Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I move the Greens amendment (1) on sheet 7319:

(1) Schedule 1, page 59 (after line 25), after item 81, insert:

81A After section 160

Insert:

160A Review by Productivity Commission of financial assistance for coal-fired electricity generation

(1) As soon as practicable after the commencement of this section, the Productivity Minister must, under paragraph 6(1) (a) of the Productivity Commission Act 1998, refer the following matters to the Productivity Commission for inquiry:

  (a) the matter of the reasons for, and need for, financial assistance for coal-fired electricity generation;

  (b) the matter of the following impacts of the existing arrangements for financial assistance for coal-fired electricity generation:

     (i) impacts on Australia's electricity generation mix and timeframes for retirement of existing electricity generation plants and investment in new generation plants;

     (ii) financial impacts for coal-fired generators in receipt of compensation and for other generators across the industry;

     (iii) impact on Commonwealth finances;

     (iv) impacts on the competitiveness of the Australian electricity market.

(2) In referring the matters to the Productivity Commission for inquiry, the Productivity Minister must, under paragraph 11(1) (b) of the Productivity Commission Act 1998, specify the period ending on 31 December 2012 as the period within which the Productivity Commission must submit its report on the inquiry to the Productivity Minister.

Note: Under section 12 of the Productivity Commission Act 1998, the Productivity Minister must cause a copy of the Productivity Commission's report to be tabled in each House of Parliament.

(3) For the purposes of paragraph 6(1) (a) of the Productivity Commission Act 1998, each matter mentioned in subsection (1) of this section is taken to be a matter relating to industry, industry development and productivity.

160B Commonwealth Government response

(1) If the report on an inquiry referred to in section 160A sets out one or more recommendations to the Commonwealth Government:

  (a) as soon as practicable after receiving the report, the Productivity Minister must cause to be prepared a statement setting out the Commonwealth Government's response to each of the recommendations; and

  (b) the Productivity Minister must cause copies of the statement to be tabled in each House of the Parliament before the end of the period of 7 sitting days of that House after the day on which the Productivity Minister receives the report.

(2) As soon as practicable after the Productivity Minister tables the report in each House of the Parliament, the Productivity Commission must publish the report on the Productivity Commission's website.

Note: The Productivity Minister must cause a copy of the report to be tabled in each House of Parliament—see section 12 of the Productivity Commission Act 1998.

160C No limit on Productivity Minister ' s powers

This Division does not limit the Productivity Minister's powers under paragraph 6(1) (a) of the Productivity Commission Act 1998.

I rise to speak to the amendment which I have circulated in the chamber. This amendment is to seek a review by the Productivity Commission of the financial assistance for coal fired electricity generation. To again familiarise the committee with the circumstances here, the International Energy Agency has just brought out its report on energy policy and in particular talked about Australia's scheme. It said very clearly that Australia's scheme is 'an example of the standard of leadership that the International Energy Agency has been calling for so that the energy sector can be protected from sudden and vacillating climate policy that paralyses investors and disrupts energy markets'. It went on to say that Australia's implementation marks 'the first major fossil fuel energy, resource-rich economy to take the most cost-effective mitigation measures'. It went on to say that the design of the scheme fits well with the IEA's findings on lessons from international experience with the exception of the free permits and cash given to coal fired generators—and therein lies the rub, because we need to bring our scheme in line with world's best practice, and it is very clear that we do not need this overgenerous cash-and-free-permit allocation to coal fired generators.

In the course of designing the scheme we did establish a potential to buy out 2,000 megawatts of coal fired generation. The coal fired generators did not take up that option, because the level of assistance is in fact so generous that they saw themselves as being profitable into the future in spite of the fact that we have an eight- to 14-gigatonne gap in what is required to even give ourselves a 50 per cent chance of staying below two degrees. If we are going to get real here, we are on track for four degrees of warming. We need to move to 100 per cent renewables as quickly as possible. It is not going to happen unless we start making this transition, and propping up coal fired generation is ridiculous. So it is quite clear to me that we need to do for this level of assistance what we have already done for the assistance to the energy-intensive trade-exposed sector. That level of assistance is being referred to the Productivity Commission for review, so it would be appropriate that we refer this level of financial assistance for coal fired electricity generation to the Productivity Commission to have a look at whether in fact it is too generous. Given the response of the International Energy Agency, even they recognise that this is actually the Achilles heel of the system and it would be much better if it were removed.

In the course of negotiating it, of course, Professor Garnaut made the point—as indeed the Greens did throughout—that this was unnecessary and that all we had to do was guarantee energy security, not the profitability of coal fired generators. The best way of doing that would be to make sure that, in the event that a coal fired generator was not able to operate, you could offer them a government guaranteed loan so that you maintained energy security. You did not actually have to give them free permits and cash to maintain their profitability.

That is the rationale for the amendment that I am now moving. I hope that others in the chamber will see that, if you take climate change seriously, you cannot afford to keep on giving coal fired generators this level of generous assistance. It is a pure fossil fuel subsidy. It cannot be regarded as any other shape or form than that. I hope we get the support of both the government and the coalition in moving to have this referred to the Productivity Commission for assessment.

Stephen Parry (Tasmania, Liberal Party) Share this | Link to this | Hansard source

The question is that Greens amendment on sheet 7319 be agreed to.