David Van (Victoria, Liberal Party) Share this | Hansard source

What the Australian people are witnessing right now is an unfolding catastrophe that threatens the livelihoods and economic viability of Australia. Unlike COVID-19, this economic catastrophe is completely man-made and a result of reckless policy and thoughtless planning from the government. The catastrophe I refer to is the artificial energy crisis of the government's own creation that will occur from their ill-conceived policies, such as the energy price cap that we saw come in through this chamber blindingly fast, without any chance for any of us to talk to it or debate it late last year. On top of that, their Rewiring the Nation plan will be a catastrophe. The government have made it extremely clear by now that they intent to forge on down this reckless path, and seem intent on choosing the most uneconomical and costly path to reduce emissions, with no consideration of the economic consequences that will unfold. We've heard from almost every sector of society about how dangerous this government's energy plans are and how little thought they have put into conducting an orderly transition to net zero.

When I attended COP27 in Egypt last year, one thing was abundantly clear: whether you like it or not, the transition to net zero is happening and going to happen. It's a coming tidal wave of enormous proportions, so everyone had better get on board. However, it's a real shame that COP was attended by so few of those opposite because if they were there, they would have heard for themselves from experts around the world that this transition will be long, it is going to be hard and it is going to be very expensive—but not as expensive as Labor are planning on making it. The aim of the transition to a renewable energy grid is not just about recklessly scattering solar panels and wind farms across the country and then paying billions of dollars to connect them to the grid, as the government intends to do through their Rewiring the Nation plan. This will leave us with an unstable grid that will result in soaring energy costs, blackouts and economic ruin. Yet, despite the Albanese government repeatedly blaming the illegal invasion of Ukraine by Russia, and the coalition's energy policy, to explain Australia's steadily rising power bills, the impact of current and proposed policy is key to the uncertain future of domestic energy prices and investment.

The government's reasoning is that this energy crisis is due to the global impact of Russia's invasion of Ukraine. However, it is important to note that prior to the invasion the Brent oil price was at $80 per barrel and the ACCC reported that the net LNG price was at $41.24 per gigajoule. So, despite the events in Ukraine exacerbating the challenges in the LNG market, it's clear that this issue has been prevalent globally and in Australia for a decade or more due to a lack of investment in new supply, and states, such as my own home state of Victoria, can well be blamed for that. Despite having an abundant amount of natural gas, the Victorian Labor government is intent on prohibiting Australians from accessing it, thereby reducing supply and increasing the cost of gas for Victorian businesses.

The Labor government have essentially nationalised the gas market and put the expectation on private companies to continue to put their own capital at risk in the market to keep this essential industry and resource abundant, while simultaneously making the operating conditions unviable for anyone who's prepared to invest in it. This kind of ludicrous and irrational policymaking will only result in further reductions of supply and increase costs and instability.

The market has already responded to this. ExxonMobil and Woodside Energy, which jointly own some of the biggest sources of gas in the domestic market, reduced their forward investment commitment to a six-month time frame. These are projects that take years to develop. They are citing the government's 'reckless intervention in the gas market' for doing so.

The supply shortage of gas should not come as a surprise to anyone. No-one can claim that they didn't see it coming. AEMO, in their GSOO—Gas Statement of Opportunities—have been saying this for a long period. Just last year, when the ACCC released their gas report, they said:

… supply conditions in the east coast market are expected to deteriorate significantly in 2023, with a shortfall of 56 PJ now expected. This is equivalent to around 10% of domestic demand and is the largest projected supply shortfall we have forecast since the Inquiry commenced in 2017.

When Minister Bowen came out and tried to defend his absurd price cap in January, he cited Treasury figures from 21 December on the wholesale price of energy. He stated:

… figures released show that that intervention, while we still have some way to go, we still have more work to do, is having an impact.

However, this data was released before the price cap had even come into effect, which was on 23 December. The government know that their policies will result in increased costs. In fact, the Treasurer's last budget, in October, forecasted an additional 56 per cent jump in retail prices. Despite going to the polls at the last election promising to cut bills for households by $275, all the government can now promise is to make the cost of living harder than it has to be.

While the shift to low- or zero-emissions energy is unstoppable and accelerating, the transition to a 100 per cent renewable grid will require a role for gas and perhaps coal to supplement the renewable energy and provide firming capacity for the grid until zero-emissions technologies become more mature, as a solution to firming the grid when it's running on 100 per cent renewables. This was made clear in JP Morgan's 2022 Annual energy paper, which explicitly states:

If the energy transition is to succeed, we cannot disconnect the generation methods we have before we have a replacement for them.

It has become abundantly clear that this government has not even considered grid stability or supply security in their Rewiring the Nation plan. Just last week we heard on the ABC, from top energy expert Dylan McConnell, that Australia is adding renewable energy at less than half the pace required to replace retiring coal fired generation and meet its own 2030 climate targets. Of course, there is the obvious solution to firming the grid that will allow Australia to reach its emission reduction goals much, much sooner than 2050, and that is nuclear power. As a mature, ready-to-implement emissions-free technology, Australia is absolutely mad not pursue this.

The Treasurer's—I won't say the word 'crazy'—6,000-word essay on reimagining capitalism, redefining how we define a successful economy, says it all about this government. Not only do they know that their policies will make it more difficult for Australians, instead of actually trying to make things better; now they want to move the goalposts and give themselves a participation medal. Newsflash, guys: if the lights aren't on and Australians can't afford to live, that is not a successful economy. It's time the government got that through their head, before they attempt to nationalise the rest of Australia.

Let us not forget that sharp rises in energy prices have preceded several global recessions, with the most famous coming from the OPEC oil embargo in the 1970s. Similarly, before the 2008-09 recession, there was a 150 per cent increase in oil prices. But somehow this government thinks that reducing supply and nationalising the energy market is a good idea and that it won't lead to energy price rises and a potential recession. I think we'll find out it will.