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

Thank you, Senator Smith, for actually making a timely tabling of the committee report on this bill, the Competition and Consumer Amendment (Abolition of Limited Merits Review) Bill 2017. The limited merits review is a review mechanism which allows companies to dispute determinations by the Australian Energy Regulator about investment plans and electricity prices Australian households and businesses face. There is great interest in the community around these issues at the moment, and it's important that there is understanding across the community about how these processes operate.

The limited merits review was initially implemented to ensure companies could have their case heard if the regulator made a mistake. It has become a mechanism companies use as part of their regular business model to have inflated investment plans signed off so that they can access regulated prices hikes. This means higher prices for consumers and gold-plated infrastructure. To their credit, and with the support of some states, like South Australia and Victoria, the government has attempted to reform the LMR process, but has been blocked at every turn by states opposed to reforming the status quo. Since 2013, 12 of the Australian Energy Regulator's 20 decisions on electricity network revenue and gas access arrangements have been subject to challenge by network businesses using the LMR process. Taken together, these 12 network businesses asked the tribunal to increase their revenue by around $7.3 billion over a five-year period. That is revenue that ultimately comes from electricity consumers across the country, from families facing ever higher prices. Thus far, $6.5 billion has been awarded to companies, contributing to the recent retail electricity price increases of up to 20 per cent we've seen around the country.

The government is right in saying enough is enough. If the states can't agree to reform the LMR process so it is focused on good outcomes for consumers, not just on good profits for network businesses, then, we believe, it's time to remove the LMR. The LMR is not the only avenue for appeal that network businesses have. It's important that people understand that this is not closing off all forms of appeal. This bill won't abolish access to courts if decisions are seen to be unfair or against the rules—and then the process of the courts can continue to operate—but it will mean that companies will no longer be able to use the LMR process to justify excessive investment that generates higher regulated prices and higher revenues. Labor supports its passage.

Richard Di Natale (Victoria, Australian Greens) Share this | Link to this | Hansard source

The Greens will be supporting this legislation. The Competition and Consumer Amendment (Abolition of Limited Merits Review) Bill 2017 is a piece of legislation that, when it comes to energy policy, is very, very rare. It's so rare as to be a unicorn. It's something we're not seeing in the energy debate at the moment. It's sensible policy, something that's got the support of evidence behind it, something that's informed and something that shows evidence of listening to experts rather than taking advice from a delusional former Prime Minister who talks about sacrificing goats to volcanoes and thinks that global warming is a great thing for humanity.

It's a pretty sad debate that we're having at the moment. If you look at where we've been over the past decade or so, you see that what we've got at the moment is the rest of the world being prepared to take full advantage of the huge opportunities that come with making the transition to a renewable energy economy. They recognise it's good for jobs. It's good for investment, it brings power prices down and, of course, most importantly, it brings emissions down so that we can begin the huge task of tackling dangerous global warming, yet what we've got is a government prepared to bring lumps of coal into the parliament. We've got former prime ministers going rogue. We've got backbenchers who believe that global warming is a big hoax. We've got members of this chamber who think it's some part of some huge international conspiracy. It's just remarkable when you see where the energy debate has got to in this country.

That's why it's good to be standing up here supporting a piece of legislation that is sensible. Normally, when you look at the Liberal Party's guiding philosophy, you'd think they are generally very happy for our economy to be working in the best interests of the rich and powerful. That's who they are. And here we have a piece of legislation that actually reins in the ability of energy companies to game—and they do game the system; they do manipulate it for their own benefit. They use the existing regulations to make sure that their interests prevail over the national interest. And we know from today's report from the ACCC that network costs are responsible for almost half of the increase in our regular power bills. They made it very clear that, when it comes to rising energy prices, we shouldn't be blaming renewable energy. We shouldn't be blaming the fact that both the business community and, indeed, some members of the parliament recognise that moving towards renewable energy is indeed a great opportunity to boost jobs, to bring in investment and to bring down prices.

The ACCC made it very clear that, when it comes to increased prices, it's not renewable energy that's the problem; it is the fact that we are gold-plating the poles and wires in our network system. They make it very clear that the rules are broken. We know that the government isn't acting because they've suddenly seen the light on climate change; they suddenly realise there's a need to bring down emissions; or they recognise that all of the independent reviews, whether they be the Finkel review, their own Warburton review or many others, demonstrate that you bring down prices when you get more renewables in the system. They're not doing it for those reasons. They're doing it because they have got nowhere else to go. When you look at the way the rules are structured at the moment, you see the current system allows a massive investment in our network infrastructure, some of it completely unnecessary, some of it investing money that could be spent in other areas that would drive down power prices. But the rules are so rigged that they allow these companies to gold-plate that network infrastructure, make huge profits and, as a result of that, see huge increases in energy prices. They realise that, despite the rhetoric on one hand blaming renewables, we're in here reining in these network companies because this is the best way of bringing down energy prices. It's one of the most significant interventions that we can make. If we seriously care about prices then let's recognise that the rules are rigged and we need to change them. That's what this legislation does.

If you're serious about lowering power prices—and all the information is telling us that renewables bring down prices—then you've got no other option but to start doing something about network regulation. This tinkers around the edges. There's a lot more that can be done, but it's a small step forward.

The network rules that we're amending are a labyrinth of rules that were set up in the heyday of 1990s competition policy. They're rules that have failed consumers. They've failed to allow innovation to occur through demand responses, they've held back storage technologies and they've utterly failed to reduce pollution in the system. They've been a failure holding back progress.

What this bill will do is stop those network companies from gaming the system through a whole range of legal appeals. It reduces power bills by preventing companies who want to invest in unnecessary work on the grid from challenging decisions made by the Australian Energy Regulator that would be made in the interests of actually reducing prices. So it prevents that appeals process that benefits big network companies over people who use energy in this country.

Of course, it's not going to stop the huge rorting that occurs—the large-scale rorting by companies who benefited from the privatisation agenda. It won't stop the New South Wales and Queensland governments, who are raising revenue through inflated interest charges. So it isn't just the big companies that benefit. Let's remember that you've got governments in New South Wales and Queensland who are using the rules to tax their community by stealth.

Change is absolutely necessary. It's critical. There's no other industry in this country that gets a guaranteed rate of return on their investments in the same way that these companies are getting at the moment. They're not forced by a market or a regulator to revise their asset values down and, as a result, their assets—which are basically the reason they can keep generating an automatic return—are hugely overvalued. They're overvalued because the taxpayer pays for it. The taxpayer pays for it, so they don't have to answer for making bad decisions, poor investment choices and all those mistakes that they have made over the last decade. They basically just get to cream the profits when, ultimately, it's of no benefit to the community. So it's important we stand here and change the rules to prevent them from basically making profits at the expense of taxpayers.

Look, if the government wanted to act seriously in the interests of households and if it wanted to take on the greedy energy companies and those sneaky state governments that seek to benefit, then what they would do is massively reduce the return on capital that these network companies get to reflect the fact that they're getting a risk-free rate of return. That's what we need to do. Stopping the appeals process is one step towards making the rules a little fairer, but it by no means addresses the underlying problem here, which is that you have state governments, complicit in this, allowing energy companies to make huge returns on their risk-free investments. That's what needs to be done.

Of course, we know what needs to be done more broadly than that. If we want to make the transition to a future where prices come down, where jobs are created and where emissions are reduced so that we finally start taking the action we need to when it comes to tackling dangerous climate change, the answer is very straightforward: we need more renewables in the system. We need to make the transition away from coal, with more solar, more wind, a pumped hydro and a range of other new and emerging technologies to replace old, polluting fossil fuels. Fossil fuels are now more expensive than their renewable energy counterparts. That's how we make the transition to a renewable energy future where prices for power are down, where jobs are up and where emissions are down.

Instead, under this government, what have we seen? We have seen their energy policy effectively subsidise an existing coal-fired power station for another few years. This thing is a relic of 1960s Russia and has become the centrepiece of the Coalition's election policy. Since they came to power, they repealed the carbon price. Remember that campaign around the carbon price: 'Vote for us! We'll abolish the carbon price, and your energy prices will come down.' What's happened since this mob have been in power is that they have repealed the carbon price, and the wholesale price of electricity has doubled. Since they've been in office, they've introduced more uncertainty into the renewable energy space so that companies are afraid of investing because they're not sure of what the regulatory parameters look like for them into the future. With the support of the Labor Party, they slashed the renewable energy target. They took money—half a billion—out of the Australian Renewable Energy Agency. Of course, they decided that they would repeal the carbon price because, in their words, it would reduce the cost of electricity for consumers. Well, the wholesale price has doubled, and it's doubled under their watch because of a series of bad decisions that privilege coal and gas over clean, green, renewable energy.

They need to understand that it is these new technologies that will allow us to solve today's problems—not a return to the past. They need to understand that by holding back investment in renewables they're holding back jobs growth and they're holding back a more affordable energy supply for consumers right around the country. The future is straightforward: it's more solar, more wind, battery technology, demand management and energy efficiency. If we do that, it's good for consumers and the environment. It's win-win. We need to get a bit of rationality back into the system and to try and take the appalling politics out of what's gone on in the energy debate and start replacing it with some rational decision-making. The way to do that is to look at what is happening right around the world, what the international investment community is doing and what business wants from the government, which is to have a very clear pathway for reducing emissions, creating jobs and making clear that renewable energy is a key part of the transition.

When it comes to the issue of network companies, we think that the solution looks like companies that are able to charge government bond rates rather than a commercial market rate to fund their capital and maintenance. We think that is a more appropriate regulatory regime. We think it makes much more sense to recognise that the network is something for all of us—for all, it's an essential piece of infrastructure. It is critical to allow people to purchase energy at an affordable price and the way to do that is by putting some constraints around what many of these network companies are able to do. It would mean, of course, that only governments or maybe a select few super funds who were looking for stable, long-term, risk-free investments would want to invest. You wouldn't see the gaming that currently goes on. We'd like to see the transition of a grid that is not in the control of corporate cowboys but that allows governments and super funds a long-term, stable rate of return, at the same time making sure that we drive down prices for ordinary people.

Again, the ACCC belled the cat today. They made it very clear that, when you look at the increasing price of power paid at the moment, it's not renewable energy that's the problem. It is this massive investment by these network companies in their poles and wires because we've got a rigged system that allows them to make that investment and fleece consumers while providing them with no additional benefit. And the government has done absolutely nothing about it. I say to every person in the country: when you open your energy bill, you should be asking for a photo of the energy minister, Minister Frydenberg, and, indeed, the Prime Minister, Malcolm Turnbull, just to remind you of who is responsible for the increased cost of electricity in Australia. It is under this government's watch, with no plan for the future, that we've seen energy costs skyrocket. It has nothing to do with the amount of renewable energy in the system. Indeed, the government's own reports, commissioned by this government—the Warburton review and now the Finkel review—all say very, very clearly that the more renewables you have in the system, the cheaper the wholesale price of electricity. That should be a good-news story. What we should be doing in this chamber is debating where the next wind farm is going to be built, where the next battery storage facility is going to be built and which states are going to be competing to ensure that their state is seen as the renewable energy powerhouse of the country. That's what this debate would look like if we had a government that put in place the parameters that we know are the pathway to cheap, emissions-free electricity generation, reducing power bills for everybody and getting rid of the rent-seeking that stifles meaningful energy market reform. That's what we need to be aiming for—not just tinkering at the margins but making sure that we have a 21st century energy system that caters for the needs of our community, brings down prices, brings down emissions and increases jobs right across regional Australia.

So we will support this legislation. We will support it because it is one of the few pieces of legislation on energy policy that takes us at least one small step towards the low-emissions, low-cost future. But there's so much more work that needs to be done. We need a plan. We need a plan that at its basis has a transition pathway away from polluting coal-fired power, puts in some certainty for workers in the industry and puts a transition pathway explicitly laid out to those communities who will be most affected, providing them with a glimpse of what their future will look like: huge manufacturing opportunities in renewables; huge opportunities in the installation of large-scale solar and wind projects; and, of course, now the opportunity to look at large-scale energy storage projects and incentives to make sure that we've got energy storage solutions decentralised and located right around the country.

We know that, when governments get out of the way, business steps in. That's what we saw in South Australia with the construction of the large-scale battery facility. Demand management is a big part of that response. Again, the government finally seems to have read the Energy Regulator's report and has recognised, finally, that demand management needs to be part of the picture and that we can, with the use of some clever software, make sure that we can smooth out those peaks and troughs in our grid so that we don't have to invest more in the polluting coal-fired power and gas infrastructure.

Of course, all of this is at our fingertips. All it requires is a little bit of vision. But we know what's getting in the way here, and I'll finish with this: the reason that we don't have that sensible debate here in Australia right now is that we have massive donations coming from the fossil fuel industry, the coal and gas industry, to all of our major parties. It seems that being a member of the National Party these days is to be on a three-year-long job interview for the coal and gas industry. You do your term in parliament, and you spruik for the industry and make some connections while you're here so that you can get out and start doing the lobbying work of the coal and gas industry.

Just look at the who's who when it comes to coal and gas. You've got people like Ian Macfarlane, John Anderson and Mark Vaile, those luminaries of LNP politics who are now out there doing the bidding of coal and gas. The revolving door exists, and it's spinning so fast now it's making us dizzy. What you have is people in this place who are getting massive donations from the coal and gas industry and can't wait to get out of the joint so that they can go and get a well-paid job working as an industry lobbyist and exploiting the relationships they've managed to develop while they've been in the parliament. That's why we don't have the transition in place, but it's up to all of us who understand what the future for Australia looks like—a renewables future with more jobs, more investment, lower emissions and lower prices.

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

I have serious concerns about the Competition and Consumer Amendment (Abolition of Limited Merits Review) Bill 2017. I have serious concerns because it may in the short term lead to some outcomes that are desirable but, in the longer term, I believe it will cause more problems. I say that because we do not have a coherent energy policy in this country. We need to ensure that in energy policy there are clear guidelines, clear parameters and clear incentives for there to be investment in our energy sector.

We also need to deal with the mess of gas exports, where LNG is cheaper in Japan than it is here, notwithstanding that it's liquefied, shipped across the ocean and then deliquefied for use in Japan. We have done something seriously wrong with our energy policy over a number of years. There can be a partisan debate on this, but clearly we have failed to take up opportunities to ensure stability in the energy sector, to ensure more reliable energy and to that ensure prices come down.

That is why I make no apology for continuing to support the views, the research and the work that was done by Frontier Economics back in 2009 when the then Leader of the Opposition, the Honourable Malcolm Turnbull, and I jointly commissioned Frontier Economics to come up with an alternative emissions trading scheme: an energy intensity scheme. That scheme was derided by the opposition and others, but it has stood the test of time as a robust mechanism for encouraging investment whilst minimising the impact of prices and still allowing this nation to meet its Paris agreement targets, which I think must be met as a matter of urgency if we are serious about climate change.

But let's go to this particular 'sugar hit' of legislation. I want to refer to the submission Frontier Economics made to the Senate Standing Committee on Environment and Communications in respect of this bill. It's worth reflecting on their concerns in relation to this. They are concerned that:

the Honourable Mr Frydenberg—

That is a pretty serious indictment in terms of the AER's decision-making process and the robustness of their decisions. As Frontier Economics points out:

That must be taken into account. The submission goes on to say that the AER has a 'very poor track record in this regard', and that the 'removal of the accountability provided by limited merits review is likely to encourage the AER to make more erroneous decisions in future that force regulated businesses' down a path where we could end up having emergency investments down the track which will end up costing consumers in the long term because it will have us lurching from crisis to crisis. We could be looking at a situation where, in the future, billions of dollars for catch-up investments has to be funded once the system approaches breaking point.

Having a system that lurches from crisis to crisis is not the way to run energy policy in this country. It's worth noting that the most mature regulatory regimes around the world, including those in New Zealand, the United Kingdom and Germany, have some form of merits review. 'The abolition of limited merits review would be regressive and put Australia out of step with other advanced economies,' says Frontier Economics. I think it is interesting to note that this piece of legislation is out of kilter with COAG. Indeed, some consumer groups submitted to COAG that the abolition of limited merits review would remove an important legal protection that consumers currently benefit from. That is my concern: what impact will there be on consumers in the longer term?

I think it is also worth noting that the decision to unilaterally abolish limited merits review trashes an agreement the Commonwealth and the states entered into when the states and the Commonwealth established a national electricity market many years ago. The states ceded their powers on the basis that there would be this safeguard. We are now trampling on that safeguard. But I acknowledge and note that, through the COAG process, the limited merits review should and could be improved through a whole range of measures.

Those measures have been discussed by COAG, and those measures would include a whole range of steps that, in my view, would improve the robustness of the process: higher financial thresholds for leave which apply to individual grounds for review; reviews to be conducted on the papers rather than through expensive and adversarial oral hearings; introducing strict time frames for the conduct of reviews; requiring appellants to demonstrate that overturning the AER's decision wouldn't be of serious detriment to the long-term interests of consumers; providing more flexible arrangements for consumers to participate in reviews; introducing a binding rate-of-return guideline, with certain elements of the AER's decision not subject to merits reviews; limiting the time frames in which material can be submitted to the regulator; and providing that the costs of reviews, including those of the AER, be borne by network businesses. And, of course, it must be all about tightening and clarifying the grounds of review. That is what was proposed in COAG in December 2016. They are sensible reforms that ought to be implemented. But instead the government has thrown out the baby with the bathwater, and I'm concerned that the long-term interests of consumers will be deleteriously impacted by this.

It's worth noting the other concerns of Frontier Economics that the regulatory framework and role of the LMR—limited merits reviews—would remove consumer rights to challenge the merits of AER determinations as much as those of regulated businesses. If the AER has got it wrong on so many changes then removing the limited merits review, removing entirely this safeguard, this check and balance—it should be modified, I acknowledge, along the lines that COAG suggested in December 2016. We are going down a path where my fear is that it will lead to more chaos, more uncertainty and, ultimately, to higher prices in the energy markets.

Merits reviews can help clarify how complex regulatory rules and economic and legal principles should be interpreted and applied. We are going to lose that by abolishing these limited merits review. The AER have a very poor track record of applying the rules correctly, and we have seen that by the fact that they've failed time and again. My concern is that this will deter efficient investment, which is bad for consumers in the longer term and which will only exacerbate our energy prices.

So these are matters that I believe ought to be considered. I do not believe this is good public policy. I understand why the government has done it, but this will not solve the problem in the longer term. What will solve the problem in the longer term is to ensure that we have a clear framework for investment. My preference is the emissions intensity scheme, which—shown through economic modelling that the Prime Minister, as opposition leader, and I commissioned back in 2009—would have a lower impact on prices, give greater certainty to investment and ensure that we meet our greenhouse gas reduction targets. This is very important from an environmental point of view and also ties in with getting the best economic impact to reduce the price of power and to reduce power price increases.

My concern is that this is a sugar hit which might have some short-term consequences that seem on the surface to be good but which mean that in the longer term we will end up paying for it with uncertainty, with a lack of protection for consumers and by getting rid of any degree of accountability on the Australian Energy Regulator in the way that it makes its decisions. Removing this limited merits review process will not be good for consumers in the longer term, and that is why I have very serious concerns about this legislation.

Malcolm Roberts (Queensland, Pauline Hanson's One Nation Party) Share this | Link to this | Hansard source

As a servant to the people of Queensland and Australia, I want to bring in a call for a return to sanity—a return to sanity, because I can see young people in the visitors gallery who will pay for the follies that we are embarking on and that we have embarked on for the last 10 years. Their parents are already paying for this suicide of manufacturing and this suicide of industry. We need a return to sanity.

This Competition and Consumer Amendment (Abolition of Limited Merits Review) Bill 2017, which the government is promoting, abolishes the ability of the Australian Competition Tribunal to review certain Australian Energy Regulator decisions. The review power was first established in 2008 under Prime Minister Rudd, who brought it in and made things unaffordable because of a fundamental belief that he pushed. It was a lie. We now have a regulator regulating the regulator. So we've got costs on costs on costs.

As I said, this review power was first established in 2008. It has been reviewed since then. In 2012 it was found to have caused a bureaucratic nightmare. In 2013 amendments were made to try and improve the operation of the regime. In 2016 there was another review, and we found that it was still a bureaucratic nightmare. We have a situation now in which a regulator, with less knowledge than the organisation it's regulating, is regulating that organisation. It's a competition tribunal, not an energy regulator. Let me read from the explanatory memorandum:

The regime was reviewed again in 2016 by the COAG Energy Council's Senior Committee of Officials, following applications for review of 12 of 20 of the AER's post-2013 electricity and gas decisions (in which affected businesses sought a total of around $7.3 billion in additional revenue) and two of the ERA's gas decisions. The review again identified a number of significant regulatory failures, including that LMR reviews of economic regulatory decisions remain a routine part of the regulatory process—

in other words, everything is getting challenged, everything; it's just another cost—

involve significant costs to all participants, continue to present barriers to meaningful consumer participation, lead to significant regulatory and price uncertainty, and are failing to demonstrate outcomes that serve the long term interests of consumers.

We've seen that because in the last 10 years power prices have doubled. That is largely due, in addition to the burden of intermittent energy supplies, to overregulation. So the view is that the regime is failing to achieve its intent of ensuring that better energy regulation decisions are made, and the delays, costs and uncertainty associated with the regime are increasing pressure on electricity prices. In other words, regulation is costing the consumers, costing families, and therefore the government has made the decision to get rid of it entirely. I want to add, Acting Deputy President Leyonhjelm—and I know you personally can see this—that government regulation decreases quality of service and product and increases costs. This is a mess that needs to be sorted out.

Let's get back to basics. We all share common traits, and one of those human traits is care. We must celebrate that because humans are wonderful; human spirit leads to the creativity that enables everything we see in this room. Two hundred years ago poverty prevailed right around the world. We had short life spans, even in the industrialised world. We had kings, then, who did not live as well as people on welfare today. That is a celebration of humanity. We have improved life spans, costs of living and the health, security and safety of people right around the world. In some places, fortunately—and we are a part of that western civilisation—it has been far more successful than in other places in the world. 'We' is the important word, because, while creativity is important and ideas are sexy, it is the sharing of ideas that is even sexier. Freedom is essential to human progress—that creativity, that spirit, that relentless drive to improve things, to improve humanity because we care. It's alive across Australia, but it's being choked.

There are eight steps to human progress. The first is freedom to let that creativity flourish, to let that creativity blossom on top of other people's creativity. It becomes exponential. The second thing is that we need a rule of law. The third is stable constitutional governance to provide for succession. The fourth is secure property rights. That is fundamental to responsibility. The fifth is honest money. The sixth is fair, efficient, low, tax systems. The seventh is strong families. There are two basic systems or structures in human society today. The first is the nation state and the second is the family—perhaps I should say the first is the family and the second is the nation state, both of which are being destroyed. The eighth key to human progress is cheap, efficient, affordable, reliable, secure energy. All of those eight steps are under threat.

It is fundamental to understand these things because when I first joined the Senate I promised that I would seek to increase accountability and to work on reducing cost of living and improving security, both materially and economically and also with regard to personal safety and terrorism. The government has three responsibilities: to protect life, to protect property and to protect freedom. And freedom must be protected for continuing human progress.

Let's look at that. As to food: farmers' property rights have been stolen—stolen in this country by a Liberal Prime Minister. Who would have thought that a Liberal Prime Minister would steal something that is fundamental to Liberal philosophy? It was government that did that. It was Prime Minister John Howard, trying to comply with the Kyoto Protocol, who stole farmers' property rights by colluding with then Premier Peter Beattie and Bob Carr in New South Wales. I'm currently Chair of the Senate Select Committee on Lending to Primary Production Customers, and it is quite clear that government action, government policy, quite often takes farmers to the brink, and then the receivers are called in. We have the world's largest island. We have the world's largest commercial fishing zone—or we had. We have the largest continental-shelf fishing zone in the world, and yet our tiny population of 24 million imports almost three-quarters of the seafood we eat.

Housing is a real problem for all young people right across this country. A study in New South Wales by the housing industry some years ago showed that 50 per cent of the cost of a house is tax.

As to taxation: the Australian Bureau of Statistics' figures in the late 1990s and early 2000s said that a person earning the average income pays 68 per cent of that income to government for rates, levies, fees, charges, special charges, special fees and special taxes. Government is sucking the lifeblood out of people.

On energy: we have the world's cleanest coal; we have the ability to use cheap coal. We have the resource of cheap hydro, which is even cheaper than coal. And yet, because of the policies that have been pushed in this country, based on a lie, we now have foreign powers producing electricity using our coal, and selling it more cheaply than can our manufacturers, our businessmen and our farmers. We have regulation throughout this country.

So what has gone wrong? Let's define the problem. John Howard said that he would comply with the Kyoto Protocol but would not sign it. In fact, to comply with the Kyoto Protocol, he introduced three actions. The first was, as I said, to steal farmers' property rights, raise the cost of food and destroy the farmers' property values. The second was to put in place a renewable energy target. He was the man who brought into place the renewable energy target. Sure, Tony Abbott increased it, but it was John Howard who brought it in. And, third, John Howard was the first leader of a major party in this country to propose an emissions trading scheme—not Kevin Rudd, not Bob Brown; John Howard.

Let us look then beyond John Howard. I have to admire—I do admire—compliment and appreciate Senator Ian Macdonald for raising the truth last December, on the last sitting Monday before Christmas, when he admitted, sadly, that this parliament has never had a debate on the science of climate, and yet we are now pushing policies that are costing families, individuals and companies billions of dollars a year and are destroying jobs.

Now we'll go to a government agency, CSIRO. I have been constantly calling on the CSIRO to provide me with evidence that human production of carbon dioxide is affecting global climate. The CSIRO has failed to provide any evidence of cause by human production of carbon dioxide. What's more, the CSIRO has failed to even identify anything unusual in the climate or anything, to be more specific, that is unprecedented. There is nothing unusual happening. Empirical evidence implies not only measured data and observed data but a logical process that proves cause and effect. We have seen some people put forward data on temperature and data on the amount of carbon dioxide we produce but nothing that shows cause and effect. Indeed, we had the Chief Scientist in May respond to Senator Macdonald's admirable question as to what the impact on global climate of shutting down all of Australia's carbon dioxide production—stopping all of our transport, stopping all of our industry, killing all our beef and sheep animals—would be. The Chief Scientist, after beating around the bush, was asked by Senator Macdonald to get to the point, and the Chief Scientist said it would be 'virtually nothing' from shutting down all production of carbon dioxide, let alone five per cent.

I hear talk about 'the scientists say'. Well, in fact, the scientists don't tell us that carbon dioxide from human activity is increasing temperature. The study produced by Cook at the University of Queensland, my old university—

Linda Reynolds (WA, Liberal Party) Share this | Link to this | Hansard source

Senator McAllister on a point of order.

Jenny McAllister (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I have only just entered the chamber, but I had thought we were debating a bill about competition and consumer laws, and Senator Roberts, in the time I have been here, has been talking—

Linda Reynolds (WA, Liberal Party) Share this | Link to this | Hansard source

Senator, that is not a point of order.

Jenny McAllister (NSW, Australian Labor Party) Share this | Link to this | Hansard source

It does go to relevance, Madam Acting Deputy President, and I ask you to draw—

Linda Reynolds (WA, Liberal Party) Share this | Link to this | Hansard source

You're asking what?

Jenny McAllister (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I'm asking you to draw his attention to the matter before the Senate.

Linda Reynolds (WA, Liberal Party) Share this | Link to this | Hansard source

I will draw Senator Roberts's attention to the matter that we're debating here, but that's really not a valid point of order. People, in discussing bills, have wideranging issues to address. Please continue, Senator Roberts.

Malcolm Roberts (Queensland, Pauline Hanson's One Nation Party) Share this | Link to this | Hansard source

Thank you, Madam Acting Deputy President. I understand it is not a point of order, and I understand that you're drawing my attention to it. I will make one more point before coming to the point that is at the core of this bill. We're told 97 per cent of climate scientists say that carbon dioxide from human activity is detrimentally affecting global climate. The reality of that study, when one goes into the details and the data by John Cook at the University of Queensland, shows that the actual number of scientists, the percentage of scientists claiming global warming will be due to production of carbon dioxide from human activity, is 0.3 per cent. But, more importantly, it doesn't matter if it is everyone if there is no evidence. And not one of those 0.3 per cent of scientists has ever produced any evidence that we are affecting global temperature or global climate.

We see instead of science—from the Greens, from the Labor Party and, sadly, from some Liberals—an appeal to name. Well, the CSIRO told us, and yet it hasn't got any evidence. We see calls of ridicule. We see smears, we see labels, but we don't see any evidence of cause. Why? Because these people pushing these claims are not scientists. Scientists are those who follow the scientific process—that is the dictionary definition. Someone with a bachelor of science is not a scientist if he or she doesn't follow the scientific process. Universities now teach people what to think, not how to think, and we see government funding being wasted there.

What I'm bringing your attention to, Madam Acting Deputy President, is that regulation based on nonsense is destroying industry, destroying jobs and raising costs of living astronomically in this country. And I then ask myself: is it malice? Is it deceit? No, it is stupidity and gutlessness. Political correctness has now meant that people are afraid of speaking out, and, as someone from a remarkable cost-of-living summit held by our office in Brisbane on Friday from our office said, we're paying the bloody bills—the people of Australia.

It is impossible for regulators to be all-knowing, and yet that is exactly what is needed for a regulator to be effective. Regulation has been aided and abetted in the destruction of Australian industry by the shovelling of tens of millions of dollars, or hundreds of millions of dollars, to parasitic intermittent energy providers. Warren Buffett, the world's greatest investor, said there is no sense at all in investing in wind energy unless it's heavily subsidised, and that is why he invests in wind energy. Greg Combet, the former director of a union super fund company and the former secretary of the ACTU, once he was parachuted into this place, allocated the shovelling of tens of millions of dollars to the union super funds based on wind farms.

The best government is small government. We ask all Australians across our communities and across our nation: who knows what's best? Who knows what we the people need? Who can best spend our money, our family's money, and who can best look after us and our families? The answer is not government. It's individuals. It's small business. It's free people. We now have a call to return to Australian values, mateship, a fair go, care, being fair dinkum, truth and openness, law and respect for people.

This bill starts to redress the mess that has been created by Kevin Rudd's government, followed by Julia Gillard's government, based on a lie that they put forward. We see John Howard and the Liberals as gutless and not able to stand up to the Labor Party onslaught of deceit on climate. We see Nick Xenophon and his team as ignorant of the facts on climate. We see the Labor Party and the Greens as dishonest on climate. Big government is the worst way. Energy prices have doubled in 10 years. Reliability has reduced. Security has been killed. And we see the state of South Australia now. Thanks to the Nick Xenophon Team and the Greens, including Senator Sarah Hanson-Young, we see the government now relying upon the herd mentality, not facts. We see the deceit and the dishonesty of the Labor-Greens coalition on energy, we see the Liberals being gutless and we see this weakness and this dishonesty combining to destroy Australian jobs. Our last car will be made in this country next month. That's it. Our farmers are doing it tough because of cost of living. Food processing is now tough. We need to return to honesty, and this bill, by at least removing one of the parasitic entities from this parasitic process, is a good start. But we need much, much more. We need a return to truth.

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

I'm unsure whether I'm the only person in this chamber who has grave concerns about the Competition and Consumer Amendment (Abolition of Limited Merits Review) Bill 2017, because I really haven't established what everyone's position is as yet, but I do have concerns about it because I feel the government is simply tinkering around the edges in respect of electricity pricing and the catastrophe that has befallen our National Electricity Market because of government actions and decision-making. In fact, I have been on the record as saying that every problem with our electricity market is a response to government policies at various state and federal levels.

I regret that they have been aided and abetted across the political spectrum. If we go through this chamber, it is the Liberal Party who have continued to push the renewable energy target over the last five or six years. It was the Labor Party before that who were intent on an emissions trading scheme, subsidising wind farms and so on. We've had the Nick Xenophon Team, who we know have recognised the catastrophe attached to a 50 per cent renewable energy target by virtue of their subtle ditching of their support for it in their policy position after causing and being instrumental in advocating for it in their home state of South Australia. The Greens, of course, are well on the record about how renewables can save the world, but they won't save people, unfortunately.

The great problem we have with electricity in this country is that government has skewed the entire process to such an extent that unreliable and intermittent energy such as wind and solar is competing on a tilted playing field. It is not a level playing field. When the sun shines and the wind blows, yes, they can generate electricity at a minimal cost, which only makes base load energy generation completely unprofitable. But, of course, when the wind's not blowing and the sun's not shining you need base load energy production, which is not viable because it can't get into the market 24/7. This is a tilted playing field. This is a complete bias that has been a disaster for my home state of South Australia, where we had a five-day blackout in some areas.

Rather than admit defeat, rather than admit that the renewable energy target and the schemes they have implemented there have been a disaster, what have they done? They have doubled down with more idiocy by paying $50 million to one of the great scammers, one of the great rent seekers of the world at the moment: a man by the great name of Elon Musk. They paid $50 million so he can install a battery which would power the state for a few minutes in the event that there's a catastrophic breakdown. But, on top of that, because they're coming into an election in March next year, they thought that we can't have any blackouts over the summer months, so they thought they'd install diesel generators—the most polluting form of electricity generation in the world. They're going to install them at the cost of $50 million to run for this summer and $50 million for the next summer, spending $100 million to avoid having blackouts over summer, to prop up and support their election campaign.

I wish I could say it was better on the other side of the chamber with respect to the South Australian government, but the Liberal Party there had just announced their battery policy, which they got hopelessly wrong in their calculations, of course. Instead of spending $50 million on a central battery, they're going to be spending $100 million subsidising batteries for other people. The simple fact is that batteries are uneconomical at the current electricity prices. I've done the research. I've done all the sums. They simply don't add up. They also don't address the limited life span. They don't address the disposal aspects, the production or anything else. They've fallen in love with this green dream, which is a disaster.

And what do we see federally? Of course we know there are those who have green theology in this space, but federally, I have read this week, the current government's approach to the crisis is to give you a couple of movie tickets so you can switch off the electricity and air conditioner at home and then go to Hoyts or whatever it be and enjoy the cool air that they're generating in their theatres. This is just absurd. This place has descended into madness when this is the sort of tinkering that is going on.

Of course, when governments and politicians of any stripe recognise the disaster, the crisis that's hitting them in the face, they go tinkering around the edges, and then they seek to blame other bodies instead of themselves. And this is what this bill actually does. This bill abolishes the limited merits review scheme. The limited merits review scheme is simply a process by which a person or body other than the primary decision-maker reconsiders the facts, law and policy aspects of the original decision and determines what the correct and preferable decision is. It's a review scheme that doesn't go through a judicial review, which only looks at the facts of law. It's about the intent, the outcomes and the processes that go with it.

I think this is a reasonable solution when you've got such competing interests as government, who are only concerned with their electoral outcomes, and private enterprise, which is only concerned with making the biggest buck it can. I have no doubt at all—all my research indicates it—that the electricity generators in this country have been gaming the system and ripping people off to an unbelievable extent. They have done it through shoddy and short-term privatisation schemes which didn't place any limits on some of the monopoly-owned assets and the returns that can be generated by them in respect of government privatisations. They've also done it because they are the biggest players in the electricity market. If you're the person who supplies that market and you're one of the biggest players in betting on whether the price of the product is going to rise or fall, you have a distinct advantage. If you've got several gas-fired power stations or some wind farms turning, you can effectively say, 'Well, we're going to shut that down for maintenance but, before we do, we're going to buy a whole bunch of futures in the electricity market', because you know the price will go up. This is what they have been doing. That's where the market failure has taken place here. It's because of government regulation. I get concerned that the government are blaming the limited merits review scheme simply because they haven't been winning the bets. They haven't been winning the arguments or the cases which say that maybe there are some flaws on both sides. But I'm not convinced abolishing it is the correct answer.

I think the best answer is actually what's proposed by COAG. There have been a number of reviews into the limited merits review scheme, and in December 2016 they did note it was failing to meet its policy intent and was leading to higher prices for consumers, but there was no consensus for it to be gone. What they wanted to do was to tighten and clarify the grounds for review. They wanted higher financial thresholds for leave which apply to individual grounds for review; they wanted reviews to be conducted on the papers rather than through expensive and adversarial oral hearings; they wanted to introduce strict time frames for the conduct of reviews requiring appellants to demonstrate that overturning the AER's decision would not be of serious detriment to the long-term interests of consumers; they wanted to provide more flexible arrangements for consumers to participate in reviews; they wanted to introduce a binding rate of return guideline; they wanted to limit the time frames in which material can be submitted to the regulator; and they wanted to provide that costs of reviews, including those of the AER, would be borne by network businesses. They all seem reasonable sorts of grounds to experiment with before deciding to abolish something.

Of course, the government see it differently because they want to cling to the lifeline that they are actually trying to do something to lower electricity prices. So the Minister for the Environment and Energy, Mr Frydenberg, responded by reaffirming the decision that the Turnbull government want to abolish it. He says that the decisions subsequent to the Federal Court decisions in 2017, which I haven't mentioned, will increase electricity prices for New South Wales customers by about $3 billion. What's increasing the prices for New South Wales electricity customers and for every customer around the country is the fact that the renewable energy target was introduced. If you look at a graph of electricity prices and supply, almost immediately, as soon as the renewable energy target was introduced, the prices start escalating. They have been going up and up and up. It's simply because $3 billion a year is channelled into inefficient, uneconomic wind and solar farms in this grand experiment to say that we can somehow do it better than everywhere else.

Let me tell you, everywhere else this has been tried, it has been an abject failure. I was told this on the weekend: for all of you who think solar panels don't work at night, apparently in Spain they can, because the subsidies for solar panels are so good and so big that they can afford to turn floodlights on to fuel the solar panels to generate electricity, because they get paid more than it actually costs them. If that is true, that is the height of insanity. Yet that's the sort of thing we're going down the path of doing. In Germany, they had this grand green experiment. They've ditched it and they're going back and saying, 'We need some regular base-load power.'

It's the same in this country: $3 billion a year in subsidies, $60 billion between 2010 and 2030. That would pay for 25 new low-emissions coal-fired power stations, 800 megawatts each—about $2.2 billion. It would pay for 25 of them. And, for those of you who are those climate greenies who want to sign up to the Paris accord and do all these crazy things, that would meet our Paris Agreement requirements as well. It would reduce our emissions by an extent that would comply with our Paris requirements and agreement.

So we could satisfy the best of both worlds. You could fuel low-emissions base-load power, if that's what you wanted to do. You could meet your international climate change agreement, if that's what you wanted to do, and you could restore to Australia the great competitive advantage that we've had in this country, which has been cheap and reliable electricity. Our greatest competitive advantage has been cheap and reliable electricity, and we have squandered it because of government bureaucracy and decision-making.

Now, if you don't want to spend $60 billion on those coal-fired power stations, I've got a better idea: as a government, you could actually provide some contractual certainty to allow other people to build them so that they were private and not government owned. They wouldn't cost the government anything; it wouldn't have to borrow any money. We could have this, and it would increase competitiveness into our international market. But what does it need in order to provide contractual certainty? It needs the understanding upon which they are building these power stations today being applied consistently for the duration of that. So there shouldn't be ad hoc policy changes coming from one side of government or another to satisfy the latest whims and demands of the international class.

And why limit yourself to coal-fired power? Why not examine the case for nuclear power? A nuclear power station of the same ilk might cost you about $6 billion, $7 billion, $8 billion or $9 billion. It's much more an upfront cost, but the whole essence is that you have less ongoing cost in order to do it from the point of view of fuel et cetera. And there are other avenues in reactive power as well, such as thorium, which is meeting with a great deal of research and encouragement at the moment. There are also modular nuclear reactors, which are much more efficient and which can be placed in regional and remote areas. There are so many options and alternatives here which will achieve what is in Australia's national interest and which will not impact on the climate in any way, shape or form, for those who are concerned about it.

But tinkering around the edges is going to do nothing. Giving tickets to Thelma and Louise or the latest Star Wars flick is not going to save anyone. It's not going to save the country's electricity grid at all. Abolishing the limited merits review system is tinkering around the edges. It is, some would argue, unnecessary to have it. I would argue that it's an inconvenience for the government at the moment, because they've been losing cases. But if you review it and reform it, I think it's completely reasonable to have a check and balance on a monopoly operation or organisation which perhaps is going to be influenced politically by the political dictates and demands of the day.

We have a fiasco in this place and in the electricity market in Australia. It is a fiasco entirely of the government's making. I will say one thing about an individual who got this entirely right in this place—there's a whole bunch of people who are prepared to claim credit for the things that they don't have any credit for or that they shouldn't take any credit for. The one person in my time in this place who consistently belled this cat and said, 'We are sleepwalking into a disaster,' is former senator Ron Boswell. Ron Boswell, every single time we got onto electricity, stood up and warned us about the perils of the Renewable Energy Target and about the dangers of it. He was dismissed; he was forgotten; he was laughed at and he was mocked, but he was absolutely right in this respect.

It's easy to forget that; people have this change of heart. I have noticed in recent times that there are some notable public figures who seem to have had an amazing change of heart in this space. That is all well and good, but the people who matter most are the ones who do the battle when the battling is hard. Ron Boswell was right; I think we're wise to heed his words now. We need to abolish the Renewable Energy Target. We need to deregulate effectively—not renationalise but deregulate—the electricity market in this country. We need more competition, we need more contractual certainty, we need more coal-fired power, we need more gas-fired power, and we in this place need to look at uranium and nuclear power and every other form of energy.

If you insist upon going down the renewable energy route, you can't allow intermittent and unreliable power to be subsidised; you need to make sure that anyone that's going to be feeding energy into our grid has the ability to provide it in a consistent, synchronous manner. That means it's got to be directly fed into the grid. It's got to be able to be either stored or supplied for 24 hours a day when it's at capacity, because anything else is to really put Australia at a huge disadvantage.

Finally, in regard to those who are worried about carbon dioxide emissions in Australia's electricity generation, Australia accounts for 1.3 per cent, I think, of global carbon dioxide emissions. We could cut it back to zero and it wouldn't make a jot of difference to the climate. We all know that, even if some don't want to admit it. But our electricity market is something like 0.4 per cent. It's negligible, and we are denying ourselves the most important and most valuable commodity for any developed country, electricity, in the name of some global green scam that has been exposed again and again and again.

Let's not tinker around the edges; let's fix the real problem. I may stand alone in saying that this bill is unnecessary, but, nonetheless, common sense eventually will prevail and a government—it probably won't be a Liberal or a Labor one, but a government—will see sense in this and restore some confidence, faith, certainty and security for the Australian people by getting out of the electricity market.

David Leyonhjelm (NSW, Liberal Democratic Party) Share this | Link to this | Hansard source

Not enough dispatchable power—that's what's causing electricity price spikes, rising prices and the prospect of blackouts this summer. In case anyone did not accept this bleedingly obvious point, the Australian Energy Market Operator has recently pointed it out in a report to the government. And what has caused this insufficient dispatchable power is decades of government penalties, threats and bans against the only forms of affordable, dispatchable power available: power from fossil fuels and nuclear power. The Renewable Energy Target must be abolished, a guarantee against future carbon pricing must be provided to prospective investors in new coal-fired power stations, and the ban against nuclear power must be lifted. To provide immediate relief, the GST on electricity, which is an essential service, must be removed. It sounds simple, and it is as simple as that.

The urgency of this call to action cannot be exaggerated. Price spikes, rising prices, and blackouts are not just inconvenient; they are job destroying and life threatening. A similar story applies to natural gas. Gas prices have jumped despite our rich gas supplies, which are stuck in the ground due to evidence-free state bans and the Commonwealth government's unwillingness to coerce these states to lift these bans. Instead, we see the government fiddle at the edges. It calls electricity companies into a room and tells them to write letters to their customers; it calls gas companies into a room to tell them to divert gas to domestic markets even if this means reneging on gas export contracts; and it introduces bills like the bill before us today, the Competition and Consumer Amendment (Abolition of Limited Merits Reviews) Bill 2017.

This bill removes the right to have the decisions by the Australian Energy Regulator regarding the price of energy transmission reviewed. Prices for the service provided by electricity transmission lines and gas pipelines are decided by the Australian Energy Regulator and reviewable by the Australian Competition Tribunal. The government has identified no flaw in the method used by the Australian Competition Tribunal to review the price regulation decisions of the Australian Energy Regulator. But, because the Australian Competition Tribunal has, on occasion, ruled that the regulated transmission prices have been set too low, the government has decided to wipe out the avenue for review by the Australian Competition Tribunal. This preference for regulating transmission prices below what a review might consider appropriate may suppress electricity and gas prices in the immediate term—and this is surely the government's motivation in introducing this bill—but it risks delivering unreasonably low returns to businesses that have invested in transmission capacity. This will wipe out incentives to invest in expanding transmission capacity, leading to reduced transmission capacity, less reliable supply and higher prices for years to come. It's robbing energy users to provide some brief relief now. The government can and must do better than this. I oppose this bill and call on the government to free up the future supply of electricity and gas instead.

Sarah Hanson-Young (SA, Australian Greens) Share this | Link to this | Hansard source

I rise to speak to the Competition and Consumer Amendment (Abolition of Limited Merits Review) Bill 2017. Senator Di Natale has already outlined that the Greens support this bill, for a number of reasons. We have just been sitting in the chamber listening to the long-drawn-out arguments—the whack-job arguments—from Senator Malcolm Roberts and Senator Bernardi, people who don't believe in the science of climate change and don't believe that Australians have the right to proper investment in clean, renewable energy. Senator Roberts carried on his usual spray about how climate change isn't real because, well, Senator Roberts doesn't believe it to be so—kind of like Senator Roberts's own citizenship scenario, I'd suggest: he doesn't believe he's a dual citizen, so therefore it mustn't be the case, despite all of the evidence to the contrary. So we will put that aside. And it may have been Senator Roberts's last speech in this place. He did cover a big breadth of topics, from the family unit, gay marriage, freedom of speech and freedom of thought to climate change, all to talk about electricity prices. He did also throw in that people who live on welfare live better than kings did 200 years ago. I'm not sure how many people out there living on the disability pension or on the pension or on social security benefits feel as though they live like kings. But, there you go—that is this representative of One Nation from Queensland: welfare recipients live like kings! I respectfully disagree.

The scary thing, however, is that it is not just these whack-job arguments from people like Senator Roberts. These are also arguments put forward by former prime ministers, like former Prime Minister Tony Abbott, who, of course, has his own whacked-out ideas about climate change: he thinks it's crap, doesn't believe it, and asks, 'What's the problem with climate change anyway?' because maybe it's better to die in the heat than it is to die in the cold. And that is the level of maturity and understanding being trumpeted by our former Prime Minister—overseas, no less. I mean, he is giving an embarrassing name to Australia in his international gallivanting.

One Nation's obsession, however, against action on climate change and against people who take the decision to put solar panels on their roofs is what I really wanted to speak about today in relation to this bill, because we know that millions and millions of Australians have opted to put solar panels on their roofs, and that's because they know that it drives down their power bills and is also a really good way to help the planet and to reduce pollution. In fact, in Pauline Hanson's and Malcolm Roberts's own state of Queensland, 34 per cent of households have solar on their roofs—34 per cent; that is the largest in the country. And Australia is now at the front—it is No. 1 in the world—when it comes to solar on households' rooftops. People love their solar panels. They love being able to invest in their own creation of energy, reduce their power bills and help when it comes to tackling climate change and global warming. But, of course, Pauline Hanson wants to rip all of this away. She doesn't believe that people should be supported through the renewable energy target. She doesn't believe that people should have support for putting solar on their roofs from feed-in tariffs. She doesn't believe in the support mechanisms through the ARENA or indeed the Clean Energy Finance Corporation. She wants this parliament to junk all of that. If she had her way, Pauline Hanson would rip solar panels off people's houses. That is how obsessed she is against renewable energy.

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

Senator Williams on a point of order.

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

A consistent stand on a point of order must be taken. When Senator Hanson-Young is speaking, she refers to senators by their christian names and not their correct titles. It is so disrespectful. I ask you to bring this to her attention, please.

Glenn Sterle (WA, Australian Labor Party) Share this | Link to this | Hansard source

Senator Hanson-Young, I remind you of the standing orders.

Sarah Hanson-Young (SA, Australian Greens) Share this | Link to this | Hansard source

If Senator Pauline Hanson had her way, she would rip solar panels off every house and rooftop across the country. That is how obsessed Senator Hanson is when it comes to renewable energy and to people who are trying to do their best to reduce their power bills and reduce pollution at the same time.

Thirty-four per cent of Queenslanders have solar on their roofs. Senator Pauline Hanson, One Nation, want to rip them off, rip away that money and rip away that support, and, instead, spend billions of dollars building coal-fired power stations. How are we going to pay for that? People's taxes are going to go up. People's taxes are going to go up because no bank and no investors want to build these things. So we're going to rip money out of the hands of regular, everyday Australians and hand it to big coal companies so that they can create dirty power and charge households and small businesses exorbitant bills in order to power their homes and their shopfronts. Senator Pauline Hanson wants to take money from everyday Australians and give it to coal companies, and she will increase taxes on her way through. This is the type of loony, whack-job policy coming from One Nation and now being supported by people like Senator Cory Bernardi and our own former Prime Minister Tony Abbott—whack job after whack job after whack job!

Thank goodness Australians are smarter than this. They love their solar on their roofs and they love their renewable energy target. The poll out today in The Australian newspaper shows huge support for supporting renewables—huge support. Sixty-three per cent of people across the country want the renewable energy target and support for renewables to stay in place because they want cheaper power and they want it to be reliable. They also want to reduce carbon emissions and reduce pollution. Whether the whack jobs in this place believe it or not, climate change is real, it's getting worse and Australians want us to do something about it. Senator Malcolm Roberts of course stood here in the chamber and gave us one of his amazing, wide-ranging speeches about how terrible everything is because he doesn't believe in it. Senator Roberts, your own empirical evidence lacking in your own citizenship case means that that may have been your final speech in this place. I'm not sure how we're going to cope without a good giggle on a Monday morning!

Anne Urquhart (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on the Competition and Consumer Amendment (Abolition of Limited Merits Review) Bill 2017. I want to say at the outset that Labor supports the bill and supports the abolition of the limited merits review.

Labor referred the bill to the Senate Environment and Communications Legislation Committee. We did it not to needlessly delay the bill or to frustrate customers or the energy industry but to ask genuine questions of industry, consumers and unions about what the impacts of this bill would be. The inquiry received 12 submissions. The committee held a short hearing in Melbourne just a couple of weeks ago and received evidence from energy companies, consumer groups, unions, energy industry experts and the government.

A number of critical points came out of the evidence to the inquiry. I want to thank the secretariat for their assistance in preparing the report and thank all those who gave submissions and gave evidence. It was important to take a moment to hear from all sides about the role of limited merits review—the current problems faced by consumers and unions and possible alternative approaches. I, for one, feel that it is never a good idea to simply abolish something without examining what the alternatives might be. In this case, it is clear that the limited merits review process appears to be slanted in the interests of network companies rather than the long-term interests of consumers.

While it may have been possible for the government to make amendments to the process, it's chosen to abolish the LMR regime. I note that the government introduced this bill to the parliament in August this year, after an announcement by the minister in June. Since its introduction, the minister has spoken on a number of occasions of the urgent need for this bill to pass. This is so that, after being in power for over four years, this government can say it's doing something to relieve pressure on energy prices for households. Energy prices have increased 63 per cent, on top of inflation, over the past 10 years. This is so that, after another year of indecision and infighting, the government can say it is putting pressure on energy companies. This is so that, after a year of being the minister, the member for Kooyong can hold doorstops and proudly claim to be a man of action.

Yet this bill will do nothing to put immediate downward pressure on power prices. As a result of this bill passing, power prices will not drop tomorrow or in fact next week. Importantly in this energy debate, this bill won't miraculously solve this government's infighting and it won't end the crusade by the member for Warringah. And it won't change the basic fact that this government has been in power for over four years and that for four years this government, under the current Prime Minister and the member for Warringah before him, has left this country without a clear energy policy.

So what is limited merits review? It was introduced 2008 following amendment of the national energy laws. Limited merits review was part of an attempt to balance outcomes between competing interests and to allow parties affected by decisions of the Australian Energy Regulator appropriate recourse to have decisions reviewed. Under the national energy laws, the Australian Energy Regulator sets the prices that businesses may charge for, and the revenue they may earn from, the provision of electricity network services and access to covered pipelines. The use of the regulator in setting the prices recognises the natural monopoly in the supply of electricity and gas. The current process by the AER arrives at its revenue and accesses determinations in lengthy and extensive inquiry processes, analysis and consultation. If an affected party or person disagrees with an AER determination, they may seek leave of the Australian Competition Tribunal to apply for a limited merits review of the determination. In making its determination, the Competition Tribunal must either affirm or vary the original decision, or set aside the decision and remit the matter back to the AER. After a limited merits review process concludes, affected parties may then seek a judicial review of the decisions.

Even with these qualifications and the intention that the LMR is used to seek a resolution to complex disputes, use of limited merits review has become a routine part of the regulatory process and has contributed to increased energy prices for consumers. The limited merits review regime has been reviewed by the COAG Energy Council twice—in 2012 and again in 2016. The 2012 review found the limited merits review regime did not adequately address all stakeholders' interests, especially those of consumers. It was excessively legalistic in its approach and was costlier, with cases taking longer than anticipated. As a result of the first review, the LMR regime was amended in 2013 to realign the processes and threshold to better incorporate the views of consumers. The second review, in 2016, resulted in agreement between COAG Energy Council ministers that the limited merits review regime was failing to meet its policy intent and had contributed to higher prices for consumers. However, there was no consensus on the Commonwealth's position that the LMR regime should be abolished. Instead, a wideranging set of amendments were agreed to in principle to enable significant and immediate reform to again improve the processes and thresholds to better meet the long-term interests of consumers.

Despite the COAG Energy Council's position of agreement in principle to amend the LMR regime, the minister in June this year announced he'd be moving forward alone with its abolition. As the member for Port Adelaide said in his address to the other place, it was pretty clear, looking at the national debate surrounding the COAG Energy Council over the past few years, that the loudest proponents of the abolition of LMR were Labor state governments in Victoria and South Australia, and the New South Wales Labor opposition. In fact, the strongest resistance to any abolition of the LMR came from the New South Wales Liberal government, particularly when Mr Mike Baird was the Premier.

I want to return now to the Senate inquiry and address a number of important points made by witnesses. First, the Electrical Trades Union and the Australian Council of Trade Unions expressed concern that the bill is being used as a blunt instrument to address high energy prices for Australian households and businesses, with little consideration for any unintended impacts on employees. The ETU gave one particularly strong piece of evidence that, as a consequence of a Competition Tribunal limited merits review in 2015, an estimated 2,000 electricity maintenance jobs had been saved across New South Wales and the ACT and the condition of those networks had avoided serious neglect.

The ETU explained that if network companies are forced to operate below recovery costs for the efficient operation of their businesses then workers will have very little protection when businesses decide the easiest path to reducing their costs is by downsizing, or by terminating maintenance workers' employment and re-employing them under a contractor. While this may be seen by some as an indirect matter, the rise of contracting and insecure work is of real concern to millions of Australians. Under a contractor workers would face a pay cut and less secure working hours, and the general conditions that they're working under would be less safe.

The ETU advised that, in their experience, employment under a contractor is more precarious, and safety may be compromised through the drive to get jobs completed. This may be seen by some as efficient and driving down costs, but lowering costs should not be done at the expense of the working conditions and safety of Australian workers. So what is the virtue in it? I can guarantee the energy network company will still find a way to extract the same rate of return for its shareholders. In the case raised by the ETU and the ACTU, the ability of the company and the union to take the determination to the Competition Tribunal for a limited merits review enabled a higher revenue determination and those jobs to be saved.

I note that the AER responded to this evidence by saying that it sets an overall revenue allowance and that it is up to the business to decide how it operates, including how much money it spends on operations and maintenance. I also note that the Department of the Environment and Energy stated that an impact on the workforce is a commercial decision on the part of the business concerned. While both responses from the regulator and the department were expected, it is disappointing and downright disgusting that workers can be used as cannon fodder by huge businesses. Whether they are energy network operators, shipping companies, manufacturers or whoever, I for one will stand here and say that this isn't right and that I, together with people across the country, will be watching the new process of the AER with great interest.

With that, I want to move on to the need for greater stakeholder participation in AER determinations, particularly those for consumers and unions. While the department noted in evidence that the very best place for consumers to engage is the regulator's primary decision process—and I note that the AER gave evidence that there have been positive changes in the engagement between some network businesses, their customers and the AER—the AER also indicated that it is working to ensure that consumers are fully included in its decision-making processes. Further, the minister has allocated an additional $67 million over the next four years to the AER. However, the clear evidence from the inquiry was that, while engagement with stakeholders was increasing, it was not always adequate. As such, I proposed a recommendation to the committee's report that reads:

The committee recommends that the Commonwealth Government gives consideration to amending the statements of expectations for the Australian Energy Regulator to emphasise that more effective engagement of consumers, relevant unions and stakeholders is expected.

In preparing this recommendation, it was brought to my attention that the government hasn't produced a statement of expectations for the Australian Energy Regulator since 2014. Such statements are often issued at the start of a new parliament or as policies change. As such, if the minister is to present a new statement, it should include specific direction to emphasise that effective engagement with consumers and unions is both expected and absolutely necessary for the proper functioning of the national energy market, that the current approach of improving empowerment for consumers is welcomed and that there is a need for the AER to do more for consumers and to embed unions into the process. I encourage the minister to look favourably upon this recommendation and to update the parliament on his actions in the coming months.

Finally, with the passage of this bill there will still be a review option available: the judicial review. Evidence to the inquiry was quite clear that, while access to judicial review was possible, it was viewed as not being an adequate avenue for redress for industry, and there is concern that key stakeholders such as unions and consumer groups will not have standing within a judicial review and that, if they were to actually get that standing, they may face exorbitant cost orders that would prevent them initially from bringing forth a review. So I welcome the comments from the AER that there is likely to be a need for improvement to the process to ensure standing and provide cost protections for consumer groups in relation to judicial review. However, I'm concerned that the AER again is neglecting the important role of unions in this conversation. They represent tens of thousands of people in the energy sector, and I believe that any moves to improve the process to ensure consumers have standing and are protected from cost orders must be extended to unions and their members.

In conclusion, I come back to the minister's urgency to pass this bill. Why is it that this minister is in a huge rush to pass this bill but at the same time is part of a government that has no energy policy, has no ideas for providing long-term certainty to the energy market and wants to abolish the energy supplement for 400,000 aged pensioners, 105,000 carers, 109,000 disability support pensioners, 138,000 single parents and many other income support recipients besides? This is a supplement whose sole purpose is to relieve the pressure from electricity bills on some of the most vulnerable members of the Australian community, a supplement that currently relieves pressure on hundreds of thousands of households' electricity bills, and yet we're here abolishing a review process that will not affect prices tomorrow or next week.

Labor supports the limited merits review for electricity and gas networks. It's a regime that has been twice reviewed and, while amendments may have improved the regime, the government has taken the option of abolition. Labor referred this bill to the Environment and Communications Legislation Committee, as I said earlier, and it was not to needlessly delay the bill or to frustrate the energy industry but to ask genuine questions of consumers, of the industry and of unions on the impact of this bill. I thank the Senate.

Simon Birmingham (SA, Liberal Party, Minister for Education and Training) Share this | Link to this | Hansard source

I thank senators for their various contributions to this debate. The Competition and Consumer Amendment (Abolition of Limited Merits Review) Bill 2017, as has been noted by many, will abolish the limited merits review regime for reviewable regulatory decisions under the national energy laws. What does this mean in plain English? Essentially it means that monopoly network businesses, primarily those running poles and wires systems for our electricity assets around the country, will no longer be able to seek review from the Australian Competition Tribunal of decisions made by the Australian Energy Regulator or the Economic Regulation Authority of Western Australia.

Why is this important?

It's important because those network businesses, those running the poles and wires distribution around the country, have been gaming the system and have used the appeals process in a manner that to date has increased consumer bills by an estimated $6.5 billion. That's the core number that every senator should keep in their mind through this debate. An extra $6.5 billion has flowed through to households, to businesses, to the Australian economy in extra energy costs as a result of the gaming of this limited merits review regime.

Senator Urquhart was just questioning the urgency of this measure. Why has the government criticised the delay that ensued? Because the Labor Party, despite saying they supported it—and I note in this chamber again today that they have acknowledged their support and I thank them for that—referred the bill off to Senate inquiry and delayed its passage through this place. It is important because further decisions in relation to energy distribution around the country are pending. The types of decisions around gas distribution in Victoria for Australian gas networks—around Albury, across Victoria, AusNet Services, Multinet Gas, gas transmission arrangements in both Victoria and Queensland—without this legislation passing, would all potentially be subject to the same type of gaming regime in the future, and that is precisely what the Turnbull government seeks to stop. We want to stop the Australian Competition Tribunal being used, in effect, as a second regulator, because that's the type of behaviour and pattern that we've seen. The default regime has been for network operators to refer decisions off to the tribunal and, indeed, to make that the place where they contest and seek to maximise their incomes and, therefore, their profits.

This regime, as has been acknowledged in this debate, has been reviewed previously. There was a review in 2013 from which certain changes were applied. Then there was a subsequent review, in 2016, and that review found significant regulatory failure, particularly in regard to the fact that reviews or appeals remain routine—that is, as I said, the network operators figure they don't need to worry too much about the first process through the Australian Energy Regulator because they will contest whatever they can at the Australian Competition Tribunal to squeeze extra income and extra dollars through that process. It also found there was a failure to deliver regulatory certainty and stability, obviously related to the aforementioned tactics and gaming of those operators. There were continuing barriers to effective consumer representation and participation, which, I note, Senator Urquhart reflected on and the Senate inquiry reflected on. I can assure the Senate that the government is cognisant of the recommendation from the Senate inquiry and that the Minister for the Environment and Energy will write to the Australian Energy Regulator to direct it to examine opportunities to enhance its engagement to ensure a wide range of stakeholders are able to participate in the regulatory decision-making process. It also found that there was an absence of meaningful guidance to ensure the delivery of materially preferable national electricity objective or national gas objective decisions and that, in essence, significant change was required and the focus needed to rightly sit with the proper regulator, the Australian Energy Regulator, in whom there is proper capacity and capability to be able to actually undertake the regulation of this sector.

I note, and Senator Urquhart half alluded to this in her comments, that the COAG Energy Council did agree in December 2016 that the limited merits review regime was failing the national interest and was failing electricity consumers around the country. The Turnbull government, given attempts at change and improvement had been made before, took the action to say that we ought to abolish the limited merits review regime and that that was the most simplest, most straightforward way to resolve this issue. This was a position supported, yes, by the Labor governments in South Australia and in Victoria, demonstrating that there is certainly nothing partisan about this. It was opposed, as Senator Urquhart said, by the New South Wales government. She did omit to acknowledge it was also opposed by the Queensland government. Both governments, yes, at that time had a vested financial interest in keeping network revenues high, because at the time New South Wales was selling its networks and Queensland, of course, continues to own those networks.

The Queensland government, the Palaszczuk Labor government, has clearly been exposed, basically ripping off consumers around that state at every possible opportunity by seeking to yield and leverage additional dollars through these systems. It's a demonstration that what matters is not the ownership but having effective regulatory regimes in place. That's why we have this legislation before the chamber, to put those effective regulatory regimes in place and to ensure that the system cannot be gamed as effectively in future.

Some—I note Senator Leyonhjelm and Senator Bernardi—have mused about whether in fact too much power is left in the hands of the Australian Energy Regulator and whether in fact as a result of that there are insufficient safeguards put into the system. I would note in response to them that judicial review remains an option to the parties through this process. This does not remove all oversight in the processes; it simply ensures that a default referral to a competition tribunal will not be in the hands of every network operator in the future. Instead, they will have to undertake the more rigorous process of justifying a judicial review process if they believe the AER has erred in its decision-making. I note also that the Turnbull government are taking steps to strengthen the AER in terms of its undertakings, that we'll inject a further $67.4 million to help it ensure that it reins in poor monopoly energy business network practices, that it is as effective as possible in the decisions that it hands down and that it ensures that we get the best possible deal for consumers, for households, for businesses, in terms of their energy regimes.

Why is it that this area of policy, in relation to network businesses, is so important to energy costs? Senators and members of the public need only refer themselves to the Australian Competition and Consumer Commission's report Retail electricity pricing inquiry preliminary report, which was released publicly today. This report makes very clear why it is that tackling the network issue is perhaps the most important initial step that governments can take to rein in electricity prices. The report says:

Network costs were the largest component of retailers' costs in 2015–16, making up around 48 per cent of an average bill charged to a residential customer.

So, for all the talk about who generates the power or who sells the power, the middleman, the network costs—those poles, wires, pipes, distribution networks—are the largest component of the costs that consumers, households and businesses are paying, 'around 48 per cent of an average bill'. Further, the report says:

… increases in electricity prices over the period from 2007–08 to 2015–16 were primarily driven by higher network costs …

So network costs are the largest component of people's bills and are the biggest contributor to the price rises that people are facing around the country. The problem is very clear: network costs have made a substantial impact—the biggest impact—on price rises, and they comprise the largest component of bills that people face.

How has the operation of limited merits review, which we're seeking to abolish today, impacted on those costs? The ACCC report further states, on page 113:

Compared to the initial determinations made by the AER, the limited merits review process has led to a material increase in network revenues passed through to consumers since it was introduced in 2008.

It goes on:

For AER decisions up to 2014, Tribunal appeals added around $3.2 billion to network revenues.

The government estimates the total addition to network revenues to be closer to $6½ billion. Frankly, it doesn't really matter. Whether it's $6½ billion or $3.2 billion, these are significant additional costs flowing through to households and consumers, and this is because, as a result of the limited merits review regime, the regulators have been given the right to charge higher prices, to pass higher prices through the system, and ultimately households and businesses around the country end up paying.

The ACCC goes on to say:

The limited merits review framework appears to have undermined the initial decision making process of the AER, and has led to significant price uncertainty for electricity customers.

It says there is significant price uncertainty and an undermining of that initial price decision-making process of the regulator. So what of the Turnbull government's steps to abolish this process to ensure that we clean up the system? The ACCC notes:

The Australian Government is currently taking steps to remove limited merits review. The ACCC welcomes this move. Reviews sought by network operators have added billions of dollars to the cost borne by electricity users. The ACCC considers that the removal of this avenue of appeal of the AER's decisions will help ensure network pricing is moderated in future.

It is a strong endorsement from the ACCC and the most recent analysis around electricity prices—it was released publicly just today. It clearly demonstrates the Turnbull government is taking the most important step it can in relation to addressing this section of electricity pricing, which is the highest growth factor and the highest contribution to household electricity bills.

It's with that in mind that I am surprised that some in this chamber—not the Labor Party, not the Greens, not the government parties and not One Nation but some in this chamber—have particularly questioned this. In fact some, in particular Senator Nick Xenophon and the Nick Xenophon Team, seem to have argued against the step that the government is taking. We hear plenty from Senator Xenophon and his compatriots arguing about electricity prices and calling for something to be done, yet when this government brings action to this parliament to address network costs, which we sought to do some months ago, Senator Nick Xenophon decides to take the side of the energy networks instead. Today, Senator Nick Xenophon has gone in to bat for price-gouging energy network operators, rather than struggling Australian households and businesses. He has come into this chamber and, in effect, defended the extra $6½ billion that households and businesses across the states and territories are paying, rather than supporting the government in taking action to rein in the operation of price-gouging energy networks. It is quite a remarkable argument that was waged. If you listen to the totality of those remarks from Senator Xenophon, as I did, you hear that they're not a particularly coherent set of remarks. In fact, there was no solution in particular offered as to how to address energy network costs. There was no solution offered as to how to address what are the largest contributors to household electricity bills and what is the largest contributor to the increase in household electricity bills.

Instead, Senator Xenophon argued that the solution to energy prices lies in an emissions intensity scheme, a concept that, I acknowledge, he has long prosecuted, but, in arguing that, he's ignoring the reality that that has nothing to do with energy networks. That is about generation activities and the two are fundamentally different. Of course, energy networks are about those poles, wires and assets that distribute the power. They're not about how it is that the power is generated in the first place. Essentially, the argument he put is technically illiterate, as it ignores the very obvious difference between the generator producing power and the poles and wires delivering it to homes and businesses.

The Turnbull government has proudly taken an approach of trying to address issues around prices at every step of the energy supply business. We recognise that there are price pressures that have flowed through to households from generation, from environmental schemes, from network distribution, and from retailers. The way to get the best solution for households and businesses is to tackle each and every one of those different components, so that's what we've been seeking to do. Energy markets and energy businesses used to be overwhelmingly the domain of state and territory governments, but we have taken action because of their failure to address each of those sections. In relation to environmental schemes, the coalition government took action that delivered a real reduction in electricity bills through the abolition of the carbon tax and ensured that, for the renewable energy target, we had a more realistic and achievable target than had previously been legislated. We took action and are taking action in relation to energy generation by supporting dispatchable energy sources in the future, such as pumped hydro schemes, that can come into the market and bring prices down when it is necessary to do so. We're supporting action in terms of network distribution through the legislation before the chamber as present and, of course, we supported action in the retail marketplace to ensure that retailers are giving the best deal to consumers and making it as easy as possible for consumers to opt into the best deal.

Surely Senator Nick Xenophon doesn't really want to leave those network operators price gouging across Australia untouched and let them continue to get away with ripping billions of extra dollars out of Australian households and consumers. Certainly, the Turnbull government will not let that occur. That's why we have brought this legislation to the parliament and that's why we are pleased to acknowledge the support of various state governments and of various opposition parties. We commend the legislation to the chamber.

Question agreed to.

Bill read a second time.