Paul Scarr (Queensland, Liberal Party) Share this | Link to this | Hansard source

I move:

That the Senate take note of all answers provided by the government today to questions without notice from the opposition

We have heard here today a number of issues canvassed which go to some of the major issues facing this government at this point in time. I want to speak directly in relation to, firstly, forecast gas shortfalls. The Australian Energy Market Operator, AEMO, is responsible for managing the electricity and gas systems across the whole of Australia. They are an absolutely integral part of making sure that all the businesses and retail customers and consumers, both business and personal, across Australia, get the electricity and gas they need to operate their businesses or to maintain their households. That organisation—not a politician, not a person in this place, but a key organisation in running the electricity and gas system across Australia—in its most recent report explicitly named regulatory approvals pricing intervention and the mandatory code of conduct, policies of the government, as 'key uncertainties impacting project timelines and the likelihood of completion' of gas projects.

These are the policies that were introduced in haste at the end of last year, in mid-December. The government called back the whole of parliament to introduce policies which effectively put price controls on the gas industry and provided the government with the opportunity to dictate the terms and conditions upon which that commodity could be sold and who it could be sold to. As a direct result of that, we now have our key regulator, an oversight authority of Australia's electricity and gas systems, saying that policy has created key uncertainties impacting project timelines and likelihood of completion.

When those of us on this side of the chamber got up and warned that it was basic economics that price control, however well intended, invariably impacts supply those opposite were derisive. They said, 'You don't care about keeping down electricity rises; you don't care about keeping down gas prices.' But, quite to the contrary, the price issue that this country was facing fundamentally was a supply issue. This country has enough gas to provide that energy resource to private consumers and businesses and plenty more on top of that. But the policy of the Albanese Labor government introduced price controls that have had a direct negative impact on Australians, be they in business or in their homes, relying upon that gas.

I can give you an example of a particular project in my home state of Queensland operated by a Queensland company called Senex which has been delayed as a direct result of that price control legislative architecture that was introduced late last year. As a direct result of this policy, a company called Senex, which I should say is approximately 50 per cent owned by a Korean organisation called Posco which has been investing in the Australian resources industry for decades and decades, has delayed $1 billion of spending on a gas project in south-west Queensland. Those gas reserves were actually reserved for domestic use. That project, which would produce gas for domestic use, has been delayed as a direct result of the price controls which have been introduced by the Labor government—$1 billion of investment. And why? They actually tell us why. They say, 'Because there's too much uncertainty.' How can you invest a billion dollars in a new project if you do not know how much you're going to be able to charge for your product, who you can sell it to, and the terms and conditions of sale? I'll say it again. How can you responsibly invest $1 billion in a project where the government can dictate to you the price you can sell it at, who you can sell it to, and the terms and conditions of sale? You know what? You can go three kilometres north of Australia, to Papua New Guinea, and invest in their oil and gas industry and not be faced with the same restrictions. So why would you invest an extra dollar in this jurisdiction, with those price controls, when you can invest in one of our nearest neighbours?

Tim Ayres (NSW, Australian Labor Party, Assistant Minister for Trade) Share this | Link to this | Hansard source

I'm astonished, really—I'm regularly astonished—by the line of argument of those opposite in relation to energy prices. The first thing that the people opposite should do in any discussion about energy prices is apologise—apologise to the Australian people, apologise to households and apologise to business—for two things. One is a decade of complete sclerosis, complete inactivity, complete failure on energy prices and complete failure on energy policy. Who can forget they had 23 different energy policy frameworks and didn't land a single one of them? That contributed to a decade of complete policy uncertainty and frozen investment. Billions of dollars worth of investment in Australian energy capability flooded offshore because the rabble over there, when they were on the government benches, couldn't land an energy policy—utter failure. The upward pressure that there is on household and business energy bills is a complete consequence of their failure.

The second thing—

we'll come to that in a minute—which Mr Morrison and Mr Taylor should apologise for, is the fact that, immediately prior to the election, the then minister, Mr Taylor, with his unknown colleague the secret minister—the then Prime Minister—were in possession of some knowledge about what was going to happen to wholesale energy prices that it was their responsibility in the normal course of events to communicate to businesses and households because that's what ministers do. And what did they choose to do? What did Mr Taylor choose to do? He decided to keep that information about price rises in the order of 18 per cent secret from the Australian people. Why did they do that? Because it didn't suit their political interests. With Mr Morrison and Mr Taylor—and Mr Turnbull, and Mr Abbott—their approach to energy was always about glib catchphrases. It was always about slogans. It was all about trying to find division. It was never, not at any point, about actually trying to encourage investment in Australian energy and in distribution. There was all this piffle from Mr Morrison about a gas led recovery. Nothing got built. Nothing got done. It was just a slogan, tested in focus groups, that led to no actual investment and no actual action.

We had Senator Scarr in here claiming that Labor's decision last year, in government, to intervene, to put downward pressure on gas prices and coal prices, has somehow led—he says it's economics 101. The thing about making that argument is that anybody who's spent time studying economics knows that, yes, there is indeed economics 101, but there's second year too and there's a third year after that, and nobody credible would make an argument to say that price controls today with investment horizons that far out are going to lead to supply constraints tomorrow. It's just a silly argument. It's a dishonest argument. It's an argument that's trying to scare people.

What do the people who actually have facts say about this? The Australian Energy Regulator says that energy prices, because of our intervention, are much lower than they otherwise would have been, by a factor of 10 or 20 per cent—much lower. But that doesn't suit the hyperpartisanship and nonsense that we're seeing from the other side on energy prices.

Slade Brockman (WA, Liberal Party) Share this | Link to this | Hansard source

I too rise to take note, particularly of the answer from Senator Farrell about Labor's policy on gas. We've just heard there from Senator Ayres why this government has not got a clue about handling the gas market. They can't just look at the last 3,000 years of economic history and recognise the fact that what they were doing was not going to have a positive impact on the gas market. In fact, it was highly likely, you could have predicted, that it would have a negative impact on the gas market. And guess what. I predicted it.

Three weeks before we were recalled to parliament—and those opposite who are laughing can go back and look in the West AustralianI wrote an op-ed because this idea of a gas price cap was being floated around by a few low-level Labor ministers, I thought: 'No, they're not crazy enough to do that. They're not crazy enough to ignore 3,000 years of economic history and impose a price to try to get gas flowing. They're not that silly.' So I wrote what I thought was a tongue-in-cheek op-ed, and it turned out that three weeks later we were recalled to parliament to pass gas price caps. I said in that op-ed—and everybody with an ounce of economic sense said at the time and have said subsequently—that a gas price is not going to do what the government says it supposedly wants to do, which is put downward pressure on gas prices and, therefore, energy prices. In fact, it's done precisely the opposite, which is what I said in my op-ed and what a lot of very-well-trained economists said, because this stuff isn't actually rocket science. There are 3,000 years of economic history, going back to ancient Greece, that shows that price caps of any sort are entirely counterproductive.

And what do we have just a months later? Anyone with any sense knew that, by putting a price cap in place, you would slow down investment, put a lot of uncertainty in the market and increase volatility in the market, and in the end you would actually put prices up. Guess what we got from the Australian Energy Regulator's draft default market offer the last week. This is frightening. It's not a matter of joking, because this impacts household power bills. It impacts small businesses—mostly on the east coast, and I will say a little bit more about that later—throughout the national energy market.

What has the Australian regulator said about the default market offer? There will be electricity price rises in South Australia, New South Wales and South-East Queensland of around 24 per cent. In Victoria, it will be 31 per cent. That's a doubling every three years—a 31 per cent increase in one year. This is at the same time that those same families and small businesses aren't just being hit with massive spikes in their energy prices; they're also being hit by massive spikes in the cost of their borrowings. A lot of small businesses need to run an overdraft. They need to run debt in order to operate, and we've seen the fastest rise in interest rates pretty much in the history of Australia. Families have seen their mortgage repayments go up by in many cases a thousand dollars a month. This has a real, direct impact on Australian families and Australian businesses, and those opposite think it's a joke to recall parliament and pass legislation to impose price caps for a political sugar hit to be seen to be doing something when actual fact they knew it would be entirely counterproductive, if they were being at all honest with themselves.

In Western Australia we're a little lucky. We have large domestic gas availability and obviously we export the vast majority of Australia's gas, and that's thanks to the Court government's decision in the 1970s.

Jana Stewart (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

I am also astounded at those opposite and their claim to care about some of the most vulnerable people in the community and their talk of caring about the cost of living and the impact that has on Australians. The Australian people inherited a trillion dollars of debt. The Australian taxpayer inherited a trillion dollars of debt. We're now experiencing a cost-of-living crisis, and those opposite have shown their true colours. They don't care about the people who are experiencing the full brunt of the cost-of-living crisis we've got in our country. They've spent the last couple of weeks advocating for the 0.5 per cent of the population with over $3 million in their superannuation balances. They want to advocate for 17 people, I think it is, with over $300 million. But actually the people who are doing it tough are the people on the ground. It's something like around 10 nurses that would be needed to pay for somebody's superannuation balance with over $3 million in it. They think it's okay for nurses to pay for the superannuation balances that have over $3 million in them.

Then on the point about energy, it is so rich for those opposite to get up and talk about energy prices in this country. I just want to talk about a couple of legacy pieces of those opposite. They voted against a saving to household power bills. They changed the laws to hide a 20 per cent increase in the default electricity offer. In nine years, almost a decade, they had 22 energy policies and not a single one of them worked—not a single one of 22 policies. They ignored over 12 warnings from the ACCC and AEMO about domestic gas supply. They're talking about gas. How's this for a fact: no new gas basins opened up under them. Under them we saw four gigawatts of dispatchable power leave and only one gigawatt come in. There are some facts for you, but we're still continuing to have some denial in this chamber. It's okay.

We've got a responsible plan to tackle some of the challenges we've inherited as a government. It's about relief, repair and restraint: responsible cost of living relief, like cheaper child care, cheaper medicine and direct energy bill relief; repairing supply-side constraints, like fee-free TAFE, cleaner and cheaper energy, National Reconstruction Fund and more affordable housing; and a responsible budget with spending restraint, returning almost all revenue upgrades to the bottom line and keeping spending essentially flat over the next four years to not add to inflation. I just want to repeat that: spending is flat—not wages, like the policy of those opposite. Our spending is flat and we're not keeping wages flat.

Australians understand that we didn't create these challenges, but they elected us to take responsibility for them. Our actions on the cost of living are there for people to see. I just want to spell them out: we argued successfully for a Fair Work Commission minimum wage increase in line with inflation and we've introduced legislation that will drive investment in cleaner and cheaper energy, putting downward pressure on power prices. The May budget will include direct energy-bill relief for households and businesses, which the opposition tried to block. We are delivering cheaper child care and medicines. We are delivering fee-free TAFE and more university places. We are expanding paid parental leave and we're building more affordable homes, including through the new National Housing Accord. Pensions, allowances and rent assistance have increased in line with inflation. And we've brought in a new pensioner work bonus so that older Australians can keep more of what they earn without affecting their pension. We are on the side of all Australians; those opposite are on the side of 0.5 per cent of Australians.

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

I rise to take note of answers to questions, I think from Senator Ciccone and Senator Stewart, about AUKUS.

Jana Stewart (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

I didn't ask any questions on that—

Andrew McLachlan (SA, Deputy-President) Share this | Link to this | Hansard source

The motion that was moved by Senator Scarr did not include the response to that question. You can speak about the other question—

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

No problem at all, I can happily switch to the other one.

An honourable senator interjecting—

I've got two—I'm good at both! Deputy President, on energy policy: it has become very apparent that this government does not, and cannot, deliver on its promises. Those opposite, after almost a decade in opposition, have obviously forgotten how to govern and that, in government, actions must be taken to deliver results.

Yes, I was just about to—the AUKUS ones that we announced.

Andrew McLachlan (SA, Deputy-President) Share this | Link to this | Hansard source

Senator Van, Senator Shoebridge and Senator Stewart! It isn't a conversation. Through me, Senator Van.

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

I'm about to tell you—I tried to before. Right now, the reality is that under the Albanese Labor government Australians are far worse off. It will only be worse so later this year when the energy prices go up.

Those opposite were always out there on the hustings, saying, 'We're going to lower energy prices,' and that energy prices were going to be lower by $275. We've heard how many times Prime Minister Albanese promised that. We know that hasn't happened and we heard this week, again, that prices are going up. Not only are they going up but there are going to be shortfalls of gas this winter. Why? Again, because of the policies on the other side.

Jana Stewart (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

No new gas projects—

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

It doesn't matter, yes, because your Andrews government had a moratorium on it, that's why. When they knew they wouldn't be able to fulfil the promise of cutting power bills by $275, they promised an assistance package would be finalised in March—with support expected to flow from April. However, again—surprise, surprise!—they've broken that promise and not delivered the financial support that they promised on the time line that they set to help people with the rising energy cost crisis that they have caused. The truth is that we knew higher power prices would come with this government's ill-thought-out, illogical and, frankly, quite ridiculous energy plan.

To be clear: I'm very supportive of the transition to a net zero economy, and I believe it should be more ambitious than what this government has set for its Paris target. When I attended COP27 in Egypt last year, one thing was abundantly clear: whether you like it or not, transition to renewables is happening. Anyone not on board and in front of this tidal wave of investment, regulation and finance will be swept away. However, it is lucky that only a few Labor members attended. If they had been there, if they'd had a strong presence, they would have been laughed out of the place, had they presented their plan to get to 43 per cent. In the best of conditions, this transition is going to be long and it's going to be hard and it's going to be expensive. Given that, we don't have a dollar or a day to waste.

What we need is for this government to not make energy more costly and harder on Australians that it has to be. Despite the Albanese government repeatedly blaming the Ukraine invasion and coalition policy to explain Australia's steadily rising power bills, the impact of the current proposed policy is foundational to the uncertain future of domestic energy prices, decarbonisation and the required investment.

This government's reasoning is that the energy crisis is due to Russia's illegal invasion. However, it is more important to note that the ACCC reported that the netback price of LNG was at $41 per gigajoule before the events in Ukraine. This issue has been prevalent globally, including in Australia, for a decade, due to a lack of investment in new supply. In fact, JP Morgan's 2022 annual energy paper explicitly states:

If the transition is to succeed, we cannot disconnect the generation we have before we have time to replace it. We know that, under this government, power prices are going to remain high—that's just a fact—and that will be its failure.

Question agreed to.