Di Natale: 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.
Chamber Senate on 16/10/2017Item BILLS – Competition and Consumer Amendment (Abolition of Limited Merits Review) Bill 2017 – Second Reading Speaker: Di Natale, Sen Richard Parliment Transcript used for reporting News