NATIONAL ELECTRICITY (SOUTH AUSTRALIA) (NATIONAL ELECTRICITY LAW—MISCELLANEOUS AMENDMENTS) AMENDMENT BILL

Second Reading

Adjourned debate on second reading.

(Continued from 23 October. Page 1095.)

The Hon. SANDRA KANCK (15:45): The question arises as to why I am even bothering to address this legislation. I attempted to make this speech earlier on—

An honourable member interjecting:

The Hon. SANDRA KANCK: Yes; I suppose it is because it is there; it is like a mountain to climb. It seems to me that since about 1996, when we had the first of the bills to establish the national electricity market, we go through this almost annual occurrence of amending legislation and not amending it because we cannot amend it. For me, it is like an annual ritual head bashing, and it really does make me wonder why we bother. Over the years, as we have dealt with a succession of these bills, each time I have stood up I have made comments, I have asked questions, I have even attempted to move amendments and all to no avail.

Nevertheless, there are two reasons that I am addressing this bill. One is to put on the record my disgust that once again we, as a parliament, are trumped by a decision made by a group of men in grey suits, probably over in Canberra or somewhere in the Eastern states, and we are not allowed to amend it. It puts our democracy up to ridicule. Each time we go through this we are told that we cannot amend it because it has all been agreed beforehand, but it always leaves me wondering: why are we doing this? It is a done deal. The energy ministers get together. They do not tell us what they are talking about. They make the decisions and then they come back to us and tell us what they are going to dump on us. Each time it happens it makes a mockery of the parliament.

I remember 11 years ago (I think it was) when we had the first of these bills, and I remember in my departmental briefing the advisers were so excited about the fact that we were the lead legislators. Every time one of these bills comes up, because we are the lead legislators, South Australia is the first to move the legislation. I could not understand then why they were excited, nor can I understand now why they were excited, because it gains us nothing if our rights to amend legislation are taken from us.

The second reason for speaking today is, once again, to rail against the national electricity market. This is a very grotesque creature that was spawned out of competition policy. I think it is one of the ugliest creations of economic rationalism that we have seen. It is a very amoral creature that concerns itself with profits. All of the decisions that are made about the national electricity market—and the bill that we have before us absolutely underlines this—are based on dollars and never on environmental benefit. The market always dictates the terms.

I received an email from the Total Environment Centre, which I have dealt with in respect of previous legislation where we have been the so-called lead legislator. This is a media release that it put out on 17 October. It is headed 'Baby steps on energy efficiency, but giant leap back for environment'. Jane Castle is the Total Environment Centre's energy campaigner and she says:

Since 1990, electricity generation emissions have grown by 52 per cent, resulting in an extra 60 million tonnes of greenhouse pollution every year. Since 1999, energy consumption has spiralled upwards by 24 per cent, much faster than the population growth. The national electricity market has done nothing to stop this.

She is absolutely right: it has done nothing to stop it and, in fact, it encourages it, because when the market is amoral, as it is, it is about getting electricity at the cheapest price under this system, and the base load generators always get dispatched. The base load generators are those, particularly, that are producing electricity from the most polluting source; that is, brown coal.

The centre then goes on to talk about the really bad impact of this particular legislation, because it is going to remove anything in the acts of other states and territories that dares to have any environmental objectives. From the attachment to her media release, I will mention a few of those. The ACT has an Independent Competition and Regulatory Commission Act 1997, in which section 7 of the objectives says:

The commission has the following objectives in relation to regulated industries, access regimes, competitive neutrality complaints and government-regulated activity:

...

(b) to facilitate an appropriate balance between efficiency and environmental and social considerations.

Section 20(2) provides:

In making a decision under subsection (1), the commission must have regard to:

...

(f) the principles of ecologically sustainable development mentioned in subsection (5);

(g) the social impacts of the decision; and

(h) considerations of demand management and least cost planning.

Those two parts of the ACT legislation will disappear from its legislation as a consequence of the bill before us. If we think about it, why should not the social impacts of the electricity market be taken into account and why should not ecologically sustainable development be a crucial part of any legislation to do with electricity? New South Wales has its IPART (Independent Pricing and Regulatory Tribunal) Act. Section 14A—Setting of methodology for fixing prices—states in subsection (2):

In making a determination the tribunal may have regard to such matters as it considers appropriate, including:

...

(g) the need to maintain ecologically sustainable development by appropriate pricing policies to protect the environment;

...

(i) considerations of demand management and least cost planning.

That, too, will go as a consequence of this legislation. Queensland has its Queensland Competition Authority Act 1997 and section 6—Matters to be considered by authority for investigation—provides:

(1) In conducting an investigation under this division the authority must have regard to the following matters:

...

(h) considerations of demand management;

(i) social welfare and equity considerations, including community service obligations, the availability of goods and services to consumers and the social impact of pricing practices;

...

(k) legislation and government policies relating to ecologically sustainable development;

...

(m) economic and regional development issues, including employment and investment growth.

That will have to go as a consequence of this legislation. Victoria has its Essential Services Commission Act, and section 8(2) says:

In seeking to achieve its primary objective the commission must have regard to the following facilitating objectives:

...

(e) to ensure that regulatory decision-making has regard to the relevant health, safety, environmental and social legislation applying to the regulated industry.

That will also go. That is only some of the information provided to me from the Total Environment Centre about the impact of this bill before us. I find it amazing that the South Australian government has agreed to this, and I would like the minister, in summing up the second reading debate, to explain the Rann government's position in relation to its climate change objectives. Does the government not consider that considerations about environment and demand management ought to be an essential part of any electricity legislation if we are to contain greenhouse gas emissions?

As it is, there is no point in even reading this bill or the minister's speech because our analysis and any comments arising ultimately will be ignored. The historical record shows that previous contributions, including some detailed questioning that I gave the legislation a couple of years ago, have made not one scrap of difference. Because of the environmental impact this bill will have, and the fact that we cannot in any way alter the bill, I indicate Democrat opposition.

The Hon. M. PARNELL (15:55): The Greens too have serious concerns about this legislation and I acknowledge the role that people like the Hon. Sandra Kanck have played. I acknowledge the role played by those who have been in this place much longer than me in dealing with this legislation over many years.

The Hon. Sandra Kanck interjecting:

The Hon. M. PARNELL: The Hon. Sandra Kanck says, ‘Asking questions that don't get answered.' She likened participation in these debates to banging your head against a wall; well, I am new to this game and I am ready to do some head-banging, because I think this legislation is in serious need of reform. Whilst I understand and appreciate the desire to try to get, as far as possible, uniform legislation, I find that the burden on our shoulders now is not just for the people of this state whom we represent; it is also for the people in the other states to whom the Hon. Sandra Kanck referred, those jurisdictions whose environment and consumer protection measures will be axed by the passage of this legislation. So, we do have a responsibility here, as the lead state, to seriously debate this bill and to get it right.

I wish to start my contribution by referring to some statements contained in the government's second reading explanation, as follows:

It is important to note that the National Electricity Objective does not extend to broader social and environmental objectives. The purpose of the National Electricity Law is to establish a framework to ensure the efficient operation of the National Electricity Market, efficient investment, and the effective regulation of electricity networks. As previously noted, the National Electricity Objective also guides the Australian Energy Market Commission and the Australian Energy Regulator in performing their functions. This should be guided by an objective of efficiency that is in the long term interest of consumers. Environmental and social objectives are better dealt with in other legislative instruments and policies which sit outside the National Electricity Law.

What a load of rubbish! How is it, in the 21^st century, that the government is pretending that environmental, economic and social objectives can be put in their silos and treated separately? It is not the way we regard other areas of the economy; and it is not the way we regard natural resources, for example. We have been incorporating principles of ecologically sustainable development and social justice in many bills we have debated in this place, so I think the government's starting point is entirely wrong.

The Hon. Sandra Kanck referred to a media release issued by the Total Environment Centre in Sydney. This is a recent release made on 17 October which is headed, 'Baby steps on energy efficiency but...giant leap back for environment.' The Hon. Sandra Kanck quoted at some length from the attachment to that press release, which showed the impact of this legislation we are trialling in South Australia on the laws of other jurisdictions. However, the media release also says:

Electricity networks must be obliged to reduce demand before they even think about building more expensive, polluting infrastructure. On top of that, the Australian Energy Regulator must be required to provide incentives for innovative energy saving programs rather than making them optional and subject to the networks' opinions.

While staring down the barrel of global warming, the states have also dumped their environmental objectives and policies. This is a disaster for greenhouse emissions. Without environmental and social objectives the National Electricity Market will continue to operate on narrow economic lines and favour inefficient, expensive and polluting power. Other countries such as Britain have well developed environmental and social objectives in their electricity market laws—why not Australia?

I think that is the main question before us: why can we not ensure that our electricity laws, our energy laws, also reflect those environmental and social objectives?

It would be wrong for members to think that this debate is purely driven by one environment centre based out of Sydney in New South Wales. In fact, there is an entire coalition of social justice and environment groups that are arguing exactly the same thing. I have another media release, which is from earlier this year, May 2007, but it is not just from the Total Environmental Centre this time: it is also signed by the Consumer Utilities Advocacy Centre, the Australian Conservation Foundation, the St Vincent de Paul Society and the Australian Business Council for Sustainable Energy. That is the organisation whose submissions have urged this parliament to increase the feed-in tariff for solar voltaic panels. It is also signed by the Australian Council of Social Services and the Worldwide Fund for Nature so, effectively it is a who's who of the social justice and environment networks.

Under the heading 'Australia to dump environment and social goals in power shake-up', the media release of those organisations dated 22 May reads:

'Federal, State and Territory Governments want to be seen to lead on climate change, yet they're in the process of neutering environmental policies by embracing the National Electricity Market...with its obsession with dirty coal generation,' said Jeff Angel, Total Environment Centre Director. 'The [National Electricity Market] has overseen a massive increase in greenhouse gas pollution and consumption. Hard-won environmental protections must not be dumped in the transfer of power to the national level.'

He poses again the same question:

Other countries such as Britain have well developed environmental objectives in their electricity market laws—why not Australia?

But the social justice perspective is in this release as well and, coordinating to Gavin Duffy from the St Vincent de Paul National Council:

It would be a fundamental failure if the policy framework does not guarantee basic social and environmental protection.

We also have the business perspective from the Director of the Business Council on Sustainable Energy, Ric Brazzale, who states:

Most states have had strong environmental objectives in their energy legislation and all governments now agree we need to dramatically reduce greenhouse emissions. At a time of heightened community concern with climate change it is bizarre to think that future energy market developments occur in a manner that does not also support emission reductions.

These groups have got together and put forward comprehensive recommendations which they have put to all state, territory and federal ministers. Their call can be summarised in three main dot points, and these are included in a document entitled the Power for the People Declaration. That declaration calls on members of parliament to ‘amend the Australian Energy Markets Agreement, the National Electricity Law and the National Gas Law’ by:

1. Requiring regulators to consider the environment and sustainable development when making decisions;

2. Requiring regulators to consider social impacts, with particular reference to preventing negative impacts for low income and disadvantaged consumers; and

3. Requiring the industry to implement cost-effective demand management and energy efficiency to help consumers save energy wherever this is cheaper than investing in more infrastructure.

The fact that such diverse groups with such different interests have got together with a common call to us as legislators to fix up these national laws should be very telling indeed. Given the fact that South Australia is the lead jurisdiction, we have the first opportunity in the nation to fix up these laws and show an example to the rest of the country.

I do not intend to read the whole of the Power for the People Declaration, but I will refer to the preamble and then briefly to the conclusion. The Power for the People Declaration commences under the heading 'Our concern' as follows:

Signatory groups have strong misgivings about the current structure of the National Electricity Market...and believe that it does not address deep seated environmental and social concerns held by the Australian community. Under the new National Electricity Law, market regulators cannot take social or environmental issues into account. However, it is clear that the market, left to its own devices, will not produce good social and environmental outcomes.

Electricity is an essential service, and necessary for health, well being and participation in employment, community and social activities. The key controls on electricity production and distribution are market rules and regulations. Yet currently this market actively operates in conflict with many social and environmental objectives, undermining policies designed to promote social cohesion and environmental protection. This will have to change if we are to prevent dangerous climate change and protect vulnerable households.

Members of parliament need to reform the National Electricity Market so that it can help facilitate, rather than obstruct, environmental and social policies and be more accountable to the Australian community. By contrast, we look to the UK, where the market is comparable to Australia and where measures to achieve better social and environmental outcomes are in place in legislation.

The declaration then goes on to list some of the amendments that these groups are calling on us to implement. The conclusion of this 'Power for the People' declaration is equally telling. It states:

Despite its poor record on efficiency, environmental and social issues, the National Electricity Market...is viewed by industry and governments as a success as it has delivered cheap electricity to industry, allowed states to trade with each other through interconnectors and facilitated competition. The Council of Australian Government...has foreshadowed another round of reforms to the electricity industry to 'ensure Australia retains secure energy markets and relatively low electricity and gas prices'. However, they have not committed to saving a single gram of carbon emissions through the reform process, nor have they acknowledged that energy reforms may have deleterious effects on some consumers. The reform process must be directed towards positioning the National Electricity Market...so that it delivers energy in ways that are both socially just and environmentally sustainable. Australia's leaders should ensure the National Electricity Market does not obstruct environmental and social goals, but helps to facilitate them.

In conclusion, it is clear that the National Electricity Market has failed. What we find is that electricity use as one measure of energy consumption is rising, prices are rising, and the market completely fails to take into account important issues of demand management and the need for energy efficiency, and it ignores renewable energy.

Our electricity laws are going to be critical to our successful response to climate change. South Australia has negotiated for special exemptions (for example, postage stamp pricing) so that everyone pays the same wherever they are on the grid, and the argument has been that this is critical for our state. My question is: why is our leading climate change legislation not critical for our state? Why is that not an issue on which South Australia seeks a special exemption? So, despite the experience of the Hon. Sandra Kanck and others, who say they have been banging their head against a brick wall for years on this, I propose to introduce amendments. The amendments will be taken from submissions from the leading environment and social justice organisations I have referred to, and I urge all honourable members to take seriously their role not just to the citizens of South Australia but also to other people throughout the country on whose behalf we lead this debate.

Debate adjourned on motion of the Hon. I.K. Hunter.