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Monday, 7 November 2011
Page: 8274

Senator XENOPHON (South Australia) (10:54): I want to go to the issue of what the impact will be of requesting upfront payments, if you like, under this scheme compared to the deferred payments in the CPRS. The Energy Supply Association of Australia complained in a letter to me, and I think to other senators: 'This effectively amounts to energy companies being asked to provide working capital to the Australian government which could be in the order of $10 billion.' They go on to say that they commissioned analysis from economic modeller ACIL Tasman and that this analysis found that reduced electricity contracting could increase volatility in the electricity market and increase retail electricity prices by 10 per cent in a single year for small users—households and small businesses—and up to 15 per cent for large users. They say that these rises in electricity prices are in addition to the carbon price.

I acknowledge what Senator Wong, the minister, said in relation to the Australian Bankers Association. They have a different view. They say that you could have a secondary market and that financial instruments could deal with this and manage the risk. So that is the difference between the two arguments. The question I am asking is: was some modelling done by the government on the impact of having deferred payments under the CPRS, as distinct from having upfront payments with this scheme? Surely there would have been some modelling done on such a fundamental aspect of the scheme design.

I note an article written by Lenore Taylor in the Sydney Morning Herald last Friday headed 'Ministers in final plea to delay carbon repayments'. It makes reference to the New South Wales energy minister, Chris Hartcher, and Queensland Treasurer Andrew Fraser. So you have a Liberal or coalition government in New South Wales and a Labor government in Queensland and the report says that both have written to the federal government 'in a last-ditch bid to win amendments to the carbon tax legislation that could prevent power prices soaring higher than forecast'. This again goes to the issue of deferring payments. So they are the issues. Was there some modelling done? What do you say to two ministers from two different political parties who have concerns about this—the Labor government in Queensland and the coalition government in New South Wales? I raise these issues because I am nervous that we are going to push up prices more than we need to. Given that the CPRS, the old scheme under the Rudd government, had deferred payments, I am trying to work out what the best public policy is to minimise the impact on households.