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

I am pleased to have another opportunity to contribute to this important debate after a necessarily brief contribution in the take note debate following question time on Tuesday. In a moment, I will come to the specific recommendations made by Finkel—the five key recommendations made—and I will make some comments and observations about them.

Before I do that, I want to take the opportunity to comment in a more general sense on the public policy development process and how it has been conducted so far in this debate. I understand the legitimate interest that the media has had in the way in which the coalition has so far conducted an internal debate about this policy issue, and I also understand why the natural instinct of an opposition party in those circumstances is to try and seek political advantage from that debate, to seek to draw attention to political divisions and to exacerbate and over-emphasise them. But I actually think this has been a very important and, in fact, one of the best policy-development processes we have been through on a really difficult question in my short time in this place. I say that because I think as parliamentarians we should be able to admit that on difficult, contentious issues like this—which involve trade-offs, which involve competing priorities and which involve a clash of values sometimes—that within a political party we do not all necessarily have the exact same view. In fact, it would be a very unhealthy thing if we all had the same view.

We represent different constituencies, different states and different seats and for that reason alone, as well as the naturally different philosophical differences that exist within political parties, we do come to this debate with a different starting point and different points of view, and that is a healthy and normal thing. I do not think it is a healthy and normal thing to pretend, as some have sought to do in this debate and in other debates, that political parties are of one mind, have one view and do not engage in internal robust debate, criticism, scepticism and enquiry. It is not true. It is not true of our party and it is not true of the Labor Party. It is not a healthy thing to tell the public something that is not true. One of the reasons why this is really problematic is that, in an age of declining faith and trust in political parties, in the parliament as an institution and in governments, we should all seek to do as much as possible to treat those who put us here—those who voted for us, our constituents—like adults and not spin and pretend to them that what is not the case is the case. It does this institution no good and our parties and our governments no good to mindlessly repeat talking points on issues and pretend that there is not a diversity of opinion. That is one reason why I think this has been a good and important process, although not the most elegant or the most clean process so far, and that it should be engaged in.

The second reason why I believe it has been an important and positive process is that in this place we all fulfil a number of roles. We are here to represent our constituents and to assist them in their dealings with the federal government. We are here to represent our parties. Those of us who serve in the executive have those responsibilities. Those of us on the backbench have our obligations through the committee process. But first and foremost—and this applies particularly strongly to those of us who are not part of the executive—is that we have obligations as legislators. Our primary purpose here is to be legislators, to vote on legislation and to pass laws. In order to fulfil that role, we should not mindlessly accept policies handed down to us by our political parties, by our governments or by the executive. It is our role to make sure first and foremost that we understand what we are voting for and the implications it will have for our constituents. A very healthy way to do that is to engage in robust debate and inquiry—sceptical inquiry—about legislation. We have an obligation to test policies proposed to us to ensure that they do achieve the objectives they set out to achieve and that they are in the best interests of the people that we are here to represent. So the desire by some in politics to hold the line, to be seen to be uniform without colour and without debate undermines, I think, the faith that the public has in our institutions and prevents us from fulfilling our role. So I have welcomed this debate.

I should add that I respect greatly the sanctity of the coalition party room and I do not propose to in any way undermine that, but, given all the public commentary on, and interest in, the process we had earlier this week, I can say that I found it to be personally a very useful process. I learnt much more about this issue than I could ever have simply by reading media commentary about it or the report itself, as informed and uninformed that sometimes can be. As a result of that process, I will bring a better informed view to the debate going forward. I congratulate the Prime Minister and the energy minister, Josh Frydenberg, for putting to the coalition party room a recommendation, a report, to government—but, as others have said, not a policy of government—for our feedback, input, insight and questions. I think that is a welcome development. On big, contentious and difficult questions like this, it is something that we should do more often.

I will turn now to the specific recommendations in the Finkel review. There are five key ones that I would like to highlight and make some observations about here today in this debate. The first is a requirement that there be an energy security obligation on new wind and solar generations. This is distinct from—which I will turn to in a moment—an energy reliability obligation. Without wading through the technical scientific matters too much, which are beyond my technical expertise, one of the issues that we encountered during the South Australian energy crisis was the lack of stable frequency or inertia provided by renewable energy sources, particularly wind power, to the South Australian grid and the problems that that caused. Everyone recognises that that was an issue and that it needs to be improved. Finkel has sensibly seized on this and is recommending that all generators that are connected to the National Energy Market meet these new technical requirements under strict new standards, which will ensure that stable frequency is provided to the electricity grid.

In addition to that, the second recommendation is, as I mentioned before, an energy reliability obligation. This refers to the fact that many renewable energy sources, although not all renewable energy sources particularly wind and solar, provide energy in an intermittent way, in an unreliable way. As we all know from the South Australian example, on a good day, wind can provide up to 120 per cent of South Australia's energy needs, and South Australia can be a net exporter of energy to the other states within the national energy market. But on a bad day, when the wind is not so strong, it can provide as little as none of South Australia's electricity needs. What the Finkel review has recognised is the pressure that this places on the electricity system and the danger that poses to the stability and reliability of the grid. He recommends that in future the government places an obligation on renewable energy providers to provide either backup or storage of electricity to ensure that in those times when the sun is not shining or the wind is not blowing that reliable stable energy can still be provided to the grid. This is absolutely essential if we are to increase renewable energy penetration in the grid any further than it has already been increased—quite dramatically in recent years.

The third recommendation from the Finkel inquiry is that a three-year notice of closure be required of all existing large electricity generators. This is designed to deal with the situation we faced in my home state of Victoria with the Hazelwood power plant, which gave very little notice to the electricity market or to the people that it serviced in Victoria that it intended to close, and gave the market and governments an extraordinarily minimal amount of time to respond to that major change to the electricity market and the pressure that that put on the system. We have to ensure in the future, if there are to be any further closures of current—particularly baseload—large electricity generators that we have sufficient notice of their plans to close so that plans can be made to ensure that the reduction of energy supply into the market can be compensated for elsewhere.

The fourth very sensible recommendation from the Finkel review was to have a consistent and coordinated national approach to emissions reductions, if we agree that that is the most important national goal. It does the energy system no good at all to have different renewable energy targets in different states and territories and nationally. Many state opposition parliamentarians have promised that—and I speak of the Victorian coalition opposition as one such example—if they are elected to government, they will abolish Victoria's Renewable Energy Target and respect the national Renewable Energy Target or whatever replaces it as the single standard for renewable energy to avoid the kind of absurd situation we had in South Australia with such an ambitious renewable energy target, far beyond that the federal target and the pressure that has put on the South Australian system.

Finkel was also appropriately critical of those states and territories which have bans or restrictions on the exploration of gas in my home state of Victoria, a ban not just on exploration and harvesting of unconventional gas sources, which it has in perpetuity, but also a ban on conventional onshore gas and oil exploration up to the year 2020, and the extraordinary damage that has done to the gas market, and, as Senator Xenophon was referring to earlier, the extraordinary price increases that have flowed as a result. There is plenty of gas in Australia which could have been harvested, which should have been harvested in the last few years and which had it been harvested would have helped to put downward pressure on gas prices but, regrettably, some very ill-advised state based moratoriums on gas exploration and exploitation had been put in place to the great cost of the manufacturing industry, households and others.

Finally, the biggest recommendation in the Finkel report and the one that has obviously attracted the most interest is the clean energy target to replace in part the Renewable Energy Target, which currently exists at a federal level and is scheduled to expire in 2020. This new target would or could replace the Renewable Energy Target and would set a goal of emissions reductions on behalf of the electricity sector by 2030. It would do so in a much more energy agnostic, technology neutral way than the current Renewable Energy Target. It would open up incentives to technologies which can help reduce emissions but not limit them just to what is effectively the case today, which is just solar and wind. It would allow, for example, a new modern gas-fired power station to come online to replace existing power stations and deliver reliable base load energy at a much lower emissions intensity. Depending on where the emissions intensity level is set, it could also allow for new high-efficiency, low-emissions coal-fired power stations, which, if replacing today's older coal-fired power stations, could reduce emissions by up to 40 or 50 per cent.

My view is that that would be a very welcome thing. My view is that, if we are concerned about the impact of emissions on the planet, then we should not quibble about how those emissions reductions come about. The planet does not mind if the emissions reductions come about through renewable energy or any other form of energy. An emissions reduction is an emissions reduction. If coal-fired power with new ultrasupercritical power stations can achieve those reductions then I think they deserve due consideration, as does the potential for carbon capture and storage with both gas and coal-fired power.

I would like to conclude this afternoon by making one final observation. The issue the government is grappling with is how to provide certainty to the energy industry to ensure that the investment strike that has taken place over recent years does not continue. We need new generation to come into the market. We need to reverse the trend in recent years where no new base load power has been built in Australia. In the last 10 years no new coal-fired power stations have been built, in the last seven years no new gas-fired power stations have been built and in the last five years 10 coal-fired power stations have closed.

The government's role in providing certainty to the energy market is only 50 per cent. Over the next 30 years, which is the trajectory by which an energy industry investor will be contemplating a return on their investment, there is absolute certainty, I regret to say, that we will not be in office and those opposite will be in office. It is just as important what policies they propose to adopt when they are in government as we propose to adopt now when we are in government on the incentives that are being provided to an energy industry investor. So, even if the government is able to arrive at, propose and legislate a clean energy target, if we are to provide the certainty that we know is needed to provide stable electricity supply to Australians, it is not just incumbent on us to propose and legislate it but it is incumbent on the Labor Party to ensure that they will not only support it being legislated but agree to keep it in place with the settings that are agreed to today when they are in government.

If they say that they will pass a clean energy target but only in order to tinker with it when they are in office, change the settings when they are in office and make it more demanding on the energy industry or if they say that they will accept the existence of the clean energy target but reserve the right when in office to trial and experiment with other schemes, such as an emissions intensity scheme, as they have been saying in recent weeks, then that certainty for energy industry investors will disappear. The certainty that they need will evaporate because over a 30-, 40- or 50-year investment time frame there is certainty that those opposite will have an opportunity to implement their policies and they weigh just as heavily on someone contemplating investment in the energy industry today.

If we really are to achieve bipartisan consensus, it has to be durable bipartisan consensus that will last. That may involve on the part of the government a compromise and introducing a measure that not everyone in the government is completely happy with, but necessarily it will also require a compromise on the part of the opposition to support a policy that they might not be 100 per cent happy with, because, if we are to continue radically changing energy policies between governments as governments change hands, then that certainty needed in the energy industry will not be provided. We know what the flow-on consequences of that will be for electricity prices, what the consequences will be for businesses in Australia, who employ so many Australians, and what the consequences will be for households in Australia. We know the brunt of the burden that they will bear as a result of that.

I encourage those opposite to consider their role in providing certainty and stability that they say is necessary. I encourage them to consider not proceeding back to the path that they were on when they were last in government, which is to favour an approach of carbon taxes in their various guises to solve this issue. I encourage them to consider backing whatever proposal the government puts to this place and committing to keeping it in place if they have the pleasure of occupying the government benches in the near future.