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