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Wednesday, 17 August 2011
Page: 8479


Mr BALDWIN (Paterson) (16:35): I rise to speak on the Australian Energy Market Amendment (National Energy Retail Law) Bill 2011. It has been a long decade since June 2001 when COAG met and established the Ministerial Council on Energy. The whole purpose of establishing a ministerial council on energy was to reach this point. It has taken a decade. In 2002, the energy market review released its report entitled Towards a truly national and efficient energy market. The review proposed the establishment of:

A statutory National Energy Regulator should be established under a legislative approach agreed by COAG to be the independent energy regulator in all jurisdictions, interconnected or otherwise, and to encompass the energy-related regulatory roles of the Australian Competition and Consumer Commission, the National Electricity Code Administrator and state and territory regulations.

It has taken a decade, because it was only on 9 March this year that the South Australian government finally passed its National Energy Retail Law (South Australia) Bill 2010. That bill received royal assent on 17 March, which was the enabling process for this bill to go ahead. The effect of this bill will require a transition period until 1 July 2012.

Why is this bill so important? As stated by the shadow minister for energy and resources, the member for Groom, having a competitive energy sector is key and critical to growing an economy. We need reliable, efficient, affordable, energy to grow our economy. We need security also. The one thing that is being undermined in the energy sector at the moment is confidence in investment. That is affecting the long-term security of the energy sector in Australia. There is nothing in Australia, no person and no business, that does not rely in one way, shape or form on energy. Each and every person could be positively benefited by this legislation, because the purpose of this legislation is to cut the red tape for retailers who operate across state borders, and who therefore have to operate under different sets of legislation and regulation. The ambition and the purpose behind this bill are to make sure that more retailers will enter the market and increase competition. Hopefully, as proven by experience, increased competition will reduce the cost of energy.

By way of background, while talking about electricity prices, since December 2007, just after the Rudd government was elected, electricity prices across Australia have increased by an average of 50 per cent and gas prices have increased by an average of 30 per cent. In addition to that, water and sewerage rates have increased by an average of 46 per cent; health costs, such as hospital, dental and pharmaceutical costs, have increased by an average of 20 per cent; education costs, such as school fees, have increased by an average of 24 per cent; and rent by an average of 21 per cent. The thing that flies in the face and makes it hypocritical in pursuing this bill, which the government supports, is the fact that the Gillard Labor government wants to introduce a carbon tax and a carbon tax will increase power bills by a minimum of 10 per cent in the first year alone, rising to over 20 per cent.

Competition in the energy sector is what will drive and develop our economy. Putting cost burdens on and setting prices through a carbon tax will actually reduce competition. One of the key aspects in relation to our energy market in Australia is that most of the electrical generation is owned by state governments. As the shadow minister said, state governments have taken a hit on their bottom line with the devaluation of their assets and will find it increasingly difficult, as indeed will private existing energy generation, to seek further loans to upgrade. This is not good for the security of energy. In fact, competition will not be addressed by the imposition of a carbon tax.

I agree with what the shadow minister said, that as of now, having the effect of this national energy retail law and the other bills associated with it, what we need to truly understand the energy requirements and needs in Australia is an energy white paper. It has been long talked about but it is much needed. If we want to give those in the private sector or indeed state government instruments any level of security in their investment, they need to have a clear understanding across a national market, national grid work, of what is required, what are the impediments, what are the opportunities. So I would encourage the government to take up the opportunity and spend taxpayers' money on an energy white paper, which would probably cost a lot less than the glossy coloured brochure that was distributed on the need for a carbon tax, after the Prime Minister promised that they would not spend taxpayers' funds on political advertising. But the need for the energy white paper is paramount to understand planning and investment and long-term energy security for our nation.

Price, as I have said, is a driver to our economy. You would think that by just driving up the price of electricity, which is the whole matrix of evaluation that has been incorporated in the establishment of this carbon tax, by increasing the cost of energy you would drive down consumption and therefore provide this great environmental benefit. I regret to inform you, Mr Deputy Speaker, that between 2000 and 2008 the cost of electricity in Australia across the board rose by 55.9 per cent. Yet over the same period consumption rose by 10 per cent, from 10,194 kilowatt hours per capita to 11,217 kilowatt hours per capita. So with the great ambition of this Labor government to jack up energy prices to reduce consumption and save the world, I have got to say that the record over the past decade has not delivered that, so I fail to see where putting a price on carbon will deliver the outcomes.

The coalition and Labor have the same targeted goal: five per cent by 2020. The problem is that the Labor government believes, along with the Greens, probably driven by the Greens, that the only way you can do it is by taxing and putting a price on things, instead of providing leadership example and direct investment, which would achieve the same outcome without cruelling Australian energy and cruelling the industry factor. In fact, there has been some benefit by investing in programs such as solar hot water systems and the like. I would like to quote from an article on 15 August by Brian Robins, who said:

An energy efficiency specialist with Ausgrid, Paul Myors, said: 'We have seen consumption falling by around 2 per cent a year for average household electricity use over the past four years. That goes against the long-term trend of a steady rise.

'It could be the global financial crisis - and rising tariffs is a factor. We are seeing the impact of energy efficiency,' he said, pointing to the move away from electric hot water systems, previously the main user of electricity in the home.

It is critical that investment in programs like that, carefully managed and financially viable, occurs. It is a pity that the minister is not here for this. I have just read a media release about the government having replaced solar hot water systems in the Indigenous communities in the Northern Territory with electric hot water systems, which shows the hypocrisy in their argument.

A lot of industries will be hurt by the introduction of a carbon tax. Industries require a competitive energy price, which is the purpose of this bill. Prior to the deregulation of the dairy industry I had one of the strongest dairy belts in New South Wales. I still have quite a number of dairy producers—in fact we have Oak, at Hexham, which still processes milk. But a release put out by the Australian Dairy Industry Council on 11 July, entitled 'Carbon tax to hurt dairy farmers' says:

The cost to dairy farming families of this carbon tax is estimated to be $5,000 - $7,000 per year. Electricity is a major component of dairy farming operating costs and this tax will have a severe, direct impact on dairy farmers.

Given that we export so much of our processed dairy product from this country, the carbon tax will affect not only the price of a litre of milk on the shelves, but now affect the export opportunities that are already being marred by the high Australian dollar.

It is not just the dairy industry that will be negatively impacted by a carbon tax. In a release dated 14 July, the Housing Industry Association says:

The residential building industry will be affected more than most.

It goes on to say:

Around 500 facility operators will be required to pay the new carbon tax. For everyone else, the tax will be embedded in the products they produce, such as electricity, gas and other fuels, and in the primary materials such as steel, glass, cement, bricks and aluminium. The cost will further increase progressively as they pass through the various manufacturing and fabrication faces.

This is a cumulative tax—it is an add on, add on, add on imposition of costs. What will it cost to build an average new home? According to the Housing Industry Association:

… an average new house and land package is due to the carbon tax will be between $5,000 and $6,000.

For those young people who are struggling—working hard and saving to build the great Australian dream—this puts their dream one further step away from reality, because they also going to suffer from there being fewer jobs.

There will be massive job losses under this tax. In fact, on the tourism industry, which is part of my portfolio, the Tourism and Transport Forum said in its report on the carbon tax that 6,400 jobs will go in the tourism industry alone. That does not count the jobs that will be lost in the region I represent, in the coal industry, the aluminium industry and the energy industry, and in the indirect jobs that support those. So those young people struggling, working hard and saving to get the financial wherewithal to buy their home will have to pay another $5,000. And when they get in there, their electricity bills are going to be higher and their furnishings will cost more. This is not a good way of creating opportunity.

One of the hidden aspects in relation to the carbon tax, and a reason we need a nationally regulated energy market to increase competition, is local government. Mr Deputy Speaker, you may not be aware, as indeed other members may not be aware, that the energy bill for the street lights in the community is paid for by the council. In New South Wales, I am not sure about other states, councils have their rate increases capped by the state government. I will give an example: in discussions with Maitland council's mayor, Peter Blackmore, I discovered that the council's electricity bill is currently $1.8 million per year. If it goes up 10 per cent, that is an extra $180,000; if it goes up 20 per cent, that is $360,000. And they will not be able to recover that from ratepayers. Where is their compensation package? In fact, Glenn Wall, the former mayor of Dungog council, said in an email to me last week, 'I am duly concerned regarding the impacts on local government and our capacity to absorb increased taxation liabilities and utility and resource costs increase, which are also being capped by the New South Wales government.' He went on to say:

The only people again that will be impacted will be our communities. Councils do not have the capacity to generate any further income. The community cannot afford huge rate increases to cover these increases (this is also problematic in New South Wales due to rate capping.) So the only option available will be to reduce the level of service we provide to the community.

Service delivery by government is key; it is essential. As I said right at the very beginning, this has been a decade-long approach. It needs to be introduced but it does not need the impediment of a carbon tax. (Time expired)