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House of Assembly - Fifty-Third Parliament, Second Session (53-2)
2017-10-17 Daily Xml
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Energy Prices

Mr MARSHALL (Dunstan—Leader of the Opposition) (14:35): Thank you, sir. My question is to the Premier. Why has the number of small business customers who have energy debts increased by more than 20 per cent in South Australia in just the last 12 months?

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:36): Because there is a failure of the National Electricity Market, and the evidence I supply the house of the failure of the National Electricity Market is the Prime Minister today standing up and saying exactly the same thing that we are saying: prices are unacceptably high. The market is not offering South Australians, or indeed the nation, responsible pricing for power. There needs to be something done.

They are saying that the market is not operating in the manner it was intended, and that's why South Australians are not getting the benefit of what they were promised when our assets were privatised by members opposite. Remember, it is important to take this into context. Why were our assets privatised? Our assets were privatised to minimise—

Members interjecting:

The Hon. A. KOUTSANTONIS: No, it wasn't the reason. The reason we were told in this house it was privatised was to minimise risk on state taxpayers, to afford South Australians more competition and lower prices.

Mr PISONI: Point of order, sir: the minister is entering debate.

The SPEAKER: I will listen carefully to the minister while I deal with this other matter.

The Hon. A. KOUTSANTONIS: The National Electricity Market, as it has been established and as it is operating, is giving South Australians uncompetitive offers by uncompetitive retailers. If you read the ACCC's report from yesterday, what he is saying is that, in South Australia, companies like AGL have 43 per cent of the generation capacity and I think 48 per cent of the customers. What he is saying there, and what minister Frydenberg is saying—which members opposite ridicule—is that they should shop around. But whenever the government says, 'Shop around,' it comes with derisions of members opposite. We now have the head of the ACCC saying that the unfair competitive advantage that—

Mr MARSHALL: Sir, I ask you to bring the minister back to the substance of the question.

The SPEAKER: Yes, the minister is debating the matter.

The Hon. A. KOUTSANTONIS: The Australian Competition and Consumer Commission review, Retail Electricity Pricing Inquiry, which was released yesterday, was a detailed preliminary report released on the impacts of electricity pricing on small business and on retail customers. What Mr Sims has found is that there are significant issues with the level of competition in South Australia, which directly impacts small business.

Small business wish to contract competitive prices and wish to use their demand to go to a retailer to get a competitive price. What the ACCC report has found is that it shows that electricity prices have increased because, overwhelmingly, there is a lack of competitive market forces in South Australia. That lack of competitive forces in South Australia is showing that we have higher retail pricing than we should. That's why the government went out to the market with its own load to bring in a new competitor.

We told the large market dominant players, who have been found in this ACCC report to be so vertically integrated into the market as to be uncompetitive, that what we have done is brought in a new retailer—a new generator—who will be offering new, competitive market offerings through the solar thermal plant in Port Augusta to lower prices.

Members interjecting:

The Hon. A. KOUTSANTONIS: Yes, that's right, and we have brought that in through the back of giving them the government's load for 20 years as an anchor tenant. If you want more competitive tension in the market, there are a couple of things that you have to do. First, you have to make sure that there is plenty of competition. You don't allow such a service like electricity to be privatised in the way that it was where you have monopoly arrangements in place.

As the ACCC found out, the drivers for the major increase in the bills up until 2016 have been made up through network charges: poles and wires and distribution lines. Of course, they are distribution lines and poles and wires that we built as taxpayers, which were then sold to monopoly interests, and monopoly interests are extracting their return. They make up 45 per cent of the bill.

It's no wonder that small businesses are struggling to get competitive offers when you are seeing such large investments by the taxpayer handed over to the private sector and the private sector treating these assets as if they were built yesterday, trying to get a return on them because they paid such an inflated price for them because of the way the market was set up by members opposite when they privatised them.

What you are seeing out of the report is that the highest prices in the nation are not in South Australia: they are in places like Queensland. What you are seeing is that South Australia's prices are lower than they are in Victoria. Of course, it's important to remember that our plan is bringing downward pressure.

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