Bills

Statutes Amendment (Energy Consumers Australia) Bill

Second Reading

Adjourned debate on second reading.

(Continued from 18 November 2014.)

The Hon. R.I. LUCAS (11:03): The Liberal Party has indicated its support for the bill. The member for Stuart has had carriage, on behalf of the party, of the legislation and has placed on the public record in the House of Assembly debate the Liberal Party's reasons for supporting the legislation. In summary, the intention is that the bill provide a greater voice for a wider body of consumers in terms of putting points of view on the national electricity market, energy regulation and, obviously, the impact on energy consumers.

We are led to believe, and the views of governments were, that big businesses in particular were able to actively engage in the never-ending debates about regulation of the national energy market and that there was, in some way, a void or a vacuum that needed to be filled by a better-organised group to articulate the views of smaller consumers.

The member for Stuart has consulted broadly. He has placed on the record the fact that, in his discussions with SACOSS in South Australia, they have supported the establishment of Energy Consumers Australia, as the body is to be referred to. The Small Business Commissioner, we are advised, is broadly supportive of the proposal. The member for Stuart has not advised of any group that is actively opposing the formation of Energy Consumers Australia. I guess that, necessarily, in South Australia, the member for Stuart's consultation has concentrated on South Australian groups, so I have to place on the record that I am not aware as to whether, in other states in Australia, there are more organised groups which are or are not opposing the establishment of Energy Consumers Australia.

One of the issues is that, when one is talking about the National Electricity Market, there are inevitable costs of any bright idea that is pursued by ministers and governments. The member for Stuart has advised that the budget for ECA would be $6.2 million, comprising of salaries and on-costs of $2.2 million; capacity building and project contracts of $2.5 million; and other costs of $1.5 million. We are advised that, inevitably, that has to be paid for by somebody. The government's response, as I understand it, is that that will be just levied on retailers and, ultimately, consumers, although I guess we can tease out the details of that during the committee stage. The member for Stuart has quoted a figure which I assume the government has provided which says that this would then be passed on to consumers at a rate of less than 65 cents per residential customer per year.

Whilst in the context of the overall operations of the national market, the total figure of $6.2 million would be seen to be small, the issue, frankly, is going to be that inevitably, with the national market, every bright idea adds additional costs which ultimately have to be paid for by somebody. Clearly, governments and ministers, of both political persuasions, as I am led to believe, have supported this proposal. As I have said, the member for Stuart has outlined that the Liberal parliamentary party room supports the position as well.

One of the questions which I do put to the minister and which we can tease out in the committee stage is: ultimately, is there any inbuilt agreement for a review of the operations of this to ensure that the value to consumers is greater than the cost of implementing the structure? That is, we are supporting currently $6.2 million, and I am sure that over the years that figure will grow and, ultimately, if there is the benefit to consumers, which some of the advocacy groups, such as SACOSS and others, which support this are claiming, hopefully there is some inbuilt review mechanism arrangement for the Standing Council of Ministers on Energy and Resources to ensure that there is value in terms of expending this amount of money. With that, I indicate the Liberal Party's support for the second reading.

The Hon. G.A. KANDELAARS (11:09): I rise to support this important bill. The bill supports the establishment of a national advocacy body in the electricity market, to be named Energy Consumers Australia. Energy Consumers Australia will be established as a company limited by guarantee, governed by a constitution, with the Minister for Energy as the single member. I understand that the COAG energy ministers' group is in support of this proposal, and South Australia is the lead house in terms of this bill.

The establishment of Energy Consumers Australia is an important step towards increasing advocacy on national energy market matters of strategic importance and material consequences for energy consumers, in particular residential and small business consumers. Ensuring that small business owners and residential consumers have every protection available is a particularly important thing to me.

The functions of Energy Consumers Australia will include providing and enabling consumer advocacy on national energy market matters. Energy Consumers Australia will fund and administer a grant program to build knowledge and sectoral capacity supporting policy development and consumer education in the national energy market.

The proposed amendments contained in this bill will provide for the abolition of the existing Consumer Advocacy Panel whilst ensuring a smooth transition of grant funding from the Consumer Advocacy Panel to Energy Consumers Australia.

I encourage honourable members of this chamber to support the introduction of the Statutes Amendment (Energy Consumers Australia) Bill 2014 to amend the National Electricity (South Australia) Act 1996, the National Gas (South Australia) Act 2008 and the Australian Energy Market Commission Establishment Act 2004.

The Hon. I.K. HUNTER (Minister for Sustainability, Environment and Conservation, Minister for Water and the River Murray, Minister for Aboriginal Affairs and Reconciliation) (11:11): I thank the two honourable speakers and their indicated support for the legislation, and look forward to a speedy passage through the committee stages.

Bill read a second time.

Committee Stage

In committee.

Clause 1.

The Hon. R.I. LUCAS: As I outlined in my second reading contribution, can the minister indicate what assurances he can give the chamber that the cost of the ECA, which we understand is to be $6.2 million, will be controlled and there will not be, over coming years, a continued growth in that budget? What are the mechanisms for controlling the growth? Is that a decision that the South Australian minister has sole control over or is it, in some way, an arrangement entered into through the standing council in terms of the budget that is to be expended?

The Hon. I.K. HUNTER: I can advise the house as far as I have been advised so far that the Energy Consumers Australia Board will be responsible for putting together a budget and putting that to the South Australian Minister for Energy. The South Australian Minister for Energy will then take that budget to the COAG Energy Council for approval. He will then have to get approval from the collective group of energy ministers from around the country, and he will be able to take those comments back to the board.

I understand that that mechanism has been built into the constitution of the company already. Of course, there is already some allocation for the consumer advocacy panel, which is being abolished in this legislation, and I presume that any sums that are left over from that consumer advocacy panel budget will be rolled into this new organisation called the Energy Consumers Australia Council.

The Hon. R.I. LUCAS: Is it the minister's advice that on an annual basis the budget will be submitted to the South Australian minister, who will then take it to the ministerial council meeting, and that on an annual basis the ministerial council has the final say on the budget? For example, if the board of ECA comes back and says, 'We now need to spend $9 million a year instead of $6 million to do our good work,' that goes to the minister, the minister takes it on the board: is the final decision a decision for the ministerial council, or is the final decision ultimately just for the South Australian minister?

The Hon. I.K. HUNTER: My advice is that the ministerial council will have overall control of the budget process.

The Hon. R.I. LUCAS: The member for Stuart has advised us that, in the initial budget of $6.2 million, something called capacity building and project grants comprised $2.5 million in the first year. I am assuming that is approximately an ongoing budget expenditure. Can the minister provide advice as to, in broad terms, what is intended for the ECA in relation to capacity building and project grants?

The Hon. I.K. HUNTER: My advice is that this amount of money, approximately $2.5 million, is based on the historical expense from the consumer advocacy panel. I am advised that in the first year that will essentially be continued, and the work that they currently do, but during that period of time they will be working with their stakeholders to work up guidelines for what will be needed by industry and stakeholders, mums and dads of course, and will then fund those sort of projects, and we can entertain ideas such that they may well be used by advocacy organisations, such as SACOSS here in South Australia, to build their capacity to engage with the energy industry to bring on a certain level of capacity and expertise. Those monies may also be utilised by companies who would seek a rule change in terms of the operations of the business market and that money could be used to fund the submission.

The Hon. R.I. LUCAS: I thank the minister for clarifying that. I was aware that organisations such as SACOSS were likely to be able to continue to be funded, but the minister is confirming, I am assuming, that employer organisations or, indeed, as he has put on the record, an individual employer or business, may well be able to seek grant funding from this particular $2.5 million, so I just seek clarification of that.

The Hon. I.K. HUNTER: I need to correct the Hon. Mr Lucas. If I gave him the impression of that last statement, I apologise. It is not individual companies who will be able to seek funding through that funding stream, it will be, if you like, their representative bodies or their peak organisations.

The Hon. R.I. LUCAS: I thank the minister for that clarification. Can the minister outline to the house in broad terms what the minister in charge of the ECA has in mind in relation to a remuneration package for the CEO or the managing director of ECA?

The Hon. I.K. HUNTER: I do not have that advice.

The Hon. R.I. LUCAS: I do not wish to delay the proceedings of the bill, but is the minister prepared to give an undertaking to seek to get an answer and provide an answer by way of correspondence after the debate?

The Hon. I.K. HUNTER: I will take that on notice and seek to bring back a response by way of correspondence. My further advice is that, in fact, it will be the board responsible for determining the CEO, and presumably the CEO's remuneration, whereas the members, the energy ministers, will be in charge of the determination of who goes onto the board and perhaps their remuneration packages. But, nonetheless, I will seek that information and bring it back to him by way of correspondence.

The Hon. R.I. LUCAS: I thank the minister for that undertaking. Can the minister outline how many staff are intended to be employed? We are told that the total salary and on-costs are to be $2.2 million. Has the South Australian government sought and received an undertaking that the location of the office of the ECA will be here in South Australia?

The Hon. I.K. HUNTER: I cannot advise at this point in time the number of staff that are likely to be engaged. I do not have the advice of the figure that the honourable member utilised. However, in terms of the location of the head office, I am told it is likely that the interim office will be provided probably by the commonwealth government to the company and is likely to be located in New South Wales for the interim period. It will then be a determination of the new board or the company where they will place their head office.

The Hon. R.I. LUCAS: Can the minister indicate whether the South Australian government has put a strong point of view to the ministerial council—I would imagine, given that our minister is the person in charge of the ECA, that his view should carry some weight—that the ECA should be located here in South Australia?

The Hon. I.K. HUNTER: My understanding is that the COAG Energy Council has not at this stage discussed where the head office of the board might be. I am told they have the view that it will be a matter for the company.

The Hon. R.I. LUCAS: What is the structure of this company? Is our minister the sole shareholder? Is that the correct arrangement?

The Hon. I.K. HUNTER: The South Australian minister is the sole member of the company, but agreement has been reached with the COAG Energy Council that all of his decisions will be approved through that body.

The Hon. R.I. LUCAS: The minister is indicating that the final decision will be taken by COAG or the ministerial council. I think he did say COAG, so just clarify that, but my question is: has the South Australian government, as a policy position, put the point of view that they will advocate that South Australia should be the head office for the ECA?

The Hon. I.K. HUNTER: My advice, as I said earlier, is that the decision on the head office will be made by the board. The board has not yet been appointed. If the South Australian minister was to put that position, he would need to put it to the board once appointed.

The Hon. R.I. LUCAS: The minister is saying clearly that the ministerial council or COAG will not have the final decision on where the head office is located, it will be a decision of the board members as to where they will be located. I am just clarifying that.

The Hon. I.K. HUNTER: That is my advice.

The Hon. R.I. LUCAS: This issue of the location of national regulatory bodies has had some history and prominent members of minister Hunter's own party have spoken loudly, strongly and often about the need for national regulatory bodies to be located here in South Australia. I do not want to delay the proceedings in this house unduly, but I could refer the minister to many statements made over the years in relation to debates as to where these particular bodies should be located and the argument that certainly Labor ministers and shadow ministers in particular put on the public record that it was essential that these bodies be located, wherever possible, in South Australia.

Other ministers will obviously fight for locations in the big cities, in the Sydneys and the Melbournes of this world, so I put on the record that I am disappointed that the South Australian government and the South Australian minister has not put on the public record a policy position that they would argue for the location of the ECA in Adelaide and in South Australia, and to take the battle up with New South Wales and Sydney, which appears to be the favoured location of the ECA.

I would hope that any interested members of the Labor caucus might be prepared to put a point of view to the minister to indicate, as I said, that Labor ministers and shadow ministers have spoken loudly and strongly on these sorts of issues in the past and that the South Australian government should take a policy position to have the ECA located here in Adelaide and in South Australia.

The other question I raised in the second reading was, essentially, whether the minister could clarify exactly who ends up paying the $6.2 million a year for the cost of running the ECA. In the discussion in the House of Assembly there was a reference to industry levies from retailers. Is that to be the sole provider of the $6.2 million? Clearly, if there is an industry levy on retailers then all consumers ultimately pay, I assume, because the retailers would obviously just pass the $6.2 million cost on to all customers, whether they be residential or small, medium or large businesses. So can the minister clarify the actual mechanism for funding the $6.2 million? Am I correct in assuming that ultimately all consumers would end up paying for the cost of the ECA?

The Hon. I.K. HUNTER: In relation to the Hon. Mr Lucas' comment earlier, I can say that I have every confidence in the minister in the other place in advocating for South Australia's best interests in this regard. I am sure he will take the best course he sees fit to getting an outcome in our interests. In terms of who will be funding Energy Consumers Australia, I am advised that Energy Consumers Australia will be funded equally by electricity and gas consumers, both residential and business, through fees collected by the Australian Energy Market Operator. My advice is that the current estimates for this will have an impact of approximately 64¢ per year per consumer for the recovery of these costs.

The Hon. R.I. LUCAS: Can the minister indicate the intended date of operation for the ECA, and when energy consumers would start feeling the additional cost of funding the ECA?

The Hon. I.K. HUNTER: My advice is that the expected commencement date is 30 January 2015. That is the date when we expect the funds to start being collected. I just remind honourable members that, of course, consumers are already paying a fee for the Consumer Advocacy Panel, which this legislation abolishes. The new fee will, if you like, be a replacement of that old fee.

The Hon. R.I. LUCAS: Can the minister indicate what the total cost of the Consumer Advocacy Panel is at the moment, on an annual basis?

The Hon. I.K. HUNTER: The advice I have is that the current cost, in terms of the Consumer Advocacy Panel, which we abolished under this legislation, is $2.9 million per year.

The Hon. R.I. LUCAS: It would appear that the additional cost of the ECA then is approximately $3.3 million a year. When the minister talks about, I cannot remember the exact number, but just over 60¢ per customer per year, is that the total cost that has been worked out in terms of the $6.2 million budget or is that the net difference between the cost of the ECA and the Consumer Advocacy Panel?

The Hon. I.K. HUNTER: My advice is that that is the total cost.

Clause passed.

Remaining clauses (2 to 28) and title passed.

Bill reported without amendment.

Third Reading

The Hon. I.K. HUNTER (Minister for Sustainability, Environment and Conservation, Minister for Water and the River Murray, Minister for Aboriginal Affairs and Reconciliation) (11:35): I move:

That this bill be now read a third time.

Bill read a third time and passed.