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Environment and Communications References Committee
09/11/2016
Retirement of coal-fired power stations

COLLEY, Mr Peter John, National Research Director, Construction, Forestry, Mining and Energy Union

KEARNEY, Ms Gerardine (Ged), President, Australian Council of Trade Unions

MAHER, Mr Anthony (Tony), National President, Construction, Forestry, Mining and Energy Union

WELLER, Adjunct Professor Sally, Consultant, Electrical Trades Union

[17:41]

CHAIR: I understand information on parliamentary privilege has been supplied to you, along with information on the protection of witnesses and evidence. I note that the ETU has provided a submission, which, for the benefit of the committee members, is submission No. 2 on the committee's website. I invite you to make a brief opening statement, and then we will throw it open to questions.

Ms Kearney : I am going to make a very brief opening statement and then hand over to my colleagues. Thank you very much for the opportunity to appear before the committee. The announcement last week that the Hazelwood power station is set to close in March 2017 has devastated many workers and their families and the Latrobe Valley community. The closure of the Hazelwood power station was not a surprise to either the state or the federal government. It will not be the last in the Latrobe Valley, let alone the country. There should have been a plan made, and made public, years ago about the closure, for the workers' futures, for their communities' futures and for the impact on the economy.

Australia's energy sector is changing. The real impacts of the shift to a clean energy economy are being felt across our regions, from the Latrobe Valley to Port Augusta to Anglesea, which have all experienced firsthand the impact of unplanned closures of power stations in their local communities. AGL has already announced that it will close all existing coal-fired power stations by 2050, starting with the Liddell power station in New South Wales in 2022, Bayswater power station in 2035 and Loy Yang in 2048.

Australia has a choice about how the transition to a net zero economy occurs. We could leave it to the market to decide when to close existing power stations, or we could manage this in a planned way that provides certainty and support to working people and their communities. The Paris Agreement, which entered into force on 4 November 2016, commits countries, including Australia, to keep carbon emissions well below two degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 degrees. Importantly, this agreement also recognises that we need to take into account:

… the imperatives of a just transition of the workforce and the creation of decent work and quality jobs in accordance with nationally defined development priorities …

From our perspective, the key principles underpinning a just transition include: equitable sharing of responsibilities and fair distribution of the costs across society; institutionalised formal consultations with relevant stakeholders, including trade unions, employers and communities at both national and regional levels; the promotion of clean job opportunities and the greening of existing jobs and industries through public and private investment in low-carbon development strategies, and, alongside that, organised economic diversification policies for those communities at risk; formal education training, retraining and lifelong learning for working people; and social protection measures—that is, active labour market policies; access to health services and social insurances, among other things; and respect for and protection of human and labour rights. We believe that, in signing the Paris Agreement, the federal government has an obligation to responsibly plan and manage the transition to a clean-energy economy in a way that puts working people and their communities first.

We know that long-term planning is needed to prevent the kind of last-minute, reactive assistance that has been cobbled together for workers in the automotive industries in recent years. History shows that industry and economic change have often been done very poorly in Australia, with workers and communities suffering hardship, unemployment and generations of economic and social depression. You only have to ask the thousands of displaced workers who used to be part of the Australian car manufacturing industry. Only a third of ex-Mitsubishi workers were able to move to comparable full-time employment when their two South Australian plants closed in 2008, while a third left the labour force altogether and a third were either unemployed or underemployed.

In considering Australia's previous policy responses to industry restructures, evidence suggests that the most successful policy responses involve early planning, proper engagement with the workforce and local communities and specific measures that target both demand—that is, protecting and creating new jobs—and supply, which is about actually helping people find new jobs.

With this in mind, we believe that the federal government needs to develop a plan to deliver a just transition for the coal-fired electricity workers and their communities. This is a sector-wide, cross-state jurisdictional challenge that can only be met with a national response. We believe that the best way for the federal government to deliver a just transition is through the creation of an independent statutory authority responsible for navigating the transition to a clean-energy economy.

This authority would ensure a just transition by overseeing a planned and orderly closure of Australia's coal-fired power stations, managing an industry-wide, multi-employer pooling and redeployment scheme—in which existing workers would have an opportunity to be redeployed to remaining power stations or low-emission generators—and developing a labour adjustment package to support workers obtain new decent and secure jobs. This should include funding not only for workers to access job assistance support but also for reskilling, early retirement and travel and relocation assistance. Finally, the authority could work across federal government departments and with state and local governments to develop specific plans to diversify the industry base of coal-fired power generation regions, supporting existing industries and helping create new and secure jobs.

If Australia does not effectively plan and manage this transition, the cost of inaction is likely to have ripple effects across the economy, not only devastating individual workers and their communities but also meaning Australia will miss out on the job opportunities that are being created in the transition to a clean-energy economy. For example, renewable energy equipment manufacturing is a growing high-tech manufacturing industry that, if effectively supported, could serve as a new export industry.

Australian unions are standing with regional communities to call on the federal government to develop a national plan to transition Australia to a clean-energy economy with the right policy mix and early planning that will ensure a secure future for workers, their communities and the economy.

Mr Maher : I will make a few comments and then hand over to Peter to speak to our submission briefly. You can see from the earlier session why we are very interested in the German model. We have scoured the world for good examples of a just transition in which workers and communities do not pay the full price of decisions led by governments and corporates. I am sure it has some shortcomings, but it is built on a principle of not leaving workers behind and on a principle of trying to keep economic activity in the regions. The electricity industry is being restructured. It is already in a crisis. It is not: will it be restructured? It is. That impacts of restructuring will be in particular regions, and the rest of the country will be untouched. That is regionally inequitable and sectorally inequitable. But no government of any political party can reach its commitments under the Paris agreement without facilitating a restructure in the electricity sector. So it is happening now.

Hazelwood is the big public trigger. It is the one that attracts all the media attention. Nobody knows exactly what shape the electricity sector will take in 30 years time, but we do know that AGL, EnergyAustralia and Origin said they are not extending the life of any of their coal assets, they are not going to invest in upgrades to keep them going longer and they are not going to build any new ones without carbon capture and storage. So we know then that they will close, and workers get that—that the companies have made a decision.

In times past, what would have happened in a vertically integrated statutory authority owned by state governments like the SECV or the Electricity Commission of New South Wales would have been that they closed the station, those that wanted to go would go with a retirement package and redundancy package, those that wanted to keep working or needed to keep working would facilitate more vacancies at the ongoing operations by having a round of voluntary redundancies at the ongoing operations. So even if they only go another 10 years, that is 10 years work. For someone who is 50, it makes a big difference. It also lessens the amount that you might have to look at, otherwise, providing for early retirement or funding of that.

I like to say that the best job you can give a power worker is a power worker's job. The best job you can give a mineworker is a mineworker's job. They cannot all close at once. They will be staggered. Most power workers used to work at another power station. That closed and they got redeployed. It is not an uncommon thing. The problem we have is that we have privatised them in most states—not all states but most states—and they are separately owned. So there is no mechanism to pool redundancies in the way that used to happen. So we think the German example provides a good example of what can be achieved with very large numbers of people—bear in mind we are dealing with much smaller numbers—to reduce the impact on those communities. For example, of 750 workers at Hazelwood 250 will have employment for some time in various tasks—demolition and rehabilitation. So you have 500. If you can find redeployment opportunities for a few hundred of those, you are lessening the impact of that very severe closure. It does not help that the French company Engie only gave us until the end of March to deal with that problem. It did not bother phasing it out. That is a real dysfunction. I am sure if governments owned it it would be a better time frame. As you have heard from the Germans, timetables matter. Time matters to get the ducks in a row.

The other thing I want to say is I think there is a little bit of interest from the energy companies in doing something. The report issued yesterday by the business leaders forum and the Australian Conservation Foundation included the CEO of AGL, Andrew Vesey. And that included a lot of the just transition stuff. So I think that the proper role of federal government is to provide leadership to see if we can at least convene some meetings and have a discussion. We will do whatever it takes to make sure that those workers have the best chances that they can possibly have. But there is only so much we can do. I think we really need federal government leadership. And I think that is possible.

I do not think it has to be a politically partisan debate. What we are trying to avoid is social dysfunction on a fairly large scale in certain regional communities. You will get multigenerational unemployment and all the social indicators will go pear shaped. It happened before with privatisation in Victoria; it will happen again. This is not about where you want to land on climate policy; this is about trying to give effect to things that we think are inevitable anyway in a decent manner—putting people first. I just wanted to make those points and hand over to my colleague.

Mr Colley : We are supposed to be a tag team, but I think Tony has managed to cover most of what I wanted to say, so I will be extra brief. We have a submission for the committee, and it will be submitted to you in the next day. I am going to extract a few points from it.

It is the case that we know that the national economy will be able to handle the closure of Australia's coal-fired power stations. It is no longer the case that we are as dependent on coal-fired power as we were. That said, it is still going to be significant. We know that the social impacts are going to be concentrated in particular regions. We know where the power stations are, we know what regions they are in, and we know what has happened in the past. As Tony said, you can basically take a case study of the Latrobe Valley during the 1990s privatisations and what happened then. So we know how severe the impacts can be. We know where we need to focus our energies. We want to mitigate this.

I will touch briefly on the experience, not of power station closures, but of coalmining closures in other countries. In the English-speaking world, there are examples of how we do it badly. In the United Kingdom, there were something like 225,000 workers employed in the coalmining industry in 1981. After the major British coalminers strike that pitched Margaret Thatcher against the National Union of Mineworkers, the industry downsized by 140,000 jobs to 1992. By 2002, it was down to 5,000 jobs, and the last underground coalmine in the United Kingdom closed at the end of 2015, leaving some remnant open cut coalmines. The overall effect of the closure of the UK coal industry—and alongside it was the winding down of a lot of heavy industry in the UK, particularly energy-intensive industry—was that large parts of the UK outside of London and the south-east were plunged into recession for two decades. It has actually taken them an enormous amount of time to recover. You are talking about a generation that was written off in a large part of the United Kingdom.

In the United States, what we are seeing is that the US coal industry is now being struck by a second wave of closures. Again, it is not actually caused primarily by environmental issues; it is caused by competition from cheap shale gas in the United States as well as emerging environmental regulation and litigation around closing power stations. A number of the major American coalmining companies have gone bankrupt or near bankrupt, are in chapter 11.

This is actually the second wave. There was a wave in the 1990s, and it was actually the result of sulphur emission regulation in the United States. What power station operators did back then was rather than choose to put in flue-gas desulphurisers, they decided to buy low-sulphur coal from the central west United States and just put it on long train rides to the more populous eastern side of the United States. That devastated the Appalachian region of the United States back then. Now we are going through a second wave of it and you have regions in Appalachia, which, again, have experienced generational social dysfunction. You have towns with 50 per cent unemployment, like Aboriginal communities in Australia. It is particularly bad in the United States because corporate bankruptcies also put people's healthcare plans and retirement in danger. In the United States, it is all tied to plans run by the employer. At least we are a bit better off in that regard in Australia.

You had a presentation earlier about the German situation. This is the counterpoint. The German black coal mining industry shut down for economic reasons, not for environmental reasons. They are importing black coal into Germany and they still have black coal fired power stations and brown coal power stations, and there is a big debate about closing them. The point we are making is not about the environmental rationale but about how to manage this socially and to bring everyone along.

When it comes to just transition, the CFMEU has said for a long time it is not just about closing down industries. In fact, we would prefer it not be about closing down industries; it is supposed to be about re-engineering existing industries and cleaning them up. We were very keen on carbon capture and storage and some of us still are, but we have seen the lack of investment by power companies, by coal companies and by governments in carbon capture and storage, and now the window of opportunity seems to be closing, if not entirely closed. It seems to be highly unlikely that power stations with carbon capture and storage will supply anything like the current proportion of electricity in Australia or anywhere else. So it has been a great disappointment to us, as we saw that as a way of cleaning up our industry and solving the emissions problem.

The emphasis of what we are saying now is on managing closures and pooled redundancy and redeployment. The clear issue in the Latrobe Valley is that, if redundancies are all concentrated in particular power stations, what you will have is some proportion of workers being able to take early retirement, but the younger workforce will either have to join the unemployment queue in the region or have to move elsewhere. Either way, it is going to hurt those regional communities—that loss of skilled, well-paid work. Those people will have to either go on the unemployment queue or move. We are trying to stop regions being plunged into recession.

The pooled redundancies and redeployment can be done on a voluntary basis or on a regulated basis. Basically, it is about creating opportunities for older workers at other power stations to retire early while the younger workers at the closing plant who want to stay in the industry longer are given the opportunity to transfer. It mitigates the pain of closure of the power plant on the workforce. It also mitigates the impact on the region. There are many questions about how this will be funded. The existing employment framework makes it difficult. It is individualised employers.

CHAIR: Can I intercede. So that there is time for questions, are you able to bring it to a close? I am sorry. I am loving what you are saying, but we are just a bit tight on time. We have to finish at 6.30. Thank you.

Mr Colley : I will point out that there are good reasons for the private sector employers to participate in the pooled redeployment scheme, in terms of their social licence to operate and also in terms of simply sharing the blame for closures rather than them being individually attributed to particular employers. It is possible to have a government regulator or the proposed energy transition authority managing the scheme. It is possible to have an employer run scheme. It is possible to have a joint unions and employer run scheme. It is possible to actually separate employment from the employer so that you still have competitive employers but a pooled employment scheme. That has happened in the past in Australia with the Stevedoring Industry Authority, where there were multiple stevedores operating in the industry but a single employer providing labour to the firms. That would be a way of overcoming some of these problems of competing employers and employers not usually cooperating with each other.

The other key point was about staging closure at Hazelwood. Engie really has made life difficult for us. There were a number of units that were up for refurbishment or sustaining investment, but, rather than just closing them, Engie has chosen to close the lot, and that is due not to the domestic situation by itself but to the fact that Engie has made a global decision to exit coal power. So Australia is just collateral damage in that global decision that it has made. We think that it would only be in the order of $10 million—maybe more, but in that scale—to do pooled redundancies across the Latrobe Valley.

When you look at what Engie says it is going to spend rehabilitating the mine site and what government packages have been announced at a state and federal level, it is actually a small amount of money. It is simply about changing people's thinking about what can be done. Overall, we think shutting down Australia's coal fired power stations is going to cost billions over two to three decades. We think if you added the social costs and managing the workforce, it might cost that much again. It sounds like a lot of money, but if it is put into context of how much is going to be spent in the next two to three decades reengineering the entire Australian electricity supply system—a recent estimate from the Climate Institute was between $164 billion and $276 billion over two to three decades—we are talking about a small fraction of the overall cost involved in managing the social impacts. It is not a huge cost.

I would caution that saying that we are not going to do this—about sowing social dysfunction and devastating regions—right now we have got Trump in danger of becoming President of the United States. There are a lot of unhappy ex-coalminers voting for Trump in the United States. We have had Brexit in the UK. We have had the rise of far Right parties. We have had our own One Nation. These are people expressing discontent at a system which leaves them behind. That is a good rationale for why everyone needs to think that just transition is a good idea. It is not just about saving the skins and the futures of power station workers; it is actually about maintaining social cohesion across our community.

CHAIR: An excellent and timely conclusion. Dr Weller, we are really tight on time. Could you make a brief opening statement, because we will want some questions.

Dr Weller : I am here to represent the ETU's submission. I also add that for the last four years I have been an Australian Research Council Future Fellow studying the transition in the Latrobe Valley. Before that, I traced Ansett workers for five years and, before that, I traced clothing and textiles workers for five years. My career is about industry transition. I would like to say at the outset that I think what people have missed in the presentations so far today is that if we are going to have a successful transition to a new type of energy, we need the skills and expertise of the people who are in the industry now who understand how electricity works. That means that the redeployment is not just about finding jobs for retrenched workers; it is about retaining the expertise and the talents of people who understand the industry and who are going to be the core of the transition. That is a crucial point.

The ETU submission, which you have a written version of, begins by reiterating the ILO principles, which I think of already been laid out perfectly well. The ETU interprets those in terms of seven key aspects that it believes need to be incorporated in what happens next: an orderly transition plan that reduces uncertainty for workers; the establishment of what it calls a Just Transition Commission to minimise the impact of unplanned events and to make sure that there is the flexibly available to respond when things happen; a job creation plan to ensure the shift to clean energy creates employment; targeted assistance for affected workers; policies to develop low-carbon employment opportunities; the creation of an Australian manufacturing renewables culture; and a national energy plan.

I add one more thing that has not been mentioned. My experience of large-scale transitions is that the workers who fall through the cracks and end up being real long-term problems for their communities and the welfare system are the people who have felt there was not procedural justice in the process. Procedural justice is something that no-one has touched on before. I think it is really important to recognise that if someone perceives that they have been asked to bear an unfair burden or if they feel they have been humiliated and bullied into the outcome which they have reached, the outcomes will be bad for them and for their families. There has got to be a thread in whatever this response is that is based on a core respect, and I think that needs to be right up-front.

CHAIR: Thank you, everyone, for your opening statements. We have just shy of 20 minutes for questions, so we will share that time out equally. Senator Hume, I will start with you.

Senator HUME: Is the suggestion that the federal government should direct closure of commercial entities? Ms Kearney, I thought that that was what you might have said.

Ms Kearney : We think that an authority should be established by the federal government to look at the closure and to look at the industry—to sit everybody down. We are not saying that it necessarily would do the planning, but it would have to talk to the industry to say, 'What is happening?' We have already heard that three plants are going to close. That decision is being made by the market, by the industries, by whomever. What we are asking the authority to do is to work with the employers, to work with those industries to say, 'Well, let's do it in an orderly fashion, and let's make sure that we can plan how you close.' Let's take on board all of the redeployment suggestions et cetera and make them happen.

Senator HUME: Those three that are closing are quite far out into the future. There is a fair bit of time to prepare for that. Is that not adequate if the organisations themselves flag it in a reasonable period of time?

Ms Kearney : I think an authority would bring all of the industries together. Those are three from one employer group. What we are saying is that we need the whole industry across all jurisdictions across the whole country to be able to come together, as Tony said, sit down and have a discussion about the industry as a whole. At the moment that is not happening. It may be happening on an individual company basis, but it is certainly not happening on a cross-company basis or across employers.

Senator HUME: Do you think that the federal government should pay for closures? Do you think they should encourage commercial entities to close by paying them?

Ms Kearney : Our paper has some suggestions about how the closure could be managed financially. You can have a look at our paper. There are some suggestions by Mr Jotzo about a planned closure and how that could happen and how it could be funded. Certainly, I do not think we can escape the fact that there probably will be some federal funding necessary for this, but it could be, dare I say it, that we may have an ETS that may be able to help fund it. There certainly should be responsibility from the industry itself to partially fund it, there is no doubt about that. We have not gone into the detail about how much it would cost. My colleague Mr Colley has a lot more information about how much that would cost. I am not saying that we are experts in how to fund it or how much it would cost even, but I do think that there is definitely going to be some responsibility for the government.

Senator HUME: Is it just for the government to fund the closure of the organisation? This is not talking about retraining or redeploying the workers. On a per worker basis, how much public money do you think is appropriate for retraining and redeploying workers? What do you think the taxpayer should pay each worker to retrain and redeploy? I am genuinely interested in the answer. I do not have a clear indication of it in my head.

Ms Kearney : I do not think we have a—

Mr Colley : I do not think we could come up with a single number.

Ms Kearney : That could be some work that the authority could do.

Senator HUME: Has any modelling been done as to what it costs to retrain and redeploy one of these workers?

Mr Colley : Obviously, if you have pooled redeployment, you are shifting skilled workers from one skilled job to another, and the transactional costs are pretty much zero. There is not a lot of retraining involved. It is when you are retraining workers to shift into another industry that the costs go up. The Germans said that one of the key things they had was entities sitting at the mine sites that were giving people career advice and giving people retraining options, and they were doing the retraining whilst they were still employed. Whereas the convention in Australia is that it is only when redundancies are actually occurring that you then have a rather threadbare patchwork quilt of ad hoc labour market programs that retrain people, and the track record is mediocre at best.

Dr Weller : The reason that large-scale closures matter is that you get a very large supply of labour with similar skills impacting on a labour market with only a certain amount of jobs. I think the government can reduce the training costs and the hardship for families by slowing down the rate at which people who are going to be retrenched are released into the labour market to enable the labour market to absorb those people without the need for a massive retraining effort. If you can break it right down into small numbers and only let people go at the rate at which the labour market can absorb them, the problem actually dissolves. The question about how much it will cost really depends on how dramatic you want the event to be.

Senator HUME: This is why I am asking the question, because obviously this government in particular does not want 500 people from Hazelwood—as just the beginning—lining up at Centrelink. That is the last thing we need. So I am asking whether there has been any modelling done as to what it might cost, whether the taxpayer is paying it through Centrelink or whether the taxpayer is paying it through retraining and redeployment?

Mr Maher : One thing we could do is to survey the workers at the ongoing stations about how many might put up their hand for a voluntary redundancy. We know what the wages costs are, so it would be a fairly simple matter to calculate what that particular event would cost.

Senator HUME: And the voluntary redundancies being paid by the commercial entity?

Mr Maher : Voluntary redundancies are a contingent liability, so they are not carried on company books like annual leave and other forms of leave. The companies will say, 'Well, we might be prepared to assist in absorbing some Hazelwood labour by a round of voluntary redundancies, but we want to know who's paying.' That is what they will say. We think there is probably a public policy argument in support of that. The Frank Jotzo paper has a reverse auction arrangement which would generate funds that might be able to be used if the government were minded to go through that.

We think there is a time line already. There are published lists of end dates for all of the power stations, and the workers understand that when the company that owns those assets says they are not going to invest in upgrades then that means they will close by that date or earlier. The risk we run is the sort of thing that happened at Hazelwood, where a commercial entity says: 'It's in the best interests of our shareholders to minimise our exit costs, so we're going to do it all at once at the end of March,' instead of doing a phased-out thing that might have cost them some more. And it leaves the rest of us with the problem. So I think the first step is really a discussion, and if the federal government could lead that that would be wonderful. That is really all we are asking.

Senator DASTYARI: At times, there has been a lot of hysterical commentary around some of this. I want to get your perspective. The evidence we heard this morning from the Climate Council and the Australian Conservation Foundation and others is that there is an inevitability that this sector is going to change. The question is not whether there is going to be change; the question is: how do you deal with that change? Mr Maher, would you comment on some of the kind of hysteria that says: simply talking about a plan for the future is somehow spooking the horses—that simply talking about and having a plan somehow is going to be what will drive the industry and the sector out, and we should not be talking about anything other than the status quo.

Mr Maher : We consulted our members about this, and they get it—that there is either the orderly exit or the disorderly exit, and the people who get screwed in the disorderly exit are the workers. If they were all government owned it could be managed in-house. But companies have a responsibility to their shareholders, and they will put that first, second and third. I do not attribute blame about that, but it is a really unfortunate circumstance when an industry is being completely restructured. I think we need a plan. The feedback I get when I go and present to workers and say, 'This is probably the way we should go forward, with a redeployment scheme and to try to generate new jobs,' is that they just say, 'Well, I hope it does not arrive too late for me.' That is exactly what Mark Richards, who is with us here and who is a Hazelwood worker—there are three Victorian workers here—said to me: 'That would be great for us, but I think it might be too late.' I fear that he may have been proven right.

Senator DASTYARI: Ms Kearney, do you want to comment on that?

Ms Kearney : I think Tony is absolutely right. I am not quite sure there is more to say. The fact, as Tony says, is that it is not about whether or not they are going to close. You are right. We are seeing them close around us already. I think the submission from the CFMEU lists 12 closures already from around—

Mr Maher : Eight.

Ms Kearney : eight closures already of plants from around the country. The fact is that we can predict the closure. All we are saying is: let's have a talk about how it happens. And I do not think that is asking too much.

Senator DASTYARI: The evidence this morning was that, because of the commercial nature of some of these entities, once the actual final, formal decision to close is made, they effectively have to announce it immediately not only because of trading insolvent but because they have market responsibilities to their own shareholders and others when the decision has been made. In the case of Hazelwood, it is—what—five months notice? Is that correct?

Ms Kearney : About that.

Senator DASTYARI: Something like that.

Mr Maher : A bit over four, yes.

Senator DASTYARI: And, in the case of the South Australian example—I think it was Alinta—that was about the same?

Ms Kearney : Yes.

Mr Colley : The thing is that Alinta actually announced that their power stations would close in 2018, I think, and then brought the closure dates forward quite a lot. One of the risks that we face is that the companies are saying, 'Well, we'll close them when their life expectancy is up,' but they might well close them earlier than that. So, again, unless you have a sort-out process, we are likely to be surprised by sudden announcements.

Mr Maher : The other thing is that, yes, they might have to announce the decision in a timely fashion, but the decision does not have to be complete closure. It could be two units at a time over a period of two years, and that would give us much more time to manage the employment issues.

Senator DASTYARI: I have a lot more questions. I could keep going, but I am very conscious of time.

CHAIR: Thank you, Senator Dastyari. Thanks very much, folks, for your evidence so far. It seems that everyone today has acknowledged that the transition is inevitable, and the question is whether or not the government plans for it. There has been a lot of discussion about the cost of planning. I am interested in the cost of not planning. Is it your view that it is cheaper for the government to involve itself in planning this transition than it is for it to then bail out workers once companies decide to close doors at a set time rather than in a staged and managed way?

Mr Colley : It is hard to measure the cost of a disaster you are trying to avert.

CHAIR: True.

Mr Colley : It is like: what is going to be the cost of a Trump presidency in the United States?

CHAIR: We cannot face that just yet, Mr Colley. It is too soon.

Mr Colley : What is going to be the cost of Brexit in the UK? There are lots of guesses about what it is going to cost the UK. The idea about bringing everyone along is that it is ensuring social stability and cohesion. We are not going to say it is costless. We know it is going to cost extra money. But what we are saying is that the cost as a proportion of the investment that is going to be required in re-engineering the power sector is actually only a few to several percentage points. It is not a huge additional cost. So it is a small part of what is going to have to be spent to repower the electricity sector.

CHAIR: Thank you. That is a good answer to that. Are you concerned that the decisions about power stations' future and hence workers' and entire regions' futures are being made in overseas boardrooms rather than by our federal government in consultation with unions and the community?

Mr Maher : There is no doubt that that is less than satisfactory. You only have to look at the recent events. When you privatise, you give away your control, unfortunately. If we end up with a lot of them closing through corporate decisions and we still have not got a base load solution sorted out, state governments will face very difficult decisions about what they do, because they have to ensure energy security.

CHAIR: We talked about the cost of energy supply and security and said that a managed transition would enable the grid to be properly managed and hence the lights to stay on.

Dr Weller : I think we have to recognise that since about 2009 the federal government and the energy sector firms have not had as close a relationship as might have been possible. I think that has been massively costly already—and that the success that Germany has been able to demonstrate is grounded in that trusting relationship between the state and the firms, in that they can get together and work things out. There is win-win and there is no loss to try and improve that relationship and find ways to reach some planned common ground.

CHAIR: Agreed. Thank you for your policy discussion paper and we look forward to the formal submissions as they come in. You propose an Energy Transition Australia, which is the body that you would propose to coordinate, to bring everyone together at the table, and then plan for this transition that is inevitable. Can you outline what role you would see that body playing in developing new generation as well as in simply managing closures of existing old coal fired power stations?

Ms Kearney : A critical part of the success of a just transition is that there are new jobs created and new industries encouraged to go to those regional towns who rely very heavily on the power plants for their main source of employment, not only direct employment in the plants but also the flow-on effect to the rest of the community who service both the plant and the families who live there. A key role of the authority we think would be to look at diversification of those economies and, similarly to what we are seeing set up in Victoria by the state government, a body that would encourage investment and new industries to those regions so that we do create new jobs and new industries and that they can actually thrive. I think it would be key part of the authority to do that.

Dr Weller : The Victorian government has had three major inquiries into the Latrobe Valley in the last 10 years, all of them have tried to attract investment and diversification, and not one of them has made any inroads into doing so. The problems are really very significant and they require much more than a local response; they require a national policy response. The people in the Latrobe Valley cannot solve that problem because it is actually not their problem; it is a problem that comes from elsewhere.

CHAIR: I might put my Queensland hat on for the remaining few minutes. Our energy system was not privatised, in the main, so in some ways we have better potential for transition planning. Have you done any work so far with the Queensland government or do you see any potential there for a managed transition? I hear you that it is better to do that at the national level, and I agree, but given we have a unique situation in Queensland where they are mostly state owned, is there any possibility there of starting this sort of discussion?

Mr Maher : Being state owned does make a difference because the body with the responsibility to supply electricity owns the assets. You also have to bear in mind they are the youngest of the fleet in the country, so you have some time too. I really think a national plan is a better option than a series of separate state plans. To the extent that funding is needed, I think federal governments would have more options if at some distant point in the future there was an emissions trading scheme, or if there was the reverse auction thing that Jotzo talks about. Put it this way: we are not rushing in to talk about something in the distant future with Queensland.

CHAIR: Okay. I was pleased to hear all the witnesses today refer to the Paris Agreement. I think you have already answered this, but just for the record: do each of your unions support those Paris targets that the government signed up to or at least, as a minimum, support those targets, or higher?

Mr Maher : We are not experts in targets. Our job in the global trade unions was to get just transition in the preamble, and our government signed it. So now we want to know if it means something.

CHAIR: Fair answer.

Dr Weller : The ETU submission makes clear their commitment to the Paris Agreement.

Ms Kearney : We have a commitment to the Paris Agreement because it has been signed by the government, but, as Tony says, our main interest is the just transition now that that has been signed. Our country is a party to it.

CHAIR: Let's see if it means anything, as you say. Given that we are on time, can I formally thank the witnesses we have heard from throughout the day and look forward to reading your submissions. I declare the hearing closed.

Committee adjourned at 18 : 29