Tony Smith (Speaker) Share this | Link to this | Hansard source

I have received a letter from the honourable member for Indi proposing that a definite matter of public importance be submitted to the House for discussion, namely:

The urgent need for a national energy policy that supports a strong economy, vibrant communities and sensible environmental outcomes.

I call upon those honourable members who approve of the proposed discussion to rise in their places.

More than the number of members required by the standing orders having risen in their places—

Cathy McGowan (Indi, Independent) Share this | Link to this | Hansard source

I rise here today to speak on a matter of great public importance—the urgent need for a national energy policy that supports a strong economy, vibrant communities and sensible environmental outcomes. For too long, energy policy in Australia has been at the whim of policy indecision, and the lack of certainty has resulted in low industry confidence and, according to many, is one of the main contributors to rising energy costs and increasing unreliability. This is a matter of great public importance. While I understand the complexity of the issue and that there is no single solution, there is an absolute need for a nationally coordinated approach across jurisdictions with bipartisan support. I welcome the words of the opposition leader, Mr Bill Shorten, and his commitment for Labor to work with the government to end the climate wars. This parliament has an opportunity to set the path of energy policy for the next generation, and I know that my colleagues the member for Denison, Mr Wilkie, the member for Melbourne, Mr Bandt, the member for Mayo, Ms Sharkie, and the member for Kennedy, Mr Katter, will provide valuable insights into the views of their communities in addressing this problem.

Today, I want to raise the profile of community energy and the community energy sector and recognise the integral role it can play in the national conversation. I will outline the actions taken in my electorate and the call to the government to be much more active in supporting community and grassroots activity. To date, the community energy sector has not been represented in the national debate—it sits on the fringe of mainstream discussion. It is a sector that has been described, at best, as an industry in its infancy. At worst, the communities working to reduce their own energy costs and secure supply have been described as living in fantasy land. But today I want to acknowledge the contribution of the community energy sector and welcome the opportunity to ensure that they continue to play an integral part in the government's energy policy.

Community owned energy projects allow communities to develop, produce and benefit from locally produced energy. They include supply based projects such as renewable energy installations and storage as well as demand-side projects like energy efficiency, demand management and community education. But, most importantly, community energy projects ensure ownership and decision-making involves local decision-making and stakeholders. In his address to the National Press Club in February, the Prime Minister said:

Australia should be able to achieve the policy trifecta of energy that is affordable, reliable and secure.

The strong view of my community is that it also needs to be sustainable.

It is in the sustainable area that community energy plays a particularly significant role. My electorate is not alone here, and there is national support for renewable energy. In March 2017, the Australia Institute reported in a national poll that 67 per cent of people in Australia think that we, as a nation, are moving into renewable energy too slowly, and 73 per cent supported setting a new RET for 2030. In releasing his report on Friday, Dr Alan Finkel said:

Our electricity system is entering an era where it must deal with changing priorities and evolving technologies. If the world around us is changing, we have to change with it. More of the same is not an option, we need to aim higher.

If we adopt a strategic approach, we will have fewer local and regional problems, and can ensure that consumers pay the lowest possible prices over the long term.

I agree with him.

Today, I want to talk about the communities in my electorate that are aiming high and who are establishing strategic relationships with local and state governments and industry to develop their own solutions, to reduce their energy costs and secure their own energy futures. It is an approach that has been supported even by the White House, with Candace Vahlsing, former adviser for climate change, saying:

… community solar in particular is a way where folks can invest together, share a solar system and it has strong economic benefits …

Across Australia, there are more than 60 groups developing community energy projects as well as solar powered breweries and dairy farms, bioenergy hubs, farmer wind co-ops and energy efficiency programs. There is great diversity in community driven energy activities across the nation and even in my electorate. I am proud to support my communities working together for a renewable energy future.

The projects, right across Australia, have many benefits—obviously finance, but they also include increased energy literacy, opportunities for local economic development and resilience and, really importantly, community development and empowerment. For example, the community of Yackandandah continue to drive change at a grassroots level with their project, Totally Renewable Yackandandah. This project is a staged community mini-grid solution, with the community aiming to achieve their vision of 100 per cent renewable energy by 2022. Working with the Indigo Shire Council and AusNet Services—and hopefully, in the very near future, with the Victorian government—this project is a clear demonstration of how community energy allows communities to reduce their costs, maybe make income from power production and enable these benefits to be felt across the broader community, addressing the government's energy policy priority for security and affordability.

Another example is the Benalla Sustainability Future Group, which, in partnership with the Benalla Rural City Council, is conducting a feasibility study in preparation for the Benalla Future Energy Plan. This project will deliver two feasibility studies for renewable energy, which will be replicated in additional areas, both small and large scale. There is also Winton Wetlands, the largest-scale wetlands restoration project in the Southern Hemisphere. Its committee of management is leading the development of a feasibility study to deliver the McKeown power project, a 10-megawatt solar park. Once completed, this project will enable all generated power to be sold to local consumers through a relationship with an energy provider, and profits will be reinvested in the regeneration and scientific advancement of the Winton Wetlands. Additionally, Wodonga council, in conjunction with Renewable Albury Wodonga Energy, has appointed Moreland Energy Foundation to conduct a feasibility study and develop a plan for a solar farm within Wodonga that benefits the whole community.

There are many other community projects, and I would like to acknowledge the work of the Goulburn Broken Greenhouse Alliance and their partnership with local government; the Murrindindi Climate Network; the Wangaratta Sustainability Network and the terrific forum that they led last Friday showcasing business case studies of when local businesses make money doing work on waste and renewable energy; North East Water—the terrific leadership role they are playing at the grassroots and the impact that their work is having right across Indi; and businesses such as Wilson Transformer Company and Mars Petcare—you really are leading the way.

These projects have set standards and other communities are following. In my closing comments, I would like to note that in my electorate, but also right across Australia, we are seeing the results of what happens when industry and community expectations run ahead of government legislation and regulation. In this parliament we have an opportunity to plan for the future, to ensure that we consider community energy as a legitimate mechanism in this debate that we are having. The community energy sector has grown since 2010, when there were only two or three groups, to more than 60 groups today. It is a great indication that this sector will continue to play a significant role in the future of energy. The question for us, as a parliament, is: how can we best support this really amazing innovation?

Australians are saying loudly and clearly: we want to invest in renewable energy and we want to invest in our communities. This means that jobs and investments stay local and communities have ownership over their own power. To us, as members of parliament, and to the minister sitting at the desk, I say: can you please give serious consideration to the work of communities like Indi, Yackandandah, Benalla, Wangaratta, Murrindindi and Mansfield. Communities are saying: 'We're leading the way; government, come on board.' I call on the government not only to support these communities but to put some money behind it—provide dedicated funding for community-specific integrated plans and projects to show the communities of Australia that the government is behind them, and, even though we might lag in legislation and regulation, we will be at the front in funding.

Josh Frydenberg (Kooyong, Liberal Party, Minister for the Environment and Energy) Share this | Link to this | Hansard source

I thank the member for Indi and acknowledge her constructive contribution to this debate about energy policy in this country. As you know, it has been a political football for more than a decade now. It really has been two opposing sides taking their positions, and there has not been a lot of meeting in the middle. Now, with the Finkel review, I think we have a real opportunity to consider the recommendations of an expert panel across a whole series of areas when it comes to properly integrating energy and climate policy in the hope that we can deal effectively with that trilemma we face: energy security and energy affordability as we transition to a lower-emissions future.

The National Electricity Market, which has been the foundation of our energy system everywhere except Western Australia and the Northern Territory, has its origins in the late 1990s. It is more than 5,000 kilometres in length from Port Douglas in the north through to Port Lincoln and across the Bass Strait to Tasmania. It is a very powerful network and one of the longest interconnected networks in the world. But what we have seen in our electricity market over the last decade is retail prices, the bills that households have to meet, double. When it comes to the public's energy bill, there are a lot of different components and therefore lots of different reasons for this increase in price. Fifty per cent of the bill is made up of network costs: transmission and distribution. We have seen, particularly under the time of the Labor government, the infamous gold plating, which saw network companies make a lot of money as the network was built out in the expectation of higher demand which never eventuated.

The coalition government under Malcolm Turnbull is trying to rein in network costs by removing the rights of limited-merits review from original decisions of the Australian Energy Regulator. Just recently we saw the public in New South Wales short-changed by $3 billion as a result of the successful appeal to the Australian Competition Tribunal and then to the Federal Court on behalf of the networks against an original determination of the AER. We say that is not good enough.

Another component of the electricity bill, about 12 per cent, is retail. The Turnbull government has announced an ACCC review into the retailers, their margins and the way they operate. A recent report of the Grattan Institute said that in Victoria alone consumers could be more than $250 million better off if there were a more competitive sector in retail. In fact they found that the margins in Australia, or across Victoria, were some three times what they were for comparable businesses in the United Kingdom; or, indeed, that these margins in this retail sector of electricity were significantly higher than in the motor vehicle sector, the fuel sector or the food sector. We are determined to rein that in.

Generation costs are about a third of the bill. They have gone up dramatically over the last four to five years. There are three reasons why wholesale costs have gone up. They have gone up because gas prices have nearly tripled in the past five to six years. We are now seeing gas customers being quoted $8 to $10, or indeed $12 a gigajoule, whereas historically, in 2013-14, it was about $3 to $4 a gigajoule. As a result of coal-fired power stations closing—we have seen nine coal-fired power stations close in the last five years—we have seen gas play a much greater role in setting the price of electricity. In 2017, gas hit the price of electricity about 24 per cent of the time, which is more than double what it did back in 2004. With higher gas prices, and secondly with coal-fired power stations closing, we are also seeing higher electricity bills.

The third reason why we are seeing higher wholesale prices is because of the market uncertainty. The last coal-fired power station that was built in Australia was Kogan Creek in Queensland, in 2007. The last gas-fired power station was in Victoria, at Mortlake, in 2010. One of the factors that comes up constantly when you speak to generators is the lack of regulatory certainty, and that, they say, is making them reconsider or abandon investment decisions. That is why Dr Finkel has talked about a clean energy target as a possible solution.

When it comes to gas we have announced that we will be introducing export controls. We are also encouraging the state governments to lift their moratoriums and bans in order to get more gas out of the ground. If we can get more gas supply then that will of course lower the price. So we are dealing with generation; we are dealing with retail; we are dealing with the network costs—they are part of our plan.

At the same time we recognise there is a very significant transformation taking place in the energy system, with a greater penetration of renewables, particularly intermittent power, namely solar and wind. But, where a wind farm may generate power 35 to 40 per cent of the time and a solar farm about 20 to 25 per cent of the time, you need battery storage. You need backup power. That is why one of the recommendations out of the Finkel review is so significant: it is going to encourage the renewable players to provide their own storage. That storage could be gas, pumped hydro, batteries or, dare I say to the Greens, diesel generation.

A point about pumped hydro is it has been a real focus for Malcolm Turnbull and his team. For the first time we have a prime minister who is putting storage at the top of the energy agenda, and I think that cannot be understated.

We understand that the public are facing high electricity bills. Indeed it is the most vulnerable consumers in our economy who are doing it the toughest. As a proportion of their disposable income they spend up to five times more on energy than higher income earners. That is why what has happened in South Australia, with the whole system going black and South Australians facing the highest electricity prices across the NEM, is such a tragedy—simply because a Labor government under Jay Weatherill did not put in place sufficient planning for a 50 per cent renewable energy target. He welcomed particularly wind but also solar to his state without understanding the need to provide the frequency control and ancillary services, the inertia and the storage that is required to stabilise the system.

In Queensland we have been very critical of the Palaszczuk government because their generators, Stanwell and CS Energy, have not provided sufficient power into the system consistent with the amount of capacity that they have. There has been gaming of the system, and as a result it is the consumer who has been short-changed. Even though the balance sheets of the state Labor government have improved as a result, it has been at the consumer's expense.

We call upon the Queensland government to do more to ensure that electricity prices can be lowered in Queensland. We call on the Weatherill government to do the same. I would say to all the Labor governments that have adopted these reckless renewable energy targets: join up to a federal plan to see a consistent, national approach—a holistic approach—as opposed to lots of different schemes in lots of different states pursuing an ideological purpose.

This is where Dr Finkel I think has made a real breakthrough. He has emphasised that the focus should be not so much on the inputs but on the outputs: how do we get to a point of lower emissions consistent with our Paris target of a 26 to 28 per cent reduction by 2030 while at the same time ensure a more stable system—not a repeat of what we saw in South Australia—and of course more affordable power?

The people of Australia were short-changed by Bill Shorten, Julia Gillard and Kevin Rudd when they saw electricity prices double under the Labor Party when they were last in office from 2007 to 2013. We are determined to right the wrongs of the past and to ensure that we focus, as the Prime Minister has said, on engineering and economics to get a better, fairer, affordable and secure power system for all Australians. (Time expired)

Andrew Wilkie (Denison, Independent) Share this | Link to this | Hansard source

Frankly, it beggars belief that in 2017, in a country as clever as Australia, we still do not have what I would call a genuine comprehensive energy policy. Frankly, it beggars belief that, at a time when members of parliament are tripping over each other to come in here and talk about national security, we would not have a plan for our national energy security. Yes, in recent times—and here again today—there has been discussion about electricity and about gas. But the truth is we are only having discussions about these forms of energy as a knee-jerk reaction to a crisis. The only reason we are talking about electricity, and the only reason Dr Finkel did his review, is the blackouts in South Australia. It is not some visionary politicians thinking some time ago that we need to address this issue. The pathway that has come out of those blackouts is entirely unacceptable. This government, supported by the opposition, really should be talking about putting this country on a pathway to 100 per cent renewable energy and net zero carbon emissions.

It is the same with gas—again, a knee-jerk reaction to the predictions of gas shortages and of big spikes in the price of gas because we are exporting so much of our gas overseas. We are not having a conversation about gas because of visionary politicians years ago seeing a problem in the future and seeing that we needed to put a plan in place to avert it—it is a knee-jerk reaction. And, again, it is putting us on the wrong pathway. It is not good enough for the Prime Minister to call in a couple of CEOs and have a cup of tea, and have a couple of photos and a headline in the newspaper the next day. What we should be doing is coming in here and discussing how we reserve enough gas for our country for the future. That is what we should be talking about. I do worry that this whole talk about gas is just a clever plan to open the country up to more fracking. What we should be doing is stopping the exporting of so much of our precious gas and keeping it for our own uses for as long as we think we are going to need it.

The trouble with the reactionary and fragmented approach to energy policy in this country is we are not even starting to talk about the one glaring gap, and that is oil. The fact is that this country is importing most of our oil needs. Eventually, that problem will go away as we move to a reliance on renewable energy and as we move down to that ultimate goal—hopefully sooner rather than later—of net zero carbon emissions. But for now, at least, we are needing to import a lot of oil. Do you think that we have visionary politicians talking about energy security in this space? No, not at all. Bizarrely, we are signatories to an International Energy Agency agreement that we will keep 90 days of our import requirements. The most recent figures that I can get a hold of show that we are holding 55 days of our import requirements. In fact, we are the only OECD country not meeting our IEA treaty requirement to be holding 90 days. Frankly, I find this just bizarre.

And what sort of holdings are we holding? This is going to horrify people who are listening to this short speech and to this short debate: we are holding 31 days of our national LPG requirement. We are holding 23 days of our petrol requirement. We are holding 21 days of our aviation turbine fuel requirement and 17 days of our diesel fuel requirement. My godfather, Deputy Speaker! At a time of unprecedented international instability, and when most of our imports come from Korea and Korean refineries, we are not even meeting the 90-day requirement of the treaty that we have signed up to with the International Energy Agency.

And what about pricing? I have made the point in this place before, and I will make it again: no government has yet taken any effective action against the oil companies to make sure that consumers can actually afford to buy the LPG and petrol for their cars. No state is being hammered more viciously in this space in this regard than my home state of Tasmania. It is simply not good enough. I commend the member for Indi for driving this project to have a crossbench MPI, and I thank the opposition for supporting us in this. What we need is a government to stand up and develop a comprehensive energy policy and a comprehensive plan for our energy security. We need to do it cooperatively and collegiately, and we need to do it as soon as possible.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

I am pleased to contribute to this debate, and I welcome the crossbenchers putting this forward. I have just one thing to start with. We hear that government needs a plan to fix the crisis we are in, but the very reason we are in a crisis is because of government interference in the very first place. Let's just go through how we got into this mess. If we go back to those glory years of the Rudd-Gillard-Rudd regime and if we look to the ABS figures—

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

You're going back a long way!

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

Do not worry, member for Wakefield, I will get to South Australia very soon. Do not worry about that. According to the ABS figures, under those glory years we had a 118 per cent increase in the price of electricity in this nation. In a little over five years, the Labor Party with their policies managed to see electricity prices increase by 118 per cent.

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

What's it up under you?

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

It takes some special incompetence to get that increase. The member for Wakefield asked, 'How much have electricity prices increased under the coalition government?' I am very happy to inform the member for Wakefield—and I will refer him to the Australian Bureau of Statistics figures, if he would care to look at them—that, from the time this coalition government was elected to the last release, the increase is three per cent.

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

Really?

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

Yes, member for Wakefield, that is correct. Under the coalition, electricity prices have increased three per cent. Under the previous government that the member for Wakefield was a member of—the brilliant work of the member for Wakefield—it was an increase of 118 per cent. He carps there from the dispatch box.

We also have to actually look at and talk about the mess we are in. Nowhere is the mess worse than in the member for Wakefield's own home state of South Australia. If you want to look at how not to do it, look at the member for Wakefield's state. The policies they have there have not only caused blackouts but also given South Australia not only the highest electricity prices in the nation but also some of the highest electricity prices in the world. That is as of today, and we know that as of 1 July electricity prices in Adelaide are going to go up by a further 18 per cent. Why are they going up? At least, thankfully, they have done something down there in Adelaide. They have spent another $500 million of South Australia's taxpayers' money, thankfully, to put in a bank of diesel generators so hopefully the lights will not go out again this summertime.

We have to admit that there are big price increases coming through in electricity. But why is this happening? It is happening because of the 20 per cent renewable energy target set by Kevin Rudd. Why was there a 20 per cent renewable energy target? Was it because of a good analysis of the economics? Was it because of a good analysis of the engineering? No. It was simply because it rhymed. We had an energy policy put forward by the previous Labor government for no other reason—it was 20 per cent by 2020—than it rhymed. And we wonder why we are in this absolute, complete mess. Even Dr Finkel, in his report, actually notes that the renewable energy target has caused this mess. I will quote from his report. He says:

Security and reliability have been compromised by poorly integrated variable renewable electricity generators, including wind and solar.

That is a direct quote from the Finkel report.

Mr Champion interjecting—

Would you like to say that you disagree with the Finkel report? Dear oh dear, we hear the member for Wakefield already dismissing the Finkel report.

Mark Coulton (Parkes, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Hughes will address his remarks through the chair, and the member for Wakefield will be silent.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

It is also worth noting that the problem that we have in this nation at the moment is we simply do not have enough quantity of dispatchable electricity. The Finkel report notes that this coming summer there is a large risk of blackouts in South Australia and Victoria simply because there is a shortage of dispatchable electricity. That is the first issue that we need to address because it may be something the Labor Party do not understand—that when the wind does not blow the power does not flow. We have seen a situation in this country where last month the thousand wind turbines spread from South Australia to Tasmania, to Victoria, to New South Wales and up to Queensland were delivering zero electricity—not enough to run one 25-watt— (Time expired)

Adam Bandt (Melbourne, Australian Greens) Share this | Link to this | Hansard source

We could be the world's renewable energy superpower. Australia could be the place that industry come to from all around the world, and from around the region, if they want clean, cheap, reliable renewable energy. Look at the sun we have. Look at the wind. Look at the waves around us. We could be world leaders in this stuff. Instead, we have a government that treats 'plan' as another four-letter word.

The Minister for the Environment and Energy got up and gave a long contribution. He seemed to want to win the climate wars by attrition by just soporifically running through what he considered to be fact after fact. Buried in none of that was any vision at all for how Australia could take its place as a world-leading renewable energy superpower. What we need to know about the mess that we are in at the moment is: when this government abolished the carbon price, and they patted themselves on the back and stood in a group hug on the floor of the chamber, what did that do? In the four years after that, the wholesale price of electricity doubled.

The minister and other members like to come in and lecture state governments about their renewable energy targets. The one thing that they do not mention is that in the state of New South Wales—where we have had Liberals in power at the state level while we have had Liberals in power at the federal level for the past few years—the wholesale price has increased the most. The highest wholesale price increase has been in New South Wales, where they are predominantly reliant on coal and where the Liberals have been in power.

What happened? This government came in and tore down the good work that was done in the previous government when Greens, Labor and Independents—people who worked across political differences and across the aisle—put in place a strong and durable plan. The government came in and tore it down, and as a result we are in chaos. We do not have guaranteed supply. Power prices are going up, and pollution is going up as well. It takes a special government to hit that trifecta of not being able to keep the lights on, pushing up pollution and pushing up power prices, but that is what has happened under this federal Liberal government.

What are we going to do? One thing that we need to do is be realistic. We need to get to zero emissions as quickly as possible in this country. The good news is that it is now cheaper to build renewable energy than it is to build coal or even gas. It is now cheaper to build renewable energy potentially with storage than it is to build some forms of gas, and certainly some forms of coal—and that is even without a carbon price, which we are going to get back one day. We have all the tools laid out in front of us, and we need to assemble those tools to make sure we have a national energy plan that sees our pollution coming down, prices coming down—because we know renewable energy is cheaper—and that keeps the lights on. Instead, we are on the verge of going back and making the mistakes of the past because the government seems more intent on developing a plan to satisfy the Trumps on the government backbench and former Prime Minister Tony Abbott than on satisfying the climate scientists. The minister and the Prime Minister seem to be spending day after day wandering around trying to convince their colleagues to support a plan, and everything seems to be about rushing to the lowest common denominator—let's make sure we have a plan that gets Tony Abbott on board so that we can get that through!

If we are going to rewrite the law to define gas and even coal as clean energy, we might as well all pack up and go home now. If we are about to introduce a piece of legislation, simply to keep the Trumps on the backbench happy, that says consumers need to not only pay higher prices for gas but also dip into their pockets to give big gas companies a subsidy—because now, all of a sudden, gas counts as a clean energy—then we are not going to fix the problem. We are simply shunting the affordability problem, as well as the emissions and pollution problem and the security problem, down to the next generation.

What needs to be understood by all of those who advocate fracking and are saying, 'Let's open up more of our farmland'—and saying pollute our water table so that we can get more gas out of the ground because somehow that will fix things—is that you could frack the whole country and it would not bring power bills down by one dollar, because all of the gas is going to go in a pipeline to be processed in Queensland and sold offshore. If you were running a gas company, why wouldn't you? Why keep any of it for domestic use when you can sell it offshore for two or three times the price? You are giving false hope to industry and false hope to consumers if you think gas is going to do anything. We need to get to 100 per cent renewables as quickly as possible. A strong government authority, which will grab this issue by the scruff of the neck and take it out of the hands of politicians and state and federal warfare, will do that. Do not end the climate wars by surrendering. (Time expired)

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

I thank the member for Indi for bringing forward this topic for the matter of public importance today. It is very important, and with the delivery of the report from Alan Finkel it would appear that we are very close to having that plan that you wish for.

One of the things that has been touched on a couple of times in this debate is South Australia. Recently I was in a meeting and it peeved me to have to say that the rest of Australia is very lucky that they have South Australia: it is the smallest mainland economy, and if you are going to stuff up the electricity anywhere, it should be in the smallest economy. We have a disaster in South Australia at the moment. If it happened in New South Wales it would drag the whole of Australia down with it. That is just how bad it has been. I have been closely watching this situation for quite some time. In 2016, for instance—things have changed a bit now, and I might get to that—South Australia had a wholesale price that was more than double Victoria's. For the first four months of 2016 we still had the Northern Power Station. All the discrepancy, all the change, happened after that time.

South Australia currently hosts about 50 per cent of Australia's wind generation capacity. About 60 per cent of that 50 per cent was in my electorate of Grey. Last year that huge bevy of wind farms delivered about 47 per cent of South Australia's electricity—47 per cent from renewables. One would think that is very admirable, but the problem is that the overabundance of renewable electricity has actually destroyed the business case for the power generators that keep the lights on when the wind stops blowing and the sun stops shining. The more of these wind farms that you put in place, in more diverse parts of the region, the less likely it is that you get these blackouts. But unfortunately the fewer days of the year that are required, the fewer days of the year that the base load generators can actually make a dollar. So, the more that fills in, the more it undermines the base load generator—as it did in the case of Alinta, to the point that they could not operate. And then of course we find that the wind does not blow 365 days a year.

In 2012 I had a meeting with the Australian Energy Market Commissioner, and I said: 'If Port Augusta goes offline, if the Alinta power station at Port Augusta is allowed to close before its use-by date'—and it had about another 15 years of useable life left in it—'the lights will go off in South Australia. We'll be in big trouble.' I was assured by the commissioner at the time, 'No, Mr Ramsey; we're just in the final touches of upgrading the interconnector to Victoria, and we are absolutely confident that once that's done South Australia can operate well with the Norther Power Station.' Boy, how was that? That was just completely wrong, and now we have been left in this unenviable position where we are the demonstration plant for the rest of Australia on how not to do it.

We are doing some good things there. I am very pleased that in the budget and leading up to the election I was able to announce that the government would be supporting a solar-thermal storage plant in Port Augusta. The Prime Minister has announced that we are backing a $450,000 feasibility study into pumped hydro, also in the Port Augusta region. And, interestingly enough—and I think I will bring this topic in; last week I spoke in Adelaide at an international uranium miners conference—Australia exports around 7½ thousand tonnes of uranium a year; it is one third of our energy exports, just in 7½ thousand tonnes. It replaces 140 million tonnes of coal on a worldwide basis, which is about 380 million tonnes of CO2 emissions. We do not get much credit for that now, do we? And it is interesting that this technology that actually has the ability to deliver large reductions of CO2—right around the world, or in our own country—we do not even discuss in this country. We cannot even get it on the agenda. It has become such a poisonous political tool—of those of the far Left, in particular—that the lies and deception are so deep that we cannot even speak intelligently about it, and that is a great shame for the nation. (Time expired)

Rebekha Sharkie (Mayo, Nick Xenophon Team) Share this | Link to this | Hansard source

Australia is suffering badly from its uncoordinated and ever-changing energy policies. Governments of both persuasions have been unable to create policy certainty. Without certainty, investors will not risk making the large-scale investments necessary to drive down prices and end market volatility. Future generations will look back with disdain on this extended period of inaction. They will look back on the vision of a frontbench passing around a piece of coal and shake their heads at all of us. I remind the government that coal is not good for humanity. In the absence of governments setting the framework in the national interest, the private interests of corporates are filling the vacuum. The result has been a growing concentration of market power and ever-rising prices. In South Australia, we are the canary in the coalmine in this new era. South Australia faces the highest and most volatile energy prices in the country.

I would like to devote my time today to talking about our gas supply. This is an integral part of the mix for base-load power as we transition to a renewable energy future. I commend the member for Melbourne on his vision for Australia being the lead renewable energy country. We can do this. Industrial gas is a critical input into most of Australia's manufacturing base, including steelmaking and the food production sector, which is important in my electorate. Australia has one of the largest proven gas reserves in the world, and yet we are exporting the bulk of it overseas. As a result, the price of industrial gas at home has increased dramatically. Companies are now being offered gas between $15 to $18 per gigajoule, as much as three times the previous price. This is such a big market failure that AGL is considering setting up a $300 million hub to import some of that exported gas—it is Australian gas that we sent overseas and yet after a return journey they still think they can make money off Australian customers.

A gas crisis is not imminent—it is already here. Unless we can bring prices back down to between $5 and $7 a gigajoule, we will lose tens of thousands of jobs in this country in the coming months and years. I echo Senator Xenophon's statements exactly when he said:

If we don’t deal with the gas crisis, Australia will see its living standards decline substantially and it will plunge us into very high levels of unemployment …

The Finkel review was not asked to look at gas prices—and yet that is the immediate energy crisis that we are facing in this country. We need to tackle the gas crisis head on before it tips our country into an avoidable recession. This is the recession we don't have to have. This is the recession we have to dodge.

The Nick Xenophon Team is working hard towards that aim. Earlier this year, we negotiated and obtained an energy package with the federal government. A major focus of that package was to begin reforms in Australia's industrial gas markets to set Australia on the path towards sustainable long-term prices and keep our advanced manufacturers internationally competitive. The measures that NXT have been able to achieve include: a commitment from the federal government to use its powers to ensure Australian gas is directed to the domestic market if voluntary agreement is not reached with gas companies by 1 July 2017, and a further commitment that longer term public interest requirements will be applied upon all future gas export contracts; an agreement by government to implement gas pricing and capacity transparency recommendations of the ACCC gas and Vertigan inquiries by 1 July 2017 to ensure that businesses negotiating gas supply contracts are not negotiating in the dark; and a 'use it or lose it' policy that will force gas companies that are sitting on huge gas reserves to bring cheap gas to market or hand their tenements over to companies that will.

To conclude, in Australia we are paying three times the spot price of gas in the US and double the long-term contract price in Japan. Why is it that the gas we are exporting to Japan costs twice as much here as it does there? There is serious dysfunction in our gas markets, and we need to deal with this absurdity head on. The Nick Xenophon Team has worked hard to obtain measures from the federal government that will bring more gas onto the domestic market and help to bring down gas prices. But much more needs to be done, and urgently. We are running out of time for Australian businesses and tens of thousands of jobs. I urge the Australian government in the strongest terms to take action on reforming our gas markets before it is too late. Stop playing with coal and see renewable energy for the future that it is. We need to do this—we cannot just keep sitting in here for years and years with one side debating the other

Andrew Broad (Mallee, National Party) Share this | Link to this | Hansard source

It is good that the House is talking about energy policy. I have the great privilege of chairing the House of Representatives Standing Committee on the Environment and Energy, and long before there was a blackout in South Australia we had identified that we should have an inquiry into the electricity grid. It is funny how it has suddenly become the political topic of the day when it really should have been something that was discussed and determined a long time ago. My involvement with the issue of how we ensure we have reliable electricity goes all the way back to the Carbon Pollution Reduction Scheme, when I was in the Victorian Farmers Federation. I remember having a discussion with Tony Windsor at the time—this was when the Independents held the balance of power—about trying to ensure we kept the carbon price off transport fuels, which was of course so relevant to regional Australia.

I want to touch on a few things that our inquiry has found, because they do feed into this discussion and into some of the findings of Professor Finkel in his recent report. There are three components to electricity. There is electrical energy; there is stability, or inertia; and there is reliability. Those three components have to exist if we are going to have a grid that people will invest in in the future. My fear, of course, is that the South Australian experiment largely has not tackled those three components, and we therefore are seeing a great deal of unreliability in the South Australian electrical grid. Talk to the CSIRO and they will tell you that once you get above 40 per cent renewable, if you have not addressed stability and reliability, you will see the grid become largely unstable. That is the case in South Australia, where it is now up to 47 per cent. It is quite aspirational—full marks to them—but it has not worked because they have not addressed the other parts of the grid, which are essential. They have a vision of addressing those concerns through battery technology, but our findings are telling us that batteries do not work once you get above 40 degrees Celsius. That is a concern for us, because the time when you are going to need to draw down to get the additional power will be those hot days when the wind is not blowing, and then you have a battery reserve that is not going to work.

In contrast, the battery that does work is pumped hydro, and I commend the Prime Minister for his commitment to expanding Snowy Hydro mark 2. What I would say is that if they are going to look at how you can use wind and solar within the mix then they should have an MOU with pumped hydro so that when it is windy they can pump water up a hill and when it is not windy they can turn the tap on and run water down. It is a natural mix. One of the things our inquiry will probably lean towards is the realistic discussion going on about a second Basslink on the west coast of Tasmania, which could feed in with the winds of the roaring forties and also pumped hydro.

I think we need to be very careful not to demonise coal. I know some here will disagree with me, but if you stood behind the exhaust of a 1960s car you would see a very dirty exhaust stream coming out the back, and that was the issue with Hazelwood, a 1960s power station, still burning coal. If you look at a modern coal-fired power station—one still burning the same fuel—you will see you can have substantially reduced emissions for fairly efficient generation.

An opposition member: That is like saying you could look at a modern steam locomotive.

Well, you might have driven one of those. You probably have one of those 1960s cars. Coal is still going be part of our mix, and we are denying reality if we are not tackling it as part of our mix. Coal-fired power stations will continue for quite a while.

Could I add that the thing driving electricity prices in the short term is the substantial increase in gas. Gas is our quick turn-on, turn-off power generation source. We do need to reduce the export of gas whilst we are waiting to bring more supply into the gas market. The magic figure is $8, and that will then bring our power prices down to $75. These things are not addressed in the Finkel review. They need to be quite interventionist policy rather quickly, in my opinion. The Finkel review provides a discussion for two, three and four years from now, but this requires an interventionist policy that addresses our concerns in the next months.

Bob Katter (Kennedy, Independent) Share this | Link to this | Hansard source

I speak with some authority on this matter. When I was Minister for Mines and Energy in Queensland, we had the cheapest electricity in the world. Proof positive was that we got the aluminium industry of Australia on an aggressive footing that has never looked back, until we ran into the electricity prices. For my colleagues on the crossbenches here, I won the Australian prize for science in the year because I put in the first stand-alone solar system in the world in the Torres Strait, on Coconut Island. The world boss of GE came for the opening ceremony. The socialists who followed me put in diesel generators and I said, 'Polluting paradise!' So I speak with authority.

I really have been amazed that there is not one single person in this place who has addressed the issue of why electricity prices have gone through the roof. It is not the fault of the Greens, as much as I would like to put it upon my Greens friends. They only put it up 30 per cent, but I do not think they should be proud of that. It was put up 70 per cent by the free marketeers. Almost everybody in this place seems to be a free marketeer. A famous comment by Paul Keating was that I was the last socialist left in this place. I used it as a term of abuse for most of my life.

Monopoly rent. If you play the famous game of Monopoly, you would know that, if you owned all of the utilities, you could charge seven times as much and, if you owned half of them, you could charge four times as much. Of course, there are two people in Australia who own 40 per cent of the electricity in this nation and its delivery systems, and they have enjoyed the Monopoly rent, which is 70 per cent—the increase. So we have gone from $700 for 15 years and suddenly, when we deregulated it, privatised it and corporatised it, it went straight through the roof—from $700 for 15 years, in nine years it went to $2,400.

If we had the remotest scintilla of interest, genuinely—not class warfare against my coalmining brothers, whom I am proud to say are my brothers—and if you were in any way fair dinkum, there is the great gospel, the greenie gospel, but it is also a good book in my opinion: An Inconvenient Truth by Al Gore. His first solution is ethanol. It is so simple to do. As the honourable member for Hobart pointed out, you are quite happy that your nation has no supply of petrol whatsoever and you are quite happy that your nation spends $23 billion a year to buy oil for petrol from the Middle East. Is that what you consider a good outcome? If you switch to 22 per cent ethanol, the same as in Brazil, the market will drive it because it is cheaper than petrol. Brazil now has 60 per cent ethanol in petrol tanks. That cuts your transport CO2 emissions by 30 per cent or 40 per cent—in one hit in your electricity if you go ahead with Hell's Gate in Kennedy. It is one of the prime wind locations in Australia, north of Hughenden. And there is the Kidston pumped storage. We could give you 1,000 megawatts, one-fortieth of the entire output of this nation, in renewables. If there were a scintilla of intelligence in this place—or in the Queensland parliament, more relevantly—they would say to Mr Adani and Mr China Stone and Mr Link, and all the other people who are on the Galilee Basin, 'If you want to produce the coal and send it to a power station overseas, then you will use advanced ultra-supercritical technology,' which cuts the output by 40 per cent—in the case of Indian coal, it is by 50 per cent—and you would say, 'You will plant some trees.' We have seven million hectares of beautiful lands completely destroyed by an introduced species—seven million hectares. Force them to take that out and put in spotted gums, Australian and our most common tree in North Queensland, and you will solve the CO2 problems of this nation— (Time expired)

Nicolle Flint (Boothby, Liberal Party) Share this | Link to this | Hansard source

We on this side of the House know the absolute importance of a responsible national energy policy. We are responsible for fixing the mess that those opposite and their state counterparts have made of energy and electricity in our nation. No-one knows the devastating impact of failed Labor policies more than a member like me, because I lived through the disastrous and dangerous blackout in September of last year. Clearly, those opposite do not quite understand what it means to lose energy security and reliability. I really do not think they do, from that response.

When we lost our power last September in South Australia, it meant people's lives were put at risk—like each and every police officer who was standing in the middle of an intersection in peak-hour traffic, in the rain and the wind, directing traffic because every single traffic light was out across metropolitan Adelaide. It meant that patients in Flinders Medical Centre who were in intensive care had to be transferred to Flinders Private Hospital because the backup generator failed at Flinders Medical Centre—not particularly funny, I say to those opposite. It also meant that families, elderly people and people living alone had to endure a long night of darkness.

This was the result of Premier Weatherill's great experiment. As he said:

We are running a big international experiment right now …

We have got a long, skinny transmission system and we will soon have 50 per cent renewable energy, including a lot of wind and … solar.

He also said:

We want to get as close to 100 per cent renewable power as possible …

We know there are challenges here … But with big risks, go big opportunities.

Well, we now know the result of this big experiment: it was an absolute disaster for my state and it put people's lives at risks. It was a disaster for my residents and a disaster for my businesses. So I call on those opposite to abandon their 50 per cent renewable energy target, which is going to put my residents and businesses in even more danger. I note that the member for Port Adelaide described the blackout last September and the blackouts that followed as 'hiccups'. They clearly were not hiccups.

In my home state and in my electorate of Boothby, residents, households and businesses are paying more than 40 per cent more for their power than the rest of the nation. In my home state, residents and businesses do not have secure or reliable power, and they live in fear of further blackouts and paying their next energy bill. We have had blackout after blackout, starting last September.

Our government, the Turnbull Liberal government, on the other hand, are entirely focused on delivering reliable and affordable power for hardworking Australians, families, older Australians, pensioners and those who most need our support. We are also doing this for our hardworking business owners, who keep this country going and keep Australians in jobs. What are we doing? We commissioned Dr Finkel to review the National Energy Market, and we are now considering his report; we are increasing the capacity of the Snowy hydro scheme by 50 per cent, which will generate enough energy to power an additional half a million homes; we are investing in storage for renewable energy, including investigating pumped hydro in the upper Spencer Gulf, in my home state of South Australia; we are investing in carbon capture and storage; we are introducing the Australian domestic gas security mechanism, which will enable us to impose export controls on gas when we have a shortfall in supply in Australia; and we are reviewing retail energy prices.

We are doing all of this because we believe in responsible government, as opposed to those opposite, who are willing to do big experiments, 'big international experiments', that involve, as we know, not big opportunities but big risks for families, for businesses, for our older Australians and for people who are just trying to go about their day-to-day lives, getting to and from work, taking their kids to and from school, and employing Australians.

I am looking forward to being part of the process of considering the Finkel report, and we are looking at it very carefully because we have to get this right. We have to get this right for the future of the nation but particularly for the future of my home state of South Australia. Nothing is more important than reliable power, secure power and, also, affordable power. Cost-of-living pressures are one of the issues that people raise with me when I am out and about in the electorate, and none more so than the cost of electricity at the moment, which, under the state Labor government in South Australia, is completely out of control.

Tony Smith (Speaker) Share this | Link to this | Hansard source

The time allotted for the matter of public importance debate has concluded. In accordance with standing order 133, I shall now proceed to put the question on the motion moved earlier today by the honourable member for Gorton to suspend standing orders on which a division was called for but deferred in accordance with standing orders. No further debate is allowed. The question is that the motion to suspend standing orders moved by the member for Gorton be agreed to.