AUSTRALIAN ENERGY MARKET COMMISSION ESTABLISHMENT (CONSUMER ADVOCACY PANEL) AMENDMENT BILL

Second Reading

Adjourned debate on second reading.

(Continued from 27 September 2007. Page 974.)

Mr WILLIAMS (MacKillop) (12:18): I am the lead speaker for the opposition on this matter—I expect, like the previous matter, I will be the only speaker for the opposition—and I will be very brief. The bill seeks to establish a consumer advocacy panel (known as 'the panel') as an independent part of the Australian Energy Market Commission. The panel will comprise a chair and four members and will be responsible for commissioning research and allocating grants in the gas and electricity industry sectors. The panel will be required to publish a draft annual budget for public comment which must be approved by the Ministerial Council on Energy and which is subject to scrutiny by the auditor-general—and I assume that would be the federal auditor-general, not the auditor-general of the lead legislator (and the minister may like to inform the house whether or not that is the case). I note that, when the panel is approving a grant for a particular project, 25 percent of its annual budget is set as the maximum amount that can be extended in any single grant. Other than that, I indicate that the opposition will support the bill.

Bill read a second time.

Committee Stage

In committee.

Clauses 1 to 4 passed.

Clause 5.

Mr HANNA: I have two amendments in relation to this clause. To put them in context, first, I recognise that the minister and the speaker for the Liberal opposition have accurately outlined the purpose of the legislation. The consumer advocacy panel is formalised by this bill—and, indeed, I believe there should be a consumer advocacy panel. The panel consists of a chair and four other panel members, who themselves may research areas of benefit to consumers in both the gas and electricity sectors. They can also allocate funding to people who wish to research such matters. The problem I have with the legislation as it stands is that it does not look after truly small consumers well enough, it does not look after domestic consumers well enough and it does not look after small business consumers well enough.

Before I go on to explain the amendment I would also like to put my remarks in context, because we are dealing with national template legislation, and I understand that South Australia is leading the way with template legislation which all states are expected to follow. I want to make a point about the democratic formulation of legislation in this area or in any other matter of national interest and regulation. It is not good enough for the relevant ministers to get together (admittedly after taking advice and considering the matter) and coming back to each parliament saying, 'This is the legislation; take it or leave it,' without an adequate opportunity for each respective parliament to contribute to the process. That absolutely top-down process, I think, is objectionable in itself, so I will take up my right to move an amendment, which I think contains helpful suggestions of benefit to domestic and small business consumers. My wish is that they will be taken up across all the parliaments of Australia; and maybe it could start here. I move:

Page 4, lines 11 to 17—

Delete the definition of small to medium consumer—delete the definition and substitute:

small to medium consumer—

(a) of electricity—means a consumer whose annual consumption of electricity does not exceed 40 megawatt hours;

(b) of natural gas—means a consumer whose annual consumption of natural gas does not exceed 1 terajoule.

The currently drafted regulations, which the government has published, refer to small to medium consumers being those who use less than 4,000 megawatt hours per year. There must be a number of consumers of electricity who use several thousand megawatt hours per year who, according to common sense, could in no way be described as small consumers. They would be household names around Adelaide; they would be major commercial enterprises.

The purpose of my amendment is to lower the bar to exactly 1 per cent of the government's conception. In other words, I suggest that we should call consumers small to medium consumers if they have an annual consumption of electricity that does not exceed 40 megawatt hours per year. If this amendment is accepted, we will have truly small consumers on the panel, and I say that is what the panel is there for. It is not for Woolworths, David Jones or Boart Longyear consumers; it is for the truly small consumers—they are the ones who really need the voice in this complex and vast electricity market.

My amendment also refers to users of natural gas. Again, I am lowering the bar to define consumers as small to medium if they consume less than one terajoule of gas per year, whereas the government's published regulations, as I understand it, talk about small to medium consumers if they use less than 100 terajoules per year. The purpose of the amendment is clear; it is to have truly small consumers represented on this panel.

The Hon. P.F. CONLON: I am sure the member for Mitchell is not surprised to know that I am not able to accept the amendment. First, of course, this bill comes to this place as a result of agreement between the states and the commonwealth, and this is the result of that agreement.

Mr Hanna: We might have a different commonwealth shortly.

The Hon. P.F. CONLON: We may well have, and I think there is no doubt that a different commonwealth would take a very different view to several matters that we have discussed over the past five years. I was very surprised to hear the other night during the launch of the federal campaign that John Howard said, 'Love me or loathe me, you know where I stand on issues, because I was at the MCE for five years when the commonwealth, on the direction of the boss, refused to have any discussion whatsoever or participate in a discussion on a national emissions trading scheme. In fact, that drove the state energy ministers to act.

What we are now discussing at COAG came from state energy ministers. State energy ministers in a separate forum because the commonwealth would not participate, commenced discussions on a national emissions trading scheme. So, you can imagine my surprise when I found last year or so that John Howard does believe in emissions trading and, in fact, now he looks like taking the work we did and claiming it as his own. So, love him or loathe him, I do not know where he stands on some things.

Mr Hanna: He believes in everything.

The Hon. P.F. CONLON: He believes in everything. But I just make that point, and I will not digress too much. This is the result of an agreement between the states. I actually think, even if I were not bound to reject the amendment, that I would not accept so low a number. Members have to understand that some larger users of electricity may have very good cause to be pursuing advocacy on a matter in which the effect of that electricity use may flow on to a larger number of people. The fact that they use a lot of electricity may not necessarily mean that they have got a lot of money. I cannot give you an example off the top of my head because I did not see the amendment until today, but I think that there would probably be examples of where it would be a good argument for some large users of electricity to be included in the scheme. Be that as it may, having reached this agreement over a very long period of time, I do not think I could reduce it to 1 per cent of that which was agreed. I think they may find that to be an amendment of some substance.

Mr Hanna: There is room to negotiate.

The Hon. P.F. CONLON: There is a lot of room to negotiate; as I see it there is about 99 per cent more. So, I hope the member for Mitchell understands that while I understand his motivation I cannot agree to it.

Amendment negatived.

Mr HANNA: I move:

Page 4, after line 17—Insert:

(6) Section 3—after subsection (2) insert:

(3) For the purposes of this act, consumer advocacy projects may include projects that investigate, consider or support the establishment or operation of appeal mechanisms for consumers of electricity or natural gas within relevant markets.

I am also concerned that this consumer advocacy panel is going to be overly concerned with the needs and the problems of what most people in the community would consider to be very substantial users of electricity and gas. So, I want to make it very clear that, in the research projects to be considered by the panel, they can, and I would say they should, investigate projects which concern appeal mechanisms for consumers.

One of the problems with the electricity and gas markets is that they are so vast and complex that it is very difficult for small consumers (I mean domestic consumers and small businesses, essentially) to have any say in the process. Even where there are decisions in the intermediate area of the market between generation and retail, there are decisions taken as to price and market entrance which have a substantial impact on the final retail price. So, why should individual consumers and small businesses not have the right to buy into that process in some way? That is why I have moved this amendment, to make it very clear that the consumer advocacy panel is not just there to authorise research into market-wide processes and perhaps economic modelling and the like, but to look at how we can involve consumers in the process if they find that there are problems.

The Hon. P.F. CONLON: Given the nature of the agreement, it is not possible for me to accept amendments on the floor. What I can suggest, as a glimmer of hope for the member for Mitchell—I am not completely hostile to what he is suggesting—and he can see this for himself, is that there are some draft regulations for the bill on a website which has some prescription. It may be possible to take into account some of the concerns embodied in the amendment in that regulatory framework. I think we have another ministerial council meeting in December, so it may be worth the honourable member, and if he can rally others to his cause, making a submission to the MCE about including such a matter in the regulations.

It seems to me that it is not entirely inconsistent with the logic of a merits review, and such like. I certainly would not support something that tied people up in frivolous reviews, but I am sure that there are ways to achieve that. So, what I would suggest is that, while I cannot accept the amendment, if the honourable member is interested it might be worthwhile talking to the MCE, which will be meeting again in December, and—forgive me for my bias—hopefully with a different federal minister.

Mr HANNA: I thank the minister for his consideration and his reasonable suggestion.

Amendment negatived; clause passed.

Remaining clauses (6 to 12), schedule and title passed.

Bill reported without amendment.

Third Reading

The Hon. P.F. CONLON (Elder—Minister for Transport, Minister for Infrastructure, Minister for Energy) (12:36): I move:

That this bill be now read a third time.

In moving the third reading, I want to apologise to the member for MacKillop because I missed a question he asked during the second reading debate about which auditor-general would audit the consumer advocacy body established. It is, in fact, the state Auditor-General, who has been auditing this body since 2004. This body is established as a South Australian statutory authority, basically as a child of the previous NECA (National Electricity Code Administrator), which used to be based in South Australia. However, we lost that argument in the new regime, so this is a South Australian statutory authority that does its work out of New South Wales, which is a little peculiar. It has been subject to the audit of the Auditor-General for some time, and so this advocacy panel attached to it will also.

Bill read a third time and passed.