Kylea Tink (North Sydney, Independent) Share this | Link to this | Hansard source

I move the amendments circulated in my name together:

(1) Schedule 1, item 2, page 12 (line 24), omit "12 months", substitute "18 months".

(2) Schedule 1, item 2, page 12 (line 25), omit "12 months", substitute "18 months".

(3) Schedule 1, item 2, page 12 (line 28), omit "12 months", substitute "18 months".

These are quite extraordinary times that we find ourselves in, and it's unfortunate that this is being pursued so close to the end of the year. Let's make no mistake: we're here today due to a sustained and consistent failure of past federal governments to look beyond the immediate political term and identify and navigate significant reform to bring our country to a better place overall. The blame cannot merely be shifted offshore to a Russian war.

With that said, the legislation we have before us today, the Treasury Laws Amendment (Energy Price Relief Plan) Bill 2022, is the instrument that is being offered and, given its potential impact and operation, it's important that it's properly scrutinised. Concerningly, from looking at media reports, it appears that many Australians may be falsely led to believe the reason this legislation is so urgent is that it is seeking to deliver cost relief for Australians prior to Christmas. The truth of this legislation is that this is not the case. The legislation we are discussing today will affect the market price available for gas and coal from mid-Q1 next year, with any impact not felt until Q2 2023. This legislation enables the flow of dollar-matched funds from the federal government via state governments to the energy providers themselves, with the end effect being the creation of an ecosystem where, rather than seeing a reduction in their bills, consumers will feel no increase or no additional pain. Fundamentally, it's akin to paying off one group to try and soften the effects on another.

Sadly, the issues we are facing are not ones that were unexpected. Speaking on behalf of the people of North Sydney, I say we're disappointed that we find ourselves at this time of year trying to rapidly and critically review a significant piece of legislation, with very little time to fully consult with those who need to be recognised as being most impacted. When it comes to the views of the people of North Sydney, though, I can confirm that residents are worried about the rising cost of energy bills, they overwhelmingly support a windfall profits tax on fossil fuels, they do not support any compensation flowing from the government to gas or coal companies as part of this package, and they have huge enthusiasm for using this opportunity to fast-track the renewable rollout.

This legislation will create a situation where the federal government is working with the eastern states in a dollar-matching scenario to effectively subsidise the cost of energy in a number of areas. Exactly how this will be done is still largely unknown, as the processes around distribution will be left to the state governments. I am moving these amendments today to extend the gas market energy price order from 12 months to 18 months to enable small to medium-sized energy providers to have the certainty they need to secure favourable contract terms.

Ultimately, the most important way we can reduce emissions across our country is to have residents and businesses buy their electricity from retailers of renewable electricity. The reality is that these are the providers driving rapid transition to true green energy for households. At present, smaller electricity retailers who try to do the right thing by contracting their supply from renewable generators are being impacted by the wholesale price rises, and a number have stopped taking new customers. While the proposed legislation goes some way to addressing this, by lowering wholesale prices for renewably backed small to medium-sized electricity retailers, the 12-month cap on gas prices creates too much uncertainty for them to reliably negotiate commercially competitive binding contracts. Setting the cap to 18 months would provide sufficient time for small retailers to have long enough price certainty to lock their hedge contracts and deliver lower costs for consumers. This will help keep small retailers in the game for market diversity and consumer choice.

Ultimately, the number of unknown factors relating to this legislation is still significant, and when looking at it objectively we must recognise this is yet another example of short-term problem solving rather than significant, long-term positive reform. In the longer term, for us to keep global warming below 1.5 degrees, we must do everything we can to transition as quickly as possible away from fossil fuels. This is an opportunity for the government to look more holistically at the role fossil fuels play in our society and for us to move away from them.

As a final cautionary note, I would also like to sound the potential for this intervention to be used as a cover for faster approval for new coal and gas projects, as has been the case in New South Wales. In the case of the amendment I'm moving today, my support for this bill is given on the condition that it does indeed enable us to transition more quickly to a renewable and sustainable future, and it should not be mistaken for support for propping up industries of the past like coal and gas. We must remain squarely focused on an orderly and ambitious transition to a clean energy future.

Jim Chalmers (Rankin, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

I want to acknowledge the engagement by the crossbench and also the amendment just moved then by the honourable member. I also want to say a couple of things about the amendment moved earlier on by the member for Kooyong. The government won't be supporting the member for North Sydney's amendment, but we do have the opportunity with the six-month review of the $12 temporary cap to make sure that it's working as intended and that we've got the time frames right. Obviously around that time, as we review that cap, we will engage with the member and with other interested parties to make sure that the cap is working as it's intended.

I want to thank the member for Kooyong for the conversations that we've had about her helpful suggestion that the ACCC make public some of the advice that we've received about the arrangements for the gas industry. We weren't able to support it in the second reading amendment stage a moment ago, but we will look to provide some information from the ACCC to the public and to the member so that people can consider that on its own merits as well. I'm in discussions with the ACCC right now about the best way to facilitate that. Thank you to the member for Kooyong and the member for North Sydney for the suggestions that they've made, and also to everyone involved in the debate so far. I'm aware that this isn't a summing up, but this is the best opportunity to provide our view on a couple of the amendments that were made.

Obviously it's become clearer in the last little while that what the opposition intends to do is abandon the workers, industries, pensioners and small businesses of this country. Shortly, when the bells ring, those opposite will be voting for higher energy prices and for no household assistance for Australian families, pensioners and small businesses. The position that we heard put by those opposite is riddled with ridiculous contradiction after ridiculous contradiction. At the same time, simultaneously, those opposite have said that we should have moved quicker on this but that we're moving too fast and it needs to go off to a committee. They've said that they oppose it because they didn't have time to read it, and at the same time they're saying that they oppose it because they've read it. They come up one after another after another and say prices are too high, but they refuse to do anything about it. It is one ridiculous contradiction after another. That is for just one reason: all these excuses, all these alibis, are all about covering up for a decade of policy failure that continues today and that has the member for Hume's fingerprints all over it. The decade of failure we've seen from those opposite has left us more vulnerable to these kinds of shocks we're seeing in the international energy markets. With their vote, and with their failures over a decade in government, they have left Australians and Australian industries more vulnerable. It is left to us, working with the crossbench, to ensure we are doing what we can to take some of the edge off these high and rising prices.

Let's be clear: the Australian people expect us to act in their interests here, and they are watching. They will know who stood up for them in this place today, and they will know who sold them out.

Opposition Members:

Opposition members interjecting—

Jim Chalmers (Rankin, Australian Labor Party, Treasurer) Share this | Link to this | Hansard source

A reminder to members who are interjecting that Hansard records the names. The people will know who stood up for Australians and their industries and who didn't in this place today.

We know that this is a complex issue. Some of the issues in the energy markets have been building for some time, and they've been exacerbated by a war in Europe; everyone knows that. The solutions are complex as well, if we're frank about it. But the proposition for this parliament is very simple today, and the clock is ticking on those opposite. We can support energy bill relief, or you can oppose it. We can protect our manufacturing industry, or you can destroy it. We can save Australian jobs, or you can surrender Australian jobs with your vote today. We stand for families and pensioners, for Australian industries and for Australian jobs. Let's get this to the Senate and let's get this done. (Time expired)

Milton Dick (Speaker) Share this | Link to this | Hansard source

The time for this debate has concluded. The question is that the amendments be disagreed to.

Question agreed to.

Angus Taylor (Hume, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

As I said earlier, this has been a shambolic process from those opposite. It is shambolic legislation, with shambolic ministers, and it will deliver shambolic outcomes. I am going to spend a moment talking about some of those outcomes. Hugo Chalmers, over there, is going to have complete control—

Milton Dick (Speaker) Share this | Link to this | Hansard source

Order! The member for Hume will refer to members by their correct title. Of all people, he knows that is the rule in this place.

Angus Taylor (Hume, Liberal Party, Shadow Treasurer) Share this | Link to this | Hansard source

It is an absolutely important rule and it should be applied consistently; I agree.

The Treasurer, over there, will be given autocratic powers under this legislation. Right at the heart of that is an aggressive price cap. But the bad news for the Treasurer is history, application and the theory all tell us that aggressive price caps are bad for consumers and make customers worse off.

Let me take those opposite through the theory, the application and the history on exactly this issue. I go right back to macroeconomics from the 1980s, with this University of Sydney textbook. I will point out that the Minister for Climate Change and Energy was there, educated perhaps with this textbook by Jack Hirshleifer, back in the 1990s, as was, ostensibly at least, the Prime Minister. On page 231 there is a wonderful exposition of aggressive price caps. The textbook says: 'Supplies will be lost, leaving less available for consumers.' It goes on to say: 'The cumulative effect may be a breakdown of legitimate trade', and then it goes on to document that this will make consumers worse off, not better off.

When we look at history, we see exactly this. Of course, those who fail to learn from history are doomed to repeat it. In the 1970s, the US president, Nixon at the time, imposed a 90-day price cap. It was a complete disaster, triggering stagflation. It was ultimately a disaster within the US economy. Gough Whitlam sought to replicate that in 1973 and took it to a referendum, and the Australian people rejected it. They rejected it because queueing up to get your petrol, being rationed, was not what they wanted. Ultimately, the costs to consumers were higher than was worthwhile to the Australian public.

Those opposite are failing to listen to experts and the industry about what will happen as a result of this legislation. I look at one of the industry players, who said on 12 December in the AFR, 'This reckless free market intervention by the government will divert investment away,' and, as a result, reduce supply. Now, what happens when you reduce supply? Prices go up for consumers. What's remarkable about this legislation is that, with this autocratic legislation they—including the Treasurer there—are controlling the price from the producers, but they're ignoring the consumers. There's no impact on bringing down prices for consumers in this legislation. It's all about their disdain for the producers.

Let me talk a little bit more about what some of the other producers have said. Meg O'Neill, the CEO of Woodside, one of the major producers of gas, in the Bass Strait, has said it will 'make it difficult for industry to economically invest' to deliver supply. That's what she said. The supply is simply not going to be there. She goes on to say that 'the unprecedented market intervention announced risks driving investment out of the system'. We've heard Credit Suisse say in recent days:

The damage has already started: nearly all gas contracting has shrivelled up in the last few days.

This is my question to the minister. The media release stated that the average Australian family 'would be $230 worse off next year if we do not take action'. What modelling was undertaken by the Treasury to provide this figure? Will the government commit to tabling that modelling?

Allegra Spender (Wentworth, Independent) Share this | Link to this | Hansard source

I rise in support of the Treasury Laws Amendment (Energy Price Relief Plan) Bill 2022. I rise in support of this bill because I think families and businesses in this country are hurting, and they are hurting because of a war overseas, and that has driven a fossil fuel price crisis.

I do not like to intervene in markets. I don't genuinely think that's the role of government. But in this case I think we have been left with no choice. I feel that, while I have concerns about the bill, it is appropriate in terms of not raising inflation and not interfering with our overseas contracts. I support the amendment the Greens have put forward to make sure that we invest in household electrification and moving our families in Australia off fossil fuels.

My question really is about what we're going to do in the long term. Australia is currently running a capital account deficit. This is something that hasn't really happened for 50 years, and this is a time when we need an unprecedented investment in capital. And we need to find a long-term way to manage our resources and our energy markets so that companies have the certainty to invest, so that our communities are protected from price spikes in the future that are driven by external circumstances such as wars, and, also, so that our community benefits from increased prices when they happen and they're unexpected. This is a long-term question in front of the parliament, and that is a question that I put to the Treasurer.

Ted O'Brien (Fairfax, Liberal Party, Shadow Minister for Climate Change and Energy) Share this | Link to this | Hansard source

In light of the lack of detail and of advance notice of this bill, there are any number of questions that need to be answered. I'll start with this one, if I may. In situations where gas demand is forecast to exceed available supply, who decides who gets $12 gas and who goes without? Which minister or department will be responsible for making that decision and on what basis will it be made? Further, will gas power generation be prioritised, or will the lights be allowed to go out?

Another question goes to the confusion caused by the government between the various documents associated with the bills. The consultation paper on the Treasury website says the Western Australian gas market will be excluded from the price cap. Which section of the primary legislation excludes Western Australia from that price? Further, on this issue, how can Western Australia be excluded from the price cap under section 53ZG of the primary legislation? Further, how does section 53ZZ(2) not directly conflict with section 53ZG of the primary legislation?

Further, does the bill or an instrument made under it prohibit a gas user from buying gas on a long-term contract and subsequently exporting it? Does the bill or an instrument made under it prohibit a gas user from buying gas on a long-term contract and subsequently reselling it in the spot market? The media release of 9 December from the Prime Minister stated:

The Commonwealth Government will partner with States and Territories to deliver targeted and temporary relief on power bills to eligible Australian households and small businesses that are customers of electricity retailers.

My question is: what is the mechanism for this? Also, will a small business with a turnover of $50 million benefit from energy price relief under this bill? Will a small business with 25 staff benefit from energy price relief under this bill? How many small businesses in Queensland will benefit from energy price relief under this bill? Will a small manufacturing business in Queensland employing 15 staff and with an annual energy consumption of 102 megawatt hours benefit from energy price relief under this bill?

All of these are questions you would expect the minister to be able to answer, and I will close early to give him the opportunity to do so.

Elizabeth Watson-Brown (Ryan, Australian Greens) Share this | Link to this | Hansard source

This week the phones and emails in our Ryan electorate office have been running really hot with people truly distressed about huge cost-of-living pressures. Steep rises in energy bills are a significant challenge. People are absolutely desperate for relief. People are in real pain, so let's be crystal clear about where the problem lies and who has been causing this pain. As so many other speakers have said today, coal and gas corporations have been driving up these prices, profiteering off war and making exorbitant profits from the suffering of everyday Australians.

The government have been talking about handing out compensation for what is, in reality, to them, a very modest price cap. I call this out as nothing other than using our tax dollars as charity for big corporations, and that's ridiculous cruelty. These coal and gas corporations made $152 billion this year in exports. They don't need to be rewarded with the extra cash; everyday Australians do. The people of Ryan are calling on the government to be sensible about and responsive to this and to look after people rather than the interests of their mates in the fossil fuel industry.

Here's what the people of Ryan think we should do instead. We should institute a windfall tax on the excessive profits of coal and gas corporations. We should be using that money to cap people's power bills at the level that they were before the war in Ukraine. We should be bringing energy retail back into public ownership so that there aren't energy retailers making these huge mark-ups by selling on energy—our energy—that they don't even produce. We should be expediting the transition to a clean energy economy so this doesn't ever happen again.

On a broader level, the fact that the government is finally capping prices on domestic coal and gas shows just how possible it is for the government to actually take more control over an essential service like energy. This year has actually put a big question mark around the way we run energy as a market based system meant to deliver maximum profits even to government corporations, rather than run it based on delivering people's needs.

Milton Dick (Speaker) Share this | Link to this | Hansard source

The time for this matter has concluded. The question is that the bill be agreed to.