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

I rise today to speak on the Australian Energy Market Amendment (National Energy Retail Law) Bill 2011 and to indicate that the coalition will support the amendment. The bill amends legislation to apply to the National Energy Retail Law, the National Energy Retail Rules and the National Energy Retail Regulations as Commonwealth law and thereby facilitates its nationally consistent and effective application. It provides for the conferral of functions and powers of the Commonwealth bodies acting within the framework, including the Australian Energy Regulator and the Australian Competition Tribunal. It also provides for judicial review of decisions of the AER under the NERL.

It is a procedural bill but, nonetheless, an important bill. The NERL is the final major component of the National Energy Market Reform program agreed to by the Council of Australian Governments in response to the 2002 COAG energy market review entitled Towards a truly national and efficient energy market and as set out in the Australian Energy Market Agreement. I am advised that participating jurisdictions have committed to commencing legislation applying to the NERL by 1 July 2012. The amendments to the Commonwealth legislation in this bill will ensure that the relevant Commonwealth bodies, which are conferred with functions, powers and duties under the NERL, including the AER, are able to perform those functions and duties and to exercise those powers from the commencement date.

I am particularly glad to take this opportunity to speak on this bill today, given that it puts in place the final pieces of a comprehensive program of national energy market reform which began under the COAG process in 2002 and took major steps during my time as the responsible minister. This has not always been an easy process. At times, dare I say, it has been an entertaining but fruitless process. However, in the long run we have succeeded. In the end, energy market reform is literally the driving force behind our economy and it is therefore important that we maintain the momentum on this reform and complete it. As I say, it was a difficult process. I saw state energy ministers come and go, particularly from New South Wales, with monotonous regularity—names that are simply blasts from the past. Whatever happened to Kim Yeadon? We know what happened to Carl Scully. There were ministers who saw energy market reform as something that should not happen because their state treasurers were opposed to changes that may endanger their income supply from the energy assets that those states have. Of course, we know what has continued to happen with regard to those energy assets and the impact that they are having on electricity prices.

Ms Hall interjecting—

Am I interrupting you, Jill?

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

I was just trying to correct your information, but I will—

Sid Sidebottom (Braddon, Australian Labor Party) Share this | Link to this | Hansard source

How nice for everyone involved. What about going through the chair? Would you not distract the member for Groom.

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

Mr Deputy Speaker, I thought there was only one speaker allowed at a time. As I was saying, in the end, there were some ministers who actually understood how important this process was. The ministers from Queensland, in the main, did just that. Minister Conlon, from South Australia, continued to push ahead, despite occasionally being buffeted by his colleagues. I have to say that, when Minister Batchelor, from Victoria, under the then Labor government, arrived on the scene, a breath of fresh air came with him. As a result of that, we are where we are now—almost at the end of this process.

I congratulate all those ministers who took a positive attitude to this, all those ministers who assisted in processes undertaken by both me and my successor, the current Minister for Resources and Energy and Tourism, because in the end this is an incredibly important set of reforms. Energy market reform, if you get it right, will help your economy grow. If you get it wrong and if you allow the instances of parochialism and state Treasury interference to derail the process, then what you do is cut your economy's growth. So it is pleasing to see this has finally arrived at this point.

The reform of the national energy market, though, is an ongoing process. In this instance, I am glad that the government is continuing the work of its coalition predecessor in moving forward with these reforms, albeit at a significantly slower place. Energy reform is a necessary process, despite the fact that in most instances it has been completed with little or no fanfare. It is only a shame that this government is so badly failing to uphold its reform responsibilities in other areas and failing to build on the previous work that had been so painstakingly completed. In particular, I am thinking of the government's repeated failure to deliver on the energy white paper and I will have more to say about that later in my speech.

This is an important bill because, as I have noted in this place and before many other groups in the community, questions about Australia's energy supply and energy security have greater prominence now than they ever had in the past. If you were to ask Australians about the most pressing issues facing their households and their budgets, in most cases you would find the mention of electricity prices very close to the top of any list. While it is important that this final piece of reform, which started in 2002, is put in place, Australians cannot afford to become complacent. Unfortunately, there is every sign from this government that it intends to undo all the hard work that has been completed in the area of energy market reform with the disastrous policies that it is inflicting on other parts of the energy sector. In the 3½ years since this government has come to power, Australians have been forced to fork out more and more to pay for their electricity and other energy bills. Since 2007, electricity prices across Australia have increased on average by 50 per cent and gas prices have increased on average by 30 per cent. It is forecast that electricity prices will double by 2020, and that is before you take into account any of this government's policies that are guaranteed to cause further spikes in the price of electricity. In every state and territory of Australia, energy prices are putting greater stresses on household and business budgets.

A few weeks ago, I spoke in this place about the disastrous consequences of the South Australian government's decision to slash support for its remote area energy scheme, which subsidises off-grid generation for isolated communities. It is almost incomprehensible that, against this backdrop, we have a federal government that is so doggedly pursuing a policy that is squarely aimed at forcing up the price of electricity and eroding the benefits Australians have enjoyed as a result of access to affordable and reliable electricity. Because that is exactly what this government's carbon tax will do: it will force the price of electricity up by another 20 per cent, over and above the increases that are already in the pipeline. Over and above the predicted doubling of electricity prices, we will see a further 20 per cent added on top by this government's carbon tax. The problem with the carbon tax in Australia which other countries do not have to face is that this tax puts our industries at a greater competitive disadvantage, whether it is the steel industry, the motor industry, the aluminium industry, the coal industry—the list goes on. In fact, this tax will impact on individual Australians at a rate 400 times greater than that of the next comparable scheme, which is in Europe. The most significant way in which it creates this disadvantage is that it forces such a dramatic increase in the price of electricity. I know some raise their eyebrows when we mention the 20 per cent figure, but of course it is not our figure. It is the government's figure. Their direct goal is to lift the price of electricity by 20 per cent.

I have spent a great deal of time in the community of late, talking to householders, small business and the largest and smallest of Australia's companies, from the big miners to the corner shop. One thread that brings all of these groups together is that they are already doing everything they can to reduce their energy usage and thus their electricity costs. It is therefore patronising in the extreme for this government to suggest that the way to avoid this punitive tax is to be more energy efficient; these companies already are. At least that is a more sensible suggestion relative to others that have been made, such as not having a shower before bed, or sleeping with a pet. That is some of the information currently available from the government on how to cut your household electricity bill! I really do wonder where we are getting to with this. Yes, we have been able to prosper because of our ready access to affordable and reliable energy, but I can assure the House that this is not an advantage that most Australians take for granted.

The other enormous problem with the Gillard government's carbon tax is that it launches an assault on the very industry that provides the majority of Australia's baseload electricity, the coal industry. The government's carbon tax will dramatically downgrade the value of Queensland's and New South Wales's electricity assets, without providing any compensation. The vast majority of the government's $5.5 billion compensation package for electricity generators will go to the high-emitting brown coal generators in Victoria and South Australia. An ACIL Tasman report released by the Baillieu government put the figure for the Victorian based generators at 97 per cent of the compensation package. This leaves Queensland and New South Wales out in the cold when it comes to their black coal fired generators, despite the fact that they are facing multibillion dollar write-downs in the value of their electricity assets because of the tax. The O'Farrell government in New South Wales has made it clear that its black coal fired power stations will suffer a loss of value of at least $5 billion because of the Gillard government's carbon tax.

Even in Queensland, Anna Bligh has made some strong statements about the lack of compensation for Queensland assets, which she claims will be written down by $1.7 billion. But I can assure you, Mr Deputy Speaker Sidebottom, as anyone who knows anything about the industry knows—and I know a little, but others I have spoken to know a great deal more—$1.7 billion will not be the write-down figure; it will be significantly higher than that, double that or perhaps even more. We know from the past that Labor leaders tend to get their numbers wrong and make statements that they are not able to back up.

Given this is the only thing that the Queensland Labor government has had to say about the carbon tax, it is certainly not for us to come out and applaud it. We can discern the truth of just how unpopular this tax is with members of the public and state governments across the political spectrum.

The significant losses in value for generators have important ramifications for energy security and will also drive up electricity prices for consumers. A drastic reduction in the value of an asset or a reduction in the viability of an asset makes it very difficult, given that the owners of the power stations are now or soon will be looking to refinance their loans. I am sorry to say that the Gillard government's destructive carbon tax casts a long shadow over the subject matter of this bill before the House today. What good is an ongoing energy market reform when the government is simultaneously engaged in energy market sabotage?

Earlier I mentioned the failure of this government to deliver the long overdue energy white paper. This is an astounding failure of government responsibilities given that, under the normal five yearly cycle, an updated energy white paper was due two years ago, in 2009. I know this all too well because I was the minister who actually delivered the last white paper, on time, in 2004. It is important not to underestimate the significance of the failure of the Labor Party to deliver in this area. While we all know the Labor Party loves a good review and cannot resist the temptation to set up another committee to compile another report, the energy white paper is a profoundly significant document. It is not just a piece of paper and it is not just a review; it is a framework for the direction of Australia's entire suite of energy policies.

Given how reliant our economy is on the energy industry and how fundamental questions of energy security are for every single home and business in Australia, the significance of the energy white paper cannot be overstated. At the moment, this government is forcing energy companies, investors, generators and suppliers to make long-term investment decisions in the absence of any updated guiding principles.

What the Labor Party has not been short on is excuses as to why the white paper has yet to materialise. We have had claims that the CPRS process had to be completed, then there was the uncertainty created by the previous Prime Minister, Kevin Rudd, aided and abetted by the current Prime Minister, to back down on the then ETS proposal. That was followed by the current Prime Minister's ironclad assertion that there would be no carbon tax under a government she leads. Now we have an increasingly desperate sales pitch for a toxic carbon tax, which I understand from members opposite is creating some real nightmares for them in their constituencies.

The energy industry cannot wait for the Labor Party to get its policy chaos in order. We need an energy white paper now. I know the Minister for Resources and Energy will have heard this time and time again from industry representatives but, that said, I implore him once again to do all in his power to get the government's house in order and to release the energy white paper.

In conclusion, the coalition supports this largely procedural bill to complete the process of energy market reform, which began in 2002. It is now the Labor government's clear responsibility to continue to take this policy area seriously.

The Rudd and Gillard governments have a very chequered history when it comes to dealing with the energy and resources sector. The carbon tax, the mineral tax, the lack of a white paper, their comprehensive list of policy missteps and letdowns, new taxes and changes of direction have shaken investor confidence to the absolute core.

The energy industry needs two things. It needs the confidence of knowing where the reforms are going and the confidence of knowing that its investments are safe. At the moment, it has neither. All it sees, almost at every turn, is policy chaos and new taxes which affect parts of the sector. In 2008, it saw changes to the condensate rules in Western Australia, then the CPRS, then the MRRT, then not the CPRS and now the carbon tax. All these send a message to overseas investors that Australia is not the investment place it used to be. That will have one consequence: despite these reforms, which the coalition are supporting, there will be a reluctance to make the big, long-term investments in Australia which we need to ensure that not only do we have reliable electricity and a supply that industry can rely on but we have a long-term prospect of lower than world average electricity prices, because that has been our competitive edge. That has been the reason that we have seen so many high-energy investments in Australia.

Whether it is the smelter in Bell Bay—close to Deputy Speaker Sidebottom's electorate—nickel refineries, aluminium refineries, copper refineries, the heavy industry that backs up the resource sector or the manufacturing sector, they all rely on one thing: an internationally competitive energy price. These reforms are there to try to provide that. The carbon tax, in particular, will destroy it. It will catapult our electricity prices into a region that simply makes us uncompetitive.

The reason the coalition are keen to support these reforms is that we want to do everything we can—in the face of the disaster, chaos and policy coming from the government—to keep energy prices down for industry. We want to keep energy prices down for households. We want people to be able to afford basic energy needs. We will wait and see what will happen as a result of these reforms and whether this government has the courage to commit itself to a white paper and continue the process. We hope so.

We hope in that haze that the government can give a modicum of confidence not only for to the refinancing process that the energy sector has to go through, particularly in the next two years, but also for the investment in the energy sector that we all need. Until that chaos ends and until that confidence is restored, we will not have significant confidence in Australia's future economic growth—and the energy sector with it. Until that chaos ends the true gains of energy market reform will not be realised.

Michelle Rowland (Greenway, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in support of the Australian Energy Market Amendment (National Energy Retail Law) Bill 2011. This bill represents the final major step in the national energy market reform program agreed by the Council of Australian Governments in response to their 2002 energy market review.

In my former life I was a legal practitioner in network industries Primarily I was in telecommunications, but I must say that I found few aspects of competition and regulation in network industries more complex than in the gas and electricity segments. I want to take this opportunity to thank and acknowledge Gilbert and Tobin, my former employers, for everything I learnt and their continuing expertise on a group level and as individuals. Their practice is indeed without peer in this area.

In June 2001, the Council of Australian Governments recognised that the effective operation of an open and competitive national energy market would contribute to improved economic performance and would deliver benefits to households, small business and industry, including in regional areas. Very significant and important reform around the economic regulation of energy markets covering electricity and gas transmission and distribution has taken place since that time.

The reform that has occurred includes the establishment of the Ministerial Council on Energy to provide national oversight and coordination of energy policy development and a national energy policy framework to guide future energy policy decision making by jurisdictions and to provide increased policy certainty of energy users and for the energy sector itself. The Australian Energy Market Commission has been established as the maker and administrator of the rules under which electricity and gas distribution and transmission businesses operate. The Australian Energy Regulator, a division of the Australian Competition and Consumer Commission, investigates potential breaches of the rules and is otherwise responsible for the enforcement of the rules.

The focus of earlier reforms has been on the economic regulation of gas and electricity networks in the states and territories participating in the national market. These networks now operate in a national regime, administered by national bodies. This approach has facilitated consistent decision making, and the detailed rules that govern the economic regulation of the energy networks have provided greater certainty to stakeholders in relation to both the regulatory processes and the likely outcomes of those processes. In particular, for businesses operating in more than one jurisdiction, the move to a single rule administrator and rule enforcer responsible for the economic regulation of energy networks has significantly reduced the regulatory burden that was previously faced with dealing with multiple regulators applying sometimes very different regulatory regimes. The reforms with respect to the establishment of a national framework for the economic regulation of the gas and electricity markets in the participating jurisdictions are now complete. The final step that is necessary to realise the vision of a truly national approach to energy regulation is to elevate the non-economic regulation of energy services to the national level, and it is the shift from the jurisdictional based approach to our national approach to the non-economic regulation of energy that is the focus of this bill.

Earlier this year the South Australian parliament passed legislation that establishes the framework for the national regulation of the non-price aspects of gas and electricity retail and distribution activities. Important elements of this framework include the Australian Energy Market Commission as the rule maker with respect to these non-price aspects and the Australian Energy Regulator as the relevant regulator and enforcement body. This government has a central role in facilitating the conferral of relevant powers and functions on these national bodies.

The regulatory package that is created by the South Australian legislation includes the national energy retail law, which provides for rules and regulations to be made under that law which are referred to as the national energy retail rules and the national energy retail regulations. The objective of the national energy retail law is to promote efficient investment in and efficient operation and use of energy services for the long-term interests of consumers of energy with respect to price, quality, safety, reliability and security of supply of energy. These issues are of critical importance to all consumers of energy. The national energy retail law, together with the national energy retail rules, will deliver important outcomes for residential and business consumers alike.

Specifically in relation to residential customers, the national energy retail law and the national energy retail rules provide for standard retail contracts to be established by designated retailers. The designated retailer is obliged to make a standing offer applicable to the customer. The prices associated with a standard offer must be published on the retailer's website. The national energy retail law also sets out the manner in which the standard offer prices may be varied. The national energy retail rules set out model terms and conditions for standard retail contracts, and retailers are required to adopt those model terms and conditions with only those alterations that are permitted or required under law or the rules.

The national energy retail law and rules provide greater scope for the negotiation of contracts between retailers and business customers. For business customers that consume energy at business premises below the upper consumption threshold, the customer and the retailer may negotiate and enter into a market retail contract for the provision of energy to the customer as well as the provision of other services. The rules set out some minimum requirements that the market retail contracts are required to meet to ensure the protection of this particular class of customers. These requirements include that a market retail contract must set out all the tariffs and charges payable by the customers and the circumstances in which the contract will terminate. In order to provide guidance to retailers as to the presentation of standard offer prices and market offer prices, the Australian Energy Regulator is also given the powers under the national energy retail law to make and amend retail pricing information guidelines. The guidelines may specify the manner and form in which details of standing offer prices and market offer prices are to be presented when publishing or advertising those prices. The disclosure regime around prices set up under the national energy retail law is designed to assist small customers to consider and compare standing offer prices and market offer prices offered by retailers.

The national energy retail law also sets out important safeguards for consumers in terms of customer hardship policies. The national energy retail law requires retailers to develop these policies and submit them to the Australian Energy Regulator for approval. The Australian Energy Regulator has the power to direct the retailer to review the policy and make variations in accordance with the requirements it sets out. A retailer is required to vary the policy in accordance with those requirements and to submit it for approval and to publish the policy after it has been approved by the regulator, and it must also maintain and implement their customer hardship policy. The national energy retail law sets out minimum requirements for such a policy, including processes to identify residential customers experiencing payment difficulties as a consequence of hardship, flexible payment options and processes to identify appropriate government concession programs and financial counselling services and to notify hardship customers of their availability. Pursuant to the rules, a retailer will be required to inform a hardship customer of the retailer's customer hardship policy.

The National Energy Retail Law and rules also deal with the important subject of energy marketing. The law provides for the development of rules for, or with respect to, the carrying out of energy marketing activities. The rules set out the minimum information that a retail marketer is required to provide to small customers, such as information that includes all applicable prices, charges, early termination payments and penalties. The rules also provide for the establishment by retailers of a no-contact list, being a list of customers who have indicated they do not wish to be contacted by mail or in person by the retailer.

The relationship between distributors and end users of energy is usefully clarified under the National Energy Retail Law and rules and will become the subject of a consistent regime across the participating jurisdictions. The rules provide certainty to customers in terms of connection to the electricity and gas distribution networks. The rules also contain model terms and conditions that, with permitted variations, will form the deemed standard connection contracts between distributors and customers.

Of relevance to the important issue of security of supply are the provisions in the National Energy Retail Law and rules which establish the retailer-of-last-resort scheme. The approach to dealing with the circumstance in which a retailer is unable to continue to supply energy to its customers is currently the subject of varied approaches across the jurisdictions. The National Energy Retail Law and the rules also set up a retailer-of-last-resort scheme, which will require the Australian Energy Regulator to ensure that at all times there is one default retailer of last resort for each connection point in the case of electricity and for each distribution system in the case of gas. Additional retailers of last resort may also be registered in respect of connection points and distribution systems. The law gives the Australian Energy Regulator important powers to enable appropriate action where the regulator receives notice or otherwise becomes aware of any event, circumstance or matter that it has reason to believe may or will affect the continuity of supply to the customers of a retailer.

To the extent that the relevant jurisdictions enact relevant legislation, the Australian Energy Regulator will have the power under the National Energy Retail Law to develop and make available on the internet a price comparator. The purpose of the price comparator is to assist a small customer to compare the standing offer prices available to that customer and the market offer prices that are generally available to classes of small customers in the relevant jurisdiction.

In relation to large customers, the National Energy Retail Law recognises that it is appropriate to be less prescriptive and to provide more scope for commercial negotiations between large customers and retailers and distributors. However, the framework still provides for adequate oversight of these arrangements. For example, the law provides that a distributor may prepare and submit to the Australian Energy Regulator for approval one or more proposed forms of standing connection contracts applicable to one or more classes of large customers. The Australian Energy Regulator is required to approve a proposed form of standing connection contract if it is satisfied that the terms and conditions of the contract are fair and reasonable and comply with any applicable requirements of the energy laws. On approval, the proposed standard form connection contract becomes the deemed energy regulator approved standard connection contract for the relevant class of large customer or the distributor.

It will be clear from the matters that I have mentioned that the National Energy Retail Law deals with issues that are of importance to all consumers of energy, particularly individual households and small business, including certainty around the supply of energy, the transparency around prices and the terms and conditions of supply by retailers. It will also be apparent that bodies such as the Australian Energy Regulator and the Australian Energy Market Commission are absolutely central to the implementation of a national approach to the retail regulation of energy service providers.

The National Energy Retail Law gives the Australian Energy Regulator an important role in protecting the interests of consumers, particularly in relation to standing offers required to be made available to small customers, including residential customers, approving customer hardship policies and ensuring continuity of supply through the retailer-of-last-resort scheme.

The Australian Energy Market Commission is also given important functions and powers under the National Energy Retail Law, primarily those relating to the making of rules regulating the provision of energy services to customers and the activities of persons involved in the sale and supply of energy to customers. Bringing the price and non-price regulation of all parts of the energy supply chain within the purview of the rules administered by the Australian Energy Market Commission and enforced by the Australian Energy Regulator will reduce regulatory complexity, particularly for service providers operating in multiple jurisdictions in our national energy market. Reducing the regulatory burden and providing greater certainty around the circumstances in which distributors are required to deal with retailers will facilitate heightened levels of competition in the retail market and provide consumers with greater choice.

The Australian Energy Market Amendment (National Energy Retail Law) Bill is an important part of the realisation of a national framework for energy regulation. The oversight of energy regulation by national bodies, in particular the Australian Energy Regulator, whose powers and functions are to be supported by appropriate investigative and enforcement powers, is crucial to the stability and overall performance of the national energy market. I am therefore a strong supporter of this bill.

Bob Baldwin (Paterson, Liberal Party, Shadow Minister for Tourism) Share this | Link to this | Hansard source

I rise to speak on the Australian Energy Market Amendment (National Energy Retail Law) Bill 2011. It has been a long decade since June 2001 when COAG met and established the Ministerial Council on Energy. The whole purpose of establishing a ministerial council on energy was to reach this point. It has taken a decade. In 2002, the energy market review released its report entitled Towards a truly national and efficient energy market. The review proposed the establishment of:

A statutory National Energy Regulator should be established under a legislative approach agreed by COAG to be the independent energy regulator in all jurisdictions, interconnected or otherwise, and to encompass the energy-related regulatory roles of the Australian Competition and Consumer Commission, the National Electricity Code Administrator and state and territory regulations.

It has taken a decade, because it was only on 9 March this year that the South Australian government finally passed its National Energy Retail Law (South Australia) Bill 2010. That bill received royal assent on 17 March, which was the enabling process for this bill to go ahead. The effect of this bill will require a transition period until 1 July 2012.

Why is this bill so important? As stated by the shadow minister for energy and resources, the member for Groom, having a competitive energy sector is key and critical to growing an economy. We need reliable, efficient, affordable, energy to grow our economy. We need security also. The one thing that is being undermined in the energy sector at the moment is confidence in investment. That is affecting the long-term security of the energy sector in Australia. There is nothing in Australia, no person and no business, that does not rely in one way, shape or form on energy. Each and every person could be positively benefited by this legislation, because the purpose of this legislation is to cut the red tape for retailers who operate across state borders, and who therefore have to operate under different sets of legislation and regulation. The ambition and the purpose behind this bill are to make sure that more retailers will enter the market and increase competition. Hopefully, as proven by experience, increased competition will reduce the cost of energy.

By way of background, while talking about electricity prices, since December 2007, just after the Rudd government was elected, electricity prices across Australia have increased by an average of 50 per cent and gas prices have increased by an average of 30 per cent. In addition to that, water and sewerage rates have increased by an average of 46 per cent; health costs, such as hospital, dental and pharmaceutical costs, have increased by an average of 20 per cent; education costs, such as school fees, have increased by an average of 24 per cent; and rent by an average of 21 per cent. The thing that flies in the face and makes it hypocritical in pursuing this bill, which the government supports, is the fact that the Gillard Labor government wants to introduce a carbon tax and a carbon tax will increase power bills by a minimum of 10 per cent in the first year alone, rising to over 20 per cent.

Competition in the energy sector is what will drive and develop our economy. Putting cost burdens on and setting prices through a carbon tax will actually reduce competition. One of the key aspects in relation to our energy market in Australia is that most of the electrical generation is owned by state governments. As the shadow minister said, state governments have taken a hit on their bottom line with the devaluation of their assets and will find it increasingly difficult, as indeed will private existing energy generation, to seek further loans to upgrade. This is not good for the security of energy. In fact, competition will not be addressed by the imposition of a carbon tax.

I agree with what the shadow minister said, that as of now, having the effect of this national energy retail law and the other bills associated with it, what we need to truly understand the energy requirements and needs in Australia is an energy white paper. It has been long talked about but it is much needed. If we want to give those in the private sector or indeed state government instruments any level of security in their investment, they need to have a clear understanding across a national market, national grid work, of what is required, what are the impediments, what are the opportunities. So I would encourage the government to take up the opportunity and spend taxpayers' money on an energy white paper, which would probably cost a lot less than the glossy coloured brochure that was distributed on the need for a carbon tax, after the Prime Minister promised that they would not spend taxpayers' funds on political advertising. But the need for the energy white paper is paramount to understand planning and investment and long-term energy security for our nation.

Price, as I have said, is a driver to our economy. You would think that by just driving up the price of electricity, which is the whole matrix of evaluation that has been incorporated in the establishment of this carbon tax, by increasing the cost of energy you would drive down consumption and therefore provide this great environmental benefit. I regret to inform you, Mr Deputy Speaker, that between 2000 and 2008 the cost of electricity in Australia across the board rose by 55.9 per cent. Yet over the same period consumption rose by 10 per cent, from 10,194 kilowatt hours per capita to 11,217 kilowatt hours per capita. So with the great ambition of this Labor government to jack up energy prices to reduce consumption and save the world, I have got to say that the record over the past decade has not delivered that, so I fail to see where putting a price on carbon will deliver the outcomes.

The coalition and Labor have the same targeted goal: five per cent by 2020. The problem is that the Labor government believes, along with the Greens, probably driven by the Greens, that the only way you can do it is by taxing and putting a price on things, instead of providing leadership example and direct investment, which would achieve the same outcome without cruelling Australian energy and cruelling the industry factor. In fact, there has been some benefit by investing in programs such as solar hot water systems and the like. I would like to quote from an article on 15 August by Brian Robins, who said:

An energy efficiency specialist with Ausgrid, Paul Myors, said: 'We have seen consumption falling by around 2 per cent a year for average household electricity use over the past four years. That goes against the long-term trend of a steady rise.

'It could be the global financial crisis - and rising tariffs is a factor. We are seeing the impact of energy efficiency,' he said, pointing to the move away from electric hot water systems, previously the main user of electricity in the home.

It is critical that investment in programs like that, carefully managed and financially viable, occurs. It is a pity that the minister is not here for this. I have just read a media release about the government having replaced solar hot water systems in the Indigenous communities in the Northern Territory with electric hot water systems, which shows the hypocrisy in their argument.

A lot of industries will be hurt by the introduction of a carbon tax. Industries require a competitive energy price, which is the purpose of this bill. Prior to the deregulation of the dairy industry I had one of the strongest dairy belts in New South Wales. I still have quite a number of dairy producers—in fact we have Oak, at Hexham, which still processes milk. But a release put out by the Australian Dairy Industry Council on 11 July, entitled 'Carbon tax to hurt dairy farmers' says:

The cost to dairy farming families of this carbon tax is estimated to be $5,000 - $7,000 per year. Electricity is a major component of dairy farming operating costs and this tax will have a severe, direct impact on dairy farmers.

Given that we export so much of our processed dairy product from this country, the carbon tax will affect not only the price of a litre of milk on the shelves, but now affect the export opportunities that are already being marred by the high Australian dollar.

It is not just the dairy industry that will be negatively impacted by a carbon tax. In a release dated 14 July, the Housing Industry Association says:

The residential building industry will be affected more than most.

It goes on to say:

Around 500 facility operators will be required to pay the new carbon tax. For everyone else, the tax will be embedded in the products they produce, such as electricity, gas and other fuels, and in the primary materials such as steel, glass, cement, bricks and aluminium. The cost will further increase progressively as they pass through the various manufacturing and fabrication faces.

This is a cumulative tax—it is an add on, add on, add on imposition of costs. What will it cost to build an average new home? According to the Housing Industry Association:

… an average new house and land package is due to the carbon tax will be between $5,000 and $6,000.

For those young people who are struggling—working hard and saving to build the great Australian dream—this puts their dream one further step away from reality, because they also going to suffer from there being fewer jobs.

There will be massive job losses under this tax. In fact, on the tourism industry, which is part of my portfolio, the Tourism and Transport Forum said in its report on the carbon tax that 6,400 jobs will go in the tourism industry alone. That does not count the jobs that will be lost in the region I represent, in the coal industry, the aluminium industry and the energy industry, and in the indirect jobs that support those. So those young people struggling, working hard and saving to get the financial wherewithal to buy their home will have to pay another $5,000. And when they get in there, their electricity bills are going to be higher and their furnishings will cost more. This is not a good way of creating opportunity.

One of the hidden aspects in relation to the carbon tax, and a reason we need a nationally regulated energy market to increase competition, is local government. Mr Deputy Speaker, you may not be aware, as indeed other members may not be aware, that the energy bill for the street lights in the community is paid for by the council. In New South Wales, I am not sure about other states, councils have their rate increases capped by the state government. I will give an example: in discussions with Maitland council's mayor, Peter Blackmore, I discovered that the council's electricity bill is currently $1.8 million per year. If it goes up 10 per cent, that is an extra $180,000; if it goes up 20 per cent, that is $360,000. And they will not be able to recover that from ratepayers. Where is their compensation package? In fact, Glenn Wall, the former mayor of Dungog council, said in an email to me last week, 'I am duly concerned regarding the impacts on local government and our capacity to absorb increased taxation liabilities and utility and resource costs increase, which are also being capped by the New South Wales government.' He went on to say:

The only people again that will be impacted will be our communities. Councils do not have the capacity to generate any further income. The community cannot afford huge rate increases to cover these increases (this is also problematic in New South Wales due to rate capping.) So the only option available will be to reduce the level of service we provide to the community.

Service delivery by government is key; it is essential. As I said right at the very beginning, this has been a decade-long approach. It needs to be introduced but it does not need the impediment of a carbon tax. (Time expired)

Ed Husic (Chifley, Australian Labor Party) Share this | Link to this | Hansard source

I am pleased to contribute on the consideration of the Australian Energy Market Amendment (National Energy Retail Law) Bill 2011. We arrive at this point today after a journey spanning two decades, a journey embarked upon in the 1990s when the Council of Australian Governments had the foresight to agree upon the need to establish a national electricity market. It was a key microeconomic reform of the 1990s and something that a former Labor government was involved in in conjunction with state Labor and Liberal governments at the time. In the time since the establishment of the market we have seen more dynamic pricing and breaking down of the old monopolies that existed in the sector and witnessed the entry of new companies, the creation of new jobs and the creation of a more customer responsive climate that has benefited both business and residential customers and that has helped deliver significant historical savings on business inputs.

COAG has maintained its commitment to this important microeconomic reform and I emphasise the point that both sides of politics have worked together to see reform work to the advantage of the nation, the economy and the community. In fact, the legislation that we debate here today is the last big part of the national energy market reform program agreed by COAG in response to the recent 2002 energy market review paper Towards a truly national and efficient energy market.

The main aims of the bill that is before the Main Committee and that will be considered by the House include streamlining regulatory requirements, increasing efficiency by harmonising regulations and delivering best practice consumer protection. What I like about this bill is that it aims to deliver benefit to industry—to businesses within the sector—and, importantly, to consumers, which will balance that out. That is to be commended and I will reflect on this further in my contribution today.

The national energy retail law will provide energy consumers with a range of benefits, ensuring that they can access energy services on fair and reasonable terms. Over the longer term, the expected reduction in red tape that the national energy retail law facilitates will provide an efficiency boost in energy service delivery and foster greater competition, helping provide an environment that can deliver more competitive electricity prices and offers. This increase in competition will also see retail customers benefit from more choice in energy retailers and in the services that they offer. The bill recognises that energy is an essential service and therefore will give consumers stronger protections.

The bill makes structural changes to a number of existing acts, like the Australian Energy Market Act and the Competition and Consumer Act, in order to give the necessary powers to the Australian Energy Regulator, the Australian Competition Tribunal and the Federal Court. The national energy retail law will work hand in hand with our new Australian consumer law to provide small customers with a range of strong consumer protections. It will also see the entire energy supply chain from wholesale markets to transmission and distribution networks through to retail markets brought under one regulatory umbrella via the Australian Energy Regulator. This is a significant improvement, especially considering the enormous level of state based regulation applied to the sector. Embedded within the legislation is a national energy retail objective to promote efficient investment in and efficient operation and use of energy services for the long-term interests of consumers of energy with respect to price, quality, safety, reliability and supply security; and, importantly, it will guarantee access for all small customers to an offer of supply of energy. It will set out mandatory minimum terms and conditions for retail contracts for all small customers and set up a framework for customers wishing to connect to new gas and electricity networks, including the installation of solar photovoltaic systems for the export of energy to the grid, and that will become something of greater prominence in the years ahead as more people seek to engage in that form of activity.

I reflected earlier on the way this legislation seeks to balance the interests of all those affected or working within the sector, and as much as the legislation is designed to help businesses operating in the sector nationally, it is mindful of the needs of consumers across the country. One area I was heartened to see some focus on was the way in which energy suppliers deal with customers experiencing difficulties paying bills. This legislation will require retailers to develop a customer hardship policy which will need to be approved by the Australian Energy Regulator and which must contain a range of programs to help residential customers experiencing longer term financial difficulties. The hardship regime includes protections for vulnerable customers, including a prohibition on the charging of late payment fees, which has been controversial in their implementation and operation; a ban on requiring a security deposit; and a requirement on retailers to allow payment by using Centrepay. Beyond this there will be limitations on the disconnection of customers—which I think a lot of people, particularly in hardship situations, will welcome—including distinct processes to follow, restrictions on when a disconnection may occur, additional protections for customers experiencing hardship or difficulty, and a prohibition on disconnecting premises particularly where life support equipment is required.

Another feature to emerge from changes within the sector has been the rise of door-to-door sales techniques designed to encourage customers to switch energy suppliers by signing new contracts for energy from a rival supplier to the one they currently use. While some consumers have welcomed the chance to change suppliers and lock in savings and get better service, others have felt pressured to sign the contracts. They have felt overawed by the complexity of the contract wording or they have had difficulties in exiting contracts where they feel that the contracts themselves have not lived up to the expectations promised in the actual negotiation phase. Energy marketing rules that build on the requirements set out in the Australian Consumer Law will ensure energy consumers receive full information before they enter into an energy contract, be it for electricity or gas or both. Importantly, the bill will hold retailers accountable for marketing that is conducted on their behalf. Again, I think that it an important learning that has emerged out of the process of change that has occurred, particularly through the course of the last decade.

The Australian Energy Regulator will develop a price comparator website like the ones currently available for health and car insurance so that customers will be able to compare retail offers put before them, and, where they need to be accessed, consumers will be able to resolve disputes with energy businesses through a consistent approach across jurisdictions. Retailers and distributors will be required to handle customer complaints in accordance with published procedure, which must be consistent with the applicable Australian Standard. Given that a lot of retailers are operating across state boundaries, it is important to be able to set in place a consistent set of arrangements as they apply to customer complaint resolution. If the customer is not satisfied with how the retailer or the distributor has handled the complaint, obviously they can refer the matter to the energy Ombudsman in their state or territory.

On this point, as much as we have seen improvements in the way that the sector has responded to customer need, we also know that they can perform better. One only needs to refer to the workloads of Energy and Water Ombudsman operations to know that consumers are not backward in coming forward about poor service. Some of the matters I remarked upon earlier form a healthy part of the day-to-day work of the ombudsmen as they operate in different states. I am mindful, in particular, of reference to the Energy and Water Ombudsman in New South Wales, who has got a healthy workload, particularly if you look at the latest stats that have been put out, which span from October 2010 to March 2011. They do remark that over the course of four years complaints about retailers have increased or continued to increase. A lot of them revolve around billing issues—for example, disputed accounts. The number of consumers complaining about debt collection or credit default listings because of a high utility debt has increased. Also, in terms of retail competition, complaints about marketers misleading or pressuring consumers continue to increase. That, as I have said and reflected on earlier, is what has been looked at through the course of this legislation and what is intended to be introduced through the course of the work of the Australian Energy Regulator to ensure that there are standards that exist across the nation so that, regardless of where consumers live, they can have some sort of protection and some sort of ability to resolve disputes. The legislation itself establishes a strong national regime to protect, as I have said, customers, particularly in the event that a retailer fails, and I would draw attention to the fact that there are provisions for a retailer of last resort. Of themselves these arrangements are not exceptional—they have been in place as a result of state based retail deregulation—but it is important to deliver a degree of consistency about the application and operation of retailer of last resort arrangements, especially when one considers how critical they will be in providing continuity of service in the event of a company being unable to continue in operation.

Services and protections such as the ones that I have reflected upon in the contribution in the Main Committee today will become increasingly important in the face of a rise in electricity prices that is occurring in states and territories, and it is our responsibility to enshrine them now to assist those that may be vulnerable. I will just leave my remarks at that, and I do commend the legislation to the Main Committee and welcome the fact that, as remarked upon earlier, we have now a national energy or electricity market and we have operators that are moving across state boundaries. There are opportunities now for businesses to participate in this sector in a way that 20 years ago they would not have imagined. As much as this seeks to liberate a lot of those companies from needless regulation or conditions that do not necessarily benefit consumers or those industries—or those businesses, I should say—it also puts in place a strong consumer protection regime. I note that the minister is present. Again I commend the fact that the legislation does seek to balance out the industry interests along with those of consumers. Thank you.

Paul Fletcher (Bradfield, Liberal Party) Share this | Link to this | Hansard source

I am pleased to rise to speak on the Australian Energy Market Amendment (National Energy Retail Law) Bill 2011, and I am pleased to follow the member for Chifley, who has significant experience working in both the energy sector and the communications sector, both networked industries. I note that there are a growing number of members of parliament with experience working in the networked industries. I do not think that is a coincidence, because across the broad sector of networked industries there has been a program of deregulation, competition and liberalisation for some 20 years, and that has led to growth, to opportunities and, I would argue, to the increasing importance of those sectors within the national economy. That is a good thing, and I argue that it is also a good thing that people with experience working in those sectors are now serving in the national parliament.

The bill that is before us is part of the long-term program to reform the national energy market. Its effect is to amend the Australian Energy Market Act 2004 so that that amended act will apply the National Energy Retail Law, the law which is set out in the South Australian act of 2011, which itemises the specific provisions of that law. It forms part of the cooperative Commonwealth, state and territory regime to regulate the non-economic distribution and retail regulation of gas and energy. The National Energy Retail Law has this to say as a statement of its objectives:

The objective of this law is to promote efficient investment in, and efficient operation and use of, energy services for the long-term interests of consumers of energy with respect to price, quality, safety, reliability and security of supply.

In its operations, this bill confers key powers on the Australian Energy Market Commission and the Australian Energy Regulator. The Australian Energy Market Commission is the national rule-making and development body in electricity and gas. The Australian Energy Regulator regulates electricity and gas transmission and distribution and, included within that, pricing.

The provisions of this bill are in one sense procedural, but they are important nevertheless in facilitating the nationally consistent application of the National Energy Retail Law and National Energy Retail Rules. They represent yet a further stage in the implementation of a set of measures that goes back to a process initiated by the Council of Australian Governments' 2002 energy market review entitled Towards a truly national and efficient energy market.

In the brief time available to me I want to make three key points. Firstly, as I have already indicated, these reforms are part of the broader competition reform process in Australia, which began some 20 years ago and has played out over that period. Energy is clearly one of the most important sectors where reform has occurred. I secondly want to highlight the tensions between that reform process and the Gillard government's stated policy in relation to the carbon tax. And also I want to highlight some inconsistencies with developments in another parallel market, which is telecommunications.

Let me start by talking about the broad competition reform process, which in many ways goes back to the Hilmer review reporting in 1993. That report noted that at that time:

Government businesses account for 10% of Australia's GDP, with rail, electricity, gas and water utilities alone accounting for nearly 5% of GDP. Improving the efficiency of these sectors remains a national priority.

The report went on to say:

While there have been some encouraging improvements … progress is being made from a low base, and Australian public enterprise productivity levels remain well below international best practice. For important industries such as rail, electricity and telecommunications, most Australian enterprises are achieving only 75% or less of the productivity levels achieved elsewhere.

That therefore was the starting point in the early 1990s, when the Hilmer review reported. Triggered by that review and some other processes, we saw the carrying out of a reform process over a number of years in the gas and electricity sectors, as well as a whole range of other sectors. But in the gas and electricity sectors we saw the separation of a previously vertically integrated supply chain; the introduction of competition between generators and retailers; network elements become subject to access and price regulation; the creation of the national electricity market; and gas pipelines become subject to third-party access.

Progress on this reform agenda was reviewed in 2002. If you go back and look at the 2002 review it does make some interesting reading, some nine years later. It opens with the observation that:

Australia is endowed with significant, diverse and high quality energy resources. Australia has approximately 800 years supply of easily accessible brown coal and 290 years supply of black coal. It has large natural gas resources in the North West, in Bass Strait and in the Cooper-Eromanga Basin …

It also referred to good wind, hydro and solar resources. The report went on to note that:

… Australia’s electricity and gas prices—

this is speaking in 2002—

are close to the lowest in the developed world … for both major industrial and residential users.

And it made this observation, which I would suggest remains as timely today as it was in 2002:

Energy is, therefore, a very significant strategic policy matter for the Australian economy. It underpins the competitiveness of our exported goods sector, is a vital ingredient for domestic industry, and it is a very important item in the monthly household expenditure budget.

A key objective of the program of the national competition reforms was to improve productivity. As Gary Banks, the Chairman of the Productivity Commission, observed in a speech in 2000, talking about progress which had been achieved to that point, a key benefit of the reform agenda was to reduce prices. He had this to say:

The increased competition that has come with these reforms has also helped to ensure that the productivity improvements have benefited consumers, through consequent reductions in prices (and improvements in quality). For example:

Declines in the 1990s averaging around 16 per cent—how things have changed.

If we turn to the second point that I want to highlight, there is a real tension between this policy agenda—the bill before us today, which implements one of the components of that policy agenda—on the one hand, and, on the other hand, the direction that the Gillard government has been pursuing when it comes to carbon tax. We now have a government going deliberately and directly in the opposite direction from the one which was cited so approvingly by Gary Banks in 2000 and from the direction which underpins the competition reforms going back to the start of the 1990s. We saw, as I do not need to remind anybody in this House, a promise by the Prime Minister in 2010 that there would be no carbon tax under a government she led, and of course we subsequently saw in February 2011 a complete reversal of direction.

What is significant about that, apart from the issues of integrity and trust, is that we have the Gillard government, in substance, reversing the policy direction which has been pursued in energy markets for many years. Since December 2007, electricity prices across Australia have risen by an average of 50 per cent and gas by an average of 30 per cent. What a stark contrast that is to the track record of improvements in competition and efficiency and reduction in prices in the 1990s which I cited earlier. Of course, what we can now expect is further sharp increases in electricity prices, stimulated in part by the carbon tax.

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

Madam Deputy Speaker, in accordance with the standing orders for the Main Committee, will the honourable member take a question with respect to the cause of the current increases in electricity prices?

Yvette D'Ath (Petrie, Australian Labor Party) Share this | Link to this | Hansard source

Member for Bradfield, will you allow a question?

Paul Fletcher (Bradfield, Liberal Party) Share this | Link to this | Hansard source

I am more than happy to take a question from the minister.

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

Madam Deputy Speaker, I ask the honourable member: does he accept the statements by the member for Groom reported in the Australian on 20 and 21 August last year, when he stated that power prices in Australia are likely to double in the next five to seven years regardless of who is in government? Does he also accept that in making those statements the member for Groom indicated that he recognised that, irrespective of who is in government, those electricity prices would occur because they are a result of requirements for investment across Australia to ensure that electricity supply reliability and security continue to meet community reliability standards—that is, relating to maintaining the existing distribution network?

Paul Fletcher (Bradfield, Liberal Party) Share this | Link to this | Hansard source

I thank the minister for the question and the opportunity to answer it. The point that I would make in answering the question is that, in an environment where prices are expected to rise, it is extraordinary that you would then stick on a discretionary tax which is likely to increase prices by a further 20 per cent, and that is the consequence of this government's policy. That is why I say and we say on this side of the House that there has been a complete reversal in policy direction by this government.

The 2002 review which I cited earlier noted correctly that our low energy prices are a huge competitive advantage, and it is clearly therefore a matter of considerable concern that we have such a sharp and direct reversal in policy direction by this government. It is further concerning that a consequence of the carbon tax policies being pursued by this government is that there is a key negative effect on major sectors of energy generation. The New South Wales government, for example, estimates a $5 billion loss in the values of its black coal based generation assets. to So it is very hard to understand why it makes sense on the one hand to be pursuing a continuation of the energy market reform process while on the other hand introducing a completely separate policy which goes in the opposite direction.

The other thing that is very interesting in the 2002 review is that it highlights the importance of certainty in the regulatory regime applying to the energy sector for the purpose of encouraging investment. I cannot imagine that the authors of that review would have predicted a scenario in which a government would be elected in 2007 promising an emissions trading scheme, would in 2010 abandon that policy, would later in 2010 make a solemn promise to the Australian people that there would be no carbon tax and then in February 2011 announce, capriciously and with no notice, that there would now be a carbon tax. The degree of uncertainty facing the industry has been ramped up beyond what might reasonably have been expected or predicted when this review was written in 2002.

The third point I want to make in the very brief time that remains to me is to highlight the difference, the contrast, between the reform agenda in energy and the way in which the reform agenda has gone wildly off track in the telecommunications sector. These are two networked industries with very considerable similarities. The regulatory frameworks are in many ways quite similar. Both were the subject of competition policy reforms throughout the 1990s. In the energy sector, the Gillard government is at least nominally continuing to implement the Howard government's reform agenda, albeit undermined, as I have noted, by its contrasting policy direction to do with the carbon tax. But it is very noteworthy that when it comes to telecommunications there has been a complete reversal of a reliance on competition. This government has effectively abandoned competition. Compare it to the electricity sector, where there has been a continued reliance on the existing assets in the sector rather than the government building new assets, where companies have been permitted to continue to operate based upon their current ownership structure rather than an effective policy of nationalisation, where existing players have been structurally separated through breaking up vertically integrated companies into generation, transmission and distribution as opposed to the spurious argument we hear in the telecommunications sector that the only way to achieve structural separation is to build a brand-new company at vast government expense. And where in the energy sector there has continued to be a commendable reliance on competition, the comparison is not a favourable one. I make the point that it is one of the many ways in which policy in these areas is rife with internal contradictions.

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

I thank the members for Groom, Paterson, Bradfield, Greenway and Chifley for their contributions to this debate. In closing, can I indicate that the Australian Energy Market Amendment (National Energy Retail Law) Bill 2011 sees the Commonwealth play an important role facilitating the implementation of the Council of Australian Governments' cooperative legislative regime for regulating the relationship between energy retailers and their customers. This regime, I am pleased to report, is the final major component of the national energy market reform program agreed by COAG in response to the 2002 report in terms of energy market review entitled Towards a truly national and efficient energy market and as set out in the Australian Energy Market Agreement.

By applying the National Energy Retail Law as Commonwealth law, this bill will help reduce the regulatory burden on energy retailers, open the market to greater competition and provide a strong suite of energy-specific consumer protections. This bill amends three Commonwealth acts. The Australian Energy Market Act 2004 is amended to apply the National Energy Retail Law set out in the schedule to the National Energy Retail Law (South Australia) Act 2011 of South Australia and the rules and regulations made under it as a law of the Commonwealth in Australia's offshore area. The Australian Energy Regulator and the Australian Competition Tribunal will have important roles in overseeing the proper operation of this legislative regime to ensure efficient and competitive outcomes in the energy market that protect the long-term interests of energy consumers. To this end, this bill amends the Australian Energy Market Act 2004 and the Competition and Consumer Act 2010 to explicitly allow the new national energy retail law to confer relevant functions and powers and impose duties on these two Commonwealth bodies. Under the national energy retail law, the regulation of all energy retail businesses, except in Western Australia and the Northern Territory, will be undertaken by the Australian Energy Regulator, bringing the whole energy supply chain under national regulation for the first time.

The Australian Energy Regulator will oversee a robust compliance and enforcement regime across all participating jurisdictions in a manner that will contribute to the achievement of the national energy retail objective. It will also have a number of new approval functions. The amendments to the Australian Energy Market Act 2004 contained in this bill provide jurisdiction to the Federal Court to hear proceedings under the national energy retail law. This bill also amends the Administrative Decisions (Judicial Review) Act 1977 to ensure the administrative decisions of the Australian Energy Regulator under the national energy retail law are subject to appropriately rigorous judicial review.

In summary, the amendments in this bill represent a significant legislative step towards a truly national energy retail regime under a national energy regulator. This cooperative scheme will ensure that Australia enjoys strong energy customer protections and the benefits of competitive and efficient energy markets, while minimising the regulatory burden on industry.

Having dealt with the legislative nature of the bill, which is important, I will deal with some of the issues raised, principally in the contributions from the members for Groom, Paterson and Bradfield, about energy prices. Then I might go to a question raised by the member for Groom about the energy white paper, which is related to these proceedings. Let us be very clear about electricity prices. This is the question that the member for Bradfield refused to answer or acknowledge. The biggest cause of recent prices is increasing network charges, particularly for distribution and, to a lesser extent, transmission, which collectively account for around 50 per cent of a household electricity bill. These problems confront all states and territories, irrespective of who is in government—be it a coalition government in New South Wales or a Labor government in Queensland. The changes are being driven by the substantial investment required in new and ageing network infrastructure. It is a fact of life. The investment is required to ensure the continued reliability of electricity supply that the community has come to expect. In essence, electricity is an essential service and the last thing the Australian community is going to accept from a state government of any political persuasion is shedding or blackouts. The reliability of the electricity supply underpins the operation of the Australian economy. I also indicate that some electricity networks are up to 40 to 55 years of age and are reaching the end of their useful life. There are therefore serious questions of reliability without that investment.

As a growing economy, our community's ever increasing expectations for the use of such things as air conditioners and widescreen televisions et cetera are part of a rising peak demand for electricity. This is largely caused, as I indicated, by the growing use of appliances such as air conditioners, which is placing additional pressure on the network. The size of the investment needed to meet these challenges varies across jurisdictions, but independent regulators recently authorised substantial expenditure by network businesses to carry out these upgrades, which obviously flow through to both industrial and household customer bills.

Let us be clear: these increases would also occur under a coalition government. There is no avoiding these increases in electricity prices. Perhaps the member for Flinders is not prepared to acknowledge that, as was the case on 7.30 on 24 May when he incorrectly and in a most dishonest way said that under a coalition government:

There will be no increase in electricity prices to consumers …

I contrast those comments with those of someone who has some understanding, the former minister for energy, the member for Groom, who understands the challenges faced by the electricity market. I referred earlier, in a question to the member for Bradfield, to comments made by the member for Groom on 20 and 21 August last year, the Friday before the election day and the election day. In the Australian he is reported very clearly as saying that power prices were likely to double in the next five to seven years regardless of who is in government. That represents the harsh reality of the situation before us. And these types of increases are being experienced under coalition premiers.

I refer to a range of comments by the Premier of Western Australia since he was elected only a matter of couple of years ago. He has had to front up to increases in electricity prices. This is reflected, for example, in a report in the West Australian of 9 February in which he said, 'The government has been increasing power prices as it seeks to overcome two decades of officially sanctioned caps on prices at a time when the cost of producing electricity has soared.' He then went on to say this in a statement on 15 February this year:

Some of the hardest decisions have been those that have increased the cost of electricity, water and gas for West Australian households and businesses. ... The reality is that the cost of delivering electricity, gas and water to households and businesses throughout this vast, hot, dry state—

Sounds like Australia, not just Western Australia—

is an expensive business. In the case of electricity, the cost of providing power is still significantly above what people pay for it. The recent increases have been necessary to ‘catch up’, after some poor decisions in the past and years of no price rises.

Decisions made across the political spectrum, I might add. He went on to say:

It is important to note that even with the increases of the past two years, taxpayers still have to contribute to cover the gap.

In his budget speech of 2010, he also said, 'Moving towards ensuring charges reflect the true cost of delivering electricity is what this budget is about.'

It is about time that we had a little bit of honesty about what is driving the increase in electricity prices in Australia at the moment. Past generations built the network. Our responsibility is to maintain and extend the network in accordance with our demands. We have a growing economy. The demand for energy is increasing. We as a community not only expect reliability but we also expect the system to meet our peak energy requirements in a couple of weeks of the year. That effectively means that we need to build a system that is only used for a couple of weeks of the year. Our responsibility is to try and work out how to reduce that peak demand through improvements in energy efficiency. That is clearly part of the responsibility of the Ministerial Council on Energy and Resources. We need to work with industry and the community on those efficiency issues.

There was a serious question raised by the member for Groom. I respect his understanding of the challenges confronting Australia from an energy security point of view. One way or another, the debate about a price on carbon has to be resolved. The record shows that we as a community have lacked baseload investment for some considerable time. There are special challenges coming the way of Queensland and New South Wales. In New South Wales, it is fair to say that the last real baseload investments were under the Wran government. When it was elected on 2 May 1976, it inherited an unstable electricity system, which led to blackouts and real problems for industry and households. That government built ahead of its requirements in terms of the needs of the community at that time, and New South Wales lived off that for many decades.

Because of the uncertainty over a price on carbon, we have not had baseload investments for some time in coal-fired power in Australia. That raises ongoing issues over the next decade about where we go in terms of energy security. We have had growth in wind power. In more recent times, we have had a growth in solar PV, mainly because the price of solar PV manufactured imports has gone down. That growth has been assisted by a range of feed-in tariffs at a state and territory level, by governments of all political persuasions, and the introduction of the RET. In terms of reliability, the only real investment has been in peaking gas capacity. I might also say that in this transition, yes, there will be a growth in wind, a mature form of renewable energy, but there is also going to be a significant reliance on gas. The energy white paper was well underway in the last parliament. What derailed it was our inability as a community, in November 2009, to resolve the issue of a price on carbon. A price on carbon goes to the question of how you price the available energy options for Australia. Once this debate about where we go on a price on carbon is completed in this calendar year the work that is already underway and well advanced on the energy white paper will proceed to conclusion. All being well, a draft energy white paper will be released by Christmas for further debate and consideration by the broader community and finalisation in 2012.

The member for Groom is right to raise the need to resolve the issue of this energy white paper. I wanted to resolve it in the last parliament. You cannot resolve it without bringing to the debate the question of certainty about where we as a community are up to with a price on carbon. That is an important input in enabling us to consider the different energy options for Australia in the decades to come. So I, in a proper way, indicate to the member for Groom that the work is underway and that my desire is, with the support of the department, to conclude this work, which has been done in full consultation with industry, prior to Christmas this year. Then it will be released for public debate. I commend the bill to the House.

Question agreed to.

Bill read a second time.

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