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Wednesday, 9 November 2016
Page: 2297


Senator BACK (Western Australia) (12:48): Mr Acting Deputy President Gallacher, I want to reflect on the circumstance we find ourselves in at the moment in this country, and that is the parlous state with regard to our energy supply and particularly the insecurity of the energy supply in the eastern states—of course, including your home state of South Australia. I want to start with the observation that if you take a country which is the geographical area of America—mainland USA without Alaska—which has got the population of greater New York, about 23 million or 24 million people, the question becomes: how is Australia such a wealthy country on a per capita basis? People come up with all sorts of different solutions. The answer has always been two words, and those are 'cheap energy'. We have had cheap energy, and indeed, in your home state of South Australia, your then Premier Playford came up with the realisation that South Australia needed an advantage, and South Australia developed cheap energy.

What a lamentable circumstance we have today when your state, in fact, underwent a complete statewide blackout of power just recently. But the unfortunate circumstance we find ourselves in is that, over the last successive years, we have seen an erosion in Australia's cheap energy. We have seen an erosion in that singular advantage that we had. We saw the introduction of the Carbon Pollution Reduction Scheme. We saw the carbon tax. We have seen the burgeoning of renewable energy targets, which of course were originally an incentive of the Howard government back in 1997. But what is even more disappointing is that this is against an international trend. In the United States, for example, the technology of being able to source shale gas and discover shale gas over the last few years means that, for example, in 2013 the cost of electricity to an American manufacturer was half that of a German manufacturer, and manufacturing came back on shore. Today that figure has changed from being a half to a third. The cost of electricity for an American manufacturer today is one-third that of Germany, and we see a burgeoning of manufacturing in that country at a time when we have reversed what was the advantage of cheap energy.

We know Australia, mainly through Western Australia but also through Queensland, will go past Qatar in the next two years as the world's largest exporter of liquefied natural gas at a time when, regrettably, we have taken the decisions we have taken to actually add to the cost of manufacturing and the cost of consumers, be they residential, domestic, business, nursing homes et cetera.

Mr Acting Deputy President, let me give you the latest figures available from the International Energy Agency on the delivery of global energy. Oil is a 31 per cent contributor to global energy; coal, 29 per cent; gas, 21½ per cent; nuclear, five per cent; bioenergy, 10 per cent; hydro electricity, 2½ per cent; solar, 0.1 per cent; and wind, 0.4 per cent—four-tenths of one per cent. Yet we see the circumstance in this country where we are rushing towards getting rid of the greatest advantage we have had, and that has been cheap energy. In the week leading up to the election in Australia, Mr Acting Deputy President Gallacher, I made two public predictions relating to your home state. The first was that by July there would have to be a significant increase in the cost of electricity to consumers in South Australia to the tune of 15 to 18 per cent. I was wrong. It was 20 per cent. The second prediction I made was that South Australia would face a state-wide blackout of electricity. I did not think it was going to happen as early as it did, so I will make this prediction today: there will be another state-wide blackout of electricity this summer in South Australia. There you are. It is on record for you. Regrettably, the reason we find ourselves in this circumstance is the decisions of successive Labor governments, who, dare I say it, have unrealistically put increased targets in place for renewables. It was the—

Senator Farrell: Mr Acting Deputy President, I rise on a point of order. Senator Back is completely misrepresenting the power position in South Australia. The reason that there are power problems in South Australia is that his party sold the electricity trust.

The ACTING DEPUTY PRESIDENT ( Senator Gallacher ): There is no point of order.

Senator BACK: It is good to see that Senator Farrell is still awake, because I am going to go onto the main reasons why—

Senator Williams: The lights are still on.

Senator BACK: the lights will once again go off. It was the Howard government that originally introduced a renewable energy target of two per cent in 1997. The Howard government then accepted the recommendation of a review committee in 2003, which was that the target should remain at two per cent. What did we see? The South Australian Labor government radically increased that percentage. We have seen the Victorian government, despite what happened in South Australia, wanting to move towards levels of renewable energy as high as 40 and 50 per cent. Then we have had Mr Shorten, the Leader of the Opposition, speaking about an increase in renewables to 50 per cent by 2030. The circumstance, contrary to that which Senator Farrell just mentioned, is that the South Australian government caused the coal-fired power station at Port Augusta to be decommissioned. I do not have the time in this afternoon's contribution to go into the vagaries of wind power, but we know that, firstly, it is intermittent; secondly, it is unreliable; and, thirdly, it is unpredictable in terms of when, if, how much and for how long it will generate energy. We also know that, on the occasion of the recent blackout in South Australia, it was a software problem associated with the wind turbines that commenced the debacle that became the loss of the interconnector from Victoria.

Victoria is currently a net exporter of electricity, but it will soon become a net importer as a result of the decision made only in the last few days for the 1,600-megawatt base load capacity Victorian power station at Hazelwood to be decommissioned. It is interesting that it was only in the relatively recent time of the Gillard government that a $500 million subsidy was given to keep that power station alive. We now have the Victorian government rushing around the countryside talking about subsidies to be given to those who will be disaffected. Regrettably, we had the Greens boasting about the loss of jobs occasioned by that particular circumstance. The story is that Victoria will supposedly become a net importer of electricity. It has been put to me that Tasmania will be one of the suppliers. Let me assure you that there is no way any time soon that Tasmania can be a reliable supplier of power to Victoria. The turbines in the hydro electricity scheme are badly overworked and underserviced. The level of water in their dams is such that they will not be able to generate sufficient electricity. And, indeed, they have cooked the Basslink link between Tasmania and Victoria, so it is not operational. Going back to Hazelwood, just to make sure it was closed, the Andrews government placed an incredible increase in the size of royalties on coal to make sure that it would become uneconomic.

I am really more interested in solutions for the future. Firstly, there is the possibility of hydro electricity being extended with greater efficiency in the Snowy Mountains scheme software and hardware activities. We know already that Tasmania is 100 per cent hydro and therefore renewable. Secondly, we have a relatively unlimited offshore gas supply off north-west Western Australia. The long-term capacity exists for that to be piped across to the eastern states to a hub in northern South Australia, to be distributed south into South Australia and then across into Victoria and New South Wales. That is eminently feasible and possible. Thirdly, and one that is off the agenda at the moment but I will mention it again briefly, is tidal power from the north of Western Australia. In France, the Rance power station, which generates power by tidal water flow, has been operating for 40 years. How can we bring it south? We do so through high voltage DC transmission lines of the diameter of a normal coaster. I could go on at greater length about the solutions—there are many—but where we are now is no solution. (Time expired)