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Monday, 9 December 2002
Page: 9930


Mr FITZGIBBON (8:41 PM) —It is always a great pleasure to follow the member for Paterson, who is a great defender of the environment. In fact, in his own electorate, where he is a local councillor, he has been a great defender of the environment in terms of local environmental plans. For example, there are height limits on developments around the beautiful Port Stephens area, although I have noted—by way of newspaper reports and other information—that the member for Paterson is not so concerned about the environmental aspects of his electorate when it comes to the building of his own residential place. Apparently up on Lily Pily Hill he is building a home which the local newspapers have described as quite grand, although it does not quite—


Mr Baldwin —Madam Deputy Speaker, I rise on a point of order. Where is the relevance in the argument that the member for Hunter is putting forward?


The DEPUTY SPEAKER (Ms Corcoran)—I draw the member for Hunter's attention to the question of relevance and ask him to stick to the issues under debate.


Mr FITZGIBBON —Of course I will, Madam Deputy Speaker. I did point out that this is a debate about the environment, and I was just making the point that the member for Paterson can be quite hypocritical in terms of his commitment to the environment. He becomes an active campaigner on local environmental issues on all occasions other than those occasions when his own home is involved. It is a residential development which I understand is somewhat outside the conditions and consent for it has been given by the local council, of which he himself is a member.

I listened with great interest to the member for Paterson's contribution to the debate and it was fairly typical of his style. It was well written by someone in his office but it failed to grasp the key issues within the debate surrounding the mandatory renewable energy targets. Although he spent most of his time speaking about greenhouse gas emissions, which I accept are very relevant to this bill, he was quite ill-informed—not about the general concept of greenhouse gas emissions but about his own party's policy towards these challenging environmental concerns. The fact is that his own party's policy with respect to Kyoto is to commit all the industries he was talking about to the same targets but not to give them the opportunity an international carbon trading system presents. So the member for Paterson and his party want to present the industries he referred to, including the coal industry and the coal-fired power generation industry, with the same targets, but they do not want to deliver to them the benefits that the ratification of the Kyoto protocol would deliver. The member for Paterson has shown a total lack of understanding of the issues there.


Mr Baldwin —Why don't you support Hunter jobs and the aluminium industry?


Mr FITZGIBBON —I am happy to support Hunter jobs, of course, but, unlike those who stick their head in the sand, I acknowledge that environmental concerns will put increasing pressure on power stations fuelled by fossil fuels. My own electorate is the powerhouse of New South Wales, generating about 80 per cent of the state's energy needs. But, over time, those power generators will reach capacity. The fact is that, if the Hunter wants to remain the powerhouse of New South Wales, it is going to have to diversify. There will not be any more coal-fired power generators under the Howard government or any Labor government, and the member for Paterson obviously has not yet realised that. If the Hunter wants to remain the powerhouse of New South Wales in energy terms, it does need to diversify and to begin to develop alternative forms of power generation—not as a replacement of the current generation capacity of the Hunter but as an enhancement of it. In other words, with energy consumption growing at about three per cent per annum, those power stations will reach capacity and we need to now start thinking about developing alternative forms of power generation.

I will return to the bill and leave the member for Paterson alone for a moment, but I eagerly await some further interjections. This bill seeks to amend the Renewable Energy (Electricity) Act 2000, which requires electricity retailers and other large buyers of electricity to collectively source an additional 9,500 gigawatts per annum of electricity from renewable sources by 2010. We often hear those figures bandied around. How do people get some concept of what 9,500 gigawatts mean? It might help those following the debate if I said that that is almost the equivalent of what the island of Tasmania produces in power in any given year. It is quite a large amount of energy.

The measure was designed to push the level of renewables based electricity generation from 10.7 per cent in the late 1990s to the projected 12.7 per cent by 2010. It was designed to increase investment in the renewables sector, and it was estimated to potentially reduce greenhouse gas emissions by around seven million tonnes per annum by the year 2010. This is a Howard government initiative, which we on this side were happy to support, and yet the member for Paterson suggests that a shift towards a greater investment in renewables is a bad thing! This is an initiative of his own government. But, at the same time, having acknowledged the success—and we have acknowledged the success—of the scheme, his party now wants to abolish the MRET bill. So just discount everything he said about the benefits of the bill; he wants to abolish what we believe is a very important initiative.

The scheme requires liable entities to surrender to the Renewable Energy Regulator sufficient tradable renewable energy certificates to cover their required purchases of electricity generated from renewable sources. The purpose of RECs is to enable liable entities to avoid or adjust the amount of any renewable energy shortfall charge that they would otherwise have to pay when they acquire electricity from non-renewable sources. The current bill amends the 2000 act to clarify key definitions in the original legislation and to provide for greater efficiency and effectiveness in the administration of the legislation. The implementation of the legislation by the Office of the Renewable Energy Regulator has revealed a number of minor deficiencies in the operation of the legislation which collectively need to be addressed to ensure the maintenance of the integrity of the legislation and the full achievement of its objectives.

The amendments contained in the bill are, as I said, administrative in nature, and include a clarification of definitions, including those related to eligible renewable energy sources, components of power stations, relevant acquisitions of electricity and penalty charges; the capacity of the Renewable Energy Regulator to vary decisions; the introduction of information-gathering powers to underpin the monitoring, auditing and compliance requirements of the act; the extension of authorised offices to include officers' appointments by the Commonwealth and by state and territory governments; the capacity of the Renewable Energy Regulator to suspend entitlements, including the accreditation of a power station in a number of limited circumstances; and, finally, the inclusion of an administrative review provision covering decisions by the Renewable Energy Regulator to take action to vary or suspend.

The regulator has indicated that, in the act's first year of operation, approximately 600,000 RECs were generated, about twice the 2001 target. This is undoubtedly sound evidence that the MRET scheme is proving successful in driving industry investment, including around $1 billion worth of investment being planned by Hydro Tasmania in both hydro and wind energy. I recently visited Tasmania to take a first-hand look at some of the very good work being done there, largely by Hydro Tasmania but also by a number of other operators, including Pacific Hydro.

I visited the Poatina power station in the electorate of Lyons, where I not only saw plans for improved hydro generation efficiency but also learned about the member for Lyons' childhood in that area. As a young lad, he was very active in the bush and was able to see, later in life, the construction of that particular power station. Since my visit to his electorate, we know where the member for Lyons gets his bush skills. I also visited the electorate of the member for Braddon, who joins us in the House today. In particular, I visited the Woolnorth wind farm. There I learned of the potential to significantly enhance the economy of Tasmania with a renewed commitment to the renewables sector. Tasmania, with its imminent entry into the national electricity market, has some fantastic opportunities. Those opportunities are being backed by the local members.

There is a fantastic opportunity to grow significant jobs in those areas, particularly in the electorate of Braddon, not only where there are jobs being made in direct generation but also where there are great opportunities for jobs in the manufacturing, for example, of wind turbines—an area where I know the member for Braddon has been particularly active. So there are some great opportunities for Tasmania and some great opportunities being posed by its imminent entry into the national electricity market. This is what amazes me about the Parer review of energy markets. The Parer review dudded Tasmania by totally ignoring the renewables sector and by proposing the abolition of MRETs. Parer says we will move to a national carbon trading scheme, which is interesting, and something that the Labor Party has always promoted and supported. But the fact is that the renewables sector will need something more than that, because a national trading scheme will be of greatest benefit to the traditional industries. I have many of those traditional industries in my electorate, and I do not have a problem with that. That reflects Warwick Parer's background. I heard the shadow minister for the environment making this point earlier. This is a report for the insiders. It enhances current generation capacity but ignores the needs of states like Tasmania and other regional areas that are looking to make a go of the newfound interest in the renewables sector.

I said some time ago that the real test for the Parer committee was fivefold. First, does it offer sufficient consumer protection and guarantee affordable supplies of energy for Australian families? The answer is no. Second, does it guarantee long-term energy supply security and competitively priced power for the development of Australian industries and jobs? Again, the answer is no. Third, does it provide effective mechanisms for encouraging greater investment in the renewables sector? I have already made the point: the answer is no. Fourth—and I think this is the most important point about Parer—does it deal with energy policy on a fully integrated basis? That is, does it go to upstream issues, including market concentration and self-sufficiency; export markets; taxation; the domestic market—all the way from the oil or gas field and electricity generators through to transmission, distribution, and transport, industry and residential consumption; fuel mix, including alternative fuel technologies; environmental issues; and fossil fuel sustainability? It does none of this. Fifth—last but not least—does it offer achievable objectives in terms of agreements with the states? Of course it does not.

This is a report designed to do one thing: set up the Howard government for a `blame the states' approach to energy policy in this country. In other words, it designs a framework which it knows will be totally unacceptable to the states, so that every issue that emerges in energy policy over the next two years or so can be blamed entirely on the states. That is the plan for Warwick Parer; that is the brief he was given by the Howard government. It is a very disappointing brief. Certainly the recommendation for the abolition of MRETs is a silly and ill-conceived one. I support what the shadow minister for the environment has put forward as a proposition: an increase in the MRET, not an abolition. We know that the target was originally two per cent. When we factor in the significant growth in energy consumption in the period between then and now, we know that it will deliver something much less than two per cent.

The energy sector plays a critical role in the Australian economy. It heavily influences economic performance, international competitiveness and, therefore, Australian living standards. The development of a national energy policy is crucial to Australia's economic and social wellbeing—a policy that provides competitively priced, secure, diverse, sustainable and environmentally sound sources of energy in a manner which delivers maximum benefit to all Australians. We all acknowledge the inherent complexities of the industry and the problems they create in terms of policy choices. Policy change in one area has important flow-on effects for the rest of the sector, the broader economy and the community. Moreover, it is not a static sector; continues to change and develop in ways that have implications for all energy users, suppliers and stakeholders. The energy policy debate is marked by great conflict: conflict between economic output and the environment, conflict between fossil fuel dependence and the use of renewable energy sources, conflict between government revenue and investment incentives, conflict between regulation and market forces and the impacts they have on investment.

These are trade-offs, and this takes me to the interjections I heard coming from the Minister for Regional Services, Territories and Local Government, who is sitting at the table. Of course I am committed to my electorate, which is significantly dependent on the production of electricity. It has a number of coalmines which supply coal to those electricity generators they are dependent on. But we must diversify. A real energy policy is an integrated one, which takes a national approach and which acknowledges both the need to concentrate very heavily on the cleaner and more efficient burning of our fossil fuels to make those industries sustainable—and that is what I am about in my own electorate—and at the same time that the world is changing. It should acknowledge—as I said earlier—that there will not be any more coal-fired power generators of any significant capacity installed in the Hunter or anywhere else in this country in the not too distant future.

It will be important for us all to acknowledge those environmental pressures and to plan ahead to ensure that industries in areas like the Hunter and the Latrobe Valley, for example—in the electorate of the member for McMillan—are sustainable. That is getting the balance right. This is where the Parer review is so disappointing. It takes such a narrow approach to energy policy. It looks only at the immediate market issues surrounding electricity and gas, and it ignores the other issues—for example, the sustainability of fossil fuel use, interbasin competition in the gas sector, and upstream market concentration in the oil sector, particularly offshore. That brings me to the last point I want to make.

I want to say something very quickly about the Bayu-Undan project in the Timor Sea. I have mentioned it in this place before, but it is of particular significance tonight and is certainly relevant to this bill and to the approach to energy policy in this country. This parliament now has four days to run this year if we are unlucky; it may be a couple more, but it is probably just four. It is a well-known fact that Phillips, the major venture partner in the Bayu-Undan project, has a contractual obligation to its Japanese contracts in terms of the LNG it intends to provide to that country. It is also a well-known fact that the ratification of the Timor Sea Treaty is a condition of that contract. It is a well-known fact that Phillips needs the ratification of that treaty in place by the end of this year, by 31 December. Yet with four sitting days to go, there is no prospect—given no legislation has even been introduced in this place—that that legislation could pass both houses of parliament in Canberra by 31 December. I am going to make an appeal to the Howard government tonight to put aside some of the interests of some of the venture partners in other areas and get on with the ratification of the Timor Sea Treaty so that Bayu-Undan gas can come on shore. That is not only in the national interest—and, in particular, in the interest of those who live in the Northern Territory—but also in the interest of our friends in East Timor who will heavily and urgently rely on the income stream which would come from that particular development.