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Monday, 7 November 2011
Page: 8275

Senator WONG (South AustraliaMinister for Finance and Deregulation) (10:59): I will answer both of these. I think that I understand what Senator Milne is referencing, although I was not involved in the committee. The proposition about the three-year fixed price is an important one. It means that there is a longer period over which this scheme is transitioned for all sectors before a floating price comes into play. That means that the products around hedging carbon risk have a longer period before the floating price comes in. That is of relevance. This policy proposition comes down to how generators will hedge carbon risk. I referred in my opening answer to the modelling to which Senator Xenophon just referred, so I have already responded to that.

On the issue of the two states and the different political parties, I would make the point that it is not surprising that treasurers of states that own generators might have a consistent position around this. I suspect that that is not party political but treasurers looking to the interests of their states. What the Commonwealth has to look at is what the sensible policy for the transition is. For the reasons that I have outlined, we think that the framework that we have put in place, with $5.5 billion and the capacity to provide financing from government if the market does not provide that, is able to deal with the risks that you have raised.