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Monday, 7 November 2011
Page: 8279


Senator BIRMINGHAM (South Australia) (11:15): I note, Minister, that in response to Senator Xenophon you describe the ESAA modelling as hypothetical, and of course all modelling, as I am sure you would agree, deals with a range of hypothetical scenarios. You also indicated that the Treasury modelling did not assume the deferred payment scenario. Minister, are you able to advise the chamber whether the Treasury modelling did assume or believe there would be a reduction in the forward contracting for electricity? It is of course one thing for it not to assume the deferred payment scenario and, therefore, as you rightly said, presumably it then did assume that payments would be made at the time that the forward purchase of these permits was locked in. However, does it accept the principle, to some extent at least, of the scenario outlined by the ESAA that there will be a reduction in forward contracting of electricity prices and, therefore, the greater risk and uncertainty, and the possible higher use of spot price electricity and, with that, the potential flow-on for increases in electricity prices? But, very particularly, does the Treasury modelling that was undertaken accept that there is a chance, in places, that there will be a reduction in forward contracting?