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Thursday, 27 June 2002
Page: 2988

Senator ALLISON (2:19 AM) —I have a very long and detailed second reading contribution and, in the interests of getting to bed before dawn, I seek leave to incorporate it. But I want to quickly indicate that the Democrats are extremely disappointed that we are having to deal with the Diesel Fuel Rebate Scheme Amendment Bill 2002. We will oppose it in its entirety. We will be supporting Senator Brown's second reading amendment, because this is not good for the environment and it is not good for the future of renewable energy or alternative fuels.

The ACTING DEPUTY PRESIDENT (Senator Ferguson)—Senator Allison, do I understand that you are seeking leave to incorporate your speech?

Senator ALLISON —Yes, I am.

Leave granted.

The speech read as follows—

The Diesel Fuel Rebate Scheme Amendment Bill 2002 seeks to extend the diesel rebate scheme to include power generation by retail/hospitality businesses that do not have access to mains electricity. The Government says the bill is needed, particularly for remote tourism operators, although no evidence been provided to support this claim. Absolutely none. And the reason why no evidence has been provided is because there is none. We hear that the reason this bill came about is because of the pre-election campaigning of a roadhouse owner in WA. An outstanding example of pork barrelling, which will cost Australians $20 million per year. $20 million, which I'm sure most Australians could suggest a number of better uses for. Like more funding for education or health.

As my initial comments indicate, the Australian Democrats are extremely disappointed by the presentation of this bill. Despite what the Government says, this bill will result in the increased use of diesel fuel (adding to Australia's already woeful level of greenhouse gas emissions). It will further mean that there will be no incentive for the remote retail and hospitality businesses to switch to cleaner renewable or alternative fuel systems. We are informed that the payback renewable remote area power systems are only marginally cost effective now and that a rebate on diesel would effectively mean that there would be little if no price differential between diesel and LPG.

Now the Government, if it were genuinely committed to reducing the use of diesel fuel in remote communities, would be concerned that the extension of the diesel fuel rebate to remote retail and hospitality businesses will adversely affect the operation of their Renewable Remote Power Generation Program (RRPGP). This is a program which the Democrats negotiated in good faith with the Government and which is so far considerably underspent.

Most businesses, and this is understandable given their short term prerogatives, will not be persuaded to outlay considerable sums on a new renewable remote power system when diesel is going to be so cheap after this bill is passed. Why, for instance, would a roadhouse pay $180-200,000 for a 12-14kW PV system if diesel is going to be 38 cents per litre cheaper, and when the relative payback period for the new investment will now be that much longer? The low cost of diesel is already one of the main reasons that hybrid renewable or gas systems have not been taken up to the extent that we might have hoped.

The Australian Greenhouse Office, the Commonwealth's lead agency for dealing with greenhouse matters, agrees. In its submission to the inquiry on this bill, it stated that:

Reducing the effective price of diesel by 38.143 cents per litre for power generation by small retail/hospitality business may result in reducing the incentive for a small segment of consumers to take up renewable energy and alternative fuel opportunities, to lower greenhouse gas emissions. This is because the measure will increase the relative payback period for affected projects to recover the up-front capital cost of such new investment.

They further argued that:

The AGO estimates that the extension of the Diesel Fuel Rebate to small retail/hospitality businesses could reduce the potential target market for the Commonwealth Renewable Remote Power Generation Program by up to 21 million litres, or about 4% of total diesel fuel consumed, although accurate data on the diesel fuel used by these businesses is not available.

I found it very interesting that when my staff contacted those officers responsible for the delivery of the Remote Power Generation Program (RRPGP) in State Sustainable Energy Authorities none of them had been consulted about the bill by the Federal Government despite the fact that this bill will impact on their programs. One of the agencies heard word of the bill through a roadhouse owner who was interested in moving from a diesel only generator to a hybrid remote area power station with renewables until he heard that this bill was on the cards. Unfortunately, for this agency, roadhouses were to be their next target group under the RRPGP program.

How this Government can support this bill when it directly conflicts with its policy objective under the RRPGP program is beyond me. This policy objective, which the Government obviously needs reminding of, is “... to increase the uptake of renewable energy technologies in remote areas of Australia, which will:

1. help in providing an effective electricity supply to remote users;

2. assist the development of the Australian renewable energy industry;

3. help meet the energy infrastructure needs of indigenous communities; and

4. lead to long term greenhouse gas reductions.”

It is important to recognise that it is not just renewables like wind and solar that will be affected.

This bill will also adversely affect the uptake of combined diesel/LPG systems that like the hybrid renewable systems produce less greenhouse emissions and other air pollutants.

An example is the combined diesel/gas generator currently operating at the Palm Bay Hideaway on Long Island. The old, polluting diesel only generator was converted to operating on diesel and propane, with a substitution rate of 35% of the normal load. The savings are estimated to be in the order of $23.50 per day or $8,578 per annum. Those in the industry anticipate that before long the technology will be available to enable generators to run on 80% gas, and with even more greenhouse savings.

But, despite the fact that we should be encouraging innovation, the use of technologies that reduce our impact on the environment, the long-term viability of these systems is now under threat, because the economic pressure will be too revert to full diesel usage, with just the flick of a switch.

In their submission to the Economics Committee, Elgas, one of the companies involved in diesel substitution advised that “based on current Elgas customers' usage, including installations under negotiation, the expected impact of this Bill would be an increase in diesel consumption by 12 million litres by Elgas customers.” Further they argue that “Based on Elgas' estimated 45% market share, the increased diesel consumption would be 27 million litres. This would produce 29,000 tonnes of carbon dioxide from all LPG customers.”

Now, I understand that the ALP is going to support this bill even though they are fully aware of the effect it will have on the uptake of renewable energy and alternative fuels for electricity generation in remote areas. To quote from the ALP's environment spokesperson, Kelvin Thompson, in his second reading speech:

Remote renewable power generation is a clear opportunity to replace fossil fuel generation with renewables, invest our regional infrastructure and provide a more sustainable future for our regions. It will then provide them with access to cheaper fuel and electricity costs, yet the government has failed to deliver on its promise of such investment. It shows that Prime Minister Howard and the government's professed greenhouse abatement commitment and their professed commitment to the sustainability of our regions are a farce. As a result, many of our remote retail and hospitality operations remain dependent on diesel power generation and they are the victims of increasing fuel prices.

Interestingly, the ALP argues that this bill is our fault and that they wouldn't be in this position if the Democrats had pushed the Government harder on the start-up of the Energy Credits Scheme.

But I'd like to remind the ALP that it was them, not us, that supported the extension of the start-up date for the scheme to July 2003 instead of July this year.

Indeed, it's all very well for the ALP to sit back and say that it's all the Democrats fault. This is a very convenient excuse. Because the truth of the matter is that the ALP is of a like mind with the Government on this issue. If it wasn't the ALP wouldn't support this bill and wouldn't have supported the extension of the start-up date for the Energy Credits Scheme. It's my view that the ALP's support for this bill, like the Government's was made some time ago, and that this bill is unfortunately a fate accompli.

Their rather loosely veiled strategy is to attack us so that their own hypocrisy will not get as much attention. But this isn't working. The environment groups and the alternative fuels groups can see through this. Those who appeared at the hearings will know that the ALP was so disinterested in the issue of how this bill will impact on the uptake of renewable energy and alternative fuels that it did not ask one question at the Committee hearings. Not one.

In my opinion this is a very sorry episode. The only glimmer of hope I take is the knowledge that we now have the ALP's full support for the implementation of an Energy Credits Scheme. We look forward to them joining us in pressuring the Government to develop and implement the scheme poste haste.