ELECTRICITY (FEED-IN SCHEME—RESIDENTIAL SOLAR SYSTEMS) AMENDMENT BILL

Final Stages

Consideration in committee of the Legislative Council’s message.

Amendment No. 1:

The Hon. P.F. CONLON: I move:

That the Legislative Council's amendment No. 1 be agreed to.

I indicate that, as a consequence of the amendment, we have placed on file some subsequent amendments. In short—and this is what I will say to all of it—we have agreed to an amendment about the eligibility for 'qualifying customers' to extend it to small customers, rather than the amendment sought. Our original objection was that it was not a doable suggestion for the distribution company. We believe we have found something which is administratively achievable and which achieves the spirit of the amendment sought in extending it to small customers, whether they be residential or business. The other amendments, as I will indicate later, are not agreed to; in particular, I think the last sticking point is the wish to give this a 20-year life time, instead of five years.

I want to place on the record again the reasons for the five years. There is great movement now in Australia, with the election of a new federal Labor government, in regard to matters surrounding renewable energy and greenhouse warming. It is very likely that within that period of five years we will see significant changes made to a number of things that may well affect the pay-back time in the investment of photovoltaic cells. Just so that it is absolutely clear that the reason for the five-year period is not that people would lose this benefit in that time: it is that there may well be a superior scheme or something that conditions the operation of this.

I can say that it is certainly the intention of this government that, if there was nothing of that nature or no additional benefit, we would be seeking to preserve this one, but we think that is a very unlikely scenario. I place on the record that it is our intention that, if there is not a scheme which does the same sort of thing or which gives a superior benefit, or at least an equal benefit, it would be our intention to seek, if we were still the government, to continue this one but, as I have said, we think that is very unlikely.

Mr WILLIAMS: The opposition accepts the amendment.

Motion carried.

Amendment No. 2:

The Hon. P.F. CONLON: I move:

That the House of Assembly agrees with the amendment made by the Legislative Council with the following amendment:

Clause 4, page 3, before line 1—Definition of qualifying customer—Substitute:

qualifying customer—a small customer is a qualifying customer for the purposes of this division;

and makes the following necessary consequential amendment:

Clause 4, page 2, lines 16 to 19—

Clause 4, inserted section 36AC—delete the definition of domestic customer

Mr WILLIAMS: I am delighted the minister has seen the sense of the amendment which was put in the other place and which was supported by the opposition.

The Hon. P.F. Conlon interjecting:

Mr WILLIAMS: We always support business people. Small businesses provide jobs for about 85 per cent of the people employed in South Australia. That is why we support business.

More importantly, we support this particular amendment as proposed by the government. It is a very sensible amendment that picks up the amendment moved by the Hon. Mark Parnell in the other place (which was supported by the opposition), because it vastly improves the scheme. It means that the scheme will now be available not only to householders but also to small businesses and a whole range of other community organisations. Back before Christmas I received a letter from a church group who wanted to know why on earth it would be precluded from such a scheme. The group argued that, as a church group, it was very important for it to do what it could to meet the challenge of climate change and global warming, and the group thought it may well be interested in putting photovoltaic cell systems on some of its buildings. It wanted to be part of the scheme because it would make it much more economically viable and attractive for the group to do that.

I commend the minister for coming on board with the expansion of the scheme. I note that the small customer is already defined in the Electricity Act 1996 as being, 'a customer with an annual electricity consumption level less than the number of megawatt hours per year specified by regulation for that purpose, or any customer classified by regulation as a small customer.' When we go to the regulations, a small customer is currently defined as one using less than 160 MWh of electricity per year. That very much broadens the amount of customers who will now be able to access the scheme the government has brought forward, and (as I believe I have argued at least twice in this place since we have been debating this piece of legislation) I would have thought that that was the government's initial aim—to make this as freely and widely available as possible. I am delighted that the government has seen the commonsense in that and that it has brought this amendment forward. The opposition supports it.

Mr HANNA: I am pleased to note that one of the two ideas I put forward when this matter was debated in the House of Assembly has been agreed to by the government. The two things I thought could improve the original government bill—which, in itself, was worthy—were the inclusion of small businesses and the extension of the guarantee period for people interested in installing photovoltaic cells to 20 years. When it comes to the inclusion of small businesses I think previous speakers all agreed that the more people involved in the scheme, the better it will be for the environment. That is the ultimate goal of the bill so it is very pleasing to see—on this point at least—that everyone is now in agreement.

Mr VENNING: I support the bill. The whole concept is very appropriate and correct. We live in times where we are having difficulty meeting demand, and we talk about green electricity—well, this is certainly green electricity. I also believe that this is a good way for the community at large to be involved in solving a problem for the government. I commend members of this parliament, including the member for Mitchell, for their input and congratulate the government for accepting the amendments in goodwill.

We have ended up with a good situation where, in the first instance, no-one is really excluded from the process—particularly in relation to small business. I am also very pleased the member for Mitchell had the time extended out to 20 years, or tried to, because there is a fair bit of money involved here and even when people make use of the government rebates they still expend quite a bit of personal money. Over 20 years (which is probably the life of the photovoltaic cells anyway) they can recover almost all the initial expenditure, and I certainly welcome that. I think most South Australians would now have a jolly good think about why they should not be part of electricity generation in the future.

In fact, all new homes ought to be wired for photovoltaics, because it is so much cheaper when you are building a house. I have made inquiries on my own behalf. We have a farm; why should we not all be doing our bit to generate electricity? At the same time, you do not get money back. You do not make money, minister, do you? All you do is offset the large electricity accounts. I think it is a good move, a positive move, and I congratulate the government, the opposition and, indeed, the member for Mitchell.

Motion carried.

Amendment No. 3:

The Hon. P.F. CONLON: I move:

That the Legislative Council's amendment No. 3 be agreed to.

Motion carried.

Amendment No. 4:

The Hon. P.F. CONLON: I move:

That the House of Assembly insist on its disagreement to the Legislative Council's amendment No. 4.

This matter is consequential on the matter I shall be addressing in a moment.

Motion carried.

Amendments No. 5 to 15:

The Hon. P.F. CONLON: I move:

That the House of Assembly agree to the Legislative Council's amendments Nos 5 to 15.

Motion carried.

Amendment No. 16:

The Hon. P.F. CONLON: I move:

That the House of Assembly insist on its disagreement to the Legislative Council's amendment No. 16.

This will be the last time I will speak to this matter, unless I am severely or sorely provoked by egregious comments by the opposition. The remaining sticking point on this issue is the wish to extend a five-year period to a 20-year period. I stress that the intention of that five-year period was merely to see what evolves out of what will be a major set of changes. It may even include a national feed-in law—who is to know? Certainly, there will be matters going to the cost of carbon and matters going to the promotion of renewable energy, we believe, in the next few years.

It is certainly the view of this government that, if those things do not emerge to the extent that it makes the proposition at least as attractive as the feed-in law that we have, we would seek to preserve this feed-in law beyond that time. I hope people understand that there is never an intention that people should get only a five-year benefit; it is merely to allow us to see what other schemes emerge in that time. For those who are knowledgeable in this area, we have seen—in the absence of federal leadership in the past—a proliferation of state-based renewable energy schemes: in New South Wales and Victoria, for example, and this scheme which goes to feed-in laws here. I stress that it would certainly be the clear intention of this government that if something was not at least equal or possibly superior to this scheme that we would seek to continue this one.

Mr WILLIAMS: It is most interesting. The minister has told the house that it is the government's intention that this scheme or some other scheme should continue on into the future to encourage people to invest in photovoltaic cells. I sincerely hope that that is the government's intention, and the minister has said that it is.

The minister has implied that, whether or not we accept this amendment, there will most likely be needed at some point in the future, and probably before 2013 (the expiration of five years from when it is intended that this legislation will come into effect), the parliament will have to come back and address this matter again. The minister is suggesting that we will come back and address it because other events, possibly in the national sphere, will have overtaken this piece of legislation and—

The Hon. P.F. Conlon interjecting:

Mr WILLIAMS: Not international: the national sphere—I thought that is what I said—will have overtaken this piece of legislation and, as a consequence, the parliament would need to come back and have a look at this legislation and maybe readjust it to fall in line with a national approach.

Alternatively, the minister is suggesting that, if we accept the amendment that is put in the other place by the Hon. Mark Parnell and give this piece of legislation a 20-year life, events that may overtake this legislation will mean we have to come back prior to 2013, or in four or five years' time, and have another look at the legislation.

The reality is that, no matter what happens, if there is a national scheme which overtakes this piece of legislation, or if there is not, I believe this parliament will have to come back, probably in four or five years' time, and say: what are we going to do for the next period, whether that be another five years—and that seems to be the way the government wants to go—or whether it be for a longer period.

The issue at stake is: what signal are we sending? This legislation is all about sending a signal, it is all about sending a signal to those people who may be disposed to investing money in a photovoltaic generation system—it is about sending them a signal. With the feed-in scheme and the proposal in this bill that people would get a higher rate of return than what they are actually paying for electricity—and it is proposing 44¢—I am told that the payback time for a photovoltaic system is reduced down to about 17 years.

On average, if you invested today and the scheme was operational, the average installation on an average home with the average consumption and consumption characteristics, it would take about 17 years to achieve payback. What we are trying to do with this legislation is, first of all, bring that payback period back to a reasonable time so that people are encouraged to invest, because without this scheme that payback period is probably in excess of 25 years, which is in excess of probably the life of the photovoltaic cells themselves. I think you can buy them now with a guarantee of about 25 years, and they probably have a life expectancy of close to 30 years.

So, the whole point of this legislation is to send a signal to those who would be predisposed to investing to invest, in the knowledge that they are going to achieve payback. I am yet to be convinced that, if we put in legislation that the system only has a life of five years, that actually sends the right signal, especially when the government acknowledges that things might change and that, irrespective of whether or not we accept this amendment from the other place, we will probably have to come back within four or five years and revisit this.

I suggest to the committee that, in accepting the amendment (which the opposition supported in the other place), to give this piece of legislation a 20-year life sends the right signal—that people can invest with confidence. They can look at the legislation and know that there is bipartisan support from the parliament of South Australia in an ongoing manner for at least 20 years and that, if they invest today, they will be able to achieve payback.

If we accept the minister's proposition, and give a life of only five years to this measure—and the minister's statement is that it is the government's intention to extend it at some time in the future—I do not know that that necessarily sends the right signal. In fact, I am told that all people within the industry (the manufacturers and the retailers of this equipment) support the amendment that was made in the other place. They support 20 years.

These are the people at the coalface, and they are saying, 'This will give us the assurance to tell our potential customers that, yes, the Parliament of South Australia does intend that this scheme should come into effect later on this year and will be in effect for at least 20 years.' Irrespective of what other schemes may overtake it, they will only overtake it if they are better in the sense that they give even greater benefit to the people who are investing.

So, I think that, by supporting the amendment made in the other place, we will have a bill (and, hopefully, an act) that will send the right message and encourage people to invest in this new technology and do all the things the government suggests it is trying to do with this measure. The opposition supports the amendment made in the other place and does not support the motion moved by the minister.

Mr HANNA: I am sorry to hear that the government does not support the amendment to allow a 20-year guarantee for those who install photovoltaic cells and want to get the benefit of the feed-in law. One of the problems with the existing bill is that it fixes a date in June 2013 for the benefits to stop. Even if we talk about a five-year guarantee, it is only a five-year guarantee, as I understand it, for those people who install something in the next six months. As you get closer to the 2013 date, it is a guarantee for three years, two years or one year, until there is no additional benefit.

As it stands, the bill, if it is left at five years, really will have little practical effect. There is so little incentive for people to get into it, with the capital cost of installing the cells. If they cannot afford to do it for another year or two, or if they are planning to buy a house in a year or two and then install photovoltaic cells, they will get a guarantee of some feed-in repayment for maybe two or three years. So, effectively, it is little guarantee at all. It is very weak.

I am not doubting the sincerity of the minister when he says that something better may come along and I am not doubting the sincerity of the Premier in wanting to do something to improve renewable energy use in South Australia; however, if this bill is left as it is, as the government wishes, it will not have any effect. That is the problem. It will be just a couple of days worth of press releases and that is all. I do want this bill to have an effect. The upper house amendment adds 15 years to that 2013 date and gives the cut-off date as 2028. It means that people have some knowledge that they will get a benefit of repayment for the capital cost they are asked to contribute. If something better comes along it will supersede the benefit that is promised in this bill. It will not get worse. We would like to see a ratcheting up of benefits to people who wish to install solar panels, not offering them something today which is of minimal value. Again, I would urge the government to reconsider.

Certainly, I will go out to all the people I can tell and say that it is the government that is holding up this legislation, not the opposition, not the upper house and not any other group. If the government can agree to this there will be a lot of happy customers out there, that is for sure. The other problem with the 2013 date is that it provides scope for a couple of the big players in the electricity market to make appropriate donations to one or other major party or both major parties before the election—not that that should influence the decisions made in the next parliament, but it just might do that.

I must say that, if it were a matter of favouring any particular industry, I think I would rather favour the producers of photovoltaic cells with government policy than the big electricity players.

The Hon. P.F. CONLON: I thank the member for Mitchell for his comments. He at least brings a genuine view to the debate. It is somewhat annoying to hear the opposition members because for years their party has been the greatest stumbling block to addressing issues of global warming, clean energy—

Mr Williams interjecting:

The Hon. P.F. CONLON: Oh, sorry, get on with it! Here is the man who believes somehow that the tedious repetition of the one thought he has somehow makes it more convincing. He spent a lot of time saying the same thing over and over and he wants me to get on with it. I guarantee him that I will take a lot less time. What I will say to the honourable member is that he proves why we want a sunset clause, because—

Mr Williams interjecting:

The Hon. P.F. CONLON: See? He cannot listen in peace. He is just a small-minded bullying farmer from down in the South-East, not like those nice farmers like Ivan Venning, who is a good guy. The member for MacKillop will have to come out well in front before he ever puts photovoltaic panels on, unlike the member for Schubert. I come back to the point. What concerns me is that if in the next few years, as I believe is very likely, something intervenes to increase the payback time, or in fact there is a federal feed-in law, naturally we would want to come back to the parliament with a bill without this clause to adjust it because I do not believe that electricity consumers should overly subsidise those people through an unintentional duplication.

We are the only parliament to have a feed-in bill. What I do know is that, having seen its attitude on this, the Liberal Party is likely to oppose any sensible change to the law, because it opposes anything that is sensible. Its whole track record is that it opposes what is sensible. I would love to put their track record in opposition up against ours when we persistently supported things on their side which we thought were sensible. Here they play games; they invent reasons; they have arguments. Do members really believe that the Liberals have lined up with the Greens to improve a feed-in law because they genuinely like feed-in laws? If anyone believes that I have a bridge to sell them. It is completely contrary to their entire behaviour on this matter over a decade. But let me say—

Mr Hanna: It's the new Liberals.

The Hon. P.F. CONLON: It's the new Liberals, yes. We saw their performance today. I will not say more on this. I do not believe my arguments are more persuasive by dull repetition. I just make the point that we do this with the best motivation. It is the first law in the world. Certainly I have to say that, on these matters, the member for Mitchell has always dealt with them quite reasonably. He has been a person you can persuade to a different point of view if he believes that you have a genuine argument. Sometimes I do think that the Greens have a notion just to cut off the environment's nose to spite its face.

I have said enough. It is, I think, embarrassing to hear the new look Libs—who have been the greatest stumbling block to progress on these matters in the country—suddenly becoming the champion alongside the Greens, which convinces me why they would never deal genuinely with any bill we brought to this place.

Mr WILLIAMS: You always know when this minister and his colleagues have nothing worth while to say, because they attack the man. You always know when they do not have a reasonable argument, because they attack the man. One of the reasons the Liberal Party is supporting this is that we understand this is the first such piece of legislation in Australia and that we are the first state to legislate for this sort of feed-in scheme, and it will set the benchmark. Not only will it have an impact in South Australia but it will also set the bar for the rest of Australia. We do not want the bar set as low as the minister wants it set but a little bit higher. We are genuine, and that is why we are talking about the issue and not about the motivation for the piece of legislation.

Members interjecting:

The CHAIR: Order!

Motion carried.