Bills

Statutes Amendment (National Energy Laws) (Emissions Reduction Objectives) Bill

Second Reading

Adjourned debate on second reading.

(Continued from 14 June 2023.)

Mr PATTERSON (Morphett) (15:38): I take the opportunity to speak in parliament about the Statutes Amendment (National Energy Laws) (Emissions Reduction Objectives) Bill 2023 and indicate that I am the lead speaker for the opposition. This bill comes into the South Australian parliament at a time of skyrocketing energy bills both for South Australian households and for businesses. In May, the Australian Energy Regulator released the finalised default market offer for South Australian, but also for New South Wales and Queensland, electricity users who are on standing offers. That default market offer had an average household power bill in South Australia increasing by nearly 24 per cent. That translates to an increase of between $439 and up to an additional $512 on South Australian households' electricity bills.

The electricity bill increases will take effect from 1 July—in only a couple of days, as it is already 27 June—and will heap additional pressure on families and their household budgets, especially now that we are in the middle of winter. Of course, the number of South Australian households on the default market offer is not the entire customer base; it is roughly around 60,000 households. The remainder of households here in South Australia are on contracts with their electricity provider, and the recommendation is that those on these standing offers try to shop around for better deals.

What we are starting to see in just the last two weeks—especially in my office, and I am sure in many other members' offices as well—is people writing to us or contacting our office saying they have started to see customers not on the default offer, customers who are on their own contracts with these electricity providers, now being contacted by their electricity retailer and finding that the new contracts are also going up substantially. In most cases, they are moving at least in line with that 24 per cent increase the default market offer went up by, but in some cases it seems to be much more; if they were on a contract that was quite low, there is a lot of catch-up going on.

This significant increase in household electricity bills is a crippling blow for families and the most vulnerable coming into winter—and we are in the middle of winter now. Coupled with what we are seeing with interest rate rises, rental increases and the cost-of-living crisis, it is making it really tough for South Australians this winter.

Some analysis has been done by the opposition in the lead-up to the state budget, and it showed that an average South Australian family with two children and an average mortgage is nearly $20,000 worse off under the Malinauskas Labor government, as living costs from interest rate rises or rental increases, petrol prices and food and grocery prices are all rising, with South Australia experiencing the highest inflation rate in the nation at 7.9 per cent. The $20,000 increase in the cost of living for families also did not take into account the electricity bill increases that are to come into effect later in the week.

Of course, households are not the only ones feeling the pain, as the default market offer for small businesses also showed an increase of $1,310. With the cost of business going up, this will have a big impact. I recently visited a restaurant with the leader, and it was quite clear that there is only so much a small business can cut back on to reduce their costs. In many cases, simply turning off the power is not an option: they need their fridges and freezers on all day every day so that they can run the business.

That $1,310 increase for business represents a 29 per cent increase for the average small business in South Australia. This is the biggest rise in the nation, and South Australian businesses deserve better. We have already had the highest unemployment rate in the nation, and we do not want to see businesses have to choose between paying their electricity bill or employing more staff. These price rises for business will also start to flow through into the goods and services they provide to consumers—and, of course, what consumers buy, in turn, ultimately feeds into inflation as well, so there are huge and ongoing concerns around these electricity price rises.

The federal budget that was handed down late last year by the government's federal colleagues showed that electricity bills were forecast to increase by 56 per cent over the next two years. That is in stark contrast to federal Labor's claim before the election that they would bring down electricity bills by $275. Those opposite have tried to deflect blame and not take responsibility at all by saying that this is all an east coast problem, but yet again, as I have demonstrated before, South Australia has the highest of the price rises of all states connected into the National Electricity Market in that recent default market offer in dollar terms. Of course, Peter Malinauskas, the Premier, had no plan at the election to ensure electricity supply was affordable and reliable, and now South Australian families and businesses are paying for it.

We also have the Treasurer saying on radio that it is up to the federal government to find a solution in the next 12 months, effectively saying, 'It's over to you, Chris Bowen,' the man who said that he would bring down electricity prices by $275. So these skyrocketing electricity prices under the Premier and this government are yet again a clear sign that we have returned to the very bad old days of Labor when we really did experience the highest power prices in the nation.

It is in this environment of skyrocketing electricity bills, when there should be a total focus on how to bring down household and business electricity bills, that we see these changes to the national energy laws arriving here in the South Australian parliament. They have come from the Ministerial Council on Energy, and this includes the federal and state energy ministers.

As I have said before, with these types of legislation South Australia is the lead legislator for the national energy laws. Now, we see these changes for including emissions reduction objectives into the objectives of the national energy laws being introduced here into our parliament. As I have said previously, the convention for such changes to the national energy laws is that the legislative amendments make their way through the South Australian parliament and then, in so doing, make their way across to the other jurisdictions, so I indicate as per convention that the opposition will not be opposing this bill.

In terms of the actual bill itself, it seeks to make changes to three energy laws: the National Electricity Law, the National Energy Retail Law and the National Gas Law. Each of those laws has an objective to promote efficient investment and efficient operation for the long-term interests of consumers. At present, these objectives are in respect of the price, quality, safety, reliability and security of supply. These are decided on by the energy market bodies as part of an efficient and economic efficiency framework.

The main effect of the change that is being presented in this amendment bill is to also explicitly add into the objectives in each of those energy laws I mentioned previously the need to also consider greenhouse gas emissions in relation to targets set by a participating jurisdiction. This change was consulted on between December 2022 and February 2023 and received a good number of submissions, some of those of course confidential and I have not had the chance to read.

At the same time this bill was introduced into the South Australian parliament only two weeks ago, I put out requests for feedback from stakeholders as well. Being such a short period between then and now, I have not received feedback significantly on this. However, as this progresses through both this house and the upper house, I am certain that it will come about and we will be able to further take a good understanding of what the feeling is here in South Australia and, of course, I will convey that on to my colleagues in the upper house.

I should say that in those submissions that were made, as I mentioned before up to February 2023, the point was well made by some of those submissions that the market bodies are already taking into account the reduction of carbon emissions when making their decisions. The Australian Energy Council made the point that the electricity sector is the only emitting sector that has made substantial reductions and also that this has all occurred in the absence of an emissions objective in the NEOs, having been driven by government policies and private sector investment decisions.

In terms of who the Australian Energy Council are (otherwise known as the AEC), they are the peak industry body for electricity and downstream natural gas businesses operating in the competitive wholesale and retail energy markets. AEC members generate and sell energy to over 10 million homes and businesses and are major investors in renewable energy generation.

The AEC supports reaching net zero by 2050. Of course, it has many members and one of those members includes the Department for Energy and Mining in South Australia, so we really should take their point seriously. As an example, the Australian Energy Market Commission outlines in its 2021 strategic plan that it takes into account emissions reductions. In its October 2022 paper, How the National Energy Objectives Shape Our Decisions, the AMC states that its 'decisions guide action towards a decarbonising, affordable and reliable energy system'. The AEC even then went on to make the statement:

There does not appear to be any case for amending the National Energy Objectives to require these regulators to have regard to emission reduction targets.

We have a number of amendments to the various national energy laws that have come through parliament in the last 15 months that really at face value make it look like changes are being made, but a lot of the feedback from stakeholders is that when rolled out practically they are not going to make a substantive change to customers especially. In this case, with these particular amendments, it is because the emissions reductions are already being pursued in energy systems.

From our perspective on this side of the house, the Liberal Party in South Australia have shown that we do not need to have emissions reductions as an objective in these energy laws to achieve practical reductions in emissions in the South Australian electricity network. Importantly, this has been achieved at the same time as prioritising reducing household and business power bills.

We saw over the four years that we were in government, from June 2018 to December 2021, the average South Australian household bill came down by $421, according to ESCOSA's reports on the average household electricity bill. Having policies that bring down electricity prices for South Australians will continue to be our priority focus on this side of the house. What is vital is that the changes to these energy laws that we are debating today do not lead to more electricity price increases into the future.

When we look at emissions and mitigation efforts that revolve around reducing emissions, it is a very complex problem, as I have said before in this house, because whether it is carbon dioxide or whether it is methane that is emitted into the atmosphere by any one jurisdiction or any one country it is not constrained just to that country or just to that jurisdiction. While we might reduce our emissions, if another part of the world increases theirs, the global atmospheric emissions continue to rise.

The Intergovernmental Panel on Climate Change released a number of assessment reports in late 2021 and 2022 dealing with this topic. This is, in fact, the sixth iteration of their assessment reports that give both scientific and technical knowledge of the effect of emissions and climate change.

The third of these IPCC assessment reports, Mitigation of Climate Change, demonstrates quite clearly the growth in global greenhouse gases from approximately 38 gigatonnes of carbon dioxide equivalent in 1990 to approximately 47 gigatonnes in 2005 and had increased to 59 gigatonnes or 59,000 megatonnes by 2019. It broke down the emissions into various regions and showed that eastern Asia made up 27 per cent of these emissions; North America, 12 per cent; Europe, 8 per cent; and Australia was bundled in with New Zealand and Japan in terms of our overall contribution.

Talking of Australia's emissions, in 1990 they were 630 megatonnes. They had fallen slightly to 625 megatonnes in 2005 and decreased further to 530 megatonnes by 2019. Within this, South Australia's emissions by 2005 were at 36 megatonnes and they had reduced by 2019 to approximately 24 megatonnes, so that is 24 megatonnes of the world's 59,000 megatonnes of emissions. Of course, that is not all just emissions based on the electricity sector—we have transport, industry, stationary power, agricultural emissions and fugitive emissions as well—but in terms of the electricity sectors percentage it made up less than 20 per cent of these 24 megatonnes.

There is a lot of talk around Australia around coal-fired generation, where that is going, and looking into some sources there. If you look at coal-fired power station capacity, in 2018 Australia had approximately 24 gigawatts of coal-fired electricity generation capacity. In comparison, the EU had 155 gigawatts, India had 220 gigawatts, the US had 261 gigawatts and China had 972 gigawatts.

Some of those jurisdictions (Australia, the EU and the US) are not looking to add any more coal-fired power station capacity to their generation mix—in fact, they are looking at retiring their fleets. China and India, on the other hand, are different propositions. China has under construction or planned approximately 200 more gigawatts of coal-fired power station capacity; India has either planned or under construction 65 gigawatts of coal-fired power station capacity. These stations are long-term investments; they will have a life expectancy taking them well past 2050, but more than likely well past 2060.

When you look at the areas on the globe that are looking to try to reduce their coal-fired power station capacity, we have the EU and the US markets doing so. They have nuclear-powered electricity as a baseload power source. I think if we are going to put emissions reduction into the national energy laws as an objective, then the country really needs to be open-minded about all energy solutions available.

Increasingly, there is the view in Australia that without having nuclear-powered electricity as a component of the energy mix it is going to be very difficult, bordering on impossible, for the transition to net zero emissions, especially if Australia wants to maintain an energy system that is affordable to both households and families, that allows for economic growth, that will really continue to provide for our standard of living here, provide for careers and jobs, but also importantly, especially with the geopolitical tensions in our part of the world, really maintain our energy security as well.

The leader mentioned in his budget reply speech as well that this conversation is starting. I suppose at this stage it is about what nuclear power generation would even look like in Australia in an Australian context. You would have to say it is not about the big, bespoke nuclear power plants, similar to what we saw built by the former Soviet Union; it is more looking around where the future of these may go—next-generation, small nuclear modular reactors.

The other point is that it is not intended that nuclear-powered electricity generation will provide 100 per cent of the country's generation, but rather it will just be part of a mix of generation solutions. Getting back to what I was saying before, we have to look at available technologies and look at all solutions to be able to ensure that if we are going to reach net zero, that it is done in a way that allows our economic prosperity to continue here in Australia.

Getting back to those IPCC reports, they do highlight some of the global challenges that come with mitigating climate change. You have developing nations such as China and India trying to lift their large populations out of poverty that, at this stage, is primarily tied to coal as an energy source, so you see the continuing and resulting increase in global emissions. Of course, South Australia has a vital interest in the success of the global efforts to mitigate greenhouse gas emissions. We really should be clear-eyed going into this that South Australia and Australia definitely have a role to play, but there needs to be a global effort from all countries in terms of trying to make progress.

The Minister for Energy in his second reading explanation made the observation that goes along the lines of what I was discussing around emissions and the trajectory here in South Australia. He said that in the 2021 financial year South Australia emitted 21.5 million tonnes of carbon dioxide equivalent, representing a 42 per cent reduction in greenhouse gas emissions from the 2005 financial year. South Australia has also met 100 per cent of its operational demand from renewable resources on 180 days in 2021. Of course, 2021 was the third year of the former Liberal government that played a significant part in these figures.

The minister then went on to proclaim that this was a legacy of the Rann-Weatherill governments. In fact, when you look at the actual legacy of the Weatherill government in which he was the energy minister, that legacy was an unmanaged transition to renewable energy that came at significant economic and social cost to South Australia. The electricity system became more and more unreliable, with blackouts occurring on a regular basis and, in 2016, the statewide blackout, where all of South Australia went dark, the first time that had ever happened in the world.

Over the four-year period between 2014 and 2018, seven million customer hours were lost to unscheduled load shedding. At the same time as the system was becoming unreliable, we had the nation's highest electricity prices. According to ESCOSA, prices for the average household rose by $477 between June 2016 and June 2018. It was a mess. That is really the only way it can be described, and this is what happens when emissions become the only priority.

They really need to be this trifecta of emissions, but price and reliability certainly need to be at the forefront of people's thought processes. The former Liberal government recognised the importance of an orderly, practical transition that delivered economic growth and also competitive power prices certainly within Australia. This required the right mix of interconnection, storage, generation and smart technology to balance supply and demand and to have grid stability.

Policies included working with industry to have the South Australia-New South Wales interconnector start to be built, the Home Battery Scheme and the Grid Scale Storage Fund. One of the focus areas of the previous government was to fast-track the construction of the interconnector between South Australia and New South Wales, which will provide 800 megawatts of capacity between the two states. This allows South Australia to export our excess renewable energy in times of high generation, when it is either sunny or windy, but it also helps to provide stability and reduce the likelihood of South Australia being separated from the rest of the National Electricity Market.

Our other connection to electricity markets nationally is via Victoria via the Heyward interconnector. We can see that when that goes over, it causes huge concerns. It happened only in November last year and we were effectively islanded from the National Electricity Market, and the consequent grid stability issues that caused really were perilous and could easily be overcome once we get this second interconnector in place.

The other important aspect to note with the South Australia-New South Wales interconnector is that when it comes online it is going to go a long way to South Australia generating net 100 per cent of our electricity needs from renewables, as it will export much more electricity than it imports. By virtue of that fact, it was attracting and is attracting investment into South Australia.

One great example I have spoken about before is Neoen's $3 billion Goyder South project. It will feature 1,200 megawatts of wind, 600 megawatts of solar and up to 900 megawatts of battery capacity. The first sod-turning for that was back in January 2022, and we look forward to it coming online at its fullest. Of course, Neoen at the time said that two-thirds of its investment—$2 billion of this—was because of the South Australia-New South Wales interconnector that was being built.

Additionally, South Australia has world-leading rooftop solar generation capacity, with the combined capacity on roofs fast approaching two gigawatts, and it is continuing to grow each year by at least 10 per cent. The interconnector with its 800 megawatt capacity will provide an additional market demand for any excess rooftop solar generation to be exported over to New South Wales. Just last month, ElectraNet released new modelling about the impact of the South Australia-New South Wales interconnector. It showed, and I quote, that households are set to save $127 per year on their electricity bills, while small businesses will save from $255 per year, with that saving becoming thousands of dollars for businesses that use significant amounts of electricity when the South Australia-New South Wales interconnector is energised.

We will begin to see some bill relief here in South Australia by mid next year when the first stage of the South Australia-New South Wales interconnector is completed, with the interconnector to be fully operational by mid-2026. This will be a huge relief for South Australians at the moment in the face of skyrocketing power bills that I spoke about earlier.

Another initiative to help with the transition, which the former Liberal government leaned into, was the Home Battery Scheme. This saw the world's largest per capita rollout of smart home batteries. South Australia is leading the nation in battery take-up, with approximately 20 per cent of all home batteries in the nation being right here in South Australian homes. Not only does this help cut power bills for the individual household but it will also help reduce peak demand for all users and, in so doing, cut costs for energy consumers, because invariably a lot of the costs that are experienced and that flow through to South Australians' bills are from big spikes at these peak demand periods, especially if there is no solar or wind at those times. That is exactly when batteries can come in and provide great utility.

We talked about excess energy and the ability of the interconnector to assist with sending that somewhere. The former Liberal government also recognised the opportunities of creating green hydrogen from renewable energy. We created the Hydrogen Action Plan in 2019 and then successfully secured federal funding for a hydrogen hub at Port Bonython. This is a sensible approach to what is a very new technology. It included national and global industry leaders who were committing their own significant capital and expertise to ensure the project is a success.

These and other policy initiatives cleaned up the mess we were left with when we came into government and ultimately saw zero customer hours lost from unscheduled load shedding over the period 2018 to 2022 as well. Importantly, it saw electricity prices fall over the four years, as I said previously, with ESCOSA reporting that for the average South Australian household prices fell by $420 between June 2018 and December 2021. This side of the house showed that electricity prices can be made the priority, and should be, as part of any energy transition.

At the same time, while reducing electricity prices over the Liberals' four years, emissions also came down as the percentage of electricity generated from renewable sources went from less than 50 per cent towards 65 per cent. That managed transition certainly gave us a lot of confidence that South Australia was on track to reach net 100 per cent of electricity demand by renewable energy by 2030. As I mentioned, the Project EnergyConnect, the South Australia-New South Wales interconnector, will certainly make big inroads into the final part of that process. In so doing, this meant that the former Liberal government set a goal of reducing emissions by 50 per cent by 2030 and achieving net zero emissions by 2050.

The Premier had no plan when he was the Leader of the Opposition that he brought to the election to ensure that electricity supply was affordable and reliable. In last year's state budget, the Malinauskas Labor government axed the Home Battery Scheme, they axed the Grid Scale Storage Fund and they axed Switch for Solar—all programs that helped to bring down electricity prices. At the same time, the government is going to spend $593 million on an experimental hydrogen power plant, which their own policy document claims to only target electricity costs for businesses, and this is not till the end of 2025. Even when asking the Premier in parliament very recently about how much the hydrogen power station will bring down household electricity bills, his response was that it will bring down emissions.

As was outlined at the start of my contribution, since being elected electricity bills have skyrocketed. The default market offer this year sees increases of 24 per cent for households and 29 per cent for business. These increasing energy prices under the Malinauskas Labor government are a clear warning sign that we could really end up going towards the same situation we have had here in South Australia previously under the former Labor government when we had the highest electricity prices in the nation and real issues around reliability in the grid. As I said before, we now have this legislation being introduced. It is not dealing directly with how to bring down electricity prices for hardworking South Australians and businesses.

I want to talk to the submissions that were put forward as part of this consultation process. Another one of those for this bill came from the Australian Aluminium Council where they made the statement:

The Council also notes that the NEO is often interpreted in favour of the long term, which can lead to short term disadvantage. For consumers, there is a higher degree of certainty around short term costs and a lower degree of certainty of long-term benefits.

So they are certainly concerned about prices rising so much in the short term that it makes the production of aluminium here in Australia cost-prohibitive compared with aluminium that is produced in other parts of the world that are ultimately much more emissions-intensive and have a larger impact on global emissions.

The consultation also investigated the framework for decision-making and decided to continue with the economic efficiency framework, which ensures that all components of the objectives—the price, reliability, safety and emission reductions—can be effectively balanced in decision-making. Of course, some of the stakeholders in their submissions wanted to elevate the emissions reduction component above the existing components, that is, above the price, above reliability, above safety; if that were to occur, it would have been a complete and utter disaster for the nation's electricity grid.

Ultimately, physics and power systems engineering will dictate if the lights stay on here in Australia and, ultimately, legislation that is put in place will not solve the real-world technical and economic challenges that the energy transition does present. Astoundingly, in the consultation paper for this bill that was released in December 2022, it stated:

Energy Ministers have agreed social equity and affordability issues are important matters for future consideration, however they are outside the scope of this process.

Again, I reiterate that prices and reliability have to be at the forefront of the energy market body's decision-making process and it would be a real mark of how out of touch energy ministers are, the South Australian Minister for Energy in particular, if they make the objectives of price reliability and safety take a back seat to emissions reduction.

The Australian Energy Council, as I said before, also made the point that the AEMC and AEMO already take into account decarbonisation when making decisions and even posed the question, as these bodies already have in regard to emissions reduction targets: what is the harm in including those targets as a national energy objective? They also gave an answer to the question they posed there, and their answer was:

The answer is litigation risk. There are, in Australia, numerous, well-funded organisations which frequently challenge decisions by regulators on the basis that the decisions do not have sufficient regard to climate change and other environmental risks. The challenges, although mostly unsuccessful, create considerable delay and expense for energy projects, at a time when the energy transition can ill-afford further delays and even higher expenses.

Of course, ultimately, those expenses and delays end up landing on customers' energy bills. The energy regulators, as you would expect, would have had regard to emissions reductions when making decisions, but importantly, going forward, these decisions will have to be really carefully recorded. Otherwise, there is a very real risk that a decision that has been made by the energy regulators has failed to take into account emissions reductions, and it could initiate a judicial review of the decision. Another litigation risk identified by the AEC related to:

If a regulator should, in the interests of energy system security, approve a measure which would result in a short-term increase in emissions, activists are likely to argue that the decision was 'unreasonable'.

We already have delays and non-investment in important dispatchable generation at a time when, even by AEMO's admission as part of its integrated service plan, the national electricity network will need to have an increase in gas-fired peaking generation to firm and support the massive increase in wind and solar. Certainly, by opening this up there is real risk from a litigation point of view that at the very least it becomes a disincentive, and at the very worst it stops vital generation capacity that is going to be able to support a sensible transition.

Another area that gives opportunity for litigation is around what constitutes a target. Is it the policy position of a government, or is it one that is legislated in the law by that particular jurisdiction? Of course, in South Australia at present, under the Climate Change and Greenhouse Emissions Reduction Act 2007 we have the principal greenhouse emissions reduction target to reduce by 31 December 2050 greenhouse gas emissions within the state by at least 60 per cent to an amount that is equal to or less than 40 per cent of 1990 levels.

The two existing renewable energy targets to increase renewable electricity use and generation by at least 20 per cent by 2014 were of course achieved in 2010 and 2011. I have spoken before that the former Liberal government had a different policy target for this from what was there in the Climate Change and Greenhouse Emissions Reduction Act. Our targets were to reach net zero emissions by the year 2050, an interim target to reduce net greenhouse gas emissions by more than 50 per cent from 2005 levels by 2030, plus a renewable energy target to achieve 100 per cent net renewable electricity generation by the year 2030.

You would have expected that, after declaring a climate emergency—I think it was over 12 months ago now in this place by those opposite—these targets that have been proposed by this side of the house could well have been legislated by the current government, but they have not. That may well lead to confusion for the market bodies around what the actual emissions objectives are in South Australia when the changes to the energy laws that we are debating today come into operation.

These are some of the serious consequences of what could arise from the legislation that the nation's energy ministers, both state and federal, are proposing by way of introducing emissions reductions into the national energy objectives of the nation's energy laws. Of course, South Australia is the lead legislator, and the convention is that, for these changes to come into effect nationally, they do so by passing through the South Australian parliament. As such, as I said earlier, the opposition will not be opposing these amendments to the national energy laws, but in so doing it should be made very clear that these changes will not make a practical difference to what is already happening in regard to emissions reductions.

This legislation is not targeting the very real need for South Australian families and businesses right now, which is to bring down energy bills. The government should be focusing on such measures. The Liberals showed that, without having to put emissions reductions into the objectives of the national energy laws, they could actually reduce emissions and at the same time bring down South Australian electricity bills—by $421, as I said, for the average bill—and bring back reliability and grid stability with zero customer hours lost from unscheduled load shedding into South Australia's electricity system. It is about time those opposite came up with a plan to do the same.

Mr HUGHES (Giles) (16:19): I also rise to support this bill, this important bill at a national level. It has been a long time coming. There is a lot to respond to in what the member for Morphett has had to say. In some ways, it is always interesting when bits are missed out and other bits are added in order to paint a picture which I would argue is not entirely accurate. I am going to read my prepared speech and then, time permitting, I might pick up on some of the themes pursued by the member for Morphett.

As parliamentarians, we often spend time dealing with issues of the moment, important but often transient issues, and sometimes issues that are not all that important but still have to be taken care of, but every so often we have the opportunity to make laws which will resonate down generations, and this is such a bill. This is a pivotal moment for Australia. It is the point where we put behind us the wasted years of inaction, the years of denying there is an urgent need to tackle climate change, the delays at the national level with the Abbott government initially, then Turnbull and then Morrison. It was nothing but disgraceful and reflected the divisions within the Coalition.

Hopefully, now we are going to get moving in a more coherent fashion. This is because the energy objectives are the foundation stones for the energy system, a system which does not merely keep the lights on for households but which underpins the whole economy. Adding emissions reduction to the objectives makes a formal change in direction. It shows that the Australian government now has the adults in charge.

I should point out, given the nature of this bill, the concurrence of the states. The Tasmanian Liberal government and the Coalition in New South Wales, as it was at the time, backed this change also. It proves that we want to catch up with most of the rest of the world and play our part, eschewing the coward's choice of saying we should do nothing because our emissions are but a small fraction of total global pollution. It sets us on course for cleaner, healthier and more prosperous times.

For years, the Liberal-National Coalition has dragged the chain, most particularly in the last decade, during which they failed to land a single coherent energy policy. I lost count of the number of policy initiatives that died on the roadside under the Coalition. I think it was something like 23 goes at energy policy at a national level and, as I said, that reflected the deep divisions in the Coalition at a national level. That inaction stifled investment, because businesses wanted to move ahead but did not know what the rules would be.

It is worthwhile reflecting upon that period of Coalition rule. For every four units of generating capacity that exited only one unit of generating capacity was added, because of the lack of investment certainty. We see the disastrous consequences of that today with Australia. This is a country with bountiful energy resources, yet we have been left vulnerably exposed to the international shock caused by Russia's war on Ukraine, a shock that has sent energy prices sky-high here for both consumers and businesses.

It is interesting, reflecting upon that once again, the opposition federally, the initiatives taken by the current federal government to put a cap on gas prices, to put a cap on coal prices. If that had not happened, we would have sacrificed a significant proportion of manufacturing industry in Australia. We can look at just my electorate. I had a meeting with GFG, LIBERTY Steel, to discuss what the impact would be if a cap had not been put on gas prices, and the impact would have been huge. We were talking about millions and millions and millions of dollars of an impact.

It is always interesting when we talk about prices. Who was the gentleman who wrote a book about electrifying everything—Saul Griffith. In the book he has done in Australia about electrifying everything he has a really interesting graph. If you look at energy prices in Australia, for many years they were relatively stable but they started to go up—and go up significantly—not when renewables were introduced but when we corporatised, privatised, our essential services, including electricity. Once we did that we changed the rules of the game.

When we privatised, that had a detrimental impact, over time, on prices. As part of that whole push, that whole micro-economic reform, we introduced a National Electricity Market, and the combination of the two things have changed the nature of energy production not just in this state but nationally, and it had an impact on prices. The privatisation of essential services is nearly always a bad way to go.

If you want an example of a state where prices have been relatively stable, look at Western Australia. For obvious physical reasons they are not on the National Electricity Market; they did something else and introduced a gas reserve. They looked after the long-term public interest in Western Australia and did not put the interests of the resource companies ahead of the public.

At the time they were vilified by the Howard government. When the then Carpenter Labor government introduced the gas reserves they were vilified by the Howard government and they were vilified by the corporates, by the resource companies, that said they would not invest in Western Australia in the future. Well, Western Australia was prescient: its gas prices went up last year by 1 per cent. They managed to insulate their economy from what was going on on the eastern seaboard, which is exposed to international prices when it comes to gas and, to a significant degree, when it comes to coal. There is a really valuable lesson there; a really valuable, real-world lesson.

Climate change denialism has run deep amongst Liberal members from South Australia from the days of the likes of Nick Minchin, a strong climate change denier, and Alexander Downer through to the bizarre claims of today's South Australian federal MPs like Alex Antic from Conspiracy Central. While a few lost souls on the furthest fringes are still calling for coal, it is interesting to note that by and large the far right have largely abandoned their calls to extend the coal era.

There are no longer columns in The Australian pretending we can turn back time—or maybe there are still one or two columns in The Australian that think they can turn back time—but they still fail to accept that the transition to clean energy is desirable and, hopefully, inevitable.

Locally, in South Australia the B team, confined by the Liberal Party to state politics, were seduced into complacency during the four years they occupied the Treasury bench. They bet heavily on connecting us to New South Wales without realising that that state's wholesale power prices were on the way to being higher than in South Australia. It is interesting when you go back to look at wholesale prices in the various states and how they have changed over time. This bill draws a line, and it is time to end the denial. Even though denial is less common now, we still have a muddying of the waters in order to generate delay when it comes to the needed transition.

I agree with the member for Morphett that this has to be a global effort and that there has to be far more heavy lifting on the part of a number of nations. It is interesting when you reflect upon what China and India are doing but, to a degree, you have to bring that down to the per capita emissions for those countries. It did give us the percentage. However, these were current percentages when it came to emissions. Greenhouse gas emissions, especially CO₂, is resident for a long time in the atmosphere, and the legacy of Western countries that industrialised first is still with us in the atmosphere and still contributing to global warming.

I would hate to be a scientist who has built a career around atmospheric physics and the other associated disciplines. They have been warning and warning us now for many, many years. When we look back to probably the mid-1980s or 1987, the evidence was fairly definitive that the probability of serious climatic change would be locked in if we did not change. Since that period, we have emitted more on a global level than in all the previous years since the Industrial Revolution. In a couple of hundred years of emissions, we have managed to outstrip that since 1987, and that is deeply concerning.

There is a note of hope because it looks like this year, when it comes to renewables globally, there is some very significant stuff going on. Indeed, when you look at how many gigawatts have been put in in China, and, to a lesser extent in India, that is encouraging. When you look at a number of other nations around the world, that is encouraging, but there is still a hard challenge ahead of us.

So let's look at what these reforms will do. They will oblige the energy bodies to consider the emissions effect of any decisions they make. That is, the Australian Energy Market Commission, the Australian Energy Regulator and the Australian Energy Operator will rank emissions reduction alongside the other objectives of price, safety, reliability and security of supply. They are all incredibly important because, if we do not get that right, public confidence in the transition will decline, and that in itself will cause delay.

As I said, when we start talking about price we have to start looking at something more fundamental. We Balkanised our electricity system: we privatised our electricity system. This is an essential service; it should be in public hands, but the horse has bolted from the stable. It is a bit hard to see how it can be stitched back together in this state and in other states. This is not some harebrained scheme to only consider emissions as some advocates demand.

The market bodies must avoid the risks of action that precipitate unintended consequences. They must plot the transition in an orderly and considered way. Also reflecting once again on the member for Morphett, some of the history is interesting. There was a blackout—that serious blackout. I remember being at the steelworks a day after the potential serious consequences that they were facing, and Minister Koutsantonis was up in Whyalla as well. He understood how serious it was.

That blackout was not due to something integral to the transition towards renewables. Indeed, when you come to look at some of the major blackouts globally, one of the biggest involving 56 million people was in the north-east of the United States—not a renewable project in sight. When you talk about wind or solar (there was some hydro), the transmission assets tripped and that very large market was plunged into darkness. There are a number of other examples of that.

The other issues of reliability were examples of load shedding where the private operators would not utilise the generating capacity they had because they did not believe it was in their interest to do so. There you had the profit motive overriding what was in the public interest. That type of load shedding would not have happened, I believe, under ETSA even though you can go back to that period when occasionally there was some load shedding.

It is also interesting to reflect that prices have been marginally higher in South Australia historically and that is because of the nature of South Australia. You have the population concentrated in Adelaide, but we provide electricity to places like Ceduna, very distant from Adelaide, and we do so for a very good reason, on the basis of equity, that whether you live in Ceduna, whether you live in Whyalla, whether you live in Port Pirie, whether you live in Mount Gambier, you are going to pay the same for electricity as people do in Adelaide—a very good socialist principle, in my view.

This is a fundamental acknowledgement that the transition must take place. These bodies hold the keys to which investments will get priority, how costs will be apportioned amongst consumers and businesses and how fast the transition will be. Up until now, there has been an underlying current trending toward decarbonisation, but the market bodies have not been able to take these into account in their formal and cautious methodology. That changes now. It will unshackle investment and deliver benefits all the way from the household level to Australia's contribution to saving the planet, and we should do our bit.

Already, Europe has established the Carbon Border Adjustment Mechanism, which is an interesting mechanism and something we as a nation should look at. If we are going to make that transition, we do not want to disadvantage our hard-to-abate sectors or at least hard to abate in the short to medium term. We need to protect those as Europe is going to do with its hard-to-abate sectors for the time being. Of course, the US is pouring billions into clean energy with the Inflation Reduction Act. It is a massive investment taking place in the United States that might well influence where people choose to invest when it comes to clean energy.

China is actually leading the world on the installation of wind and solar, and I had a bit to say about that the other day. The sheer scale of what they are doing now—albeit they are still adding coal, and hopefully that is going to diminish over time—when it comes to solar and wind is mind-boggling. They have added more this year than the whole of the installed capacity in the National Electricity Market in Australia. That is the rate of change. That is why the International Energy Agency is saying that 2023 might be a pivot year with regard to investment in renewables globally, but we still have a long way to go. I do not underestimate some of the technical challenges and the resource challenges as well that go with the transition.

Australian energy primary producers and manufacturers need to be positioned to take advantage of these new global trends if we want trade to flourish. This bill helps Australia to clean up our act and give our businesses a chance to succeed, and you do not have to take my word for it. A whole raft of organisations—some of them major fossil fuel organisations, major gas infrastructure companies, a whole range of institutional bodies, peak bodies—have come out in support of this change in direction or this enhancement of the direction we were going in. So it is incredibly fortunate there has been a change of government at a federal level.

Mr PEDERICK (Hammond) (16:39): I rise to make a contribution to the Statutes Amendment (National Energy Laws) (Emissions Reduction Objectives) Bill. In May this year, commonwealth and state energy ministers agreed to amendments to the national energy laws to incorporate an emissions reduction objective into the national electricity objective, national gas objective and national energy retail objective, respectively.

As with previous changes to national energy laws, South Australia is the lead jurisdiction and, as per the convention, the legislation has been approved by the Energy Ministers' Meeting prior to it being introduced in the Parliament of South Australia. It is interesting that in regard to this, and in his second reading explanation, the minister stated:

In the 2021 financial year, South Australia emitted 21.5 million tonnes of carbon dioxide equivalent, representing a 42 per cent reduction in greenhouse gas emissions from the 2005 financial year. South Australia also met 100 per cent of its operational demand from renewable resources on 180 days in 2021. That was the legacy of the Rann-Weatherill governments.

In fact, the legacy the Weatherill government left the state was an unmanaged transition to renewable energy that came at significant economic and social cost, including the statewide blackout in 2016 and the nation's highest electricity prices.

What we saw with the statewide blackout in September 2016, when we were sitting in this place, was the ineptitude of the government of the time. They were overseeing a situation where essentially, if you put it in very simplistic terms, one circuit breaker went out and threw the whole state out. I know people who used to work in the old power stations at Port Augusta. There used to be a system, five systems across the state—what was going on, that was pure genius that we lost the whole state.

The former Liberal government recognised the importance of an orderly, practical transition that delivers economic growth and competitive power prices. Policies included working with industry to have the South Australia-New South Wales interconnector built, which was interesting because Labor were all for this until they decided they were not for it. I am so pleased to see the interconnector well on its way, as it will help when we have an excess of renewable energy, because we do have a lot of renewable energy in this state and more going in all the time, with more wind turbines and more solar. A lot of solar is being put in around Tailem Bend, which used to be part of my electorate but is now in the member for MacKillop's electorate, and other areas of the state. Certainly, there are some new solar-generating power stations along the Murray River.

The Home Battery Scheme and the Grid Scale Storage Fund were part of our former government, which at the same time led to the emissions figures quoted by the minister in 2021. Between June 2018 and December 2021, ESCOSA reports show that the average electricity bill for households fell by $421. We saw that the current Premier, Peter Malinauskas, had no plan at the election to ensure that electricity supply was affordable and reliable. In last year's state budget, the Malinauskas Labor government axed the Home Battery Scheme, the Grid Scale Storage Fund and Switch for Solar.

Since Labor was elected, electricity bills have skyrocketed in this state. In May this year, the Australian Energy Regulator's default market offer was released and it showed a nearly 24 per cent increase in South Australians' household power bills of up to $512 and, for businesses, an increase of more than $1,310—a nearly 29 per cent increase. This is outrageous because it is putting livelihoods at risk and it is putting businesses at risk.

We have a lot of virtue signalling about where we go. We have made our position quite clear where we want to go on the transition to renewable energy, and we are well on the way. We are well on the way, but we have price caps put in place for both coal and gas. Do you know what that does, especially in the gas sector? It restricts exploration, it restricts access to more gas so that it can be drilled for, keeping the price of that gas down. The simple fact is that gas is 50 per cent cleaner than coal. We should be encouraging more exploration and we should be encouraging more exploitation.

For all those out there, the anti-frackers, the anti-gas, the anti-coal, good luck, because I bet there are plenty of members on the other side of the house who are getting those phone calls, those contacts from constituents who simply are not able to pay their power bills. As they get the notices that are coming through now from their power providers, they are not just up by 24 per cent or 29 per cent, but some quotes are coming through at a 50 per cent rise and moving forward. It is outrageous and I do not know how we are going to keep people in their homes. I simply do not know how people are going to be able to afford the power prices. It is just ridiculous.

We have Victoria, where essentially they have banned exploration. We have protests in Western Australia, protests in the Northern Territory, or north of the Northern Territory, by different groups fighting against gas development. These are just crazy times. We have had the discussion about the billions of people in China and India who are quite happy to burn coal, and a lot of that coal gets exported from Australia. Only a few years ago, Western Australia contributed $260 billion to the national economy, and it is probably over $300 billion now, which represents probably around 20 per cent of the financial capability of this country.

We see Queensland with their coalmines with a $12 billion surplus. It was interesting when we had the federal elections in 2019, how many of those Labor coalmining seats came over to the Liberal National Party because of the anti working people policies of the Labor government.

The Hon. A. Koutsantonis interjecting:

Mr PEDERICK: Yes, I support the transition but let's see some way how to get there. We just heard from the member for Giles about why the costs are dearer in South Australia because we do transmit power right across the state to Ceduna. Well, what a case for promoting the cause of small modular nuclear reactors so we can work to a zero net gain in clean energy, so we can work to clean energy and work forward in a proactive way. The minister laughs, because he's got no idea.

The Hon. A. Koutsantonis: So the four years you were in office, where was the nuclear reactor then?

Mr PEDERICK: He's got no idea, and I hope there are plenty of people going into his electorate office complaining about the high bills that they are about to get, because I know for a fact that there are plenty of people getting told that they will have a 50 per cent increase in their power bills. We have to be a lot smarter in this country when we rely so much on the many billions of dollars of exports for the coal and gas that we export while we are crippling our own community, not just in this state but right across the country, but without a real outcome for the private citizens of this state and this country so that they can afford to stay warm, stay dry and feed their families. It is just outrageous.

There is not a real plan for that. I can see when the power bills start coming through in September, and then as they go through the rest of the financial year, we are going to have more and more people homeless. We have the cost of living crisis already which is crippling people and they are about to be crippled more by these excessive power prices.

We have to have an orderly transition, and we do have to have a look at real outcomes so that we can get to zero emissions, but it is outrageous that we do all this, crippling our economy, crippling our people's capacity to pay, but at the same time our economy is so reliant on these exports of coal and gas. It will be interesting where it all ends, but I really am concerned for the good people of this state that they can pay for their power.

Mr McBRIDE (MacKillop) (16:50): It gives me great pleasure—and probably sadness and frustration—that I am going to be speaking on a topic not in a way that will be detrimental to any political party or any government in particular but in general terms of the country's issues, and perhaps this state's issues, in regard to energy.

When I sat in the party room yesterday and said to our party, 'Why are we following suit? Why don't we oppose this and question the validity of such proposals and how this is worked through?', they said, 'There's a national agreement. We want to fall into line.' If we were in government, we would be part of this process federally. We would be working together, like the Labor state government is, on a national front with the other state jurisdictions and the federal government on what the commonwealth and state energy ministers agreed to and the amendments that fall under the Statutes Amendment (National Energy Laws) (Emissions Reduction Objectives) Bill.

As one of the few people in this chamber—and not the only one, and I certainly do not think that I am—who very much belong to a very old, conservative business, I want to say that costs and expenses are one of the most important driving forces for a business to be profitable. Probably it is no different from a household budget. When your costs outdo and outweigh your income, when they outdo your returns, things start going pear-shaped for not only households but businesses across the board.

Energy for this state was really highlighted through the Playford years when they built the Port Augusta coal-fired power station, which probably revolutionised the state with its reliable, cheap, affordable energy, and then put in a grid network right across the state that still functions today in a way that looks after those in Ceduna to those in Adelaide to those in Mount Gambier. It was a foresight that held the state in a position for huge opportunity and growth. No doubt it had its ups and downs through those periods as well.

What I am really wanting to speak to here is, no matter whether you are a Labor government or a Liberal opposition in a small state like South Australia, whether you belong to a Labor or Liberal political party in Queensland or even on a national front, I think it is imperative that governments start waking up and realising that the people who are driving this—making these rules and regulations, putting this in place and putting a huge amount of speed into this changeover to renewables—need to take a long, hard look and ask themselves about the sensitivity of the speed that this is being rolled out, with the technology that is keeping pace and where we are going with prices and costs to businesses, families and households.

If you look at the end of the spectrum and what the result is on people's lives and budgets, businesses' future prospects and their vulnerabilities—costs are going up and so forth—what really stands out is that there must be something going wrong for these prices to be rising at way beyond inflation. We can say there is a war on and, yes, that might have captured energy prices around the world and, yes, it is out of our control, just like I have to deal with seasonal fluctuations as a farmer, just like I have to deal with commodity prices that are on a world scale and beyond my ability to change.

Those sorts of things that come along like a war between Ukraine and Russia, again, are outside of Australia's energy market and there is no opportunity to change or to administer any sort of outcomes that are different to what is happening because of this. But you would think that the experts and the bureaucrats and the energy providers might be able to sit back and recognise the end result, what prices the grid is actually charging households, families and businesses, and that it cannot continue to do so in this vein.

If we take into account, as has been said by the other speakers—and no doubt the energy minister can say this too—we have a goal about renewables and we have a goal about carbon. Yes, we want a clean energy grid by such a date with such an outcome, whether it is 2030 or 2050. They can be absolutely magnificent goals and represent an achievement that maybe the voters and the electors said, 'Yes, we would really love a taste of this.'

But then I would ask those who believe in such goals at such a pace and time frame: does it absolutely work? Does it meet the agenda of looking after the most vulnerable, retirees, those who are invalid pensioners, those who are on the social welfare system? Does it work for the working class and perhaps what they are now calling the working poor? Why are they the working poor? Both partners in a marriage can be working, they might own their own house or they might be renting, they are seeing both interest rates and rents rise, and they are seeing energy prices go up. The feedback is that they are working for nothing as the cost of living rises.

I know the Malinauskas Labor government is fully aware and cognisant of this trend and these costs and so forth. You see this roll out and see that the state and federal government have got together on 19 May and imposed more regulations, more restrictions and even bigger goals and earlier goals about what energy is going to be produced under, and how we are going to be able to market the fact that our country and our states are leading the world in renewable and low-carbon emissions in their electricity grids, yet the fundamentals out there so that people can work and use this electricity grid are failing all around them.

This is the thing that I really do not understand, in the sense that I can accept that we are a very clever species as the human race. We have developed and changed and we do that faster than any other species on this earth. I know that as we are challenged throughout the next 10, 20, 50 or 100 years we will develop the processes in place, whether it be hydrogen, whether it be a combination of both solar and wind energy—and whether nuclear needs to play a role in this or not is yet to be determined. I think it needs to be seriously considered, that is all.

I have heard voices in this parliament say, 'Why didn't the Marshall government pick up on this?' There are lots of things I could say as to why the Marshall government did not do it—I could, but this is not the time. What I will say is that I am hoping the other side will look at any potential answer that will address these high-cost energy prices, whatever that may look like, and put some sort of foresight into this energy grid. Does it require nuclear? How long would that nuclear last? Will hydrogen meet the needs of cheaper power generation and back up what batteries cannot? They need to look at all these sorts of things.

I have heard on the other side, too, the member for Giles, who talked about mammoth new renewable energy projects. In fact, what we consider huge for our state and perhaps even huge on an Australian scale can be small on the world scale. The rest of the world is moving down this path as well in a very fast fashion. It would be very interesting to see where our energy costs are going with respect to the rest of the world's energy costs, and are we still affordable or are we way off the spectrum; are we heading off the spectrum?

This comes back to the point that I talked about really from the start. When you talk about businesses, talk about families and talk about households, governments of all jurisdictions—I can even say local government, state government, federal government—we all have a responsibility if we are going to manipulate a market and move such clauses like goals and time frames and deadlines. We also must take responsibility for the consequences of these sorts of things. I cannot understand why any government can hang its hat on one goal, and this may be a beautiful goal, being a carbon neutral, a carbon-free energy grid by such a date. If that date was extended by five, 10 or 20 years, then yes, you might say there would be more carbon in the atmosphere for such a period and that would be devastating, but is it as devastating as seeing one million of your population out in the cold?

They have no roof over their head. They cannot afford to buy food, cannot afford to turn the lights on, cannot afford to heat or cool their houses and cannot afford to pay the rent; as we already know, we have a housing shortage. I do not understand where anyone gets off on that goal that I have just talked about, renewable, carbon-free energy from such a date, compared to the toll that may be occurring to our most vulnerable people in one of the wealthiest, best living countries in the world.

I will finish off by saying to the Labor state governments, in South Australia and around the rest of Australia, and to the Labor federal government: please do not have the wool pulled over your eyes by bureaucrats and businesses that perhaps can see some sort of windfall gain, be it financial gain or be it kudos from the fact that we could be the most green, renewable country in the world with our energy grid, but we lose half the housing and half the people in that area.

They fall into some sort of safety net. They need help or cannot manage their costs, lifestyle and living, but they want to participate in our society. They want to work in our society, they want to have a family in our society, but they cannot turn the lights on. I ask all governments in this country to give serious consideration from a business point of view to the fact that costs do matter and that perhaps the goals that have been set in place are a detriment to that.

The Hon. A. KOUTSANTONIS (West Torrens—Minister for Infrastructure and Transport, Minister for Energy and Mining) (17:01): I have noted with interest the remarks of members. Just so we are clear about what it is we are debating, we are not debating small thermonuclear reactors. We are not debating the cost of living, although I accept it is an important issue, and I applaud the passion with which the member for MacKillop has argued on behalf of his constituents. I do point out to the shadow minister and his other colleague the member for Hammond that the enthusiasm they have for small modular reactors was missing between March 2018 and March 2022.

I also note that the passion for nuclear energy and the nuclear life cycle was missing completely when there was a royal commission in this place, conducted by the then Labor government, where we wanted to look at all aspects of the nuclear fuel cycle. Members opposite ruled out every single one—every single one. Now, while we are talking about a piece of national reform that simply means to change the rules and aspects of the way we look at infrastructure being built in the grid to take into account carbon, it has become a proxy debate for all sorts of things.

I applaud members' enthusiasm for their contributions but had there been potentially a stickler for the standing orders who might have got up and moved points of order about relevance, that might have been successful. I, of course, am not such a stickler for the standing orders. I like to see a thousand flowers bloom and see debate take off. I thank the shadow minister for his remarks. I understand he wishes to go into committee to pose a few questions of the government on this reform.

I do want to call out one thing. I do not want to use the term 'dangerous', but it is potentially unprecedented. Just to be completely aware, these reforms began long before I became the most recent energy minister. These reforms were agreed to by the New South Wales Perrottet government and the then Liberal Tasmanian government. The current Liberal Tasmanian government has endorsed these changes.

This is a bipartisan piece of work. I know that the Liberal Party had a debate in its party room considering not supporting this legislation and breaching the covenant that governs the lead legislator status of the nature of these reforms. South Australia is the lead legislator in the energy sector and the lead legislator for national heavy vehicle and rail, and these are important reforms held inhouse within South Australia and give South Australia a level of pre-eminence.

For the entire time the Labor opposition was in opposition—for those long four hard years—we never once opposed a national reform, although it was our right to do so, on the basis that in principle these are national reforms. I just say to the member for MacKillop: I understand his passion, I understand his concern, and he is probably one of the few rare members in this house who takes up the true meaning of the word 'liberal', which means it gives him the ability and opportunity to speak freely about the things that matter to him—probably the only one who exercises that right; the rest behave like a lot of Labor MPs, using solidarity and basically caucus rules applying a discipline on them.

The member for MacKillop, whose father or grandfather I understand was one of the founding members of the modern Liberal Party, has kept that culture in place, whereas I suppose other members are more inclined to toe the party line. On that basis, I applaud him. I do not necessarily accept the merits of what he is saying, and if one day nuclear power is considered appropriate for Australia this legislation will mean that all that development will need to take into account the carbon emissions—that is all it does.

It is a momentous piece of legislation and an important one. I thank the opposition in advance for its support for speedy passage through both houses of parliament. I commend the bill to the house and I look forward to the committee stage of the bill.

Bill read a second time.

Committee Stage

Clause 1.

Mr PATTERSON: As I referenced earlier, a number of submissions as part of the consultation for this amendment bill made the point that the Australian Energy Market Commission, the Australian Energy Regulator and AEMO already take into account decarbonisation when making their decisions. One submission, from the Australian Energy Council, stated, 'There does not appear to be any case for amending the national energy objectives to require these regulations to have regard to emissions reductions targets.' Bearing that in mind, how much more will this bill reduce emissions in the electricity market and gas market than would otherwise occur?

The Hon. A. KOUTSANTONIS: My advice is that there is no formal carbon target; it is regarded as a case-by-case basis, where they will be reviewing every proposal on the basis of taking into account its carbon emissions. You said earlier that they already take carbon into account. I am not sure where you were quoting from. Could you—

Mr PATTERSON: The Australian Energy Council, their submission.

The Hon. A. KOUTSANTONIS: The Australian Energy Council submission? I am not aware of what regulation or energy law they are referencing, but this codifies that all three bodies will take into account carbon on a case-by-case basis. I think AEMO put out some reports that talk about carbon emissions in certain scenarios, but this is the national energy law being amended to mean that carbon will be considered on all proposals.

Mr PATTERSON: On 1 July, we will see the new AER default market offer come into place and see South Australian households and other households throughout the country have determinations on their power bills if they are on standing offers. In the case of South Australia, households have bill rises of up to 24 per cent—$512—and, as I said, other households on contracts will also see their power bills rise. What advice have you received about what sort of effect including the emissions reduction objective into the national energy laws might have on household electricity bills? Could it reduce them? Could it increase them? Could they stay the same?

The Hon. A. KOUTSANTONIS: The objectives that we currently consider when we are contemplating any investment in the grid require a framework around price, reliability, safety, security of supply, quality and now we are adding emissions. The framework will still require consideration on price. I do not anticipate this will add cost at all. If the opposition has evidence that it will, I would like to see it, but I do not have any before me that it will increase prices.

What is increasing prices in Australia and what is increasing prices around the world, as much as people hate to hear it, is the conflict in Ukraine that means 360 million Europeans who were once bathing in Russian gas, cheap Russian gas, have seen that gas turned off to a large extent and are now seeking gas from other sources, which has created a supply shortage around the world, and that supply shortage means that prices have increased. Australia's gas prices are internationalised, and that is what is seeing price increases in Australia.

It is not some secret plan. It is out there for everyone to see. The events coincide with the increases. Because there was less gas available in Europe, coal became the dominant form of generation in Western Europe. Record levels of coal were being used in Europe. Coal prices went up. There were coal shortages through shutdowns in New South Wales and Victoria. There were planned outages and unplanned outages. That all coincided with these dramatic international events that led to a very cold winter last year, supply shortage in coal and gas and a price shock that pushed prices up.

Some of those matters have been resolved through the code of conduct being implemented and the price cap being put on and the stabilisation of a lot of that plant and equipment that was out, but to link this bill with the international price shocks of war in continental Europe I think is a stretch. I am not saying that you have done that; I am just saying I think for some commentators it is a stretch.

Mr PATTERSON: I mentioned household electricity bills and gas bills, and then we are also going to see in July increases for businesses as well for the default market offer that saw South Australian bills for businesses on default market offers increasing by $1,310, or 29 per cent, and others on contracts seem to follow this price rise.

Other points that have been made by industry bodies such as SACOME are that, while sometimes householders are shielded from some of the ancillary charges—frequency control, voltage control—businesses are much more exposed to those spot prices and carry, they say, a disproportionate burden in terms of those that come about obtaining grid stability as we move through renewable energies. Again, what advice have you received around the impact of including emissions reductions as one of the objectives specifically on business electricity bills?

The Hon. A. KOUTSANTONIS: In terms of those small businesses the member is talking about, what he omitted were the massive rebates that are being offered for the next 12 months. Yes, small businesses will see an increase, some of them of over $1,000, but they are also getting $650 in the rebate, and that means that the increase has been minimised for those businesses. Some households in South Australia will actually be paying less next financial year than they have this financial year as a result of the rebate.

So we are doing what we can, and what we have done is buy time. The commonwealth government has acknowledged that this is a national crisis. This is not a South Australian isolated issue. This is occurring in Victoria, this is occurring in New South Wales, this is occurring in Queensland, it is occurring in New Zealand, it is occurring in the United States, it is occurring in South-East Asia, it is occurring in Western Europe, it is occurring in North America, it is occurring all around the world.

What we are giving the commonwealth government with our co-funding of this massive, unprecedented subsidy of over nearly a quarter of a billion dollars directly into the pockets of South Australians that offsets their bills is time—time for the commonwealth government to come up with a national response to this, and we are supportive of it. But I do not think it is fair—and I am not saying that the shadow minister is accusing us; this is a very cordial—

An honourable member: Very cordial.

The Hon. A. KOUTSANTONIS: Very cordial. I do not think it is fair for people to say this is a uniquely South Australian problem. Clearly it is not. This is an international problem that has ramifications in South Australia, and we are acting. If there was no response, if there was no subsidy—so businesses will be impacted in the same way households are, but what we are doing is giving every small business in South Australia a $650 rebate on the back of that increase. The increase could be as low as $350 for some people, even lower for others, depending on what tariffs they are on and their time of use. We are trying to minimise that impact.

I accept subsidies are not ideal, because subsidies are an opportunity cost on something else we could be using that money for. So I agree, but we are where we are not because of any policy decision made here in South Australia. We are where we are because of a policy decision made by Vladimir Putin, not a decision of the Malinauskas Labor government. Like the rest of South Australia and the rest of the country, we are simply suffering under international conditions that have caused this.

Clause passed.

Clause 2.

Mr PATTERSON: The act comes into operation on the day it is assented to by the Governor, and the aim, in the consultation, is talking about September 2023. It seems like preparatory work is already being undertaken by some of the market bodies in anticipation of this, obviously still paying respect to our parliament but expecting it to go through.

As you said before, we have a convention here that is standard not just in terms of energy laws that are national but other national laws. There are no problems with that, but could you just explain what is going to happen straightaway? Are they looking to act straightaway? If so, in what regard? I might have some follow up questions in response to that.

The Hon. A. KOUTSANTONIS: The market bodies put out long-term thinking on the energy market, sometimes five-year plans; the Integrated System Plan is a good example. If we miss the cycle, we could have another five years where carbon emissions are not considered as part of the key principle taken into consideration; so we are in a rush.

I have to say that this reform is long overdue; this reform should have been done a long time ago. I think, above all, this is one of the most consequential reforms we can make to decarbonisation of the electricity sector outside a carbon price. It is very consequential, and we do not have time to waste. We have seen the impacts of climate change accelerate. For us to give investment certainty to people about the Integrated System Plan that has been put out, the statement of opportunities that has been released, we need to make sure that the planning also takes carbon into consideration. It is important to give that lead time for investors, the market and the market bodies to prepare for it. That is the rush: this should have been done years ago.

Clause passed.

Clause 3.

Mr PATTERSON: Clause 3 talks about the acts that we amend. In a similar vein to the questions I asked around the short title, by including emissions reduction objectives into the National Electricity Law what advice do you have regarding whether wholesale electricity prices will be impacted? Will they be reducing, increasing or staying the same?

The Hon. A. KOUTSANTONIS: The Australian Energy Market Operator dispatches at lowest cost every single time. That principle is not being changed by this. Adding carbon will not change the principal of lowest cost dispatch, so I do not think it will have an impact on the wholesale market.

Mr PATTERSON: By including emissions reduction objectives into the National Energy Retail Law, what advice do you have around any impact on the electricity or gas bills of end customers, whether be they households or businesses, in terms of reduction, increase or staying the same?

The Hon. A. KOUTSANTONIS: As long as the Liberal Party stop their vendetta against gas, where they have banned gas in the South-East of this state, I do not think there will be—

Mr Patterson interjecting:

The Hon. A. KOUTSANTONIS: Same answer. I do not think it will have any impact on the retail pricing. The principles in place have not changed. I suppose the equivalent is, if we took safety out or took quality out or took price out, would it have an impact on emissions? When you put all these things together as a whole, as a package, it gives the operator and the market bodies an opportunity to say, 'Well, when you are making your investment into the National Electricity Market, you take into consideration the quality of the power you are delivering, the price that you are delivering, the security of the supply of the power, and emissions.' All those things work in conjunction to deliver the lowest possible price we have. It washes through the whole system, so I do not think it will have an impact.

I will say this: I think the abandonment of a carbon price has actually increased prices in Australia rather than decrease them because it has given no investment certainty to the transition. What we have now without a carbon price is disorderly exits from the market, no incentivisation to the market for firming capacity, and that has led to a lot of government interventions into the market that have added costs. For example, the Perrottet government's massive intervention in the New South Wales system may well add cost. It may save money; it may add cost. We will see.

The market method of applying a price to carbon, having an emissions scheme, is much more efficient, but we cannot have nice things, so we are doing this through basically the Angus Taylor approach, which is direct action. What we are doing here through the market body's work is that all the jurisdictions have got together in saying, 'Well, it's about time.' As one of the principles, having a look at all the market bodies, emissions should be considered, and they should.

Mr PATTERSON: In regard to national gas laws, which is different from electricity, what advice have you received in terms of including emissions reductions into national gas laws, in terms of how much wholesale gas prices may reduce, increase or stay the same?

The Hon. A. KOUTSANTONIS: I do not think it changes my answer to the previous questions. I refer the member to my previous answer. This is a high-level change, so I do not think it will make a direct impact on either fuel sources.

Clause passed.

Clause 4.

Mr PATTERSON: In the consultation paper, it was outlined that by placing emissions reductions into the objectives of the National Electricity Law, each of the objectives in there (price, quality, safety and reliability, security of system supply and then, equally, reliability, safety and security of the national electricity system) and then also by this change achieving targets set by participating jurisdictions, as per the amendment (I will not read it all). Your second reading speech seemed to allude to that. To help any sort of future judges who may look at this very entertaining discussion we have—to confirm that each of those will be treated equally, so price is treated just as equally as safety is treated just as equally as reliability is treated just as equally as reductions, emissions; they are each discretely looked at, not just the whole price, reliability, reductions equal to emissions targets.

The Hon. A. KOUTSANTONIS: That is certainly our intent, and I would refer anyone, any judge looking at this, to my second reading remarks for the intent of the legislation and what it is that the energy ministers wanted to change. I love all my children equally, and all those principles are as important, and one shall not be taken into consideration over another. It should be taken into consideration as a whole, as a package.

Mr PATTERSON: Further moving along that path, in its submission the Australian Energy Council made the point that by including emissions reductions into the objectives of the National Electricity Law it increases the chance of litigation. They stated:

There are, in Australia, numerous, well-funded organisations which frequently challenge decisions by regulators on the basis that the decisions do not have sufficient regard to climate change and other environmental risks. The challenges, although mostly unsuccessful, create considerable delay and expense for energy projects, at a time when the energy transition can ill-afford further delays and even higher expenses.

They broached a number of solutions. As a solution to this risk, they proposed that one of those measures could be potentially removing the right to challenge decisions of regulators on the basis of an alleged failure to have regard to emissions targets. My question is: how does this bill take into account the litigation risks, and how will the risk of litigation be minimised by the participating energy market bodies so as not to have expenses and delays from court action ultimately impact on customers' energy bills?

The Hon. A. KOUTSANTONIS: All like bodies are already subject to judicial review. They deal with these risks every day. It is a free country. The courts are entitled to hear grievances, and they do, and the market bodies should prepare themselves for it. I do not know what motivates people to take judicial review but for whatever reason, if these market bodies are subject to it—and they should be—this would be no different. I am not sure that this minimises the litigation risk. If anything, it is status quo.

Mr PATTERSON: To further go down that path, will the legal imperative to satisfy the emissions reduction objective contribute to other objectives within the national electricity objectives not being efficiently met?

The Hon. A. KOUTSANTONIS: Every project is different. Every project will have a different principle that is more relevant to it than others, but the economic efficiency framework governs the assessment of this and it means that all are taken into equal consideration. So I do not think it changes.

As I said earlier, the market bodies are subject to judicial review. They do what they have to do to minimise a judicial review and that risk. Nothing changes. It will be the status quo. They will add this to their framework and they will still work to minimise the risk of judicial review. But judicial review is there for a reason: courts are an independent, third arm of government and they are entitled to hear grievances. That is the nature of a democracy.

Mr McBRIDE: I have a question in regard to where it talks about, under (i), reducing Australia's greenhouse gas emissions. My question to the minister is in regard to carbon credits. One of the things I have been made aware of as an agricultural producer is that carbon credits around Australia are going to be plentiful, and there is going to be an opportunity for landowners to not only capture credits but to also lift production.

The reason I come back to these emissions and this subparagraph (i) about reducing greenhouse gas emissions by this piece of legislation is: is there any relationship for generators to purchase credits up and above an emissions level? In other words, if you set a level at 20 per cent, 30 per cent or 50 per cent, does it matter that you might have more credits that could take you over those emission levels where you actually could lock down carbon into permanent-type market structures that would allow generators to produce more carbon than the legislation is proposing?

The Hon. A. KOUTSANTONIS: This is not an energy intensity scheme. There is no carbon baseline here. This is not a carbon price. This is a high-level framework where investments and activity in the NEM will have a consideration around carbon emissions. What I think the honourable member would be talking about, if it was relevant, is if we were introducing an energy intensity scheme or a carbon price or a carbon pollution reduction scheme or some sort of baseline and credit scheme, then that question would have merit.

Mr McBRIDE: I understand. Thank you to the minister for explaining that. For my further clarification, my straight-out question then is: is it correct that these emission levels have no correlation to a carbon market, for example?

The Hon. A. KOUTSANTONIS: There will be no trading of carbon credits as a result of this scheme. This scheme does not create an emission credit which can be traded or has a value. They might place a value on it internally for their assessments, as they do on safety, on price, on reliability for their internal BCR work they do, or their business case work but, in terms of a tradeable commodity in the sense of a carbon market, no, is the advice I have.

Mr McBRIDE: Thank you very much for the explanation. As I am learning through this process, I am probably not as well advised as the shadow minister. If there are generators at the end of the year—and I imagine you are measuring these emissions—and we know that our electricity grid is backed up by diesel, it could be backed up by gas, and they have to turn on the gas and diesel to generate more electricity, but your emissions levels have already peaked out, does that generator have the ability to go into the market and purchase carbon, for example?

Do they have leniency from a piece of legislation or a government to say, 'To keep the lights on, we were aiming for 30 per cent reduction, but we are only going to get 25 per cent this year,' because there were not as many sunlight hours, for example, or there was not as much wind over the 365 days in the year and, 'We did not produce all the power we needed to, so we needed to back up even greater quantities of power by fossil fuel generation'? What happens in this example?

The Hon. A. KOUTSANTONIS: Nothing. That is not what this is governing. There is no carbon trading mechanism in place. This is a decision-making framework. This is not a market. It is for new investments. It is for decisions within the electricity market. It is not about setting a price on carbon. There is a fundamental misunderstanding. We are not creating a carbon market through this legislation.

I would like there to be a carbon market, do not get me wrong; I support a price on carbon. I would be happy for it to be plastered on posters and put around my electorate: I support a price on carbon. I think it is the fastest and most efficient market mechanism we have to decarbonise. Unfortunately, because of some political parties—well, two—we cannot have a carbon price. This is not about introducing a carbon price. This is about the market bodies taking into account emissions, along with a whole range of other factors at a higher level.

Clause passed.

Clause 5.

Mr PATTERSON: In terms of the regulations that will be put in place for the national electricity objective, of course you have regulations and sitting above them, alongside them, you have power system and operation requirements that even legislators have to make sure they do not get in the way of to make sure that the actual physics of the electrical system works. What sort of regulations are proposed to address this? It talks in relation to a matter of achievement of targets. Is that referring to the next clause, clause 6, or is it referring to the overall changes in this bill?

The Hon. A. KOUTSANTONIS: My advice is this clause is only giving us a regulation-making power. There are no regulations yet contemplated. If that is incorrect, between the houses I will get you an appropriate answer, but that is the advice I have, or my understanding of it.

Clause passed.

Clause 6.

Mr PATTERSON: In regard to targets that are set either by the federal government or state governments, there is this talk around whether it is a target that is in legislation or policies. For example, in South Australia, as I mentioned before, currently in our legislation and the Climate Change and Greenhouse Emissions Reduction Act, we have an emissions reduction target to reduce greenhouse gas emissions within the state by at least 60 per cent to an amount that is equal to or less than 40 per cent of 1990 levels by 2050.

It also talks about increasing renewable energy, electricity use and generation by at least 20 per cent by 2014. That is what is in legislation and then there are targets that are policy based that have gone above that—for example, net zero emissions by 2050 or renewable energy targets to achieve 100 per cent net renewable energy generation by the year 2030. How are the targets going to be decided upon, that this is the target that the market bodies would have to look at to make their decisions on in terms of considering emissions reductions as an objective?

The Hon. A. KOUTSANTONIS: As the act reads, jurisdictions will nominate a target and that is the target that should be considered as part of the framework through the decision-making process that the market bodies have to take. Every jurisdiction will put up its framework—its targets—as you have set up and that is the decision-making framework around which market bodies must operate within that jurisdiction.

Mr PATTERSON: Just for the absence of doubt, the target that the AEMC has on its ledger cannot then be challenged in court litigation by saying, 'That target is different from what is in the legislation in a particular jurisdiction'?

The Hon. A. KOUTSANTONIS: It does not need to be legislated. If there is a legislated target, it would necessarily be on the list. If there is no legislated target, the minister can nominate a target. We have a legislative target. I could be incorrect about that. Yes, we do have a legislative target for greenhouse gas emissions. That is our target.

Mr PATTERSON: In regard to cross jurisdictions, you might have the case where one jurisdiction has a particular target, a neighbouring jurisdiction has a target and you have the federal government with their target. How does this work with decision-making bodies, especially making sure that, when they make their decisions—we talked before about judicial review—they properly take into account price when taking into account submissions on reductions in a particular jurisdiction with crossed targets?

The Hon. A. KOUTSANTONIS: That is just what market bodies do. Australia is a very large continent that basically has six very unique state jurisdictions and two territories and there are reliability standards that are different. Market bodies take those into account across jurisdictions. There can be different targets within the same jurisdiction for different types of industries. I am relaxed about this because this is what they do now. There is not a unifying price on carbon that governs carbon emissions.

I will say this again: what should be in place is a baseline. This is the baseline of how much your carbon emissions can be where you are paying that price. Below that, you get a credit, and above that, you pay a penalty, and then you have a market. That is how you reduce carbon emissions: you incentivise new investment into renewable resources and dispatchable renewables and you get the evolution of a functioning market without government interventions. We cannot have that because Tony Abbott did not like it, so now we have this system where we are going jurisdiction by jurisdiction and election by election. To get this framework up, we are given the discretion for jurisdictions to have different targets.

In a perfect world, say, in a federation where we had a national parliament and a national cabinet that could agree that climate change is actually real, that the science is irrefutable, that the polar ice caps are melting, that global temperatures are warming, that there is greater impact on our climate, that events are becoming more extreme and more pronounced and that it is getting hotter and hotter because we are releasing carbon into the atmosphere, perhaps pretty please it would be nice for the commonwealth government to introduce a form of baseline and use tax policy appropriately. We had that and it was abolished and there is no plan to return to it.

Other jurisdictions have gone down this path and their transition is going a lot smoother than ours because they used the most efficient market method to decarbonise. With all due respect and affection to the shadow minister, it is because of his political party that Australia has chosen the most expensive path possible known to humanity to decarbonise through massive government interventions because a carbon price, according to the commonwealth Liberal and National parties, is socialism, so we cannot have it.

We are not going to have it, so now we go through this rigmarole where we have individual states having their individual targets that are informing decision-making, rather than being fixed targets that have penalties in place informing decision-making. It is a slower method of doing it, but at least it is something.

Mr McBRIDE: What will be the consequences for generators if targets are not met in South Australia?

The Hon. A. KOUTSANTONIS: It is not the framework with which you should be looking at this legislation. We are not setting up a penalty regime. There is no penalty regime. The market bodies are looking at infrastructure investments within the grid, and one of the principles they will now take into account is the emissions intensity of that investment while still considering price, safety, reliability and the other principles.

This is not a cap and trade scheme. This is not a carbon price. This is not an energy intensity scheme. If it were, I would tell you and I would be proud of it. I would be sending out letters into the shadow minister's electorate saying, 'Hooray,' but we are not doing that. We are not imposing a carbon price. We are giving the market bodies a framework as a lens through which they view their decision-making process on all forms of infrastructure within the grid. That is the frame.

Mr McBRIDE: Thank you to the minister for explaining this to me because I am struggling with the concept of market forces and what this legislation then meets. He has added in his answers talk about previous years, previous federal governments and perhaps language used by those who are fighting climate change. Perhaps you would call them climate deniers, perhaps they are absolutely avoiding the closure and shutting down of renewable energy in the Australian economy over the last two decades. Maybe that is going to be one of the great failings of where we have landed today—because now we are restricted so heavily by options to work with market forces.

You mentioned the Abbott government fighting this way back in 2014; if they could foresee that we are now talking about these types of methods and strategies in 2023, maybe they would not have done what they did back in 2014. We cannot talk about a carbon trading scheme that might be more transparent, might be more obvious and perhaps even more affordable than we have now landed with. Who is to know?

This is not a mischievous question, but I need that clarity and understanding. I know that you are probably going to repeat your answers, and my apologies to the minister for that. I just think of the little town of Bordertown, where they do not have an electricity grid that meets the town's needs because it is only operating at 60 per cent because of its age and perhaps the growth in Bordertown. It has this dirty diesel generator that turns on most days of the year to provide power to the town of Bordertown because the electricity grid does not meet its needs.

We cannot have solar development in the town, because the power grid does not meet the town's needs, or that development of solar power. I am talking about a large solar investment that stands alone, not just rooftop solar or anything like that. We cannot have that. I wanted to have the minister's clarity—that is a nice way to put it—that this type of process will not affect this sort of diesel generation of power and that we will not find ourselves having the lights out in Bordertown when they will not be able to start up that diesel generator.

The Hon. A. KOUTSANTONIS: I should explain to the member, who I think is probably one of the most astute members in the house, that these reforms relate to regulated assets. Project EnergyConnect is a regulated asset. When that was being built and it passed through its routine tests and it went through its decision-making process by the market bodies, the frame from which it was considered was on price, reliability, security of supply and quality of power. Emissions were not part of that scope.

The discrete scenario that the member talks about is no doubt a consequence of the failure of the privatisation of our transmission and distribution network by the previous Liberal Treasurer. If there were another consideration of investment to improve the quality, price, reliability, safety of that network, that would also take into account emissions. The regulated framework on the regulated assets is about making sure that carbon emissions are taken into account as well as the other factors, because it is a regulated asset. That is all.

If a private operator wants to put a diesel generator into the system, they can; if they want to put a renewable resource into the system, they can. I think we are at cross points of the intent of the legislation here. I am happy to offer the member a briefing because I know he has a vast interest in this matter and is a fierce advocate for his local community and really wants to get the best outcome for his people, but I do think there has been a misunderstanding here about what our intent is which I blame the shadow minister for.

Clause passed.

Clause 7 passed.

Progress reported; committee to sit again.