Katy Gallagher (ACT, Australian Labor Party, Minister for the Public Service) Share this | Hansard source

Senator Canavan also mentioned price increases. Well, 20 per cent, the increases that we have factored in already that are hitting households and businesses now, are the increases that happened on your watch, and that is absolutely the truth and the fact. Everyone understands it. Ten years of failed energy policies, delay, dysfunction and inability to land an energy policy saw us inherit an energy system in crisis. Yes, it was impacted by the illegal invasion of Ukraine by Russia, but there was also the fact that our energy system wasn't resilient or robust enough to deal with the transition that is occurring worldwide in the economy.

We are standing up for our national economic interests, absolutely. We understand that some of the companies are unhappy with the measures that are outlined in this bill, but they have different responsibilities to ours. We have a responsibility as a government to deal with the situation that has been unfolding over the last six months; to look at the impact on jobs, on small business, on large business, on our big manufacturers and on households; and to look at what's happening in the states and territories and the pressures that they are under. That is our job, and part of what we're doing works alongside the Powering Australia plan which we took to the last election and which those opposite think is such a joke. Well, it's not a joke. It is an orderly transition to the biggest economic transformation that is occurring, and you want to put your head in the sand and pretend that it's not happening and that a shift to renewables, the cheapest form of energy available, shouldn't happen. That is your approach. It's not the approach of the government.

I am not going to take up all of my time, although I am tempted, because I do want to deal with some of the issues that have been raised. I would like to thank senators—on the eve of Christmas, almost—for coming back and dealing with this bill. I tried to acknowledge that at the beginning. I would also like to thank senators who have contributed to the debate.

The bill contains measures which will contribute to stabilising gas prices in times of significant volatility in global energy markets. Without any intervention, retail gas prices are expected to increase by 20 per cent in 2023-24 and retail electricity prices are expected to increase by 36 per cent in 2023-24. High wholesale gas prices impact industrial and commercial customers' viability and result in households ultimately paying higher prices for electricity, gas and goods. The government is committed to ensuring Australian consumers and businesses have access to an adequate supply of gas at reasonable prices.

Schedule 1 of the bill will amend the Competition and Consumer Act 2010, providing an enabling framework to facilitate a gas market code to address systemic issues in the market, including a reasonable-price provision and an emergency cap on wholesale gas prices for 12 months.

Schedule 2 to the bill will amend the Federal Financial Relations Act 2009 to introduce a new type of payment to the states and territories to support temporary and targeted relief on energy bills for eligible households and small businesses. It will provide an appropriation of $1.5 billion to be paid as financial assistance to the states and territories, who will jointly fund the relief and administer the payments under a new funding agreement.

The inclusion of a reasonable pricing provision in the gas market code is to provide a basis for producers and buyers to negotiate domestic wholesale gas contracts at reasonable prices. The temporary emergency price cap is intended to ensure domestic industry remains viable and to limit energy price rises for households and businesses. The government intends the cap to be set at a level that reflects the cost of production and which preserves a reasonable rate of return on investment. The impact of these measures is to lower wholesale electricity prices by 30 per cent in 2023-24. This will bring down power costs for businesses and families across Australia compared to what they would have been otherwise, without our package of measures.

The government has conducted modelling to determine the impact of our policy. However—and this relates to some questions Senator McKim asked—modelling that delivers impacts on the revenue of projects by technology has not been conducted, not least because project revenues are also impacted by the contracts projects have signed, including power-purchasing agreements, which are common for the renewable energy projects in particular.

The fact is that our policies will not undermine or change the fundamental economics of investment decisions. These policies will not change the fact that firmed renewable energy is the cheapest form of energy and presents the most attractive investment for investors. The Energy Price Relief Plan, of which this bill is a part, is designed to mitigate the impact of Russia's illegal war on Ukraine on Australian energy prices. After this intervention, we will continue to see the transformation of our energy system to more renewable energies, just as we saw before the Russian invasion.

Of course, the main difference between the situation for renewable energy after our package is implemented, and before Russia's horrific war, is the fact that now, unlike pre-February 2022, we have a Commonwealth government committed to working with states and supporting renewable investment, including by modernising our electricity transmission network through Rewiring the Nation, as well as the recently agreed Capacity Investment Scheme, which will deliver $10 billion worth of investment in dispatchable, renewable and storage capacity.

The agreement struck with states at National Cabinet will see the states leading on the implementation of coal price ceilings in their jurisdiction. In particular, this affects New South Wales and Queensland. In order to implement a price ceiling for coal used in power generation to bring wholesale prices down, contracted coal will need to be addressed. We are working with the state governments on this issue, and it is still the subject of negotiations and further analysis. Negotiations on those funding arrangements are currently underway for each state and territory.

The answer to the questions from Senator McKim is that it is still too early to provide any further details of those negotiations. They are all ongoing. But, if further appropriations or financial assistance are required, then the appropriations would have to be dealt with using standard processes, either in the budget or in a special appropriation. None of those decisions have been taken at this point.

The fact remains that the faster we can deliver on our renewable energy potential, the lower power prices will be and the less we will be exposed to the volatility of coal and gas prices. That is the longer-term solution and the longer-term game plan, and there is no serious disagreement about that.

I would like to thank and acknowledge my colleagues on the government benches for agreeing not to participate in this debate. They stand strongly behind the bills that are presented to the Senate, but I appreciate their assistance in helping to facilitate this afternoon. I commend the bill.