second reading: Renewable Energy (Jobs and Investment) Bill 2017

Debate resumed from 24 August; motion of Ms D’AMBROSIO (Minister for Energy, Environment and Climate Change).

Mr SOUTHWICK (Caulfield) — I rise to speak on the Renewable Energy (Jobs and Investment) Bill 2017. This is a bill that the government has certainly talked about for a fair time, and we have been eagerly awaiting some detail around it for some time. It has been announced, reannounced and reannounced. I must say that when we finally heard the bill was going to be introduced we were expecting something with a fair bit of detail around it. It is unfortunate to say that the bill is pretty much just a further media announcement in terms of where the government is on this stuff, and it certainly lacks a lot of detail in terms of the mechanics of the way the Victorian renewable energy target (VRET) will actually run.

This side of the house certainly believes we should have a very, very strong energy mix. We certainly support clean energy, and we support renewable energy. We support renewable energy that is underpinned by 24/7 baseload power. We believe, and we have said so all along, that we should have an energy system that is underpinned by good market forces. We have seen plenty of strong situations, and I will be talking a little bit about the solar industry in which the market has actually decided to take up renewables into the scheme. Particularly if you look at solar, we are seeing Victoria leading the way in household solar, where one in six households now have solar panels on their homes. But in situations like solar, which I will talk more about later, the uptake has actually increased where there has been less involvement by government and more opportunity for the market and households to determine the value, what will ultimately be the cost savings and therefore the commercial decision that has been made by many households.

But what we have here is a bill that is set to drive up energy prices and threaten energy security, and it is the government ideologically backing one energy source over others. This is an ideologically led government; it has been from the very beginning. We have an ideological minister that is determined to cut down any baseload power, whether it be gas or whether it be coal, at the expense of renewables. As I said, we should have an energy mix and not be backing one energy source over another. That threatens security and threatens affordability. Certainly the coalition’s plan is this, and we have said it time and time again: number one, we should have security — we need to ensure the lights stay on; number two, we need to ensure that it is affordable; and number three, we need to ensure that it is clean.

What this government is doing is effectively attacking the renewable energy industry, because it is siding up and threatening those that can least afford to pay their power bills and putting them up against the renewable energy market. Ultimately each and every Victorian wants to ensure that their bills are affordable. Each and every business wants to ensure that they can continue to employ people and that they are able to continue to keep their business running. I have travelled the state, and I have spoken to business after business that have now gotten to a point where they are absolutely at odds with this government. They are angry that this government is forcing up one energy source over another and ultimately sending power bills skyrocketing.

If you ever wanted an example of what this government is all about, I think one was about the third time that the Victorian renewable energy target was announced. It was announced when the government was involved in bringing Al Gore to Victoria at an expense of $150 000 for a resilience conference and to talk about this Victorian renewable energy target — $150 000 of taxpayers money used to bring a climate change celebrity to saddle up with the minister to announce the closure of Hazelwood and that they would be introducing a Victorian renewable energy target. We could all think about how many of those dollars could have gone to supporting those people on the edge in terms of their power bills and those that are struggling with affordability issues — low-income earners that are effectively bankrolling a celebrity at the expense of paying their own bills. All of us pay, taxpayers pay, at the expense of ideology.

Acting Speaker, do not believe me and do not believe the coalition. What does industry say? What do the commentators say about this particular target? Firstly, Matthew Warren from the Australian Energy Council said:

Victoria’s electricity system is interconnected to other states as part of a national grid. Decisions made here affect other states. That’s why major policy measures to reduce emissions should be implemented at a national level.

Effectively what Matthew Warren and others are saying is that Victoria is connected to a national energy market and therefore should not be doing things like this at the expense of Victorians.

We have been advocating all along for federal targets. Certainly that is what we have been doing as a coalition. To have ‘go it alone’ targets at the expense of Victoria and Victorians is dangerous. It is dangerous according to industry; it is certainly dangerous to the future of security and affordability of our power system. Continuing on, Matthew Warren said:

We are yet to see the modelling that the Victorian government has used for its cost projections … We have learnt from South Australia that more renewables initially reduced prices but as they push out traditional, firm generation without equivalent replacement supply, wholesale prices have almost doubled.

I make this comment on two fronts. If you do not have a plan to transition out the baseload generation and you want to replace it with renewables that do not have the baseload of battery storage and others going forward, then you jeopardise the whole electricity system. That is not to say that we should not be moving towards renewables over time and replacing baseload generation, but it has to be done sensibly.

This government sat by and watched Hazelwood power station close within five months of notice. Not only did they watch it close, they gave it the final nail in the coffin by tripling the coal tax — the $260 million coal tax effectively put the nail in the coffin of Hazelwood’s closure. We would not be talking about the energy crisis today if this government had done something to ensure the lights stayed on in Hazelwood. It should have allowed the generator to operate until such time as the renewables kicked in. It should have waited until the mix of renewables, in terms of battery storage, was effectively proven in the market and allowed batteries to work.

Instead this government said, ‘No, let’s get rid of this as quickly as possible’. The Minister for Energy, Environment and Climate Change — very, very quickly when she was in opposition — called for a closure of Hazelwood and in government has got her way, with Hazelwood closing. That has been the result.

I make mention of modelling because we have had nothing but dodgy modelling, and I am going to talk a little bit more about that later. We asked the minister’s office for modelling; we have asked for this several times. We asked for it in the briefing and we were told in the briefing, ‘Yes, no problem. You will receive the modelling’. When the first reading of this bill was announced, there was a two-pager — a glorified press release — put out to say, ‘Here is the modelling’. No-one believed any of that.

Then what did we have? We were told at the briefing almost two weeks ago that we would have the modelling. Well, guess what, Acting Speaker? We received the modelling — half an hour ago, so it is very hard for me to stand up here and be able to understand any of the things underpinning the modelling when they have only just flicked it over to us with half an hour’s notice.

You would expect, for such an important announcement, that the government, which has been working on it for nearly two years, would have it at their beck and call, and they would just offer it to the market to have a look at to support their policy. But no, and that is because they are hiding something, and it will all be exposed.

Do you know what this government is determined to do? This government is determined to go straight down the path of South Australia. We have seen what happened in South Australia. They are now resorting to diesel to keep their lights on. If we are talking today about renewables and about clean energy, the last thing that the renewable energy market, our environmentalists and anyone who cares about the environment should want is for us to ensure security with diesel generators.

What we have seen with South Australia is epitomised by this headline in the Australian: ‘“Dirty” deeds with diesel generators done real quick, if not dirt cheap’. The article states:

Taxpayers in South Australia face being slugged tens of millions of dollars for dirty carbon dioxide-emitting diesel generators the Weatherill government wants shipped in by December to prevent pre-election blackouts.

They are expecting pre-election blackouts in South Australia. That is straight down the path that the Premier and his government want to send Victoria. Following on from South Australia, the Premier wants to outdo South Australia at the expense of every single Victorian and every single business with the cost and security of power. We have seen this before in terms of the cost:

It cost the Tasmanian government more than $11 million a month to run 100 megawatt of diesel power generators early last year when its interconnection to the mainland was down and low dam levels affected its hydro-electric scheme.

We saw it in Tasmania, we are seeing it now for the summer in South Australia and we will be seeing it in Victoria.

What do others say? What does Tony Wood from the Grattan Institute say? He said:

…the policy was a ‘nasty dog’s breakfast’, with dodgy modelling of energy bills based only on wholesale prices.

‘No-one is debating the future need for more renewable energy in the system …

We as a coalition are not debating that either. What we are debating is the modelling that underpins it and supporting one energy source over another at the expense of affordability and security. Tony Wood goes on to say:

… a national approach would consider the most efficient place to source that from … It appears to me that the lesson of South Australia has been ignored by this policy.

What does Emma King from the Victorian Council of Social Service (VCOSS) say? She said that a renewable energy target was ‘important and welcome’ but:

… we shouldn’t pretend the VRET will magically drive down prices.

We shouldn’t be building a greener Victoria on the backs of people doing it tough.

What did the minister say about what the VRET would do? Instead of — pardon the pun — coming ‘clean’ on this and saying, ‘Right, we understand this is going to cost Victorians money but we are focusing on the environment first and cost second, and we believe it is better for the environment to do this’, that would be fine. There would be nothing wrong with that because that would at least position them in terms of where the Labor Party is.

That is how the Greens position themselves. Do you know what? I do not admire much about the Greens but the one thing I do admire about the Greens is that they stand by their own convictions. That is who they are, that is who they represent in terms of their party, and at least we understand where they are going.

We do not understand where the Labor Party is going on this. They do not support low income earners on this, they do not support industry with this, and now they are turning around and saying that it will save money. In fact when it was announced on 23 August, the Minister for Energy, Environment and Climate Change said the Victorian renewable energy target would save households $30 a year. Only in January this year, a few months earlier, the minister was quoted in the Herald Sun as saying that Victoria’s ambitious renewable energy target would cost households up to $520 each, based on government estimates. The article states:

Consumers are likely to pay through an extra charge on electricity bills for up to 20 years.

The minister went on to say that the impact of the Victorian renewable energy target on households would be ‘modest’, at ‘no more than 50 cents per week over the life of the scheme’. The article continues:

She refused to release detailed modelling, citing current cabinet confidentiality …

There is a bit of a pattern emerging here. Based on current household numbers that would mean a cost of about $1.2 billion. So here we have a minister who on one hand in January says that the VRET is going to cost each household up to $520 a year over the life of the scheme and then on the other hand says it is actually going to save households $30 a year. Who do we believe?

We have also had a number of people say the same thing, as I have been stating, including the Australian Industry Group, and I quote:

Australia’s peak industry lobby group fears Victoria’s decision to go it alone and pursue a 40 per cent renewable energy target within eight years will push up prices that are already hurting business.

Tim Piper, Victorian head of the Australian Industry Group, said … there was no clear pathway to reaching 40 per cent without imposing extra costs on energy users.

So again here we have the Australian Industry Group saying exactly that.

What does VCCI, the Victorian Chamber of Commerce and Industry, say? Mark Stone has also said his members are hurting from skyrocketing energy bills:

The target must not put upward pressure on prices and put Victorian jobs at risk …

Time and time again we are hearing from industry, we are hearing from organisations representing those who are doing it tough — the most vulnerable in terms of VCOSS — and we are effectively hearing it from a left-wing think tank, the Grattan Institute, suggesting that these policies are going to hurt all Victorians.

So what are the costs? We also heard that effectively the cost of this will actually put a hole in the state budget of $250 million to $350 million. Effectively whether Victorians will be paying this on their bills or whether all Victorians will be paying this through the budget, there is a cost. It is not going to magically appear. It is not going to magically pay for itself. We are all going to pay for it.

There is no doubt that we are in an energy crisis right now — no doubt. This has been underpinned by the Labor Party, underpinned by Premier Andrews, who has stood by idly, watching base load close and pushing these sorts of targets in his left-wing agenda ahead of everything to save a few inner-city Greens votes. Again, with the likes of a by-election coming up and future elections coming up in these inner-city seats, he will spare nothing to actually do this. But one of the things that we have seen is the federal government commission the Finkel review, which had 50 recommendations. I know there has been a lot of talk in terms of the clean energy target that has not been supported, but to get 49 recommendations supported within a short period of time is a good thing.

But what does Alan Finkel, the chief scientist who did the review, say? He warned that the quick closure of more baseload power stations could cause supply chaos during peak demand. Alan Finkel said that we should not be looking at go-it-alone targets. He said that we should be looking at one target — a national energy market — not go-it-alone targets. The fact of the matter is that we will be putting Victoria at a disadvantage compared to other states. So we have New South Wales, no target; we have Western Australia, no target; we have South Australia going to an election and the coalition suggesting that they will scrap the target should they be elected; and we have Queensland, the same. But in the current environment we have New South Wales, which we are often compared to, with no target, and Victoria, which will have a target. So what we are suggesting is that companies should go and relocate themselves into New South Wales because we are going to effectively put a target in Victoria that will create affordability and security issues compared with the other states.

Certainly that is something that we, the coalition, do not support. We support, as we have said all along, federal targets. We do not support these go-it-alone state targets. It is a national problem that requires a national solution. What we need is this government to stop playing politics with people’s jobs, stop playing politics when it comes to householders’ power prices and start doing something to ensure that their policy, which was described by Tony Wood from the Grattan Institute as a dog’s breakfast, will reduce power prices, rather than be an ideological target that is going to push up prices.

I said that I would talk about the solar industry, and I did want to draw attention to the solar industry. Now, in the past I have talked about renewables as being part of an energy revolution, and I have been quoted on that. I know there are people in the gallery that have been to events that I have been at, and I do believe that ultimately renewables will play that important part and the market will decide in ensuring that we get a good mix underpinned by affordability and reliability. Certainly the innovation of renewables will come to play — no question about that. I absolutely believe, hand on heart, that innovation will get us to that point. But the difficulty that I have is when the government intervene the way that they have been doing to try and pick winners, the government always get it wrong. They always get it wrong. This is not Labor versus the coalition, although many would say that we are a little bit better when it comes to managing finances. However, certainly when it comes to this sort of stuff I guarantee this government is heading into uncharted waters.

One example of that is the solar industry. With the solar industry, what we had was a big uptake of solar energy. Many people in recent times decided that they were going to take up solar. But we also had a very high target. In 2009 the Victorian Labor government introduced a premium feed-in tariff of 60 cents per kilowatt hour for 15 years. This was corrected in 2011 as a transitional feed-in tariff by the coalition to 25 cents a kilowatt. The coalition then brought in a minimum feed-in tariff in 2013 of 6 cents to 8 cents. What I wanted to say about this, which is very important, is that during that time Victoria saw a 33 per cent increase in solar connections for the first six months of 2012 compared to the same period in 2011, despite the feed-in tariff being reduced from 60 cents to 25 cents. So what we had was a reduction in the tariff and a reduction in government intervention but more people choosing to take up solar. What that says is that when governments interfere, every single taxpayer has to pay more. Those that do not have solar, the low-income earners and the renters, are all effectively subsidising the people in this instance who can afford to pay.

Certainly we should be encouraging people to uptake solar, but on the understanding that government have not got their hands in the pocket of every Victorian and every Australian. The cost of government subsidies in subsidising the haves with the have-nots with solar was $14 billion — $14 billion between the haves and the have-nots with subsidising solar. Again, this did not have to happen. Solar will be taken up without the ongoing subsidy. That is what we are suggesting.

I went to the clean energy conference — just on 18 months ago, I think it was — and I had an opportunity to wander around to the exhibitors, many in the industry that were displaying their various renewable options. I spoke to a lot of battery providers. The one thing that battery providers said to me was, ‘Whatever you do in terms of energy policy, do not go down the same path as what the solar industry did, with these huge subsidies, because we don’t want an industry that is underpinned by government grants just for another government to pull the grants from underneath us because they are not sustainable and then for the industry to collapse as a result of this’. This is what the battery industry said to me: ‘Learn from the mistakes of the solar industry’. So that is what we are suggesting here.

The target which has been set of 25 per cent by 2020 will certainly almost happen. A lot of industry sources have said that it will almost happen with or without a VRET. Again, that is a further example of market forces taking shape. However, the 40 per cent target from 2025 is where it gets really, really concerning. It gets concerning because something has to give. What will give is Yallourn W. We are hearing the energy council and others say that a baseload power station that has an end date of 2032 could come out early — as close as 2020, 2022, so 10 years early — taking another 22 per cent of energy out of the market. That is the same amount as Hazelwood — effectively Hazelwood all over again. What that does is it further impounds costs and it further impounds security issues.

I can tell you this about more government intervention in this game: if you are really a hand-on-heart, genuine, signed-up fan of the renewables industry, then you would not be wanting ongoing intervention by this government. I can walk you around to every industry group and to households. They are saying, ‘For God’s sake, don’t give any more dough to the renewables industry group. All it’s doing is pushing up prices’. That is what industry is saying, and that is what households are saying. That is why things have changed, and that is why now there are real concerns out there in terms of what this government are doing. They are pushing up energy prices; they are threatening security. The Australia Energy Market Operator is talking about 72 days of power shortages coming up. We are importing power rather than exporting power over the summer period. We have now had the industry and the regulator suggesting blackouts coming into summer.

This is horrendous for a state that was always underpinned by affordable power and by reliable power, a state that now has to rely on the likes of Tasmania and New South Wales. This is completely scandalous, and it is a situation the government owns fairly and squarely. They own it. They own this VRET 100 per cent, because we will not be supporting this. This will be a day that the Parliament will remember and that Victorians will remember for a long time, because it will be the day on which we will see a continued escalation of power prices, a continued security issue, a continued problem for all Victorians and a continued fight which never really had to be that way. We could be having an energy mix. We could be having renewables and a 24/7 baseload living hand in hand, moving towards a transition to clean energy. That is what we could be having — not underpinning, not putting up the gas industry and not putting up the coal industry against renewables, but a transition.

Bill Shorten does not believe this lot. Bill Shorten does not believe the Labor Party on this stuff. He has certainly not signed up to a go-it-alone target. Bill Shorten does not believe them in terms of what they have done with gas either. So the Labor Party in Victoria are on their own when it comes to this. The only reason they are doing it is probably the worst possible reason. I mentioned ideology as one thing, but they are doing it for a few seats — to win a few votes at the expense of each and every Victorian. That is what they are doing this for; make no mistake. They do not look after the working class. They do not support the working class, which at the moment are paying more for their energy bills than they ever have — and that is a disgrace. People cannot afford to actually keep their lights on and to keep warm in winter, and they will struggle with air conditioning over summer. Each and every Victorian can blame only one lot for this, and that is the Premier and his Labor mates, who have chosen ideology and a few inner-city seats at the expense of each and every Victorian’s cost-of-living pressures with energy.