Legislative Council: Wednesday, November 30, 2022


Electricity Distribution and Transmission Network

Adjourned debate on motion of Hon. R.A. Simms:

That this council—

1. Notes that the commonwealth budget released last week forecast:

(a) a 56 per cent increase in electricity prices over the next 18 months; and

(b) a 44 per cent increase in gas prices over the next 18 months.

2. Notes that Adelaide recorded the highest quarterly rise in CPI in the country with a 2.6 per cent rise for the September 2022 quarter and an annual rise of 8.4 per cent.

3. Recognises that cost-of-living pressures are continuing to increase for South Australians.

4. Acknowledges that the privatisation of ETSA was a failure of market regulation and contributed to an increase in electricity prices.

5. Calls on the Malinauskas government to establish a commission of inquiry to examine reviving ETSA and returning South Australia’s electricity distribution and transmission network to public ownership.

(Continued from 2 November 2022.)

The Hon. R.P. WORTLEY (16:03): I thank the honourable member for bringing this very important matter to the attention of the council. The government did, indeed, note in the federal budget delivered on 25 October 2022 that commonwealth Treasury expects a sharp increase in energy prices. The budget records the commonwealth Treasury's assumption that electricity prices will have increased by 20 per cent by the end of this year and that, given forward wholesale contract prices for electricity remain elevated, retail electricity prices are expected to rise by a further 30 per cent in 2023-24.

The budget papers added that domestic wholesale gas prices remain more than double their average prior to the Russian invasion of Ukraine. Retail gas prices are expected to increase less than wholesale prices, by up to 20 per cent in both 2022-23 and 2023-24 as major gas retailers are somewhat insulated from spot prices, either through long-term contracts or investment in gas supplies. Nevertheless, sharply higher spot and forward prices suggest a sizeable increase in wholesale costs. The government regards these forecast prices as completely unacceptable.

The government has also noted the consumer price index data and other economic indicators from the Australian Bureau of Statistics, business organisations and academic researchers. The government agrees with the honourable member that these forecasts and datasets show that cost-of-living pressures are escalating. This is occurring in South Australia, across the nation and across the world.

The illegal invasion of Ukraine by Russia has harmed energy market systems globally, and South Australia is not immune to the impact. The government has not been idle in providing immediate relief for the most vulnerable households. In the June budget, this government moved to assist these households with measures that include:

doubling the Cost of Living Concession for eligible households in 2022-23, increasing from $112.30 to $224.60 for tenants and commonwealth senior health cardholders at a cost of $39.3 million;

providing $24 million over two years to provide a $100 subsidy to government school parents, caregivers and independent students for the school materials and service charges for each of the 2022-23 years; and

allocating $5.2 million over four years to grant free public transport for eligible seniors on Adelaide Metro services, 24 hours a day, seven days a week, expanding from previous arrangements where free travel was only available to seniors outside the peak periods.

Nor will this government rest at those points in tackling the rising cost of living. More measures are being considered by a range of agencies.

The honourable member calls on the council to acknowledge that the privatisation of ETSA was a failure that has contributed to rising energy costs. The government wholeheartedly agrees with the honourable member's view. This side of politics opposed the privatisation from the start and has had to spend years ameliorating the worst effects of that move by former Treasurer Robert Lucas and his Liberal colleagues.

However, where the government parts way with the honourable member is his call for a commission of inquiry into returning South Australia's electricity distribution and transmission network to public ownership. We part ways not because there is no merit in the call but rather because such an inquiry is unnecessary at this point in time.

The government has established a National Energy Crisis Committee of cabinet, chaired by the Premier, the Hon. Peter Malinauskas. The cabinet committee will be supported by a task force co-chaired by the Minister for Energy and Mining, Tom Koutsantonis, and DEM chief executive, Paul Heithersay. The cabinet committee has an open mandate to examine all aspects of the electricity and gas systems, and make recommendations to ensure SA consumers and businesses receive cleaner, affordable, reliable energy. Any consideration of reclaiming government-owned electricity assets, including the former ETSA and Optima assets, will already be covered as a subset of the committee's work.

Council members will be aware that the government is already investing in new generation, which will be operated by a government business enterprise—the clean fuel generator being built through the $593 million investment in the Hydrogen Jobs Plan. Previously, when the ALP was in government, it invested in two sets of generators that were specifically in place to cover supply shortfalls and put downward pressure on prices. Unfortunately, the Marshall government chose to lease these generators to the private sector under long-term contracts, thereby weakening the electricity system by losing government control of these key assets.

The council should also recall other aspects of the former Labor government's energy plan. Initiatives included incentivising construction of the big battery at Jamestown, known as the Hornsdale Power Reserve. It was a revolutionary concept to build a grid-scale battery to stabilise supply. Uninformed critics—the people who should have been informed but were not—misunderstood the purpose of the battery. They labelled it the Big Banana. They said it would be useless because it could only supply energy for a very brief period. But time proved the critics wrong.

Hornsdale Power Reserve, owned and operated by Neoen using Tesla equipment, saved South Australians tens of millions of dollars in ancillary support costs. It has been so successful that it has increased in size from 100 megawatts/129 megawatt-hours to 150 megawatts/193.5 megawatt-hours. The range of support services it provides has been broadened and, significantly, big batteries have been installed across Australia and in many other countries.

The former ALP government introduced the Tesla Virtual Power Plant scheme, which has benefited thousands of low income households. We support broadening schemes providing the benefits of solar and batteries to more lower income families, and we will have more to say on that in the months ahead. The government has the appetite for considering further public ownership in the energy market. It has initiated a green paper/white paper process to co-design with industry, interest groups and the public a more holistic policy, covering all aspects of the transition to a decarbonised future.

As I said earlier, the government welcomes this motion and a spotlight being shone on these pressing matters. However, the government is taking a bigger picture approach to deal with the problems in a more comprehensive way and in a deeper collaboration with the South Australian people. We urge the honourable member and other members of the council to turn their attention to making a considered contribution when the green paper on the energy transition and decarbonisation of the economy opens for submissions early next year. That is why we will vote against the narrow focus of establishing a commission of inquiry.

The Hon. H.M. GIROLAMO (16:11): I rise to speak on this motion on behalf of the opposition and indicate that we have amendments to the motion but do support parts 1 through to 3 of the motion. It is a great opportunity set the record straight on a few things. The former Liberal government inherited an electricity system on its knees from the previous Labor government after the statewide blackout, and who could forget that, and being reliant on dirty diesel generators to keep the lights on and the risk of blackouts ever present.

Previously, South Australia was regarded as a world-leading energy jurisdiction, with over 60 per cent renewable energy and cheaper electricity and no insufficient supply or grid stability impacts on consumers when we were in government over the previous four years. Other policy initiatives included the largest rollout of home batteries per capita in the world, virtual power plants, voluntary demand management, four additional grid-scale batteries and the soon to be completed SA-New South Wales interconnector—these were all driving down prices.

Electricity prices for South Australian families went down by $421 under the former Liberal government. The electricity savings also flowed through to all businesses, with businesses receiving an on average 16.8 per cent saving since the change of government in 2018. Independent modelling has also shown that the former Liberal government's signature energy policy, the $2.4 billion SA-New South Wales interconnector, Project EnergyConnect, will deliver another $100 of savings, on average, for South Australian families once it is up and running.

Under the previous Labor government, electricity prices skyrocketed by $551 from June 2015 to June 2017. Additionally, seven million customer hours were lost due to load shedding during the last four years of the previous Labor government, compared to zero customer hours lost over the four years of the previous Liberal government. That bears repeating: for the last four years of the Labor government, there were seven million hours lost, compared to zero customer hours lost due to load shedding under the entire term of the former Liberal government. This is an extraordinary comparison.

Now, with the Labor government in place, electricity prices are again rising off the back of rising gas prices, especially on the east coast, which is where the majority of the National Energy Market to which South Australia is connected is. The current Labor government are blaming the war in Ukraine and privatisation, rather than taking any responsibility. While the war in Ukraine has caused international gas prices to rise dramatically, and this has flowed through to domestic prices, it is not the only reason for the energy crisis on the east coast. Wet weather and floods, coupled with maintenance delays caused by supply chain issues, has resulted in coal-fired power stations on the east coast being unavailable. This shortfall in baseload generation led to a large increase in demand for gas-fired electricity generation. This increase has seen a large, uncontracted demand for gas at a time when gas prices are already increasing.

I would like to take members back to a time in 1991 that cannot soon be forgotten. The collapse of the State Bank in 1991 was one of the largest economic disasters in South Australia's history. As a result of being legally underwritten by the government of South Australia, the state was saddled with a massive debt, thanks to the failings of the Bannon Labor government. The Brown Liberal government was elected in 1997 to clean up the mess the Bannon and Arnold Labor governments had left this state in.

Due to the dire financial situation the state found itself in, and based on information provided by the Auditor-General and the advent of the National Electricity Market, the Olsen Liberal government made the decision to disaggregate ETSA to combat the massive state debt. The state's fiscal situation was improved due to these difficult decisions, rectifying somewhat the situation the former Labor government left the state in.

The Hon. Robert Simms has claimed that privatisation of ETSA delivered higher energy prices; however, that simply is not the case. A report in 2013 undertaken by Ernst and Young examined electricity prices in South Australia from 1998-99 through to 2010-11 compared to New South Wales, Victoria and Queensland between 1996-97 through to 2012-13. It found that since privatisation electricity bills have increased less in the privatised states of Victoria and South Australia compared to the same period in the non-privatised states of New South Wales and Queensland.

ABC Fact Check has claimed that the ABS index of electricity prices across Australia, showing movement of electricity prices over time, also does not demonstrate a link between privatisation and price rises. Blaming the privatisation of ETSA is a convenient excuse for rising electricity prices, without taking responsibility for the costs associated with the energy transition, which has seen the exit of reliable baseload power from the system before a relevant equivalent was in place.

The disorderly nature of the energy transition in South Australia, where baseload power exited the system before a reliable equivalent was in place, has led to higher prices and lower grid reliability. This transition occurred under the former Labor government. The former Liberal government had a comprehensive energy solution to maintain power system security and underpin an orderly transition to more clean, affordable and reliable power.

Between June 2018 and December 2021, electricity prices for South Australian families went down by $421 under the former Liberal government. These measures included the SA-NSW interconnector, the Home Battery Scheme, grid-scale storage, voluntary demand management, Switch for Solar and the Electric Vehicle Action Plan.

The recent storm damage to the Victorian interconnector, causing South Australia to be disconnected from the National Electricity Market, or 'islanded', further highlighted the importance of having a second interconnector between South Australia and New South Wales. AEMO declared that the SA-NSW interconnector is absolutely critical for the ongoing secure operation of the South Australian power system.

The $2.4 billion SA-NSW interconnector will allow for renewable energy to be exported to NSW when SA is producing an excess and also means that SA can have access to energy from NSW in times of shortfall. The Labor Party actually promised a NSW-SA interconnector 20 years ago but never delivered on this program. If Labor had acted, then we would not be in this situation now.

In its first budget, the current Labor government cut the Home Battery Scheme and the grid-scale storage fund and did not replace them with any alternative other than a $593 million experimental hydrogen power plant, which their own policy documents claimed to only target electricity costs for business and will not be in place until the end of 2025. That is too far away for those in the midst of an energy crisis right now.

Labor has removed two important pillars that not only help reduce household electricity prices but also increase fast frequency control to assist with maintaining power system security in situations threatened by negative demand that is heightened by interstate islanding. If this motion was to pit the energy policies of the two parties of government against each other, Labor's record falls woefully short on delivering cheaper energy for South Australians.

South Australians are tired of the blame games. South Australian families and businesses deserve a focused government, a focused parliament, on finding practical solutions to lessen the increases in power prices. South Australia cannot wait. We need an energy policy that will support South Australian families and businesses during this energy crisis. The Labor Party must stand up and take responsibility. I therefore move:

Leave out paragraphs 4 and 5 and insert new paragraph as follows:

4. Calls on the Malinauskas Labor government to develop an energy policy that will support South Australian families and businesses during this energy crisis.

The Hon. R.A. SIMMS (16:20): First off the bat, the Greens will not support the Liberal Party's amendment, which I submit is designed to rob the motion of its veracity, and is in keeping with the Liberal Party's revisionist view of South Australian history, this idea that they cannot take any responsibility for the original sin that has bedevilled our electricity network in this state, that is, of course, the disastrous decision of the Olsen government to sell off ETSA, to dud South Australians and to negotiate a totally dud deal for our state, one that has resulted in higher electricity prices and an insecure electricity network.

There is something seriously wrong in our state when we have an electricity network that cannot weather a storm. It is unacceptable that we had thousands and thousands of South Australians being denied power for days and days on end following the storm that occurred the other week. On the one hand, some will say, 'Well, acts of God happen, we are going to see freak weather events, that's part of life'. Certainly, as the climate continues to change, we will see more freak weather events, but that is why it is so vitally important that we have an energy system that is fit for purpose.

The private sector has not been delivering on the energy needs for South Australia because there has not been the appropriate investment in resources in the workforce over time so that we can be prepared for these sort of events. The Greens certainly stand with the union movement in its critique of the approach that has been taken to electricity in our state.

I must say that I am a little perplexed by the position that has been taken by the Labor government because, on the one hand, they purport to support many of the elements of this motion, yet they do not intend to vote for it. With all due respect to the Hon. Russell Wortley, who made a contribution on behalf of the Labor Party, it is not what people say in this chamber, it is what they do with their feet, it is how they vote that is the important test. If the Labor Party is really serious about looking into bringing back ETSA, if the Labor Party is really fulsome in its condemnation of the appalling record of the Olsen government, they will support my motion. The proposition is very simple.

I flag with honourable members that I intend to test that proposition by calling a division on this matter. In summing-up, I also want to read into Hansard an excerpt of a public letter that has been sent from Dale Beasley, the Secretary of SA Unions, to the Hon. Peter Malinauskas MP, and it is a letter that has been published publicly. He says in this letter:

Privatisation of the South Australian electricity system by the Olsen Liberal government has been a boon for foreign owned corporations but has been a disaster for South Australian electricity users.

Clearly it is not in the best interests of South Australians that the natural monopoly of public electricity supply is run by private corporations to create huge profits. This model has seen under investment in maintenance and replacement of electricity distribution infrastructure and a failure to build the renewable energy generation and grid scale energy storage that we require to maintain security of supply and price stability.

We in the Greens agree. The letter goes on to say:

SA Unions respectfully suggests that your Government consider establishing a public trust (ETSA may be a good name) to plan, build and operate electricity generation and storage assets for the benefit of all South Australians.

We agree with those sentiments. Many will say that this cannot be done, that we cannot bring back ETSA, we cannot unscramble the egg. I urge those who make that claim to consider the remarkable success of the Andrews Labor government in Victoria last weekend, a remarkable achievement given the appalling fear and smear campaign that was run by some in the right wing media and the appalling misinformation campaign spread by the Liberal Party in that state.

One of the really exciting elements of the platform of the Labor Party in Victoria is their commitment to revive the State Electricity Commission with a majority share owned by the state. They are wanting to bring back public ownership of their electricity. Why can we not do it here in South Australia?

When the Labor Party came to government here in this state, they promised a commission of inquiring into bringing back public ownership of the trains and trams. The transport minister has announced more recently that that is not necessary because the government is going to progress with it and we welcome that, but why not take the same approach when it comes to electricity? If it is good enough for our public transport network, why not do it for our electricity network? That is why the Greens are testing that proposition with this motion today.

Amendment negatived.

The council divided on the motion:

Ayes 4

Noes 13

Majority 9


Bonaros, C. Franks, T.A. Pangallo, F.
Simms, R.A. (teller)


Bourke, E.S. Centofanti, N.J. Curran, L.A.
Game, S.L. Girolamo, H.M. Hunter, I.K.
Lee, J.S. Maher, K.J. Martin, R.B.
Ngo, T.T. Pnevmatikos, I. Wade, S.G.
Wortley, R.P. (teller)

Motion thus negatived.