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

I was very grateful to have the opportunity to participate in the MPI debate yesterday, initiated by the Labor Party, on energy. So I'm even more delighted to have an opportunity to re-emphasise some of the points that I made yesterday and to add some new ones to this very important debate. I thank them, again, for bringing this important issue before us. Senator Watt's contribution leant heavily on the theme of ideology, and he accused the coalition of being ideological in our approach to energy when we know that nothing could be further from the truth and we know that the only ideological parties on this question are, in fact, the Labor Party and the Greens.

The coalition has an agnostic approach to energy. We don't feel the need to pick and choose and to support winners above others within the energy market. We think it would be a great thing if renewable energy prospered, just as we think that other forms of energy that meet our energy needs should grow and prosper. That may include, and should include, base load traditional sources of energy such as coal and gas. One of the other common refrains from those opposite in this debate is that what we need and what we lack in this policy space is certainty and, if only the energy industry had certainty, then prices would be stable or may even fall. But the truth is that part of the energy industry already has certainty, and that's the renewable part of the energy industry.

The renewable part of the industry has certainty, and we know that they do because there's been record investments in renewable in recent years under this government and under the policies of this government. In 2016, large-scale renewable energy investment was at a record high, and it was five times greater than it was in 2015. More than $4 billion has been committed over the last year in renewable energy investment. Of the 98 new power plants accredited in 2016, 86 were solar and, just in case you are not clear, zero were gas and zero were coal. Small-scale renewable investment was also strong with 182,000 new installations last year. So there's no lack of certainty for the renewable energy industry. There is a lack of certainty for other players in the energy market, and they are providers of traditional thermal base-load power, such as coal or gas—an essential part of the energy mix for the foreseeable future until we can get to a system that somehow can provide sufficient backup or reserves, because we know that renewable energy is variable and unreliable due to weather conditions.

Why don't coal and gas have certainty? Why isn't anyone investing in these products? Why hasn't a power plant of these types been built for the last 10 years in Australia? Because they're lacking certainty. And their lack of certainty is a future Labor government. They know there is a chance of a future Labor government, and they know when it comes their business model could be completely smashed by a carbon tax, an emissions trading scheme, an emission intensity scheme or what other new name the Labor Party comes up with for its plans to tax energy production. For an investor in a coal-fired power station—even a new high-efficiency, low-emissions one—or in a gas-fired power station, when they're contemplating their 30-year return on investment that they need for their business model to work, they know that they don't have the certainty they need.

I think it's also worth unpacking exactly what the Labor Party and the Greens mean by certainty when they're talking about the renewable energy industry. Normally, when businesses are seeking certainty what they are seeking is a stable policy environment, secure property rights and certainty around taxation to make sure that, basically, they can run their own business without intervention and be confident that they'll get a reasonable return on their investment. That's the certainty that most businesses seek.

The certainty that the Labor Party and the Greens are seeking on behalf of the renewable energy industry is not property rights certainty; it is not stable tax arrangements; it is certainty of subsidies. Senator Watt admitted it in his own contribution to this debate. He said that the renewable energy industry requires subsidies in order to succeed. They need subsidies. So the certainty they seek is taxpayers and energy users—consumers—continuing to pay renewable energy companies, even when their products are not competitive, when they're not economic, to have that certainty of return. The coalition doesn't believe in this approach. The coalition believes, as I said earlier, in an agnostic approach that allows all forms of energy to compete fairly and evenly and allows those which have the best model to succeed. We're not in the business of picking winners and choosing winners.

The idea that there is some risk to the renewable energy industry from the removal of subsidies completely undercuts their argument that renewables are currently cost competitive. We heard in this debate only yesterday from Senator McAllister that renewables are cost competitive, that they are efficient, that they are, in fact, even cheaper than traditional forms of energy. Why do they need subsidies then? For what purpose should we subsidise an alternative energy source which is apparently more efficient and cheaper? It shouldn't be necessary at all. They should be able to survive on their own two feet. The truth is that those opposite know that they are not yet ready to survive on their own two feet. Perhaps they will be one day. Hopefully, they will be one day. But the truth is, right now, today, they need subsidies, and those opposite are calling for certainty of taxpayer subsidies.