James Paterson (Victoria, Liberal Party) Share this | Hansard source

I welcome the opportunity to contribute to this very important debate on a vital issue for Australia's future. The problem the Finkel report is trying to solve is a problem of regulatory uncertainty. Dr Finkel has been very polite when discussing the concept of regulatory uncertainty, as have many of my colleagues in government when discussing this report in the media—particularly the minister, Josh Frydenberg.

I want to be a little bit more direct: the only regulatory uncertainty that exists in this market is the risk of a future Labor government. That is the risk that is weighing over the energy market. There is no-one contemplating an investment in the energy market today who is worried that, in the absence of some kind of incentive, there is no way for them to recoup their investment in the energy sector. Of course there is—they can charge a market price and get a market return for their investment. What they are worried about is that a Labor government will be elected in the future and they will smash them with a tax, and that will totally undermine any calculations they make today about investment in the energy market.

That is why, in the last 10 years, we have not seen any coal-fired power stations built—not even a modern, high-efficiency, low-emissions coal-fired power station. That is why, in the last seven years, we have seen no gas-fired power stations built. And that is why, in the last five years, 10 coal-fired power stations in the National Electricity Market have closed. They have closed because they all know that there is a very great risk that, at some point in the next 40 to 50 years—the kind of horizon that is necessary in the energy market to make an investment—that there will be a Labor government, and that that Labor government will bring in a tax. Whether that tax is in the form of an ETS as Labor once proposed, or a carbon tax as it proposed at a different time, or an emissions intensity scheme as it now proposes, a tax will be brought in and that will totally ruin energy market investment and totally ruin any return on that investment. That is why investors have been sitting on their hands; that is why investors have been sitting out of the market; that is why the only thing that has been built in the energy market in recent years has been in the renewable energy space. And as well and as good as that is, it has failed to provide the reliable baseload power that we need, as South Australia has most powerfully demonstrated in recent years.

We need regulatory certainty, and the only way we are going to get it is not just if the Labor Party willingly embrace the Finkel report, as they seem to be tentatively doing; not just if they ultimately back the government's response to the Finkel report—which I hope they do, but I will not hold my breath; but if they also promise, and promise convincingly, that they will never reverse from that position. That is, if they are elected to government, they will not turn around and go back to the tax approach that we know they have favoured in this space for such a long time. If investors are worried that Labor may change its spots when in government—perhaps even under the influence of the Greens, as we saw very memorably during the period of minority government in the 2010 parliament, that it will again go back to this tax approach to climate change—then, ultimately, it will ruin the investment certainty that is needed over a 40- to 50-year investment horizon.

My view is that the Finkel report is a very welcome contribution to this debate that has the potential to help to resolve this uncertainty. I put great hope and great faith in it. The settings that we choose as policy makers, though, to put into the system that Finkel has proposed to us are just as important as the system itself. The exact level of the emissions intensity benchmark, for example, is a very important policy decision that this government will soon have to make and that we hope in time the opposition will support. If that level is set too low and it excludes too many potential technologies, then we will ensure that we will continue to have the price rises that we have seen in recent years and that will continue to hurt household and family budgets and will continue to put pressure on our businesses.

Reliable cheap energy used to be, and from many years was, a source of competitive advantage for Australia as a country. It is becoming less and less the case because of the failure to provide certainty for investors in this market. I hope that the Finkel review and the government's response to it will help resolve those issues. I hope that it will provide the certainty that is needed and I hope that the Labor Party will sensibly walk away from their approach of whacking a big tax—whether it is an EIS, an ETS or a carbon tax—on the energy sector. I hope that in doing so investors have confidence that for their 40-to-50-year investment horizon they can get a reasonable return on their investment. If we do not do this, then we will all be paying the consequences. The Australian people be paying the consequences in the form of higher prices; we are all politically will be paying the consequences, as they damn us for failing to act in this area.