Nick Xenophon (SA, Nick Xenophon Team) Share this | Link to this | Hansard source

I move:

That the Senate notes Australia's energy crisis, its impact on consumers, businesses and the broader economy, and the need for urgent and effective responses.

This relates to the energy crisis facing Australia, its impact on jobs, on businesses and on our economy, and the need for urgent action to intervene to take emergency steps to deal with this crisis.

If I may start with an extract from the book Why Nations Fail by Daron Acemoglu. He talks about Argentina. He says that Argentina was one of the wealthiest countries in the world. Australia and Argentina were two of the wealthiest countries in the world at the beginning of the last century. Up until the World War I, Argentina was thriving. It did not live so much off the sheep's back but off cattle and agriculture—very similar to Australia. Then there was a series of bad policy decisions made—of instability and of policy mishaps and policy missteps—on the part of the Argentinians, and Argentina went from being one of the wealthiest countries in the world to being a country in chaos, a country whose economy faltered and a country where there was enormous poverty and dislocation.

A number of the factors in Argentina will never happen here—we are talking about a level of political instability as something that could never occur in this country—but the bad economic decisions made led a wealthy country to become one of the poorest in the world. My fear is that unless we tackle the energy crisis in this country in the coming months—not in years, but in the coming months—we will have our Argentinian moment. We will take a number of courses of action that will cause deep damage to our economy, that will lead to tens of thousands of jobs being lost—jobs that we will not get back—that will scar our economy and scar our economic and social future.

I will be very careful in the context of this debate not to ascribe political blame, because if there were ever a time for bipartisanship it is now. If there were ever a time for some clear policy thinking to deal with this crisis, we need to deal with it now.

There are two aspects of this crisis that we must deal with. The first relates to our electricity sector and investment certainty in respect of our electricity sector. We have had the Finkel review by the Chief Scientist, Dr Alan Finkel, and I will go to that shortly. That has been useful in prompting a debate and the need for investment certainty. Whether you believe in the science of climate change, as I do, or not, you ought to believe unambiguously in the harsh reality of the investment climate, where investors around the world will not go near Australia to invest in new-generation capacity because of the policy uncertainty. We need that policy uncertainty to end. We need very clear guidance to create that policy certainty. I am concerned that the Finkel review does not address those issues in the sense that a clean energy target is not the preferred option of the Australian Energy Market Commission. It is not the preferred option to deal with issues of certainty and of the lowest cost methods of abatement. We must go down a path where we can meet our Paris agreement targets of a 28 per cent reduction in carbon emissions on 2005 levels by 2030 and, eventually, the trajectory that will get us to zero emissions by 2050. We need to do that and there appears to be, at the very least, a bipartisan acknowledgement that those are the targets we must get to. But how we get to them appears to be fraught with difficulty.

Back in 2009, along with Malcolm Turnbull, as the then Leader of the Opposition, we jointly commissioned Frontier Economics and its managing director, Danny Price, to come up with an alternative carbon trading system and emissions intensity scheme, which back then was derided by one side of politics, the current opposition, as being a mongrel of a scheme. It is now Labor Party policy, and I am glad that they came to that position—it seems that the mongrel has become a top dog in the course of eight years or so—but, curiously, the coalition has walked away from that and is now looking at other alternatives. We need to have the best, lowest cost emissions abatement scheme in place. We need to look at the way we transition to renewables and we must do so carefully and sensibly. I support renewable energy, but I also support it being done in an orderly and transitional way. I previously put a position forward that we need to aim for a 50 per cent renewable energy target by 2030. I believe there are better ways to meet our Paris agreement targets. I believe that we should of course aim to have baseload renewables and renewables that can give grid stability, but we need to be very careful about having a target that is simply black and white and does not take into account the realities of the marketplace.

The inquiry by the Select Committee into the Resilience of Electricity Infrastructure in a Warming World, of which Senator Hanson-Young was the chair, was conducted recently and looked at what happened in South Australia. What is instructive is that, as a result of that inquiry, documents were discovered that had been provided to the South Australian Department of the Premier and Cabinet back in 2009—two reports, essentially saying, 'If you want to go beyond 20 per cent renewables, you need to be very careful that you have grid stability. You need to be very careful that the system is there to ensure stability so that, if you have blackout events, there is reliability in the system.' Those independent reports, by McLennan Magasanik Associates and the National Institute of Economic and Industry Research, were not heeded, in my view, by the South Australian government. So mistakes were made—and that is not being pejorative in any way towards renewable energy. On the contrary, if we are going to do it through transition, we should do it right.

We have two issues here. The first is the price of electricity, which is rising on the eastern seaboard by some 20 to 30 per cent by 1 July for consumers and retail customers. It is rising by 18 per cent in South Australia, already one of the highest priced electricity markets anywhere in the world. That is something that the Finkel review looked at, but one thing that the Finkel review did not look at—and this is not a criticism of Dr Finkel because he was not asked to look at this specifically—is the gas crisis that is facing Australia. We have a situation in this country where, absurdly, Australian gas being exported overseas and landing in Japan, even with the cost of shipping it there and the costs involved of liquefaction and de-liquefaction to get it into the Japanese market, is half the price of gas here in Australia—the same gas; effectively the same molecules. How can it be that we have Australian gas going overseas and they are paying half the price of what we are paying for it here?

The market is dysfunctional. Of course, I support market solutions, but when the market is broken, you need to look beyond that. You need to look at emergency interventions.

For a number of years now, Manufacturing Australia and leading manufacturers have said that the gas crisis is real and we need to deal with it. The AWU in conjunction with Manufacturing Australia—one of those alliances between industry and the union movement—took the same view, and they have been warning about this for years. They are saying that this is a looming crisis and if we do not do something about it, it is going to hurt manufacturing. In recent weeks, I have spoken to a number of manufacturers who tell me that their gas bill, which is already in the millions of dollars each year, will more than double by the end of the year. They are the contracts that are being offered. Unless we bring the price of gas down, we can expect to see hundreds, if not thousands, of businesses pushed to the brink and some over the edge, and tens of thousands of jobs lost in this country. The impact it will have on manufacturing will be severe. The impact that it will have on jobs will be severe. The flow-on effects will be severe. It will leave lasting scars in our economy. I fear that, unless we deal with the gas crisis sooner rather than later, it will push the country into a recession. It is not alarmist to say that—the businesses I am speaking to are talking about laying off hundreds, if not thousands, of workers—given the sizes of the enterprises and the flow-on effects of those businesses closing down.

We need to deal with this. I do not ascribe blame. We have stuffed it up as a nation. We need to fix this as a nation and take away the rancour of politics from it, because poisonous politics have stood in the way of this. Manufacturing still matters in this country. We have a situation where something like 200,000 jobs have been lost in manufacturing in this country since the GFC. But we still have over 850,000 Australians employed in manufacturing in this country, and that is a major sector of our economy. It has slipped as a percentage of GDP. Some six per cent of our economy is now based on manufacturing compared to 12 per cent a decade ago. We are bumping above Botswana and Rwanda in Africa—two countries that have never had the manufacturing and industrial base that we have had. If you lose those businesses, the flow-on effects to the economy and in reducing innovation will be quite profound.

What do we do about it? In my negotiations with the government, in particular with Senator Cormann, a number of measures were agreed to, which I welcome. Those measures relate to having more transparent gas markets. Those measures relate to dealing with the use it or lose it principle. My concern is that there are companies out there that are masters of creating scarcity, because we have enormous supplies of gas, particularly in the North West Shelf, that seem to be just sitting there. I have asked many questions in the Senate estimates process about the use it or lose it policy. These retention leases ought to be unlocked. We need to take every measure possible because we need to unlock that gas and bring it into the marketplace.

We have been warned about this on many occasions. The ACCC—the Australian Competition and Consumer Commission—in a report dated 13 April 2016 to the Assistant Treasurer, the Honourable Kelly O'Dwyer MP, set out issues in the competitiveness of the wholesale gas industry. It was very disturbing reading. That was over a year ago. We were warned then that there were factors feeding into the uncertainty about future gas supply on the east coast: that the magnitude of gas flows into LNG projects were removing gas from the domestic market and the lower ore price had led to declining investment in gas exploration. A whole range of regulatory restrictions were also raised, but those LNG projects were a very serious issue in reducing gas supply. The ACCC, in one of the headline parts of its report, said:

The LNG projects have disrupted the gas supply-demand balance in the east coast gas market

That is something that we have ignored. Right now, there are businesses that I am talking to that have a gas bill of $15 million, or $30 million in some cases, who tell me that their gas bill will at least double and they cannot sustain a successful business on that basis. They are going to have to shrink that business or shift offshore. They will not be able to compete with our international trading partners with gas prices going up that high. This is a looming tsunami of job losses that we face unless we tackle this with a great degree of urgency. This is something that Manufacturing Australia and the AWU have been talking about for years. We have shied away from a domestic gas reservation policy, having a national interest test. They have had it in the US and in other parts of the world. I know it is a market intervention, and I know it is anathema to many on both sides of this chamber to have that level of market intervention, but what do we do? We cannot afford to let manufacturing businesses in this country die because of these distortions in the gas market and in the transparency of the market. Do not take my word for it; there are many others who are saying this.

Bruce Robertson, from the Institute for Energy Economics and Financial Analysis, has been banging this drum year after year. He has been warning of the risks of our export LNG plants in the context of ensuring we have adequate supplies of gas for the domestic market. Bruce Robertson and the Institute for Energy Economics and Financial Analysis put out a report titled Australia's export LNG plants at Gladstone: the risks mount, and I commend the report. Bruce Robertson is one of the pre-eminent analysts on gas and LNG in this country. What Mr Robertson is saying is that, incredibly, there is going to be a glut in the global supply of gas, but for some reason we have a lack of gas here in Australia. He says that the doubling and tripling of prices is untenable for Australian industry and that there is a lack of transparency in the tenements that are there. We need to have integrity in oil and gas company accounts and better disclosures. So for those who do not want market intervention, we have information asymmetry here that we need to deal with. At the very least, we need to have the level of disclosure that they have the in United States, where gas reserves are determined on a much better benchmark basis, where there is less opacity in terms of those gas reserve figures. Mr Robertson concludes:

Poor disclosure in the oil and gas industry is leading to poor policy decisions in Australia. It is not possible to produce good policy outcomes in the current information void.

That is something that concerns me very deeply. He refers to the Australian gas cartel and says:

The Australian gas cartel has been very successful at restricting supply to the domestic market and forcing up the price. There is plenty of supply and plenty of reserves on the East Coast of Australia. Australia will be the world’s largest exporter of LNG by 2021.

This does not pass the pub test. It does not pass any reasonable test.

How can we be one of the biggest producers of gas in the world yet face a domestic gas crisis in this country, which is going to literally force the closure of hundreds of businesses, including manufacturing businesses and energy intensive businesses? Never mind the flow-on effects on every consumer in this country, because gas is an increasingly important part of our baseload energy mix.

We need to tackle this, and it must involve levels of intervention. If we cannot get the price of gas down, and if those businesses cannot secure contracts in the coming months at a much lower price than the $12, $15, $18, $19 per gigajoule that is being offered at the moment, it is unsustainable. We should have a gas price in the order of $5 to $6 a gigajoule. The days of $3 or $4 a gigajoule are gone. I know that, but we need to at least have a competitive price for Australian industry. We have had inquiry after inquiry into this. The government is taking a number of steps, and I acknowledge we worked constructively with them on those for transparency. But my fear is that the businesses I have spoken to in recent weeks say that we need an urgent intervention.

There will be an intervention on 1 July in export markets with export controls, but from the little information I have seen in respect of that, my fear is that it will not be enough to deal with this issue. It will not provide the level of intervention powers required in order to get a result, to bring those prices down. The proof will be in the pudding, and the reason we have not had more companies speak out about this is very simple. Multinational companies talk to me privately, and they say to me: 'If we tell the world how bad things are in Australia, what will our head office do? Our head office in Europe or in the US or wherever it may be will say, 'We do not want to do business in Australia; we will make plans to shift to other plants.' Private businesses, not publicly listed, are saying, 'We have covenants in our loan agreements that if our profit forecast declines dramatically that can lead to the loan being called in,' and they do not, understandably, want to speak publicly about this.

I urge my colleagues to consider this as an issue of great national significance. We are at a tipping point in this country, we are at a crossroads, because, if we go down a path where gas prices are not reduced, we will see the decimation of our remaining manufacturing sector in this country and many tens of thousands of jobs will be lost. We need to make some tough decisions that may involve intervention and that may involve using every constitutional power we can in order to free up gas for the domestic market at an affordable price. It may involve cooperating with the states in order to take this action. It will involve a whole sweep of measures, and, whilst I welcome the measures the government has put in place to date that we work constructively, the information I have been getting in recent weeks is that, unless they see a significant decline in the price of gas, those businesses will not be sustainable. That is why this is so important.

I will conclude by saying this: a hundred years ago Australia and Argentina were two of the richest countries in the world. Argentina went down the path of bad and disastrous decisions and a path of penury and dislocation from which it has never recovered. We cannot, we must not, go down the Argentinian path. This is our chance and our opportunity to tackle this in a bipartisan sense, because the consequences of gas prices not going down will be catastrophic for the Australian economy. This is the immediate crisis we face in addition to the bigger, longer-term issues in respect of electricity supply and security of fair and reasonable prices in this country. Thank you.

James Paterson (Victoria, Liberal Party) Share this | Link to 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.

Claire Moore (Queensland, Australian Labor Party, Shadow Minister for Women) Share this | Link to this | Hansard source

As you well know, there are very few certainties that come before this chamber, but this afternoon the arguments that Senator Xenophon put forward about the concerns in our community about our energy situation—and in particular the impact on consumers, businesses and the broader economy and the need for urgent and effective sponsors—I think, come as close to certainty as we have ever had in front of us.

I listened with great interest to the arguments that Senator Xenophon put forward and, in his contributions, he was focusing very clearly on the impact of gas supplies and gas prices. While that was not one of the leading processes in the Finkel report, I think it could be easily picked up in the response that we, in this parliament, make to the recommendations of the Finkel report. Having survived the years of where there has been such furious debate in this place—alluded to by Senator Paterson—about the way people bring pre-acknowledged and predetermined positions and are not prepared to compromise, we have not seen a great deal of compromise on this issue over the last few years.

I am concerned by the final element of Senator Paterson's proposal, which was: whatever the government comes up with must be the right answer, and that everybody in the chamber—ergo, everyone in the community—must agree with that, not question it, not look at how we can move forward. We have to agree, absolutely, with what the government of today says will be our future.

I do not agree with that proposal. I do not believe that that is what the impact and the expectation of the Finkel process has been. It seeks ongoing consideration, research and activity around the issues to develop a plan into the future, to which we sign absolutely, and we should all make every effort to ensure that it is effective and meets the needs of the community.

To make an expectation that absolutely everything that is determined at this time must be without any change—and I did like the use of the verb to 'quibble'—or quibbling and that that will be the way we are going to move forward automatically reinforces the divide. It reinforces the space where there will be the kind of debate that we have suffered from in this place around the issue of the best way to look at energy, the best way to respond to not just Australia's need—though I do note Senator Xenophon's proposal is looking particularly at a crisis in Australia.

As I have said many times in these discussions over the last few years, we are not only looking at Australia in this process; we are looking at our world and how it responds to the dictates of the pressures of climate change, of us living on this planet together, while maintaining our lifestyles, which is very important, and our effective use of energy. Together, we have to fulfil commitments to ensure that we do have a future, not just here but across the globe, which is where international agreements come into play. We must ensure that Australia takes a leading role in those international discussions so that we are part of a worldwide response.

I was heartened today by some of the responses by Senator Brandis in question time—and that is not something I say a lot. However, I was heartened today when he said that the government would be relying on the science. That is something that is very valuable to hear because consistently, in past debates, the role of the science has been debunked. The role of science has been dismissed and used almost as an argument for not responding—instead of listening to and working with the strong scientific evidence that we have, there has been a desire for personal reasons and needs to actually debunk the science. There is a big difference between questioning and actually strongly questioning, demanding effective research and demanding stringent investigation, and there is a big difference between that approach and debunking and dismissing. I think that one of the many lessons we need to have learned over the last few years is that this movement to debunk, dismiss and attack scientific processes has been wrong. That has actually coloured a lot of the debate and has caused great pain and concern not just in the scientific community but, I think, in our wider community as well. So I was really pleased to hear Senator Brandis say that the approach of the government is going to value the science and listen to the science.

We did have a very strong step in that direction by the agreement of the federal government and all the states and territories to give our Chief Scientist and the extraordinarily highly credentialed team that supported him through the conducting of the review the very serious but responsible and appropriate task to undertake an independent review of exactly where our community is at the moment in terms of our energy needs and where we need to move forward. The fact is that that review was conducted in a rigorous way and an engaging way. The approach that the Finkel team took to this review is the way we need to continue. They placed absolute importance on the science and ensured that they got the best possible research positions, the best possible knowledge and the international awareness of what the science is in evidence to their review.

What they also did was open the process to the community, the business groups and across the whole of the country so that it was not only located in certain regions. The Finkel review ensured that they heard evidence from people who were concerned about these issues all across the nation and gave them the opportunity to be involved. People were not excluded. They were not told that this was the business of other groups or of people who may have credentials or particular experiences. This particular review was placed in the situation where everyone had the opportunity to be involved, and they took that opportunity. Hundreds of submissions were received by the review and all were published. Meetings and discussions were held with groups across the country—groups that often in the past have not talked to each other. I think the message this review process gave us is that there is an opportunity to engage in debate and discussion without degenerating into abuse and disgust. That is something I think would be a model for how we go into the future with this process. They actually did that by asking for the advice and asking for the engagement.

I began this contribution by saying there are very few certainties in any debate, but one thing that is certain is that people across Australia are concerned about our energy situation. They are concerned about where energy in the future will be obtained so that we are able not only to maintain the goals that we have now but to improve and have greater access to the kinds of things we all value. The certainty is that people are concerned about increasing prices of power. There is no argument about that. Mr Acting Deputy President, no matter how you look at the figures and no matter which graphs you use, it is clear that energy prices have been rising. It does not do us any credit to talk about whether they rose more quickly 10 years ago or now, or what the expectation is in the future. The fact is that energy prices are growing. That is putting greater pressure on families and individuals. As we heard from Senator Xenophon's contribution about his interaction with a range of businesses, it is also putting extreme pressure on businesses that actually provide jobs and economic opportunities for people across the country. So the certainty is that people are concerned about the source of power and the cost of power.

It is always a position of debate when we get surveys about whether people are concerned about climate change and renewable energy. People can pull out graphs and survey results all over the place and argue about what is fact. But what I can say is that my own perception is that people across the community are concerned about a genuine clean energy future. They are concerned about the impact of energy use and different sources of energy, the impact on climate change and about a clean environment in our country. And that does not matter whether you are talking with people in Central Queensland in my state or the power areas around Gladstone, Mackay and those areas, or whether you are talking in capital cities.

I think there is an open discussion going on around the issues and the impact of different forms of energy on the environment. Instead of actually taking that out of the debate we are having through this process and putting it into a separate box, this should be central to the debate that we are having around our future. If we keep these issues separate or if we deny that these are real and important to people, we are closing down experience, we are closing down knowledge and, I believe, we are closing down a really integral part of how we are able to plan into the future. As I said, we are actually changing the impact we would have as international citizens in this place.

Senator Paterson, in his contribution, went through the various recommendations of Finkle. I think what we have seen is, across a range of different groups in the community, people have responded in a positive way. Consistently, when you look at quotes from a number of the major industry groups, the major unions and from ACOSS, you see that there is a willingness to consider what has been put before us. I think that is a very positive step. There is a tendency for all kinds of reasons to rush to judgement, particularly if you think that somebody has said something that you agree with and you can actually join in concert with that and say, 'Naturally, this was the right result because I agreed with it.' Or, if you do not agree with it, you can rapidly jump into an attack mode and say, 'This is garbage. There's no way this will work. We won't go down that track.'

The thing about which I have found the most hope in the debate we have been having in the last couple of days is: it does seem to be, across the board, an approach that says let's have a good hard look at what the Finkle review has said and let's see how we can move forward with it. It certainly is a major move forward. I really like this quote. I am worried about cherrypicking quotes from all around the place, but I am going to use this one because I think it sums up a little bit of a view about where we are at the moment. It is from Matthew Warren from the AEC. He said on the ABC:

Right now, we couldn't do it worse if we tried. We're making everything worse. We're making prices higher, reliability more unreliable, and we're not delivering the emissions we're required to deliver.

As a snapshot of an assessment about where we are, that actually is a pretty strong warning that there has to be change.

When we look at some of the other responses, the common theme is: let's have a reasonable consideration of what is before us and see what the next steps are going to be. I think that is the challenge for all of us. If we do this, we will consider and look very clearly at the recommendations around the issue of the clean energy target. It is a different approach and is, actually, one that is not in the current Labor Party policy. I am really pleased that I have heard Mark Butler, our shadow minister in this space, and also Bill Shorten speaking very publicly that we will actually consider this different option and see how it could work. With the Labor Party policy which we took to the last election, about which we were very sure, as you know, Mr Acting Deputy President Gallacher, we are not going to say, 'Just because Finkle has recommended something different, we are going to close our minds to this particular aspect of the recommendation.'

In terms of our own approach, there has only been the one element that we have questioned at this stage, and that is around the use of the term 'clean coal' and whether it can actually go under the heading of renewable energy. And that debate will continue. But it is certainly something that is not new. With the other recommendations which Senator Paterson read into the Hansard record, those areas are things which, I think, now, the Finkle process has given the challenge to all of us as a community and as a parliament. And it is not bipartisan; it needs to be cross party. The term 'bipartisan' belongs to a previous part of history. We now have to engage with a range of representatives that come here with the vote of the population to say that we need to consider what is before us in terms of this debate. In terms of where we take it, we need to look very seriously at some of the arguments that Senator Xenophon has put before us about the issue around gas in this country and the impact on businesses. That is one area that I do not think was picked up as strongly as it could have been in the Finkel review, but we have the opportunity now to include it in the discussions that will inevitably come from looking at it reasonably and with responsibility.

An element that I want to finish with is the expectation of the community. People in the wider community are suffering in their awareness of rising prices and their fear of the future. They need to be able to look with confidence to the parliament that they have elected to respond effectively to the processes that are before us. If we continue to just throw barbs across the chamber and refuse to work together in this area, we are not fulfilling the responsibility that we have from the people who have elected us. We should not add to their uncertainty, vulnerability and anger by not taking up the challenge that is before us now. While not everybody in this country has read the full Finkel review or the submissions that are now public, people in the wider community are caring about the issues. They are reading things in the media and listening to media commentary and they expect us to make a reasoned, responsible judgement about how we go forward. We have a way to go to learn how to do that as we should.

Cory Bernardi (SA, Australian Conservatives) Share this | Link to this | Hansard source

In following Senator Moore to discuss this topic, I do make the point that Senator Moore referenced the issue—I will paraphrase here, Senator Moore—that it is time to stop the argy-bargy and work together constructively to get an outcome. That is generally the way of those who are getting what they want. They want to work constructively because they know that the capitulation of common sense and reason is almost complete on the other side. When it is outreach and working together, it means doing what those on the other side of the chamber actually want. That is a problem because the energy crisis this country undoubtedly faces is a direct product of the policies that have been enacted by successive governments over the last decade. Now, belatedly, honourable senators and MPs are being dragged kicking and screaming to recognise the disaster that they have created. I say that it is belatedly because it has been obvious to all and sundry who want to see and who can study the facts for themselves and to those people who bother to talk to people in business about the crisis of electricity. It has been obvious to all and sundry who have taken the time to talk with pensioners and families who are struggling to pay their electricity bills if the lights are even on. That, once again, is a direct product of the people in this place and the decisions that have been made over many years.

It is government policy that is responsible for the electricity crisis in this country—nothing else. It is government policy that has created the problem. There are no ifs or buts. There is this foolish pursuit of renewable energy targets that has compromised our electricity security, not only most notably in my state of South Australia, but right across the country. I say it is foolishness because everyone knew that renewable energy was intermittent, unreliable and uneconomic yet they pursued this green dream, thinking that, somehow, we can pave our way to nirvana. Well, it has all come crashing down because the renewable energy industry itself is completely unsustainable without taxpayer dollars, and those taxpayer dollars are being borrowed. At the moment, about $40 billion a year overall is being borrowed, but some of that is being channelled into the renewable energy sector, which has so egregiously let down the people of South Australia and is letting down the people of Australia. In my state of South Australia, we had what was effectively a five-day power failure. That is Third World stuff. For five days, a state in a First World country was without power. Businesses lost tens of thousands of dollars, and millions of dollars in some instances, in stock because the lights and the refrigeration were not kept on. Business investment in places like Port Lincoln, where they want to build cold storage facilities, has been absolutely stopped. Millions of dollars worth of investment has been stopped because they cannot rely on the electricity generation. We see businesses in small country towns and larger businesses in major metropolitan centres buying diesel generators to back up the unreliable electricity supply—and why? Because of the ideological pursuit of a 50 per cent renewable energy target.

That is Labor's policy and, until a few moments ago, it was Senator Xenophon's policy. Senator Xenophon cannot escape unscathed here, even though he is crab-walking away from his own belief system, because he was the one who was pursuing this renewable energy policy with some sort of special zeal. Then, when it was turning catastrophically bad, he decided he would tax the taxpayers more by demanding and insisting upon $70 rebates and subsidies for everyone who was suffering under the policy that he created. Now, today, he has done the little mea culpa. He said, 'Maybe the 50 per cent renewable energy target was a bit ambitious.' He sacked his best mate from being a candidate for his next party in South Australia, whatever it is called, because his mate belled the cat and said it was a ridiculous policy. I wonder if his mate is going to be reinstated. That will be something for Senator Xenophon to announce to the South Australian people—'I got it wrong for so many years. My mate got it right. Maybe he should be leader of the Nick Xenophon Team.'

But the responsibility does not just lie with the Nick Xenophon Team. It lies with everyone who has tried to cobble together some amalgam of fiction married to an ideological agenda that is being imposed from afar. Apparently, because we are resource rich, we are a prosperous nation and we have bountiful products with which to produce electricity, we are somehow destroying humanity. It is simply not true. Cheap, reliable and abundant electricity is the recipe for economic and human progression. If you have any doubts about that, go to a place like South Australia, where it is not cheap and it is not reliable. Our industry is suffering. Our state is suffering. If you want to extrapolate it out, go to a place where there is no real electricity connected in any meaningful form. Compare the quality of life, the life expectancy, the health and welfare outcomes and the economy there with those places that are generating cheap and plentiful electricity.

Yet, notwithstanding the crisis that our country faces, the ideologues are still pursuing this green dream. They are shutting down coal fired power stations with nothing to replace them. In South Australia, of course, the Labor government faces a political crisis because, in March of next year, after what is expected to be a stinking hot summer with plenty of power blackouts due to the green energy schemes that they have insisted upon, they will be looking to have a quick fix. Do you know what the quick fix is? They are going to go out and lease or purchase a whole bunch of diesel generators to back up their green dream. Diesel generators are probably the most inefficient, most polluting form of generating electricity known to man. I have heard reports that in another green oasis, that second life experiment called Tasmania, where the Greens been running the show far too long, they have got diesel generators there. It costs something like $11 million per month to fuel these diesel generators and to subsidise them. In South Australia, the government is going to be switching those on in about November or December just so they can get through the politically expedient period of three or four months without any blackouts. The cost of that is going to be tens of millions of dollars, which is going to be more than it would cost to fund the Port Augusta power station to keep it operating, burning coal for another couple of years until they can build another gas-fired power station or thereabouts.

Then we have, of course, the crisis with gas that Senator Xenophon talked about. I understand that gas contracts are wrong, are not acting in our interests and we have been done over on some of them. But there is this tie-up of resources. There is an inability for people to explore the gas or unconventional gas in some areas, to access a bountiful resource, because, once again, green ideology seems to have infected every major party. It started on the crossbench with one or two and it has crept its way around this chamber. I am happy to tell you and am happy to tell the people of Australia that Australian Conservatives are not buying into it.

Our energy policy is remarkably simple: stop subsidising any of it. Let the market do its work. I have heard time and time again about a market pricing mechanism. Leave it alone and the market will work it out. Become agnostic about how your electricity is delivered and generated and allow investment to take place. I do not care if it is windmills, solar panels, batteries, gas, coal or nuclear—there is the other thing missing in this debate. No-one seems to want to talk about the N-word, nuclear.

They do not want to talk about it because it might challenge some of their own beliefs, but I can tell you right now that, if a nuclear power station stacks up economically, we need to open our minds to having one built. There is no doubt about that, because that is a zero-emissions way of generating electricity. That would satisfy those catastrophists who have bought into the Marxist agenda of global warming, which is not happening. It will also provide base load power. I know there are concerns about that, but the new generation of reactors—the modular reactors—can be dealt with in a safe and efficient manner. In actual fact, if we decided to get really smart, we would explore the nuclear fuel cycle, including the safe storage of radioactive material, as a generator of revenue for this country.

That is what we need to open our minds to in this country, but instead we are doing every single consumer in this country a disservice. With every insistence that we fund another renewable energy project or somehow demonise the coal industry, we say it is okay for us to dig it up and ship it to India for them to burn, because we recognise their right to have cheap, reliable electricity. Or we send it off to China to burn over there, because we think they deserve cheap and reliable electricity. But somehow the Australian people do not deserve it—and what is it? Senator Moore referenced Senator Brandis's answers in question time today. Senator Brandis said—and I will paraphrase—that our commitment to the Paris Agreement was 'not an obligation but an undertaking' or words to that effect. So why the hell did we sign it in the first place? What's the point? It is not going to make one jot or tittle of difference to the climate. The only thing it is going to do is impede our economic development in favour of other people's economic development. And who the heck is an unelected international body to tell us or to instruct us or to obligate us to fulfil their fanciful dreams, particularly when the world's largest economy and emitter has just walked away from it? We should do the same.

If we are serious about solving an electricity crisis, we need to change the mindset in this place. That means we have to accept there is a place for any type of electricity generation if it is economic and if it is sustainable. When I say 'sustainable', I do not mean you have to have it committed for 100 years, but, if the crisis is baseload energy and someone wants to build a coal-fired power station, we should allow them to do it and we should allow them to do it with certainty. That means that if government is going to be a technology agnostic and wants to get the best results for the Australian people, it will say, 'We will not change the environmental conditions attached to that project for the life of the project.' If governments in the future break that agreement, they will then have to compensate the generator for it. In other words, they would do so at their own peril, because that is how we will give investment confidence to this country. It will be the same. We should have an open mind to nuclear power or thorium reactors, which people are continually telling me about and that are even more efficient again. We simply cannot close our minds to this, because otherwise we are not dealing in reality.

The crisis we face right now is going to get worse before it ever gets better. It will simply not get better if we are relying on Elon Musk and his battery storage technology. You can send $100 million on batteries and it will keep South Australia alight for six minutes or something like that, I am not sure, and then 10 years later you can replace them again and spend another $100 million to keep it alight for another 12 minutes when the wind has been blowing and the sun has been shining. Let me tell you, it is a very dark day for a lot of people in hardship in this country. It is a dark day because they do not want to turn their heater on and they do not want to turn their lights on, because the cost of power is out of control.

I come back to it: the only reason it is out of control is because the market has been distorted. It has been distorted by taxpayer-funded subsidies. In effect the taxpayers are paying twice, because they are paying the bills of the government and the interest costs on the money that the government borrows to throw in to international renewable energy generators, wind and solar farms, who then pass on the higher costs of their generation to the Australian consumer. They are subsidising coal and gas out of existence. The intermittent gas generators cannot afford to fire up their plants, because they are competing, when the wind is blowing, with something that is subsidised to zero. This is madness. It is utter madness, and it says almost everything about the failings of government, but not just the current government.

We have been through this many times. We had 'the great moral challenge of our time'. Remember when Prime Minister Rudd said that? And then, of course, we had the different approach of Ms Gillard. She said there would be no carbon tax under a government she led and then she introduced one. Then when Prime Minister Rudd came back he was remarkably silent on that climate change malarkey in his three weeks in office—a vindicating stroll around the country. Then we had Mr Abbott, of course, who repealed the carbon tax, but did initiate the Renewable Energy Target scheme. He claimed to have reduced it to 26 per cent or something along those lines. We have all in one way, shape or form gone along with this to solve political problems.

The difficulty now is that it is a political problem but it is also a massive economic problem for our country. That economic problem, as I said, is caused by government policy. It does not matter if you call it an ETS or a RET or a LRET or a CET or any other acronym. It comes down to this: the government interfering and distorting a market, damaging Australia's economic prospects and damaging individual Australians' quality of life. That is what we are facing. Until we recognise that and everyone in this place and in the other place faces up to that fact and says the only way to solve this is to ditch the ideology, ditch the theology attached to it and ditch the green dream which will never be reached. We have to open up the market to what it does best—that is competition, that is certainty and surety and that is survival of the fittest.

That will guarantee the best outcomes for the Australian consumer. It will guarantee us a place at the First World table where electricity stays on. The South Australian experiment is gradually being exported right around the country. It is being exported there through the ideology of Labor governments, Liberal governments and Nick Xenophon wannabe governments. The only government you can rely on to clean it all up would be a conservative government. I know that that is highly likely, at the next election anyway, but the aspiration is there for everyone else to follow. If you want a policy agenda that is going to act in Australia's interest, dump the ideology. Open your minds to what is required to make a difference in our people's lives and our economic future.

David Fawcett (SA, Liberal Party) Share this | Link to this | Hansard source

I want to concur with a couple of things my colleague Senator Bernardi has just said: yes, dump the ideology and that we do need a conservative government. I would just remind members in this place and the public who are listening that it has been said of the Liberal Party that it is the home of classical liberal thought but also the natural home for preserving conservative values. That is what Menzies brought to Australia and it has seen some of the best decades in Australia's development in history post World War II.

Cory Bernardi (SA, Australian Conservatives) Share this | Link to this | Hansard source

You're stealing my party name.

David Fawcett (SA, Liberal Party) Share this | Link to this | Hansard source

I am being accused of stealing the conservative name. I think we had it first in terms of the character, Senator Bernardi. As a conservative—in fact, I said this in my maiden speech in this place—one of the reasons I am attracted to the Liberal Party is that as an experimental test pilot, which was my previous career, I am open to new ideas. That is the whole purpose of testing things and trying things and experimenting with things. But I am also a conservative because there are fundamental principles, particularly in the engineering space, that you just cannot walk away from because of ideology or marketing or hope or anything else. The two have to work in balance.

This energy debate, I think, is a classic example of where those two things have got out of balance. There is a whole bunch of dynamics at play here and even the tabling of Dr Finkel's review brings out some of the worst in Australia's polity, in the media and in community debate. What we see is people assuming that you are either for it or you are against it, and if you dare to talk about or question or look at alternatives then people assume that you are either a climate denier or you are whatever—that label they want to put on you. But I have to say it is that attitude that has got Australia into the problem that we are currently in. Certainly speaking as a South Australian, I see the problems in my home state where what the Premier there called the great big experiment in renewable energy has gone horribly wrong. So we do need to take the report that Dr Finkel has handed down in response to a direction from COAG, who have recognised finally that the system we have had for many years needs changing. The National Electricity Market is over 20 years old. It was designed in a day where the generation of power was predominantly from things with spinning turbines. Whether it was from hydro or coal or gas, it generated a consistent power that was essentially different sources of the same kind of power fed into a network.

The introduction of renewable energy, particularly where it has been accelerated by schemes like the RET and by government, often local or state government, regulations to encourage the uptake or placement of things like wind farms by providers of renewable energy, has occurred without the required systems engineering to understand what all the inputs are and what the failure modes of systems are. Just in the last few months, people in this place have finally started talking about some of these principles of engineering as opposed to the ideology or the legal basis or other considerations that often constrain or guide debate in this place. I am on record as saying it and I will say it again: I think the Australian nation would be well served if we had more systems engineers and fewer lawyers in the parliament so that legislation and policy going forward was actually based on a good requirements analysis and an understanding of the constraints and the objectives, working through the different models and approaches and then looking at how we test the implementation to make sure that what we have put in place works. We are part way down that path.

So what do we need to do in this area? As Senator Xenophon stated, we do have to address the current situation. There are a number of factors that have driven electricity prices sky high. We have stabilised that in part by getting rid of the carbon tax, but back in May 2014, to take a particular month, the electricity price was set by the peak gas price only nine per cent of the time, whereas in May 2017 it was set by the gas price 24 per cent of the time, which means all of the other generators are actually dragged up to the price of the highest input at that particular time. So we have seen this distortion of the market driving prices up. The other key thing that we need to do, other than getting prices back down to an affordable level, as I said yesterday in another contribution to this debate, is lower the cost of energy. It is the low cost of energy that has traditionally allowed Australia to be competitive in manufacturing and a range of other industries. If we want to maintain good wages and a First World standard of living, then we cannot compete with other nations unless some of our input costs are more competitive. Low energy prices are one of those key input costs for many business sectors. Pricing is one thing, reliability is another.

We need to understand the true cost of integrating renewable energy—in fact, all forms of energy. We need to understand the system requirements in terms of interfaces and failure modes and what the true cost of those things like wind farms, for example, are. I am completely technology agnostic when it comes to generation, but I do believe you need to look at the system as a whole. If you need to look at ways of addressing system stability and frequency issues as part of increasing the amount of power coming from something like wind, that needs to be one of the costs which is weighed up against how much this is costing us to bring it into the marketplace. In South Australia's case—everyone has talked about the blackouts there and we have had members opposite call out that it was a storm that caused it—I again come back to my test flying background. When we test an aircraft, we look at the response and the controllability of the platform in a range of environmental conditions. One of the things we look at is what we call the gust response, and some aircraft are just dreadful. It only takes a gust of wind, almost, for some very light aircraft to be almost uncontrollable. Others, heavier aircraft or aircraft with better designed control systems, can respond to a whole range of turbulence and still be quite controllable. What we are talking about here is the trigger event. The trigger event may well have been a storm; the trigger event may well be a lack of wind. There could be a range of trigger events, but the thing that we are concerned about is the design of the NEM and the design of the system so that it is resilient and able to withstand shocks to the system—and, again, that is where systems engineering comes in.

The third area that I think we need to get right in looking at the NEM is making sure that we have certainty so that people are prepared to actually invest into new generating capacity, into new distribution systems and into new storage systems. That requires policy certainty. A lot of the people who have come out in response to the tabling of the Finkel report have said, 'This is fantastic. Let's adopt it, because we need certainty.' I agree with them that we need certainty. But what I would just caution is that—while Dr Finkel's report is a very well informed, considered and expert input into this debate—it is an input and not the solution. With any report that is given to government, the government will normally take some time to consider it and obtain a range of opinions from other stakeholders before deciding on how they will actually respond.

Why do I think that is important? Already, what we see is people looking at the Finkel review. Other than those who are just retreating to their camps, there are those who say it is fantastic and that we should just adopt it, to those who say it allows coal and therefore it is bad and to those who say it does not allow enough coal and therefore it is bad. There are some people within the industry who have started looking at things like the modelling. Again, I am not an engineer in terms of power systems and electricity, but I do understand modelling. Again, we use a lot of that in the world of flight testing. It is a fantastic tool to work out what might happen and it is a fantastic tool to analyse why something happened, but it is not perfect. Certainly, speaking as a test pilot, the ultimate certification needs to rely on tests as opposed to just modelling.

One of the reasons that is so critical is that the design of your modelling tool is important but also the assumptions that you make are important. Having gone and had a look at the report, I notice here that they have used one particular software tool called STRATEGIST. I have gone back to the US Department of Energy and had a look at their power sector modelling reports, where they have done an analysis of different tools: it is a well-regarded tool. But it is one of a number of tools. There is another tool called PLEXOS, which happens to actually be written by a company called Energy Exemplar in South Australia, in Adelaide, my hometown. Interestingly, that is used by numerous academics, universities, regulators and power providers. In fact, it is used by the majority of people, like AEMO and others, here in Australia. This tool was used by the firm that was supporting the Finkel review was but one tool in the market. It probably does not have the penetration of perhaps some other tool. That is not to say it is not valid, but it is one view and one method of analysing data. They also used some other tools, particularly around renewables, to understand some of the changes in that.

What I want to go to particularly is annex B, where it talks about some of the assumptions that are used. For example, the assumptions around the existing renewable energy target. With modelling, you can have a model or perhaps even a couple of models, something that people trust to be transparent and reliable. As I have looked at something like PLEXOS, it is used by a number of regulators and market operators. The extent of its uptake around the globe says that there are software products that are accepted as a good baseline that everybody would trust to do a sensitivity analysis, as you vary the inputs and the assumptions to it.

So let us take the assumption here that the existing RET is going to remain for all scenarios. That is what it has said here. If we varied that—there are some people who hate the RET; there are some people who think the RET should be greater—what would happen in terms of the decisions to invest in new coal by people who perhaps favour clean coal technology?

What would happen if we varied it in terms of reduction? Where would the investment level in renewables be? Just that one factor could actually make some quite remarkable differences in who would invest and then what the impact would be in terms of pricing and reliability, and, importantly, understanding things like emissions.

There are other factors that we should be looking at. For example, availability of international offsets. The model in this report has assumed that there are no domestic or international offsets allowed. That is fine—that is one assumption. But what if we did a sensitivity analysis on that? What if we said: 'Let's play with that variable to see what the impacts are on some of the other considerations? Are there combinations or permutations of the assumptions and inputs that potentially could deliver us an even better outcome in terms of lower prices and reliability of power, and still achieve emissions outcomes?' There is a whole list. I will not go through the whole lot; I think I have made my point with those.

The other part that I think is really important is that as a society we also need to do a cost-benefit analysis. One of the parts that I found interesting in the report by Dr Finkel was when he looked at Australia's emissions—it is generally accepted that they are around 1.3 per cent—and what the contributions are by different sectors to that. The NEM contributes about 30 per cent. So in terms of Australia's emissions in the world, we are talking about 30 per cent of 1.3 per cent here.

As my colleague mentioned earlier today, when he asked Dr Finkel in estimates:

… if we reduce the world's carbon emissions by 1.3 per cent,

Completely, which would essentially mean shutting down Australia—

what impact would that have on the changing climate of the world?

And Dr Finkel said:

Virtually nothing.

What we are seeing here is that even if we achieved perfection by shutting down Australia, at a huge cost to everyone, it would not make very much difference at all.

I am not asking us to pull out of Paris or other things like that—I think it is great to put on the record that Australia has consistently exceeded the targets that have been agreed to at the various international conferences and that we are well on track again to meet our current targets. I think that is a great thing. But I think there is a valid question to ask about not being afraid to have a transparent approach. We should take the reports by people like Dr Finkel and take other concepts, and look at doing that sensitivity analysis around the inputs and assumptions and also weigh up the cost benefits. We should ask, 'Can we reduce power prices by 50 per cent and could we increase reliability to close to 100 per cent?' Is the difference in terms of the actual output we make—that 30 per cent of 1.3 per cent, that is not very much—something that we could live with? Can we say, 'Yes, we think we can still meet our emissions targets.' Or, if there had to be a variation to that, can we find an amount where we could say, 'Yes, we're happy to work with that with the international community.' We should not be afraid to have that discussion.

My view, from what I have read and from different people I have spoken to, is that it would be possible to meet our emissions targets but at the same time be driving down the price of electricity as an equal priority with reliability. That means both systems engineering and integrity in the redesign of the NEM. What that requires is for people to have confidence in the process. That is why I think that we need to move away from the situation that has developed, even in the last two or three days, of people taking sides and assuming that the Finkel report is the be-all and end-all—that we either accept it or we reject it. We should take a sensible systems-engineering approach which says: 'This is a rigorous and very valuable input to the debate. Now let's set up—let's get AEMO and some of our key universities; let's get people who produce tools that are accepted and validated around the world to do that sensitivity analysis. Let's work out what the best combination is that will achieve the lowest price, the greatest reliability and our emissions target.' The people who hate coal may not like to hear this, but it is just possible that if you varied those parameters—if you varied, for example, the RET: took it down, got rid of it—you might get to a point where you actually get enough investment in good, solid baseload power that enables us to meet our emissions targets, but drives down prices to the extent that our economy is able to compete more effectively, creating more jobs and a better environment for people in the nation. All of these things will remain unknown unless we are prepared to engage in the discussion.

We have the tools. As I said, I can—not that I am vouching for the company, but they work out of Adelaide, they are used by our regulators, by regulators overseas. We have the tools. We have the academics. We have the people in the market. Let us have the maturity as a nation to go beyond the binary positions that people adopt; let us do that analysis to challenge some of these assumptions, to look at the different options and then be prepared to say: here is a transparent matrix of test results that show that this combination is going to achieve these results. We can then pick the combination of price reliability and emissions that the Australian community says is in our national interest. If there is one thing to come out of the debate this week, it is that we need to be prepared to move beyond the simplistic binary debate, engage in more depth and work together towards what is in the national interest, and certainly that requires engineering and not ideology.

Helen Polley (Tasmania, Australian Labor Party, Shadow Parliamentary Secretary for Aged Care) Share this | Link to this | Hansard source

I also rise to make a contribution in this debate. This is about Australia's energy crisis, the impact it has on consumers, on businesses and on the broader economy, and the need to urgently respond. But unlike those on the government benches, who do not seem to know which way is up, Labor is committed to finding a solution to this energy crisis—a crisis that has engulfed this country under the leadership of the Turnbull government.

People across the country have been waiting to hear about this all week—that is, whether or not the government will step up and take serious action to deal with the energy crisis that is gripping the nation. Under Mr Turnbull power prices, as we know, have gone up, pollution is up, but jobs are down. The electricity policy paralysis of this government has led to this energy crisis. We need a plan for cheaper, cleaner and more secure power, and that means more renewables.

The Finkel review, which I will touch on shortly, has made it clear that the best way forward to deliver cheaper, cleaner and more secure power is through renewable energies, and I know that my colleague opposite, Senator Duniam, would concur that Tasmania has in fact led the country for decades in renewable energies. But what we also have to comment on here tonight is that we have a Prime Minister who promised so much to the Australian community when it came to climate change, who promised so much when it came to innovation, but who has failed to deliver on each area of this policy—and we are not even going to talk about the budget failures at the moment. We had a weakened Prime Minister even before this debate was before us. What we have seen this week, yet again, is a government in crisis. It just does not have any clear direction of where it wants to go. We know that it is not Mr Turnbull who is running the agenda. We know that his predecessor, Mr Abbott, takes every opportunity he can to try to 'help' the Prime Minister—he does that every day—and so what we see is a government with ministers who do not know which way to go.

This government promised at the last election that it was going to be a government about jobs. It failed on that account. They have failed to provide a united and a mature adult government, because quite clearly they are acting like children at the moment. They are divided on so many fronts; it is absolute chaos. I was asked out at the doors this morning: 'What happened at the ball last night? What was the gossip going around the room?' I said, 'I wasn't even at the ball, but I can tell you it isn't gossip that's going around at a function there last night.' This is what people out on the everyday streets in my hometown of Launceston, around Tasmania and around the east corridor know: this is a government that they thought was going to deliver so much under Mr Turnbull, but he is not the Prime Minister that they voted for. He is not in control of his own government. He is in chaos. There is no unity of purpose there. We have different groups. We have Mr Abbott coming out at every opportunity to try to assist the new Prime Minister to keep him on track. There is one thing the people do know, and this is not gossip. This is the reality: this government, led by Mr Turnbull, has been a government that has done nothing about ensuring equality in our community across the board.

There is so much happening through this area of policy, on energy alone. We talk about the impact it has on people—on families, on older Australians and on pensioners. They are the people Senator Bernardi actually referred to, and I agree with him. What we find is that Australian pensioners and those who are on fixed incomes are finding it increasingly difficult to be able to meet their budgets when it comes to electricity. I do not know how many times I have heard from people in my home state about the fact that they can no longer afford to put the heater on at night. These older Tasmanians who have worked hard all their lives can no longer afford to pay their bills, so what do they do? They go to bed and turn on their electric blanket because it is cheaper and more cost effective to run their electric blanket than to heat their lounge room. That is the reality of it. This government has done nothing but add to that with their unfair budgets.

The Prime Minister keeps trying to tell us that the only reason the wholesale power prices are going up is because of gas prices. Let's be very clear: power prices are going up because of the policy paralysis of this government and the uncertainty under the leadership of Mr Turnbull. The Liberals can try to spin it any way they like, but the reality is that under this government for the last four years the power prices have continued to rise. I know my good colleague from the other side will come up when he speaks after me and put his own spin on these things, but the reality is that this government is so out of touch in understanding what is happening in the Australian community.

On top of this, what we know is that in 17 days the government are going to bring about even further hardship to people in this country. Some 40,000 Tasmanians are going to be worse off because the government have been a part of taking away their penalty rates. They could have stopped that. Again this week they voted against Labor's legislation to protect penalty rates for some of the lowest-paid members of our community who do the jobs that look after us if we want to have lunch on a Sunday or if we want to go out on a public holiday. They are the people who are away from their families. They are doing the things that people expect them to do when they go to a restaurant, a hospitality—whatever the circumstances—or hairdressers or pharmacies. But these people in government are so out of touch that they do not care. They do not care at all.

We know the real effect of their budget and what they want to do via the government's attempt to remove the energy supplement from the most vulnerable Australians, a cut that will rip $550 from the pockets of pensioner couples in this country and $229 from a single Newstart recipient struggling with inadequate payments already. So that is 1.7 million people that are going to be affected. This is a cruel cut, so we will keep opposing that and we will always oppose that. It is quite obvious that over the last four years the increases in power prices and the terrible, unfair budgets that the Turnbull government and the Abbott government have delivered to this country have made it harder for everyday Australians. If you believe some of the gossip around this place—even from my good friend Senator Abetz yesterday; there might be a second coming, obviously, when Mr Abbott comes back and takes over the leadership again—we will see more of that in their budgets.

But the Liberals want us to believe that repealing the carbon tax was the key to guaranteeing low electricity prices for everyday Australians and that somehow the energy supplement is redundant. Actually, the wholesale energy prices have doubled under the Abbott-Turnbull governments. It may not seem like much for many who sit in this chamber, and particularly the Prime Minister, but $14.10 a fortnight is a lot of money when you are already living on a very meagre income. That money is crucial to those people who are trying to meet their budgets for just essential items. It is so evident that Mr Turnbull, who promised so much, has let down even Liberal supporters, but this government does not understand anything when it comes to fairness—nothing at all.

I want to turn to the Finkel report. Without reform, we will be forced to endure, as I said, higher prices, reduced security, lost investment opportunities and stubbornly high emissions. We need a careful considered review of the decisions that we need to make to lead to the return of a stable investment environment, affordable prices and reliable supply. The Business Council and other businesses and environmental groups sent a very clear message to the government last week: to give full and fair—there is that word 'fair' again; the problem is they do not understand what fair means—consideration to the Finkel report. We, on this side, are committed—Labor is committed—to giving that full and fair consideration. We have welcomed the release of the Finkel review, and we are clearly looking at the recommendations of the report. We are taking it very seriously. Unlike the Liberals, Labor is committed to finding a solution to the energy crisis that has engulfed this country under the leadership of the Turnbull-Abbott—maybe Abbott again—government. This is why we took a detailed energy policy to the last election.

I want to go back to what we have done in Tasmania for decades that no-one, not even those cynical people on the other side of the chamber that laugh with their interjections—Senator Duniam understands, because he is a Tasmanian and he understands; he is very proud, as I and my colleagues are on this side of the chamber. Tasmania has been very innovative when it comes to hydro—world leaders, international and national leaders. We have led the way, and it has been successful for our communities. But there is still more to do. We have wind energy. We have wave energy. There are so many other opportunities for us to look at. We have solar energy. I fundamentally believe that solar energy is fantastic for our community, and more and more people will take it up. The only difficulty that we have in Tasmania is that the rebate has been reduced, which is making it harder for some Tasmanians to be able to make that investment. We should be encouraging people to invest in solar. It is going to be better for our communities and better for our family budgets. It is better for the environment, and it is something that is good for us as individuals and as families.

As I said, it all comes back to a government who are so busy having their own internal crises that they have not been able to give due consideration, careful and fair consideration, to this report, so we are waiting, as are the community, to hear what direction this government is going in. I would have to say that there are a lot of people that are concerned about the coal industry. Coal—that is, the industries and the mines that we have now—obviously will always have to be taken into consideration. It is also part of our economy and important in terms of the benefits that it provides to communities, jobs, the economy et cetera. But it is very clear from my reading of this report that we really ought not to be moving into opening up any further new mines.

As I said, this comes down to the leadership of this government. I know that Labor will continue to push to consider the recommendations and work forward in the interests of resolving this energy crisis, giving some certainty and security, and doing something about ensuring that people can afford to heat their homes so that older Australians, older Tasmanians and those on fixed incomes do not have to resort to turning off the heater, going to bed and running their electric blankets.

Jonathon Duniam (Tasmania, Liberal Party) Share this | Link to this | Hansard source

It is always a pleasure to follow my great Tasmanian colleague Senator Polley and listen to her contributions to debate. I think that tonight, though, she was reading from the pages of her latest bestseller, Away with the Fairies, which you can find in your local Dymocks bookshop. I do not know that there was much fact. There was a lot of commentary and hyperpartisanship, which is something that I have even heard her own colleagues talk about in this debate and other debates—the need to remove the partisanship from this debate. The last 15 minutes of debate on this particular issue have been about nothing but how bad, in Senator Polley's eyes, the coalition government is for Tasmania, pensioners and workers, and how good Senator Polley and her colleagues on that side of the chamber are. I recommend that the 17 people listening to this debate across the country head on down to their local bookstores and see if they can pick up this fantastic fictional novel. Senator Polley tells me that she will be doing signings in her electorate office the week after next.

But I do welcome the opportunity to speak on this debate on the motion that has been moved by Senator Xenophon. It is an important topic, it is salient and it has been on the minds of many in this building and across the country for this week and much time leading up to now. The motion reads:

That the Senate notes Australia's energy crisis, its impact on consumers, businesses and the broader economy, and the need for urgent and effective responses.

The motion sums up everything about the debate we are having now and what we need to do. It is great that we are able to take the time in the Senate to actually talk about those particular issues, the impact on the groups that Senator Xenophon mentions and what needs to follow.

Listening to the contributions that have been made throughout the course of this debate, I come to it with the information that has been provided to me by the people I represent from the state of Tasmania. The biggest issue that they raise, which seems to be an undercurrent in every contribution on this debate, is the need for certainty—certainty around prices and supply in the case of businesses, particularly major industrials. That is the one key theme that keeps being brought up to me in my home state of Tasmania—one that I simply cannot ignore.

One issue that Senator Xenophon did raise in his contribution was around a particular source of power generation, and that was gas. That is something that we do not have a great deal of experience with in Tasmania, although, watching from the beautiful Apple Isle to see what is happening in other states across the country, I think the moratoria on further gas exploration are part of the problem. Where we have state governments who refuse to allow further exploration, it means that we do not have more to inject into our domestic market and it means prices go up. As has been pointed out by Senator Fawcett and others in this debate—although my friend Senator Polley would argue with this, and she did—the high price of gas has had an impact on overall power prices for businesses and households across the country.

So, again, the key point for me from Tasmania, and I think many who have spoken in this debate, and indeed many of those colleagues I have spoken to from my own party room, is about certainty. Certainty for investors—people who want to get into the energy market. They want to know what they are buying into and that what they invest in today is going to be a decent investment in a number of years' time because decent investments mean that people can provide a more stable and better yield on their product. They want to know that supply is stable and reliable and that it is not going to flicker on and off. Intermittency is something that we do not have to deal with. It is something we have heard talked about with regard to wind and solar—but not so the case with hydro in our great state of Tasmania. The most important thing for the average person on the street, the people who bowl into my main electoral office in Devonport in the north-west of Tasmania, is affordability. It is so incredibly important in trying to make the household budget work and, if you run a small business, in trying to make sure that the books balance at the end of the month.

I think enough has been said, in broad terms, about the Finkel report. We have had a week of discussion on this and I suspect, based on what I hear from my colleagues across the way, that they will want to keep talking about it for some time to come—fair enough; it is an important issue. I think it is a good opportunity to touch on the point that was made by Senator Brandis in his answers to questions over the last three days and that is around the trilemma that the nation faces with regard to energy policy: the need for reliability, affordability and to meet our international obligations. The one thing that seems to be lost on many in the opposition is the need for process around that. What we have had presented, as promised, was a report. A report was provided to the government by the Chief Scientist and that report was released publicly. As you would expect, following on from receipt of such a document, which is weighty in the concepts it canvasses and the issues it covers, there is a discussion. The point has been made by others in this debate that we come to this debate from different backgrounds representing different constituencies and with different preconceptions about how we think the issue ought to be dealt with. Once a discussion has been had, then the government has the opportunity to respond. They are the steps you take.

As I said in the contribution to the take note debate a day or two back, those opposite seemed aghast at the fact that we were having a discussion, that we were even canvassing various elements of the debate and various options on what some people think might work and what others think might not work. But I think that is an important part of what we have in this country: a healthy democracy, the right to speak your mind and the right to stand up for your constituents, and not just to be told what you are going to say and do. We on this side of the chamber are not a homogenous blob of mindless individuals but people who come to this debate with different backgrounds, experiences and views on what is right and what is the best way to go.

Senator Paterson, as I referred to before, has talked about the different communities we represent. In my state of Tasmania, particularly in the north-west, we have a much lower average household income in that part of the state than in many other parts of the country—so much more than people in eastern Sydney or downtown Melbourne or even parts of Hobart. People in the north-west of Tasmania, where my main electorate office is in the city of Devonport, struggle with the cost of power. Senator Polley's point about pensioners and people on fixed incomes who have been forced to turn the heater down or to hop into bed just to stay warm rather than get cold on a winter's night, the cost of power is a chief concern. That is what is driving my contributions to this debate and the debate more generally. It is about ensuring that whatever we do moving forward means that we do have affordable power for Australians and for Tasmanians alike, that no-one misses out and that everyone has the ability to purchase power and fund whatever activities they undertake. That impacts on families and also businesses. Businesses need to know how much they are going to be able to allocate towards power so that they do not get a shock power bill in a month's time, find that the books do not balance and have to add to their overdraft or similar. There was the case in Tasmania where a number of major industrials were reaching the end of long-term contracts that they had signed with the power generator Hydro Tasmania and prices were going to increase significantly. Thankfully, the Tasmanian government intervened and did what it could to restrain the cost of power, but it demonstrates the point that cost is very important in this debate.

As I said in some comments I provided to the Hobart Mercury newspaper yesterday—it was reported today; and Senator Fawcett touched on this point as well—the minute you start talking about something like affordability of electricity as a chief concern as opposed to some of the other elements of this debate, you are written off as a 'climate denier' or, as Senator Carr would like to say, a 'knuckle-dragger'. I think that is an insult to people who complain—

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Who said that?

Jonathon Duniam (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Senator Kim Carr made that comment.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

A knuckle-dragger?

Jonathon Duniam (Tasmania, Liberal Party) Share this | Link to this | Hansard source

A knuckle-dragger is how people who are concerned about the price of power are referred to. As I was about to say, those people who are worried about paying their power bill—and I have my own power bill here, which is quite significant; I was just about to pay it—

John Williams (NSW, National Party) Share this | Link to this | Hansard source

How much was it?

Jonathon Duniam (Tasmania, Liberal Party) Share this | Link to this | Hansard source

It was over $3,000 for a quarter.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

What!

Jonathon Duniam (Tasmania, Liberal Party) Share this | Link to this | Hansard source

That is correct. The heaters were on high. The point is that anyone who complains about the cost of power and is therefore labelled as a knuckle-dragger. I do not think that is right. I think the people of Australia who are struggling to pay their power bills deserve respect; they deserve to have their concerns heard. This government, that opposition and the crossbenchers should all understand how important their budgets are to us and help them pay their power bills.

On Tasmania, as Senator Polley mentioned, we do have a very proud history of being a renewable electricity generator through our tremendous hydro scheme. We have a great history down there. Many communities were settled as a result of the hydro scheme. Many immigrants came to our state and have been a great part of the tapestry of the Tasmanian community. As Senator Polley said, we are a world leader—and I would like to think in some cases over the course of history we have been certainly a trendsetter—when it comes to new and innovative ways to generate energy. South Australia is not the only state to have had a power crisis. In recent times, the Tasmanian community faced a perfect storm of low rainfall—

John Williams (NSW, National Party) Share this | Link to this | Hansard source

A drought.

Jonathon Duniam (Tasmania, Liberal Party) Share this | Link to this | Hansard source

a drought—that is right, Senator Williams—and a broken Basslink Interconnector, which is the extension cord that effectively connects Tasmania to mainland Australia. As Hydro was trying to keep up with demand for electricity, we were running down the dams to dangerous levels. We had to ship in containerised diesel generators to keep up with demand and to ensure that we did not empty the dams. We are not immune to a power crisis, so we need to make sure that we have in place plans to increase capacity to keep up with growing demand and trends in power consumption. This is why I am excited about the announcement that the Prime Minister made with regard to the future of Tasmania's hydro power scheme. There is the pump storage proposal that is being examined by the Australian Renewable Energy Agency and also a number of other schemes and projects, including the refurbishment of the very successful and historic Tarraleah Power Station, which will generate in excess of 2,000 megawatts. As ARENA pointed out at Senate estimates, those projects will necessitate the establishment of increased interconnectivity with mainland Australia—be that a second or third cable, I do not know, but I am excited by the prospect of Tasmania becoming the nation's battery and providing base load renewables in the form of hydro.

On Tasmania—if we can go back in time a number of years—a lot has been said about whether coal should be in or whether it should be out. I thought it would be interesting to put on record something that I know is already on the public record.

I refer to an article in The Mercury newspaper, dated 20 October 1981—which, for the record, was before my birth! It is entitled 'Coal-fired power "best option"'. It was written by a fellow by the name of Wayne Crawford. The article says:

TASMANIA'S environmental lobby has expressed its preference for coal-fired thermal power generation over the construction of more hydro-power dams.

So, to be clear, that is the Tasmanian Greens and associated entities opting for coal fired power as opposed to renewable energy in the state of Tasmania. The article continues:

The director of the Tasmanian Wilderness Society; Dr Bob Brown—

Who would be known to many in this place; he is a former senator—

said yesterday that if there was to' be a new power station, then coal-fired thermal was "the best centralised option we have."

He went on to say:

… the conservation movement regarded a coal-tired thermal station as a "manifestly better" option than more dams.

It is there in black and white: for coal fired versus dams they would go with coal back in 1981.

Also in the article, Mr Peter Blackwell, from the Tasmanian Conservation Trust, which exists to this day, talked about coal fired power stations yielding more energy than what was proposed at that time, and that was the Gordon-below-Franklin Dam, which—according to this article—was only going to generate 180 megawatts. Further, he went on to say that pollution levels quoted by the Tasmanian Chamber of Industry's advertisement, which is what this article was in response to were for a station:

… five times as big as what was proposed in Tasmania, and apparently involved an old-fashioned combustion system and no equipment to control emissions.

So in here I read that the Greens also believed in clean coal technology. It is amazing how things have changed in the course of over 30 years. They have gone from believing in clean coal and opposing renewables to opposing clean coal and only supporting hydro and other forms of renewables. But I suppose that anyone can change their mind over time.

I will return to another point that Senator Paterson made, about the obligation on the opposition in this debate. I think that it is a point that he also made well in his take note address a day or two back. His point was that the Australian opposition needs to be up-front about what its proposal is. Senator Polley said that the opposition will consider the report, look at ways forward and make a decision. Whatever that decision is, I think that it is right to give certainty to the Australian community—to all of the people who we represent in this place—and to tell Australians what they will do and what they will sign up to, and to stick to that.

What did concern me was Senator Moore effectively saying no and reserving the right to move the goalposts after a decision is made. In effect, this was everything that Senator Paterson was warning us about—that the Labor Party will say one thing now for the purposes of a political point before an election and then say something very different afterwards. That could mean new targets and new rules, and therefore no certainty—which is what we are trying to avoid. So I was quite disheartened to hear that from Senator Moore.

The point was also made about the debate being divisive and that we need to move away from the sniping and hyperpartisan nature of this debate. I would have thought that was right, but when you look back at question time over the last three days that is exactly what it has been. The questions have not been serious ones like: 'What are you going to do? How can we help? What is the best way to advance Australia's future here?' They have been all about: 'Is it true that this was said in the party room? What do you say about this comment in the paper?' Those are nothing that I think would aid Australians when it comes to this debate in any way, shape or form.

I will touch on just one other issue, that of our obligations to the globe and part of that trilemma that I mentioned at the commencement of my contribution. We are told that we need to adhere to our global obligations when it comes to emissions reduction. I do not think there are that many people who would argue against that. But I suppose that the other end of that is that we need to take into account the global situation—how we stack up as a country against other emitters across the globe. If we are genuinely interested in emissions reduction then we should be genuinely interested in our brothers and sisters overseas committing to emissions reduction too. We cannot go it alone, as it has been said previously. We do have an obligation and we should adhere to that. But if you look at other countries—China and India, for example—they are high emitters. And, yes, I know they are very different countries to ours. We do have to take into account what they do and what they plan to do to meet global obligations that we have been told we need to meet, as well, and we have to look at their challenge relative to our own.

I will conclude on that note. I do thank Senator Xenophon for bringing on this debate. It is good to have the ability to air my personal views on this issue—and from the Tasmanian perspective. I look forward to seeing the debate unfold over months to come.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

I would like to join this debate. Thanks to the Senator Xenophon for moving the motion. I was just doing a bit of research. I noticed that with the Xenophon Team in South Australia there is a bit of controversy about where they stand with these renewable energy targets. I think Peter Humphries was the candidate who attacked the Weatherill government for saying that the pursuit of 50 per cent renewable targets was reckless and expensive and so on.

Barry O'Sullivan (Queensland, National Party) Share this | Link to this | Hansard source

Senator Xenophon, on a point of order?

Nick Xenophon (SA, Nick Xenophon Team) Share this | Link to this | Hansard source

Senator Williams has just said something that is materially inaccurate. It is a complete lie and misrepresentation.

Barry O'Sullivan (Queensland, National Party) Share this | Link to this | Hansard source

That is a debating point, Senator Xenophon.

Nick Xenophon (SA, Nick Xenophon Team) Share this | Link to this | Hansard source

Wacka should know better than that.

Barry O'Sullivan (Queensland, National Party) Share this | Link to this | Hansard source

Senator Xenophon, you would know better. That is not a point of order. Resume your seat. Senator Williams, you have the call.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

I am just doing some research. I must bring up that article I just read and show it to Senator Xenophon. He might even talk to the paper which wrote the story about the situation. Never believe those newspapers, Mr Acting Deputy President. I did not make it up; I read it out of the paper. I will google it and show it to Senator Xenophon soon.

On electricity and how it has changed in my life, I know it has not changed much in Senator Dastyari's life. He is only a young fella—born on 28 July 1983. That makes you about what—34 at the moment?

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Nearly 34 soon.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Nearly 34? Next thing you will be driving a big car!

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

A big red car.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Just make sure it is not a V8 and you put all that carbon into the air and help us grow our wheat crops.

Sam Dastyari (NSW, Australian Labor Party) Share this | Link to this | Hansard source

Is it automatic? I can only drive an automatic. I don't have a manual licence—

Barry O'Sullivan (Queensland, National Party) Share this | Link to this | Hansard source

Senators! Order!

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Thank you, Mr Acting Deputy President. Interjections are disorderly, aren't they?

Barry O'Sullivan (Queensland, National Party) Share this | Link to this | Hansard source

They are disorderly.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

I often remind people of that.

Senator Dastyari interjecting —

Alex Gallacher (SA, Australian Labor Party) Share this | Link to this | Hansard source

You can't interject against yourself, mate!

Barry O'Sullivan (Queensland, National Party) Share this | Link to this | Hansard source

Order!

James McGrath (Queensland, Liberal National Party, Assistant Minister to the Prime Minister) Share this | Link to this | Hansard source

You're interrupting yourself. Stop it!

John Williams (NSW, National Party) Share this | Link to this | Hansard source

The people listening on the public radio here say, 'Let's get serious with this debate.' I remember as a little fellow back in the 1950s—long before you were born, Senator Dastyari—and when we lived on the farm in South Australia, where my great-great-grandfather settled. We had the 32-volt system. We had a little windmill and the batteries alongside the house, and the old Coopers motor—the same motor we used on the shearing plants for many years—to start up when the wind was not blowing. It appears that since then things have only get worse in South Australia with the renewable energy target. This is what I find so frustrating. We used to rib our friends in South Australia when we left South Australia in 1979 to move to New South Wales. We used to say that there is a sign at Cockburn—Cockburn is little place on the border of South Australia and New South Wales—that says, 'The last one out of South Australia, please turn off the lights.' The sign has been pulled down now because the lights go off automatically!

Nick Xenophon (SA, Nick Xenophon Team) Share this | Link to this | Hansard source

Oh, yeah, it's hilarious, Wacka!

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Senator Xenophon, I will tell you what is hilarious: when I go back to South Australia and I see all of those wind towers over the hills at Jamestown. I have no problem with renewable energy, if it stands on its own two feet. But to think that three-megawatt per hour wind generators are subsidised to the tune of $700,000 a year each—that is for each one—so then they can sell electricity cheaper into the grid. And you wonder why Port Augusta goes broke. And you wonder why it is shut down. Then when the wind is not blowing, you wonder why you do not have electricity. I think the situation of these subsidies—these renewable energy certificates—to the wind towers is costing this country a fortune. As I said, in my life I have come from the little windmill on the farm to the batteries and to the generators. The situation we face now is that we have relied on cheap energy in this country to compete around the world. That is what we have relied on. Go to the abattoirs.

We have a business in Inverell—and I am very proud of it—called Boss Engineering. Seven years ago they kicked off. They employed seven people making wide air seeders for planting wheat, cereal, sorghum et cetera. They now employ just short of 100 people. When manufacturing is dying in Australia, Boss Engineering, making what I believe to be the best seed planter in the world, is growing week by week. But what is their energy cost going to be? What do we have more of per capita in this country than anyone else in the world? Energy: whether it be gas, whether it be coal or whether it be potential energy. I say that with total confidence.

Senator Duniam, hydro energy is a wonderful scheme while there is plenty of water in the dam, but it is not much good when the dam is empty, like the scare that hit Tasmania through that dry spell where they seriously looked at seeing their dams run dry—a very serious situation. Now we have adopted this whole policy of, 'Let's save the planet.' As Senator Macdonald has said in here 100 times, we produce 1.3 to 1.4 per cent of the world's CO2 emissions. Are we are going to change the planet? No, we are not. But what we are going to do, if we run out of energy and it gets more expensive, is simply put the cost up and transfer manufacturing overseas like we have already done so often during my lifetime. This is a serious situation, and I think it is very sad for a place like South Australia. I talked to my friend Michael Kelly at Jamestown. Michael lives with his wife, Mary-Ellen, there in Jamestown, where I grew up. His quarterly bill for just the two of them is around $800 a quarter. My quarterly bill at home on the farm—given that I have an underground bore that waters seven paddocks and an underground tank for the house with a pump that every litre that goes into the house is pumped through—

Alex Gallacher (SA, Australian Labor Party) Share this | Link to this | Hansard source

We want a little bit of that water back down the Murray.

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Yes, we are in the Murray-Darling catchment basin in Inverell as well, by the way. You want our water and yours—our rain and yours. That is a pretty selfish attitude, I think. Anyway, the situation is this: our power bill is about $380 a quarter. I think that is very, very reasonable. I do not think it has gone up much in the last six months. My wife, Nancy, always pays the power bill. I think that is very reasonable, but the point I make is that two of us living in our house at Inverell, when we have underground pumps and so on, are looking at $360 to $380 a quarter, while our friends with the same number of people—two people; one couple—in a house in South Australia are looking at $800. That shows the expense of electricity in South Australia. It is driving industry out, so we have to find a solution. But what is the solution?

I think hydro-electricity is a wonderful thing—and thanks go to Minister Barnaby Joyce, who is very keen to get on with building the dams—but what will happen when we pick out a site to build a new dam? I will tell you what will happen: it will be just like the Adani mine. Along will come the Environmental Defenders Office, and into the courts they will go, saying, 'No, you can't build a dam here, because there might be some certain frog under threat or whatever.' That will then be stopped for years. We cannot build a dam, and, of course, what we desperately need to do is store more water in this country as both the population and the need for food production grow. That will all be stopped by the left-wing environmentalists who are supposed to help the environment, but half the time they damage the environment—I say that especially because of the way they manage the national parks and allow them to just grass up and burn and kill the animals in them.

We are getting into a really serious situation where it is so critical to have efficient and cost-effective energy in Australia, and yet what a mess we are making of it. Now we have the Finkel report and we are having a discussion. Those opposite are ribbing us, because we are discussing what the best policies will be as we go forward to give us a reliable supply of energy—reliable, Senator Xenophon, which is what your state desperately needs. Now New South Wales and Queensland and everywhere else we seem to look also need it—even Tasmania, with their hydro renewable schemes and their dry weather hits. We need to have the most efficient and reliable, and hopefully the cheapest, sources possible. That is why we need to have a look at the whole review and see what can be done best.

It is funny that Senator Polley was saying we need more renewables. South Australia has led the country on renewables. That is a fact when it comes to wind and solar, but perhaps not so much on hydro—there are not a lot of dams down there. But that has been the state that has got in to the biggest mess with the supply and cost of energy. Tasmania has the greatest amount of renewables and Senator Polly says, 'We went to the last election—the Labor Party—with a clear energy policy.' Well, what was that clear policy? It was the carbon tax/emissions trading scheme. Those opposite had a carbon tax and it was costing the country about $9 billion a year. We on this side promised to remove it when we won government under the then opposition leader Tony Abbott. We had the biggest reduction in prices for many years and those opposite want to bring it back. After the carbon tax, those opposite will move to an emissions trading scheme if they are elected in govern in this place—supported by the Greens, of course.

Mr Acting Deputy President O'Sullivan, I do not know if you know what an emissions trading scheme is, but basically it is a very simple scheme where wealthy people sell fresh air to wealthy people and poor people pay for it. That is the basic emissions trading scheme. The big companies will trade the dollars and who will pay? The poor widowed pensioner will pay when she gets her power bill. She will be living on a pension and they will increase the price of electricity—a crazy situation.

I am very pleased to see Prime Minister Turnbull, and especially Minister Canavan, intervene with the gas exports—the reason being: who owns the gas in the ground? It is owned by the people of the state, the Crown, and that is why royalties are collected on it. It is very good for companies to come out here, invest, take that resource owned by the people and export it overseas. That is good for our balance of payments and it is good for helping to pay our bills. However, the situation is this: when the people own that resource, enough should be kept back here in Australia to supply our needs first and foremost. I look forward to more changes in that field in the very near future.

The price of gas is going up and up, and there is a crazy situation in Victoria where even traditional gas pumping and production is being banned by the Labor government there. They say, 'We do not want to have any gas production.' Then they complain because they do not have enough gas to keep industry going, to keep the households going and to keep the gas ovens going or the gas heaters or the gas hot water systems. So where does it come from? A little bit of realistic policy in Victoria would be a big help, instead of just trying to appease the ultimate left wing, green, save-the-planet people who seem to be concerned about destroying jobs and industries. The fact is, if you want to look after the environment, you have got have money. When you have got money, you can spend it on the environment. If you are going to put us in a situation where we are moving our jobs and industries overseas then that just makes the country poorer, and we will not have the money to spend on the environment; other countries will make use of it.

As I said, to get a reliable supply of electricity we need steam—hot water—to drive the turbines. Whether that is heated by coal or gas does not really matter, but it is an efficient supply of electricity, and we can just turn it up almost instantly. If you have been through a coal-fired power station, you will see how quickly they can actually raise the temperature of the water and the steam pressure—in a matter of seconds. It is quite amazing how they powder the coal and feed it into the furnace. We need that, especially on hot days, when people rely on their air conditioners to keep them cool, especially in aged care facilities. In the hot summers, people who are 80, 90 or 95-years old in 40 or 45 degree heat—whether it be a north wind from Alice Springs blowing down to South Australia or a north-westerly coming into New South Wales from the centre of Australia—need to be cooled and cared for. We need reliable energy and a reliable electricity supply. That will come with coal, gas and, to a certain extent, hydro so long as there is enough water in a dam. Of course, we just do not run water out of the dams to spin the turbines; we also need that water to be used for irrigation, human consumption or whatever.

So what is the final plan? We on this side of the chamber are looking at a plan that has been put forward, an idea by Dr Finkel. We will assess that and make the best decision. But I hope that we come up with the reliability and the savings because the more we put the cost of electricity up, the more we are going to drive business overseas, shut down businesses here and send them to the wall. Important businesses such as engineering, abattoirs and food-processing industries help us produce those vital exports that Australia relies on to pay for all the imported products we now import since manufacturing has been wound back and since we simply cannot afford to compete against cheap labour countries overseas. We used to be able to help with cheap energy. Unfortunately, the way we are going, that cheap energy is going. The Labor Party's carbon tax will not fix anything as far as keeping the price down for energy. That will just put the costs up, cost the industry, cost jobs and cost the nation.

Stephen Parry (President) Share this | Link to this | Hansard source

It being 6 pm, the time for the debate has now expired.