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

Happy new year to you, Deputy Speaker Payne. I rise in support of the Competition and Consumer Amendment (Australian Energy Regulator Separation) Bill 2024. This bill resolves some longstanding issues with the current governance arrangements for energy regulation in Australia. It responds to the needs of the rapidly changing Australian energy market and also positions the sector for the future.

The Australian Energy Regulator, or AER, has been in operation for nearly 20 years. It is one of the three major market bodies that oversee national electricity and gas markets in Australia. The Australian Energy Market Commission develops the rules for market operation, the Australian Energy Market Operator controls the day-to-day operations of those markets and the AER has the role of monitoring compliance with the regulations and performance. Each agency supports the Energy and Climate Change Ministerial Council to develop and support Australian energy policy, with the basic understanding being that markets create the lowest prices.

The AER regulates electricity networks and gas pipelines in all states and territories excluding WA. This translates to around 800,000 kilometres of overhead electricity lines and underground cables, servicing about 11 million customers. The gas pipelines are over 73,000 kilometres long and provide gas for more than 4.3 million customers. The key role of the AER is to set the maximum amount of revenue that electricity and gas providers can earn. The AER's decision-making process evaluates the projected demand for electricity and natural gas, the age of the infrastructure, the operating and financial costs and the reliability of the network, including its safety standards. The AER regulates the wholesale gas and electricity markets, where prices are set by matching supply with real-time demand. When I say real-time demand, I mean that you can actually just go on the webpage and see how the spot prices are changing second by second. The AER monitors the elements of this process, including network constraints and outages, demand forecasts, production forecasts, and market dispatch and prices.

The other important role the AER has is to help customers make informed choices about which provider supplies their energy. They protect consumers from prices that are too high and approve customer hardship policies amongst other safeguards so that people aren't sitting in the dark or the cold. As the AER states:

Consumers are at the heart of everything we do.

The AER works to ensure energy consumers have access to a reliable and secure market and that they pay no more than necessary for energy to their homes and businesses.

Deputy Speaker, you can see the AER has a comprehensive and wide-ranging mandate. It was established nearly 20 years ago under the umbrella of the Australian Competition and Consumer Commission. Its initial budget way back in 2004-05 was $6.5 million. In 2023-24, the budget grew to over $95.6 million. The organisation has seen a rapid growth in the number of employees as well. When it began, there were 15 staff; it now has approximately 400 employees. It's been acknowledged for some time that, due to both the wide-ranging remit of AER and its growth, the current governance structure is not fit for purpose. This bill before the chamber, therefore, establishes the AER as a standalone Commonwealth entity separate from the ACCC.

The reforms will give the AER authoritative control over both its funding and its employees. Currently the chair of the ACCC is technically responsible for leading, governing and setting the strategic direction of the entity of which the AER is a part. However, the AER's independent board retains ultimate accountability for these factors. Obviously this is a clear disconnect between authority and responsibility.

The bill amends the Competition and Consumer Act 2010. It establishes the AER as a non-corporate Commonwealth entity for the purposes of the Public Governance, Performance and Accountability Act 2013, so the AER board will become the accountable authority of the body. The AER chair will become the head of the agency to align with the Public Service Act 1999, implementing these arrangements for the 400 employees. This bill also establishes the ACCC enterprise agreement for the new AER entity.

This bill does not alter the remit of the AER, which I outlined at the start of this speech. The changes have the support of the 2020 review of the Energy Security Board. They were driven by consultation over many years with the Treasury, the Department of Finance, the Australian Public Service Commission, the ACCC, energy ministers from the states and territories and the AER itself. The necessary approval to amend the Competition and Consumer Act was granted by state and territory energy ministers way back in May 2023.

The implementation of the bill recognises the need to maintain the independence of the AER. Consequently, the Minister for Climate Change and Energy will not have ministerial powers over the AER. The minimalistic approach to this separation guarantees that the ACCC and its constitution are not affected. Both entities will continue to benefit from the information-sharing arrangement currently in place. Importantly, staff will not be disadvantaged in any way by the reform. The AER will transfer all existing staff and be able to employ its own staff moving forward.

There are numerous benefits to these reforms. Primarily, it sets the AER up to be more agile in the face of a changing energy landscape. It makes decision-making and governance more streamlined, eliminating duplicate decision-making, and it removes the dual ministerial responsibility for the AER's activities. Currently the Minister for Climate Change and Energy has portfolio responsibility for the AER and the Treasurer has responsibility under finance law that pertains to the ACCC.

Finally, it removes the governance risk that currently exists. It will end the governance of AER employees by the ACCC so that the AER becomes independently responsible both for its strategic direction and for its employees, as I previously mentioned. The need for this is reflected in the AER's Strategic plan 2020-2025. This plan recognises the importance of organisational culture with a focus on achievement and innovation. The AER board will be able to drive their cultural goals more effectively, as their employees will no longer be embedded in the ACCC.

The reforms in this bill have been backed by stakeholders and experts for some time. There have been a number of public reviews recommending an autonomous AER. In 2015 the review of governance arrangements for Australian energy markets recommended establishing the AER as a standalone body. This was then reinforced in 2017 in the Independent Review into the Future Security of the National Electricity Market.

This bill enables the AER to respond quickly to changing consumer energy demands and to independently continue its critical role in ensuring affordability for Australian consumers. As our nation moves forward towards net zero, it is vital that energy market governance is clear and the AER is able to fulfil its purpose to ensure energy consumers are better off now and into the future. I commend the bill to the House.

Dai Le (Fowler, Independent) Share this | Link to this | Hansard source

Once again, I stand up in this House to speak out about energy. As we know, it's not money that makes the world go round; it's energy. Energy is a critical resource to our society and economy. Without it, we are doomed. It has been explained to me by industry experts that, in the energy system—electricity and gas—the Australian Energy Regulator is supposed to be the cop. The AEMC, the Australian Energy Market Commission, makes the rules; the AEMO, the Australian Energy Market Operator, and the electricity networks are supposed to implement the rules; and the AER is supposed to use its powers to enforce the rules. So it's a very complex network of organisations, institutions and agencies that manage our energy market.

The AER was called a 'partially effective regulator' by the National Audit Office in 2020. In particular, the ANAO determined that:

Performance reporting arrangements have not enabled the AER to demonstrate it is meeting its purposes, such as promoting the efficient operation of energy services for the long-term interests of energy consumers with respect to price, quality, reliability and security.

These words are special because they directly reference the National Electricity Objective, the NEO, which is the most important text in the electricity system. The National Energy Objectives are meant to guide all regulation. The AER is supposed to make decisions and take action to make the NEO happen. It doesn't, for lots of reasons. The enforcer of the rules has not been enforcing the rules, so the NEO isn't being delivered and prices keep going up more than they should. Maybe one of the reasons is that it is underresourced. It has said that to many people for a long time, so maybe this extra resourcing will fix that—maybe. It depends on what the AER does with this extra money. The AER will be given $100 million, up from $6 million, and an increase in staffing numbers from 15 to 400 employees. That's a lot of money and a lot of people.

So what is the plan to be a better enforcer of rules and a better promoter of the National Energy Objectives? Does the plan pass the sniff test? Will the government explain why they think an increase in funding and staffing can help lower electricity prices? Will the plan work? Who is keeping them accountable for the implementation of the plan? How is the effectiveness being measured? When will we see results? In particular, how are they going to make AEMO, the networks and the big retailers—Origin, AGL and EnergyAustralia—better deliver the National Energy Objectives? This is where the big money is going, with every dollar of it from consumers.

Politically, the networks are ascendant right now. Their industry organisation, Energy Networks Australia, has lobbied the government very hard and is getting away with more and more consumer dollars through government policy—Rewiring the Nation, community batteries, ring-fencing waivers and the current AER consideration of gifting the DNSPs money to install behind-the-meter batteries, which I'm happy to present information on—and also through their regulated return processes. AEMO is also running amok, with their budget ballooning from $310 million pre COVID to $740 million now. That's more than two times as high—crazy!

Regulation is a matter of utmost importance to the people of Fowler and all Australians due to its impact on efficient energy markets and the urgent need to tackle rising energy costs. This issue cuts across every household and business in our country, and the current chaotic system demands immediate action. As the minister stated, the intention of this bill is to amend the Competition and Consumer Act 2010 to separate the Australian Energy Regulator from the Australian Competition and Consumer Commission and establish it as a non-corporate Commonwealth entity with operational control over its staff, resources and governance arrangements.

Right now, energy pricing feels like a lottery. On Monday the price might be low, by Wednesday afternoon it's sky-high and by Thursday lunchtime it's in the negatives. This unpredictability is not just inefficient; it's unsustainable. How can families and small businesses budget and how can manufacturers plan when our energy market operates in such chaos? The lack of stability is costing Australians dearly.

The government has so far announced $50 billion to get clean energy technologies into the market, but, for the most part, it can't get them out the door. There are all these announcements, big headline announcements, that the government has made, and this ignores whatever portion of the $230 billion Future Fund will go into renewables. I'm sure I'm missing other funding announcements as well.

Why not prioritise giving to consumers, houses and small businesses to adopt, host, trial et cetera new clean energy technology? Everyone wants lower bills. They are struggling at this very moment, as we speak. People are telling me that their energy bills have increased dramatically—not only that but insurance bills, rent bills, grocery bills. Everybody is telling me that, especially in Fowler—I don't know about other electorates—and in Western Sydney.

We need to get things right. The nice thing about clean energy technology is that the stuff that is proven to work—solar, batteries, cars, heat pumps—can be spread out, and it makes coal and gas mines less profitable and, hence, less likely to proceed.

Since my election I have repeatedly asked the government what it plans to do to bring down electricity prices and create certainty for consumers. I asked the government in August last year what fundamental changes it would make to the energy pricing mechanism and the broken electricity market. I'm glad to see they have now announced an energy expert panel to study the situation and recommend reforms, but we need actions now. I hope that, in setting this independent body up, working Australians will see their energy prices decrease.

Debate adjourned.

Sitting suspended from 16:52 to 17:04