey, Liberal Party) Share this | Link to this | Hansard source

On 23 May I raised in this House the plight of the 13 outback communities in South Australia—all within my electorate of Grey and all of whom have had the economic carpet ripped out from under them by the state government's February decision to remove more than $1 million from the remote area energy scheme. Withdrawing the subsidy results in residents and businesses in these towns, the bigger users of electricity, facing increased electricity bills in excess of 100 per cent. It is not as if they start from a low base; already, electricity in these communities is about 50 per cent higher than that paid by similar communities on the grid. Typically, businesses have been paying around 29c to 30c a kilowatt hour. New tariffs will mean it will go as high as 60c a kilowatt hour.

For some businesses it will mean extra bills in excess of $100,000 a year. The largest of the 13 affected communities is the opal mining town and tourist icon of the South Australian outback, Coober Pedy. Andamooka is another opal town, adjacent to Roxby Downs, that is also affected. Other towns are Yunta, Nundroo, Marla, Oodnadatta, Marree, Kingoonya, Glendambo, Parachilna, Blinman, Mannahill and Cockburn.

On 15 May I attended a meeting in Coober Pedy with Senator Nick Xenophon and John Darley, an Independent member of the state's upper house. Around 200 people attended, with representatives from Oodnadatta, Andamooka and Kingoonya. The underground venue was crammed, and they were incensed at their treatment by the state government. For most Australians, electricity provision is as simple as ringing up an electricity supplier and asking them to turn on the power. The supplier purchases electricity through the national electricity market and resells it to the customer. Customers can shop around for the best deal but, whichever supplier they select, the same deal is available to customers in Adelaide, Mount Gambier, Ceduna or Yorketown. In effect, electricity is seen as an essential product and supplied to all at the same rates. This situation is brought about by government regulation. A general tariff enables businesses to operate on a more competitive basis across the state. However, the situation only applies where the local distribution network is connected to the national grid.

The reasons for any particular community being connected to the national grid are largely historical and/or opportunistic. In the past, local councils were instrumental in rolling out local networks and, in some cases, generating the electricity locally from diesel generators. At a time when the electricity sector was government owned and controlled, decisions were made to extend the network where practical and communities were given little option but to give their assets to the state in return for reasonable rates supplied through the state network. Other communities were seen as too remote to link to the grid, and generation subsidies have been provided to these communities so they have not been significantly disadvantaged in comparison with the rest of the state. Every other state in the Commonwealth with off-grid generation has developed a similar policy which, in effect, means remote off-grid power is provided at the state-wide price.

On 18 February all this changed in South Australia, when the Rann Labor government announced it was slashing $1 million from the remote area subsidy scheme. For the 13 affected communities this is a staggering blow. The biggest rises savage the business sector, where some major employers are facing annual rises in the tens and hundreds of thousands of dollars. It should be noted these towns are in some of our harshest environments, where summer-time temperatures regularly reach the high forties; refrigeration and cooling costs are high, but absolutely essential; and frosty winter nights are bitter.

It seems to be not understood by the city-centric Rann government that all of these communities are in direct competition with other states in Australia for business, skills and staff. Providing a higher cost environment will cost business and it will cost jobs. Like a carbon tax, a higher electricity price must cascade through the whole community. If a worker cannot afford to live in communities like Marree or Oodnadatta or Coober Pedy, why would they stay when the rest of Australia beckons? The state government has abandoned these communities and stands to be condemned.

Take, for example, the case of Coober Pedy. Not only is electricity difficult there; it is a pretty dry spot as well, so water is also difficult. The Coober Pedy council provides potable water by desalinating a salty groundwater aquifer. The mean average rainfall in Coober Pedy is 156 millimetres a year. Clearly, a reliable water supply is not a luxury; it is an essential. The electricity increase will cost the council an extra $185,000 a year, and they will be compelled to pass on that cost to the water consumers. Before the increase, the consumers were paying $4.93 a kilolitre; now they are paying $5.70 a kilolitre. Australians generally are reeling from savage increases in water and electricity prices—and who could blame them?—but very few will pay $5.70 a kilolitre. The Coober Pedy economy relies heavily on the tourism market and must pitch its product into a competitive environment. Extra expenses in the supply of water, electricity and general services must be passed on to the customer. Coober Pedy is being penalised by the handicapper—in this case, the state government.

This parliament should condemn the South Australian government for its uncaring and savage attack on these 13 communities. Where is the Australian principle of a fair go? Critics may say that this is not the province of the federal government and that South Australians will have their opportunity to express their anger at their government at the next election, and I am sure they will, but as their representative I must take every opportunity to bring pressure to bear on the state Minister for Energy, Michael O'Brien, who dismissed the collective communities by saying: 'These people choose to live there. They can pay the bill.' Okay, Mr Minister, you are right; they do choose to live there, but by the same token the people of Coober Pedy, Oodnadatta and Andamooka do not choose to support public transport subsidies in the city. They do not choose to support the Adelaide Symphony Orchestra, the Adelaide Festival of Arts, the V8 supercar races taking to the streets each year, the new tramlines in the city or, indeed, the $500 million plus that will be spent on the upgrade of Adelaide Oval. When will the Rann government recognise the outback's rights? What is fair is fair. If outback communities are expected to support the city then that support should be reciprocal.

While the state Labor member for Giles and Speaker, Lyn Breuer, says she is not happy with the tariff increase, it seems that her government is not listening. Energy Minister O'Brien has announced a phase-in period. That is not good enough. It is like offering someone a slow poison: it will get you in the end; it just takes longer to kill you.

The government is prepared to put millions of dollars into supplying electricity to our remote Indigenous communities. Towns like Coober Pedy, Oodnadatta and Marree have significant populations of Indigenous people, and their electricity prices are affected by the cuts in the subsidy. The increases flow right through the economy, affecting the price of everything. As a society, we should be doing all we can to attract remote Indigenous populations to communities where there are employment opportunities. This policy is a direct disincentive. Surely we should have consistent policies right across the region. The withdrawal of the support effectively places another barrier in front of good outcomes in this area of Indigenous engagement.

This policy also exposes the state government's attitude to harvesting the fruits of the regions but not supporting the communities from which those profits come. The government is happy to promote the regions as the great new financial benefactors of the state through a much promoted and announced mining boom. These towns are the lifeline for many of these proposals and exploration ventures. I call on this parliament to condemn the government.

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

I listened carefully to the contribution by the member for Grey. He is a neighbour of mine. We share a common border and, I think, for many of my rural residents and many of his, we share some common interests, although we do not always agree on every issue. I think he is a somewhat myopic representative. He is very diligent in putting the views of his constituents as he sees them. The member for Grey did not really give the broader environment in which South Australia finds itself or the South Australian government's significant achievements much of a fair go. I think he was being a little critical and perhaps a little partisan.

Obviously South Australia has had significant success over the last few years. We have an exploration boom which will, I think, in time turn into a mining boom. That will have significant advantages for the state, and we hope that it has significant advantages for the whole state. Similarly, we have added to our defence industries. We have a state that now more than ever before has life in the city and life spilling out into the suburbs and into the country towns. There are things like the Adelaide Fringe festival and the V8 car race, which I heard the member for Grey refer to, and the trams. They do not just benefit city folk.

Mr Ramsey interjecting—

It is often possible for people in the northern suburbs to say the same sorts of things: 'I don't go to the car racing or the oval.' But they do go to the upgraded Lyell McEwin Hospital. It is possible to say that the state overall has gotten a lot better over the last eight years. I think that we have had a pretty good government. When history comes to make a judgment on Premier Rann and his government, it will say that it was almost the perfect synthesis between the legacies of Playford and Dunstan. We have had a government that has changed the economic basis of South Australia by promoting mineral exploration and the defence industries while still maintaining a significant manufacturing base. Similarly, we have had the best of Dunstan's social reforms in that we now have a city that is alive and vibrant and an arts community that is alive and vibrant. I do think that it really is a choice between having the symphony orchestra or having electricity subsidies. But budgets are always an exercise in choice.

There is no doubt that, because of the global financial crisis, things are different. We have seen the effects of that around the world, with six million jobs lost. Despite what the opposition says, there has been a significant change to both employment and credit conditions across the world. That has impacted on government budgets. And it often has pretty tragic impacts on business. Things do need to be reviewed. I do not think that the member for Gray really gave the South Australian government's changes on 14 May much credit. But there has been a sincere effort made to reduce the impact of these higher bills, which only apply to large consumers; they do not apply to average consumers under this scheme. There has been an attempt to phase this in to allow people more time to make adjustments. And those adjustments can be significant. Obviously, there are new technologies now that can significantly lower power bills through alternative generation and also through efficiency. So it seems to me that there has been a sincere attempt made to lessen the impact of this change on large consumers under this scheme.

This is a 15-year-old subsidy program. It is important to note that subsidies do not come for free. Other taxpayers pay for them. While the member for Gray talks about the fact that every other electricity consumer has the same deal as the city, I do not think that that is true. I have many country constituents who burn thousands of dollars of diesel every vintage season or every time their business has an upturn because they cannot connect to the grid because of the excessive costs that you get charged to connect to the grid now. That is a very big problem for regional growth and one that has not been well-thought through or talked about.

We have to acknowledge that subsidy programs cost everybody. I notice that this subsidy program provides basically triple the metropolitan domestic tariff. I know that the member for Gray would say that it needs to be. I know that he says that people in Cooper Pedy produce wealth for the state. I acknowledge that. But I have metropolitan constituents, particularly in the northern suburbs, who create most of the state's wealth and most of the state's exports. And yet no-one would expect—

Rowan Ramsey (Grey, Liberal Party) Share this | Link to this | Hansard source

It's well subsidised, Nick, don't worry about that; it's well subsidised.

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

That is not true. We have many horticultural businesses and one of the lowest tariff regimes for cars in the world. We have horticultural exports. We have defence exports. The northern suburbs exports a lot more than just cars. You should acknowledge that we are really the engine room for South Australia. We produce most of the wealth of the state and we do not get much credit for it. I remember that the Olsen government promised just before an election never to privatise electricity—of course, they did. Consumers in my electorate suffered price rises of up to 30 per cent.

Mr Ramsey interjecting—

That had a very big effect, and we can go back and debate the merits of privatisation and debt recovery versus higher prices and the like, but the one thing that was not done for the state by Country Liberals during that period was to provide any sort of universal service obligation on our electricity producers. It was forced on the federal Liberals by the National Party during the Telstra privatisation, but there was absolutely no attempt to look after country residents during the electricity privatisation. There was absolutely no attempt to make sure that in the future—10, 15, 20 years down the track—the provision of essential electricity infrastructure would be there for towns like Clare or Balaklava or even for areas closer to the city. In my electorate there are many country businesses which face significant costs to get connected to the grid, but no Country Liberal looked after them when the privatisation went through.

It is a very big problem for both parties, to be fair, but it is not something that is well talked about. It is not true to say that just the people of Coober Pedy or other towns affected by this particular subsidy program have been affected. Everybody outside the metropolitan area, and even some people in the outer suburbs, have been affected by the changes to our electricity network. I think that if the member for Grey were being a little bit more sincere he would acknowledge that fact and have a look at proposing that perhaps there should be a bit of cross-party lobbying for any future South Australian government to set up some obligations. As I said, I have constituents who burn $50,000 or $60,000 worth of diesel every year during vintage season. That is mainly because of privatisation issues.

Opposition members interjecting—

John Murphy (Reid, Australian Labor Party) Share this | Link to this | Hansard source

Members on my left will cease interjecting!

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

You have got to give me a chance to finish, Member for Grey. Obviously, no one likes to see subsidies withdrawn. The truth is: subsidies are pretty intoxicating. Governments of all persuasions need to be pretty careful about subsidies, because once they are in place they are very difficult to remove and very difficult to review. It is not a partisan thing; I think the whole body politic, perhaps, is a little enamoured of subsidies—the public is as well. We really have to run a much stronger public interest test across all of them before we introduce them. If we continue with the current view on subsidies—including those available under 'direct action', which would be an orgy of picking winners, an orgy of public money going to the private sector—if we are not very careful about this, if this and other parliaments around the country are not open and honest about the costs of such subsidies and apply a far more rigorous public interest test, the country will be poorer. For this reason, the South Australian government and its KPMG review should be applauded and not condemned. (Time expired)

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

I rise to support this motion which expresses concern about the South Australian government's decision to slash support for its remote areas energy scheme, which subsidises off-grid generation for isolated communities. I note the member for Wakefield is leaving before I have a chance to mention the subsidies that go into his electorate. I would have thought the member for Wakefield would have stood in total shoulder-to-shoulder support with the member for Grey, seeing as the industry in his electorate—he was not going to mention it, but I will mention it—the car industry, the General Motors Holden plant, is probably the most subsidised industry in Australia, and with very good reason. Where there is a need, industries should have support. You cannot choose between your children. You cannot say an industry in the seat of Wakefield, which absorbs billions of dollars of taxpayers' money in the forward estimates—

Mr Champion interjecting—

billions—trust me, I gave them the money, I know exactly how much they get. Mr Deputy Speaker, you cannot say the car industry in Wakefield is worthy of subsidies but the opal industry in Coober Pedy is not.

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

But there was reform as well.

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

Mr Deputy Speaker, I am happy to engage the member for Wakefield in a debate on the car industry. I suspect I know a little bit more about the economics of it than he does. If he wants to start, I am happy to accommodate him. What concerns me about the South Australian Remote Area Energy Supplies Scheme is that, at a time when we are seeing unprecedented rises in electricity prices around Australia, it will add 100 percent—perhaps 120 percent—to the cost of electricity for businesses in the regions in question. The member for Wakefield was quick to point out that households will not be affected, and don't we know that that is all that matters to the Labor Party! They are only ever worried about the vote; they are never worried about small business. The former Leader of the Labor Party put it simply when he said that the Labor Party was not a party that known to support small business, and isn't that the truth!

Government members interjecting—

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

You're verballing him now. He's not even in the building anymore; he's not here to defend himself.

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

They were his words; they were Kim Beazley's words. He said, 'The Labor Party is not a party of small business', and this is just another example of the Labor Party deserting business—in this case, in remote areas of South Australia.

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

Maybe I should quote Black Jack McEwen to you.

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

I thought Black Jack actually supported industry in Australia.

Nick Champion (Wakefield, Australian Labor Party) Share this | Link to this | Hansard source

He loved subsidies—don't worry about that!

Michael McCormack (Riverina, National Party) Share this | Link to this | Hansard source

He loved farmers.

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

In amongst the chaos coming from the other side, I am going to persist with the point that the Labor Party is now saying to small business in remote areas that they need to pay triple, if not quadruple, the price of electricity that people have to pay in the inner-city Adelaide suburbs that the member for Wakefield tends to talk exclusively about. People in regional and remote Australia are part of the wealth production of Australia. You cannot say, 'If you live in the city, you're a better wealth producer than if you live in the country.' I would suggest that the member for Wakefield, when he goes up to Coober Pedy, calls in on Olympic Dam on the way back and sees how much wealth is produced there. I suspect it is a little bit more than he gives them credit for.

The insidious nature of electricity price rises lies in the fact that there is very little that people can do to avoid using electricity. Those opposite suggest that people just turn off the lights, save electricity and be more efficient. But I suggest that the prices for electricity that people in remote areas are already paying means that they are exceptionally efficient with electricity; they do not leave extra lights on. The next thing those opposite will be saying is that those people should turn their air conditioners off, but I am sure that when the member for Wakefield takes up the member for Grey's invitation and travels up there on a moderately warm day of around 45 degrees he will be tonguing to walk into a room where the air conditioning is switched on. I suggest that the owners of that room put a little coin slot in the door so that the member for Wakefield can pay his share of what he thinks is fair to charge people in regional areas for electricity.

It is worth noting that in Western Australia the state government provides a subsidy to remote customers of around 20c per kilowatt hour. Even the Labor governments in Queensland, the Northern Territory and Tasmania see the value in doing this. I commend this motion to the House. (Time expired)

Tony Zappia (Makin, Australian Labor Party) Share this | Link to this | Hansard source

The member for Grey brings into this House a motion whose subject is clearly the responsibility of the South Australian state government. I acknowledge that he acknowledged that, but his bringing into the House this motion clearly tells me that the member for Grey does not have confidence in his state parliament counterparts to raise the matter on behalf of the people of rural and regional Australia. He knows full well that this is a matter that they should be raising in state parliament, but I can well understand why he lacks confidence in his state colleagues in South Australia; having watched their performance over the last 12 months, I would lack confidence in them as well.

The member for Grey talks about a meeting on 15 May which he attended. I have no doubt that he accurately reflects the views of that meeting when he says that people who attended the meeting from the communities were concerned—I do not question that for a moment. But the fact is that Lyn Breuer, who is the state Labor member for the area, has also taken this issue up on behalf of her community. In doing so, she has brought about some changes to the proposal that was originally mooted. Ms Breuer, who is the member for Giles, which covers an area that is not much smaller than the electorate of Grey, has been able to bring about some significant changes to those parts of the original proposal that I suspect were the causes of the concern at the meetings that the member for Grey attended. The member for Grey said that Ms Breuer is speaking out but is not being listened to. I would like to quote from a press release from Ms Breuer on this very matter issued on 14 May:

I am pleased that the government has listened to the business operators in these remote areas and accepted that more time is required to adjust their use of power.

She went on to say:

This outcome provides greater certainty for job-creating businesses in our outback towns while still encouraging more efficient use of energy at a time when there is a great deal of upward pressure on the cost of generating electricity.

That is not quite the government response to Ms Breuer taking up this matter on behalf of her constituents that the member for Grey purports.

Any policy designed to increase energy efficiency in remote communities must include two critical elements. The first is a phased transition that allows business to adjust their structure over a period of time so that they can move towards greater energy efficiency without there being an immediate detrimental effect on their profitability. The second is to ensure that arrangements subsidise small and medium domestic users. Small to medium users have limited ways available to them to soften the impact of increased tariffs. Businesses have greater scope to find energy efficiencies if afforded the time to do so. Let us bear in mind that this subsidy has been in place for 15 years. It is not unreasonable, after 15 years, to review what has taken place. That is exactly what the minister has proposed.

I understand that the South Australian government has announced additional funding of $1.3 million to the department of transport, energy and infrastructure to enable the revised tariffs to general supply customers to be phased in over three financial years. I understand that there are some 2,600 customers across some 13 remote communities who will be affected by this proposal. The subsidy continues to focus on small to medium domestic customers—customers that use up to 8,000 kilowatts per annum. These customers will continue to pay no more than 10 per cent above the on-grid regulated standing contract tariff.

I understand that all general supply customers outside of Coober Pedy will now see increases of between five per cent and 15 per cent compared to pre March 2011 bills. In Coober Pedy, 90 per cent of general supply customers consume under 70,000 kilowatts per annum and will face increases of 10 per cent or less.

The state government has in fact announced a review into the subsidy program. I understand that as part of that review things like the grid connection fee, the energy efficiency measures, renewable energy and Synergy opportunities will all be looked at. It is responsible to do that after 15 years of having a subsidy scheme in operation. I believe that the state government is in fact responding responsibly to the concerns and managing the electricity needs of the region well. (Time expired)

Debate adjourned.