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Monday, 7 November 2011
Page: 8305


Senator MILNE (TasmaniaDeputy Leader of the Australian Greens) (13:14): There are a couple of remarks I would like to make before we get to the coalition's amendment. One is in relation to the deferred payments issue that we have been debating here this morning. I am now really confused about where the coalition stands in relation to this matter. I understand that what Senator Xenophon was talking about was a concern about the working capital burden that a carbon price imposes on the energy sector in terms of buying the permits upfront and having that investment. Generators are saying they will need to hold $4 billion worth of permits in any one current year and a further $6 billion worth of units to support forward contracting. They were asking for deferred settlement arrangements.

We have talked about the fact that they do have a three-year certainty and so on, so the matter has been dealt with. We will have to wait until we see the practice to see whether these concerns are exaggerated. I have taken those up with the government. But clearly what the Energy Supply Association has said is that if they cannot afford a contract then the market, in their belief, would be more volatile, the electricity market would be more expensive and prices would be higher for consumers. So what we have, as I understand it, is the coalition saying that they will not honour any forward permits. They have come out and said that. In fact, the Leader of the Opposition, Mr Abbott, has come out and said that electricity generators ought not buy any forward permits because the coalition will not honour them.

By the same logic and argument, therefore, the coalition is saying that they want more volatility in the electricity supply market. They want to have greater expenses for the electricity market and they want to have much higher electricity prices for consumers because they want to deny generators the capacity to purchase into the forward market. That is as I understand it at the moment, so I find it interesting that Senator Birmingham is standing here trying to suggest he has some concerns about the provisions of the legislation relating to the settlement arrangements under the auction provisions when it is the coalition's policy to actually prevent any banking of permits and any projection into the forward market. In fact, AGL came out in the joint committee and said that the coalition's position represented a billion-dollar dead weight on the Australian economy because it drives up the cost of capital in the next few years because of the level of risk the coalition is driving into the scheme.

I thought it was important to clarify here with the coalition attempting to show some concern about the energy supply sector's supposed concerns about their ability to forward contract. If any group of people is undermining a forward contract market and driving up electricity prices and volatility in the market, it is the coalition. It is another reason why I believe we are going to see yet another retreat from the coalition. We will see them back off and not repeal these bills—in the event that they ever did come into government—because business will not tolerate it. Business wants certainty. Business wants the ability to forward contract, to hedge against risk, to even out its supply over time and its working capital arrangements. It wants those certainties, and the coalition is intent on taking those certainties away.

So business is going to start to wind up, as we saw them do when the International Monetary Fund came up for discussion last week, when even the Business Council of Australia came out. Even the Business Council, which has supported the coalition to the hilt up until now, came out last week saying that the Leader of the Opposition, Mr Abbott, was completely wrong on this and that it would be a breach of Australia's global responsibility and reputation to behave in the way that the coalition was suggesting.

As for the idea that what the coalition says in here stands, at the very time we had the coalition in here talking about why ARENA and CFEC were such bad ideas—'such a honey pot for the white-shoe brigade', to quote Mr Robb—in the lower house we had Mr Macfarlane saying that, not only would the coalition not oppose ARENA, contrary to the blood oath, in fact they would not repeal it either. They are not even opposing it, let alone repealing it. So in relation to the emissions trading part of this scheme we will see the coalition not repeal these bills if ever they get the chance.

Now we are going to find business winding up very strongly on the coalition on economic credentials. We saw it over the weekend with the embarrassing situation for Senator Cormann where nobody told him the coalition was going to make a massive retreat on superannuation. He was busy up here with the superannuation industry, telling them there was absolutely no way they were going to honour the nine to 12 per cent. There was every certainty they would be repealing that, and then when you turn round twice there is a phone link-up based on what the politics demand and Senator Cormann is left hung out to dry. So already we have had the coalition in the Senate hung out to dry by expedience from coalition members in the lower house.

So I thought it was important to get some clarity around the issue of working capital arrangements for generators, future contract­ing and cash flows. I want to put on the record that the Greens did take this seriously through the joint house committee. We have looked at the submission from the Energy Supply Association. We have recognised that ACIL Tasman did that modelling for them. We have seen how ACIL Tasman can be very various according to whomever has asked for the modelling. I noted that in particular in relation to other aspects of this carbon price. I want to look very carefully at what does happen on the forward contract­ing, but I am of the view now, as is the government, that the three-year period gives people a clear indication of where things are going on pricing and will give them a clear collar, if you like, once flexible pricing starts. I think it is important in this context to have that on the record.