Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

I rise to not to talk about electricity prices, particularly in New South Wales and particularly on the mid-North Coast of New South Wales. There has been a lot of discussion at a community level around concerns over the last five years of record increases in electricity prices—up around a 70 per cent increase in prices over the past five years. It is a genuine issue of concern within the community. In relation to last week's New South Wales budget, on page 5.18 of the 2012-13 budget statement there is something that is of no comfort for those who have continued to see increases in electricity prices. Under dividends received by government under distribution and transmission there is a 2011-12 dividend of $639 million which is increased to $901 million in the 2012-13 year in the New South Wales budget. That is over a $250-million increase in the one year. On our rough estimates that is a 41 per cent increase over that one-year period. This is from a government in its second year who went to the ballot box in March 2011 promising to cut the dividends to the government from the distribution and transmission network and promising to do something about electricity prices. Sadly, that has not and does not look like occurring any time soon. Instead, we see the issue of the emissions trading scheme being loaded up to blame for all the evils of the extraordinary electricity price rises over the past five years.

Last week in New South Wales the Independent Pricing and Regulatory Tribunal, IPART, released figures showing that electricity prices, again, will rise by 18 per cent from 1 July. This is, as I have said before, an increase of 70 per cent over the past five to six years. IPART have confirmed that carbon pricing will account for only eight per cent of that 70 per cent increase and that the real culprit is poles and wires charges, which have gone up by more than 70 per cent over the last five years. IPART have made it crystal clear that network charges are up 70 per cent and that carbon adds just eight per cent. It is hard for all mid-North Coast residents and New South Wales residents as consumers to understand the intricacies of electricity prices. The various retail, network and green components make up the total price we pay, which makes it easy for some to blame a carbon price for electricity price rises, even when the regulator has shown that to be wrong.

There is one proven way to cut through all of this confusion and obfuscation. All we have to do is follow the money. If anyone doubts or denies that network charges are the real reason power prices are so high, then the New South Wales budget of last week has come to their rescue. We only have to look at that one line item at page 5.18 of the New South Wales budget statement for 2012-13 under dividends on distribution and transmission which shows that in its first year the O'Farrell government expected $579 million in dividends from its four state owned power network monopolies when it, in fact, received $639 million; $60 million more than it budgeted. This is in a climate when the election promises of the 2011 campaign to cap power network dividends was made and made strongly. That promise is in the document entitled, NSW Liberals & Nationals plan for an affordable & sustainable energy industry. On page 2 at point 4 it says, 'We will cap dividends at forecast levels.' That was the promise. That was the contract.

Honourable Members:

Honourable members interjecting—

Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

Well, only $60 million above to begin with. The budget papers prove that they broke that promise by $60 million last year. That is nothing compared to what comes next year. The same budget papers at 5.18 reveal that state owned power network monopoly dividends will increase from $639 million last year to $901 million next year. That is an incredible 41 per cent increase in one single year. In fact, if the O'Farrell Liberal-National government had kept its promise to cap dividends last year—a promise that plenty of people, I acknowledge, voted for and welcomed—the increase in forecast dividends would have been an astounding 55 per cent. The O'Farrell government will skim from its power network monopolies $242 million more in cash next year than it did last year. That is roughly an extra $80 from each and every power consumer in New South Wales—higher for small businesses—and, unlike with the carbon price, there is little or no assistance or compensation or whatever you want to call it for most households and absolutely nothing for small business.

Ewen Jones (Herbert, Liberal Party) Share this | Link to this | Hansard source

So they should do what they said they were going to do before an election?

Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

Yes, they should do what they were going to do—based on the interjection—and stick by their election promise to cap the dividends.

Ewen Jones (Herbert, Liberal Party) Share this | Link to this | Hansard source

You should tell the Prime Minister.

Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

My election promise, not only at the 2010 election but also at the 2008 election, was to back an emissions trading scheme. Point 4 is a clear promise from the New South Wales Liberals and Nationals plan for affordable and sustainable electricity to introduce a dividend policy. They themselves last week broke this promise by nearly $300 million. The New South Wales Liberals and Nationals promised to 'introduce a dividend policy that stops government treating electricity companies as cash cows', but the reality is that households and small businesses are paying dearly for ballooning power profits. You could say that they are paying for a bad dividend policy based on a lie.

It is no wonder that landholders affected by a new high-voltage transmission line promised in the electorate of Lyne question whether the project is designed to meet power demand or to make money. TransGrid is one of the four state-owned power monopolies that will pay much higher dividends next year than it has in the past, and its transmission line proposal has been met with extreme distrust by landholders of all political variations.

IPART has made it clear that wholesale electricity generation costs have not increased over the past five years. Let us be very clear about that: wholesale prices in New South Wales over the last decade have hardly moved. Added to that, demand in New South Wales over the last two years has fallen. Those who can think logically can add all that together—wholesale prices are holding, demand is falling and retail is going through the roof with 70 per cent increases over the last five years.

This is the greatest market failure in Australia today, and it needs to be corrected by state governments, which are currently skimming the super profits, setting their own rates of return and not dealing with appeals to rates of returns such as those that occurred in New South Wales, where they gave themselves a 10 per cent return over the last five years.

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

Caesar judging Caesar.

Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

Caesar judging Caesar; thanks to the interjection. I am talking about the actions of a previous Labor government as well as those of the current Liberal-National Party government: I am talking about actions that have been made across party lines. This is a market failure of grand proportions which the Commonwealth, if the states are not going to deal with it themselves, needs to start to address.

Before us on page 518 is the story, which I have heard of a lot lately, of the cat being belled. There is nearly $300 million in dividend increases from the new New South Wales government, which largely ran on a platform of fixing the problem. They have not, and there is now a moment in time where the Commonwealth seriously needs to consider what it is going to do about the National Electricity Market and what it is going to do about the greatest market failure in Australia today, which is sending cost-of-living pressures through the roof and causing a whole range of debates around carbon pricing that deny the reality of what is really going on in the electricity market today.