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

I have just handed over the largest private member's bill ever presented to this Commonwealth parliament. The bill invites the parliament to end the greatest market failure in Australia today—a regulatory rort and rip-off that since 2009 has cost electricity consumers $3 billion, as identified by the ACCC commissioner last week. Of this $3 billion, $1.9 billion has been transferred from the pockets of New South Wales electricity consumers to the pockets of the state government alone, costing the average customer somewhere around $100 extra each year. This is not spending on new poles or wires or better reliability; it is just extra dividends to the state governments around Australia. Under the definitions of the Macquarie Dictionary, this is both a 'rip-off' and a 'rort'. Unfortunately, the current national electricity law cannot be amended by the Australian parliament. This private member's bill asks the House to consider that and change it.

The national electricity law is a uniform national law but only by virtue of the adoption of a South Australian act in other states and territories. The National Electricity (South Australia) Act 1996 has been adopted by other states and territories, forming the national electricity market. The purpose of this bill is to adopt in so far as practicable the existing national electricity law to make the national electricity law an act of the Commonwealth. This bill incorporates as far as possible the existing Australian Energy Market Act 2004; this bill adopts as far as possible the Australian Energy Market Commission Establishment Act 2004, which is also a South Australian Act, to make the commission a statutory body of the Commonwealth.

I have brought this bill before the House because there is a widespread consensus that the electricity sector has experienced a profound regulatory failure when it comes to network prices. That is the view not only of the majority of Australian consumers, households and business; it is now quite clearly the view of the major independent regulatory bodies in Australia—whether it is the Productivity Commission, the ACCC or state based organisations like the Independent Pricing and Regulatory Tribunal of New South Wales.

The national electricity law contains the national electricity objective—defined in the explanatory memorandum and quoted in there as essentially seeking to balance investment with consumer prices. But in recent years that balance in the national electricity objective has been utterly lost. In a further red herring, governments, even today through COAG, are failing to deliver the national electricity objective. Some state energy ministers are now blaming the Australian Energy Regulator or the ACCC, despite detailed independent reviews that prove them wrong. At best, first ministers at the moment are only going as far as acknowledging the problem. Again in the explanatory memorandum to the bill there is a quote from the communique from the COAG meeting of 25 July, stating that COAG gets the problem without actually starting to resolve it. The Prime Minister is also quoted in the explanatory memorandum, from 7 August this year, stating the problem and threatening to use a big stick if required. This is the opportunity to use the big stick. As well in the explanatory memorandum I have quoted the Leader of the Opposition saying that in his view it is all Julia Gillard's fault because the federal government has the regulatory power on pricing approvals.

While the sentiment would support this bill being approved by the House, currently that is not correct because these are uniform state laws which, if we want to change anything, have to go through every single state parliament for any single amendment to try to get better outcomes from the national electricity objective. I have put both of those in the explanatory memorandum to, hopefully, have both party rooms consider the positions of their leaders in, hopefully, supporting the intent and objective of this bill. Likewise, in the explanatory memorandum I have quoted the Productivity Commission of only 18 October 2012 where they quite clearly identify the problem that we need to deal with as the Australian parliament. One quote in particular I want to put on the record:

Quite apart from the continued parochial mix of costly state-based regulations, the AER claims that the national regime is flawed too, and has led to inflated costs of capital and created incentives for inefficient investment, with flow-on price effects.

Flow-on price effects equal $3 billion out of the pockets of consumers for no added benefit in the delivery of electricity in Australia today. The fact is the overall network price regulation scheme has been established by federal, state and territory governments on a mixed multilateral and unilateral basis. The rip-off of the moment which needs to be fixed, however, is that the national electricity law is a creature of state parliaments themselves. It is simply not possible at the moment for this Commonwealth parliament to unilaterally correct or amend these regulatory failures under the current state based laws. As it is now clear that the national electricity law, a creature of state parliaments, is itself a chief cause of the regulatory failure we have seen in recent years, I ask this House to take a lead on this issue.

The national electricity law specifically establishes a framework for merits reviews of decisions made by the Australian Energy Regulator. In the explanatory memorandum, I quote the New South Wales IPART in that regard, identifying $1.9 billion in New South Wales alone in the last three to five years where this failure has, in my view, ripped off consumers. I also quote the ACCC commissioner about the merits review process and the cherry-picking of one or two issues without any consideration of the overall impact on customers.

The head of the ACCC is telling us that a flaw in the national electricity law has already cost consumers $3 billion—about $100 a year per household or business. Likewise, the Productivity Commission is reporting that we need to do more to place emphasis on the national electricity objective as the guiding principle for decisions in any merits review process. We cannot do that now with the current structures of the law and the regulatory environment. We need to take a lead in allowing the national electricity law to truly be a national law over which this parliament has some command and control.

This bill, if passed, will remove a serious conflict of interest. Several states and territories own and receive revenue from electricity network monopolies while retaining a determinative role over the legislation governing reviews of network price determinations. These state governments, like New South Wales in my view and I hope in the view of many, have a severe conflict of interest. You only have to look on the public record at the New South Wales government's budget statement of this year to see that it shows that dividends from its state-owned electricity network monopolies will climb from $639 million last year to $901 million this year—a 41 per cent increase in one year alone. Other states like Queensland, Tasmania and Western Australia have decided to forgo such increases but the New South Wales government continues to demand extra dividends from every power consumer in the state. Under the guise of a $15 rebate for pensioners, about $100 has been taken at the same time due to the ongoing structural failure.

Those extra dividends are a direct result of the regulatory flaw specifically identified by the New South Wales IPART, the Productivity Commission and the ACCC. The government of New South Wales, my state, has been the only winner from a flawed regulatory regime and continues to accept almost $2 billion from that flaw. It is a flaw that today we need to take the opportunity to correct if we are genuinely acting in the best interests of delivering on the national electricity objective and on behalf of consumers feeling enormous pressure at the moment with the failed pricing regime. I do not believe that the state governments can fix this. I do not believe that COAG, with the vested interests attached to COAG, can fix this. This parliament can fix it by passing this bill. I therefore commend the bill to the House.

Bill read a first time.

Kirsten Livermore (Capricornia, Australian Labor Party) Share this | Link to this | Hansard source

In accordance with standing order 41, the second reading will be made an order of the day for the next sitting.