Statutes Amendment (National Energy Laws) (Rules) Bill

Second Reading

Adjourned debate on second reading.

(Continued from 3 July.)

Mr KOUTSANTONIS (West Torrens) (17:11): It is good to be here speaking on this bill and I commend the minister for introducing it. I commend the ministerial council for its speedy introduction. One of the great frustrations of the Energy Council is—

The DEPUTY SPEAKER: Member for West Torrens, pardon me for interrupting, are you the lead speaker on this bill?

Mr KOUTSANTONIS: Yes.

The DEPUTY SPEAKER: Could you indicate that to the house, please?

Mr KOUTSANTONIS: I indicate that I am the lead speaker on this bill. One of the great frustrations of the ministerial energy COAG is the frustration of delay at the rate of change. When Dr Finkel was given a mandate by the commonwealth government and the MCOE (Ministerial Council on Energy) to do his review, one of my greatest concerns was the timeliness of the implementation of those reviews.

To say that the politics and structures of the National Electricity Market are Byzantine would be a compliment. They are archaic, undemocratic, difficult to navigate, difficult to understand and there are many little empires that people attempt to defend, which is completely understandable. There is an inherent conflict between the market operator, the Australian Energy Regulator and the Australian Energy Market Commission, and now we have an Energy Security Board.

The Energy Security Board has been tasked to implement the recommendations of Finkel—99 of them, excluding one—and to implement a new one. I have forgotten what it is called. It is Turnbull's latest incarnation—the NEG, the National Electricity Guarantee, which I suspect will be amended again in one form or another because it is in fact a de facto energy intensity scheme without, of course, the baseline set for emissions, but no doubt the national bodies will eventually sort that out.

What this legislation does is finally give the ministerial council, once there is unanimous agreement (which is no easy task) of all the NEM states, the ability to then agree to make a rule, which is done through the South Australian minister's lead legislator. My concerns about this when I was minister was the delay in attempting to get change through the COAG. That delay often took years—sometimes four or five years.

In fact, I think one reform that I saw through had been instigated by the Hon. Paul Holloway. So we are talking about long periods of time. Every time there is a review or a referral, it goes back to the MCOE, goes off to another agency, and the rule maker takes a long time to consider the implications of all this. What this does is allow a much faster reaction time to the problem at hand. Fundamentally, it goes to who is the decision-maker of the National Electricity Market?

One of the first things Josh Frydenberg said as energy minister at the first COAG meeting was that he wanted COAG to unanimously agree that ministers were responsible for the National Electricity Market regardless of the ownership of the assets. I thought that was a very interesting first gambit by the national energy minister. The reason he said that is: do not underestimate the illiteracy of people in the energy industry about the political process around rule making, the permutation of those rules and how the market operates, and, indeed, even amongst some bureaucracies.

We are very lucky here in South Australia to have some of the most well-versed and skilled public servants who understand this market. When they read it their ears do not bleed, but the eyes and ears of the people they explain it to bleed as it is explained it to them. It is very, very complex. This ignorance of how the system operates has allowed some behaviours in the market to flourish. Some of those behaviours in the market are reprehensible. The way some gentailers behave should be criminal, but they are allowed to get away with it.

As politicians attempt to reform the process, you run out of runway, you run out of time, because the process is so long. The whole idea—and I hope I am right about this—is to try to shorten the time between a unanimous decision of the council in rule making. If we were able to achieve that I will be very impressed but I am sure there are people, as we speak, who are going through this legislation attempting to find ways and means to still insert themselves.

One of the concerns I have about the ESB is its first foray into policymaking, which I think was appalling, and I told the Energy Security Board such. They appeared in a partisan way with the Prime Minister backing a policy of the commonwealth government which it did not have the power to do, which I thought was an appalling foray and was the spark for much of these reforms here today. I can tell you that in a bipartisan way across the national energy COAG there was universal condemnation of the way they conducted themselves, which is quite rare and, I thought, a very sad day for national reform in the electricity market.

However, that is in the past now and the NEG is on its way to the next COAG, and we will see how they go there. I have no idea how states are going to vote to implement the NEG. I know that this government agreed sight unseen to support the NEG and good luck to them. We will see how that operates.

I have grave concerns about the NEG operating in South Australia given the way it is structured, given that we are a gas state and we have generators setting the price. If you have the NEG load over the top of it you could have some very perverse outcomes in South Australia that could give market players with a lot of market power a lot more market power. I am very concerned about its applications in South Australia. But we will wait and see. We have been assured by the government that the NEG will lower prices and not increase prices in South Australia, so we will wait and see what its operations are.

In terms of this legislation, it is a national reform, so there is a very long tradition in the parliament of bipartisan support. I thank the minister, when he was shadow minister, for always supporting national reforms, which made the South Australian parliament an exemplar for national reforms. This is quite unique. What occurs at the national COAG is that when a decision is made the South Australian minister has the responsibility of legislating on behalf of the entire country here in the parliament.

That can be quite difficult, especially with time lines in the parliament, but there has always been bipartisan support. It would have been very difficult for the minister to always win the day in the party room, but I am very pleased with the way he conducted himself during that process. I offer the same bipartisan support for national reforms, whether we agree or disagree with them.

I want to make it very clear today, excluding this bill, that if we support national reforms because they are part of the COAG process it in no way implies political support for those processes, but we accept that if the national COAG decides unanimously, as it should, that all states will implement this change, we will support that. But, of course, we reserve the right, if elected, to then argue for a change in that policy. We should not differentiate this voting here with political support. I just make that very clear, as did the minister, about his support, when he was shadow minister.

Without taking up too much time of the parliament, I look forward to reining in the ESB and the bodies that operate the National Electricity Market. I am sure they await this legislation with eagerness—probably not—and we will see if this COAG can actually implement the recommendations of the ESB and the Finkel inquiry quickly, in a timely way, so that, in the end, consumers can actually get the benefit of lowering power prices. For far too long, since the privatisation of ETSA, South Australians have suffered under increased prices through no fault of their own.

There is nothing more frustrating for a consumer than when, no matter how much they improve the efficiency of their home use, they still see their power bills go up. There is nothing more demoralising. I hope these reforms have a speedy, unamended passage through both houses of parliament. I wish the minister all the very best in the implementation of the Finkel recommendations. I hope that we can get some quick decision-making done at a national level. This will not be the last time he is in the parliament making reforms. I will track with great interest his success or failure at the national COAG about reforms that he wishes to move.

The relationship at the national COAG is always interesting, as is how new ministers are brought up to speed with reforms. It is quite complex, but it is a very collegiate group of people and they work exceptionally well and often in a bipartisan way that is not seen. You do see a lot of bipartisanship, although I think that has started to fracture over the last couple of years, but hopefully that can be rebuilt relatively quickly and we still get some common-sense decision-making in the National Electricity Market.

I think the NEG's days are numbered. I could be wrong. I stand to be corrected, but I think, as a proposal, it will not succeed, but again I do not know when the Prime Minister is calling the election. If he calls the election before it is implemented, I think it is dead because I suspect he will lose the election, but I could be wrong.

If he is successful, I think the NEG will be implemented. Depending on the margin, depending on what the make-up of the commonwealth backbench is, there might be a very different emissions target. I do not know what the baseline will ultimately be, but I think there has been a lot of manipulation of the National Electricity Guarantee.

Fundamentally, what the Australian Energy Market Commission has done is convince the commonwealth government to accept an energy intensity scheme by another name with very different emission settings, which is fine, but I have always believed that the simplest solution is often the best. The simplest solution to this is trusting the science and the market-based solutions. The market-based solutions are an energy intensity scheme.

Alas, those days are behind us—it is the NEG. We will see if that is implemented in full. We will see what happens at the next federal election with the NEG. Again, this legislation empowers politicians and ministers who are accountable to people to actually implement change, which is the whole frustration of the COAG. I commend the bill to the house and I urge its speedy passage through the parliament.

The Hon. D.C. VAN HOLST PELLEKAAN (Stuart—Minister for Energy and Mining) (17:23): I thank all those who have spoken on the bill before me, but particularly the shadow minister, the former minister. It is well worth putting on the record that he was one of the key people to get this COAG agreement formulated. I think it is a very good, sensible agreement to put forward. He has articulated his views on this bill, and I concur. He has also articulated some other things, but I certainly agree with his comments on the bill.

It is a good, sensible thing and it is important to speed up the process. It is important that the ministers and the governments who are responsible for making these decisions have a greater opportunity to be involved in them in a more timely fashion. It is important that the Energy Security Board be part of that decision-making process as well, given the skill, ability and talent and the fact that they represent the other, larger, national NEM bodies.

So as not to delay the house, I also commend the bill. There is a series of 20 amendments, which are identical and can be moved in three blocks because they only apply to three clauses. It is the only change that I have, and I know that the shadow minister's office has been advised of them. Every single one of them is simply to remove the word 'proposed' from the relevant clauses and that is a technical change recommended by parliamentary counsel. It is essentially a small oversight from when the bill was drafted.

I thank everyone who has spoken, and I thank the opposition for their support of this very sensible development, which commenced before the last election. I am glad that the previous Labor government got it started and I am glad that the current Liberal government can get it finished.

Bill read a second time.

Committee Stage

In committee.

Clause 1.

Mr KOUTSANTONIS: Have these amendments been approved at officer level by the COAG?

The Hon. D.C. VAN HOLST PELLEKAAN: No, they were not approved at officer level, but it was considered by our department and by parliamentary counsel that they were a minor drafting issue and that it was not necessary.

Mr KOUTSANTONIS: It is my responsibility to ask a second question. Can the minister assure the house that the amendments do not change the intent of the ministerial COAG?

The Hon. D.C. VAN HOLST PELLEKAAN: Absolutely.

Clause passed.

Clauses 2 to 7 passed.

Clause 8.

The Hon. D.C. VAN HOLST PELLEKAAN: I have had advice from the Clerk that amendments 1 to 8, which all refer to clause 8, can be moved in a block. I move:

Amendment No 1 [EnergyMin–1]—

Page 4, line 31 [clause 8, inserted section 90F(2)(a)]—Delete 'proposed'

Amendment No 2 [EnergyMin–1]—

Page 4, line 35 [clause 8, inserted section 90F(2)(b)]—Delete 'proposed'

Amendment No 3 [EnergyMin–1]—

Page 5, line 6 [clause 8, inserted section 90F(4)]—Delete 'proposed'

Amendment No 4 [EnergyMin–1]—

Page 5, line 7 [clause 8, inserted section 90F(4)(a)]—Delete 'proposed'

Amendment No 5 [EnergyMin–1]—

Page 5, line 14 [clause 8, inserted section 90F(4)(b)]—Delete 'proposed'

Amendment No 6 [EnergyMin–1]—

Page 5, line 18 [clause 8, inserted section 90F(4)(c)]—Delete 'proposed'

Amendment No 7 [EnergyMin–1]—

Page 5, line 20 [clause 8, inserted section 90F(5)]—Delete 'proposed'

Amendment No 8 [EnergyMin–1]—

Page 5, line 30 [clause 8, inserted section 90F(5)]—Delete 'proposed'

Amendments carried; clause as amended passed.

Clauses 9 to 16 passed.

Clause 17.

The Hon. D.C. VAN HOLST PELLEKAAN: I move:

Amendment No 9 [EnergyMin–1]—

Page 8, line 28 [clause 17, inserted section 238B(2)(a)]—Delete 'proposed'

Amendment No 10 [EnergyMin–1]—

Page 8, line 31 [clause 17, inserted section 238B(2)(b)]—Delete 'proposed'

Amendment No 11 [EnergyMin–1]—

Page 8, line 34 [clause 17, inserted section 238B(3)]—Delete 'proposed'

Amendment No 12 [EnergyMin–1]—

Page 8, line 35 [clause 17, inserted section 238B(3)(a)]—Delete 'proposed'

Amendment No 13 [EnergyMin–1]—

Page 9, line 1 [clause 17, inserted section 238B(3)(b)]—Delete 'proposed'

Amendment No 14 [EnergyMin–1]—

Page 9, line 5 [clause 17, inserted section 238B(3)(c)]—Delete 'proposed'

Again, I move these en bloc. They are all identical and remove the word 'proposed'. Amendments Nos 9 to 14 all apply to clause 17.

Amendments carried; clause as amended passed.

Clauses 18 to 24 passed.

Clause 25.

The Hon. D.C. VAN HOLST PELLEKAAN: I move:

Amendment No 15 [EnergyMin–1]—

Page 11, line 15 [clause 25, inserted section 294G(2)(a)]—Delete 'proposed'

Amendment No 16 [EnergyMin–1]—

Page 11, line 19 [clause 25, inserted section 294G(2)(b)]—Delete 'proposed'

Amendment No 17 [EnergyMin–1]—

Page 11, line 22 [clause 25, inserted section 294G(3)]—Delete 'proposed'

Amendment No 18 [EnergyMin–1]—

Page 11, line 23 [clause 25, inserted section 294G(3)(a)]—Delete 'proposed'

Amendment No 19 [EnergyMin–1]—

Page 11, line 28 [clause 25, inserted section 294G(3)(b)]—Delete 'proposed'

Amendment No 20 [EnergyMin–1]—

Page 11, line 31 [clause 25, inserted section 294G(3)(c)]—Delete 'proposed'

I move amendments Nos 15 to 20 en bloc, as they all apply to clause 25 and they are all identical.

Amendments carried; clause as amended passed.

Remaining clauses (26 to 29) and title passed.

Bill reported with amendment.

Third Reading

The Hon. D.C. VAN HOLST PELLEKAAN (Stuart—Minister for Energy and Mining) (17:32): I move:

That this bill be now read a third time.

Bill read a third time and passed.

At 17:32 the house adjourned until Thursday 5 July 2018 at 11:00.