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Legislative Council - Fifty-First Parliament, Second Session (51-2)
2007-10-25 Daily Xml
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AUSTRALIAN ENERGY MARKET COMMISSION ESTABLISHMENT (CONSUMER ADVOCACY PANEL) AMENDMENT BILL

Second Reading

Adjourned debate on second reading.

(Continued from 16 October. Page 907.)

The Hon. M. PARNELL (11:14): I commence by acknowledging that South Australia is the lead state for these electricity bills, including this bill, which establishes the consumer advocacy panel. I will have more to say about our role as the lead state later when debating the other bill.

The important thing now is to note that we have a tension at work here between our role as legislators, doing the best we can for South Australia, and the desire of all the states and territories to try to have uniform legislation. I do not think that the second consideration—namely, uniform consideration—should have the primacy that perhaps other members argue it has. I think we need to be able to make changes that may be specific in the South Australian context.

Another point to note about national legislation, and our being the lead agency, is that, in relation to these electricity bills, I am receiving correspondence from national organisations we would not normally expect to deal with because they can see that South Australia is where the debate will be. They look to us to show some leadership. One organisation that has written to me in relation to this bill is the Consumer Action Law Centre in Melbourne. I will read a few sentences from its submission, as follows:

Dear Mr Parnell,

You might be aware that amendments to national energy legislation were introduced into the South Australian House of Assembly on 27 September. South Australia is the lead parliament for national energy legislation. Once the legislation is passed, it will be applied by the other national energy market jurisdictions (that is, New South Wales, Victoria, Queensland, Tasmania and the ACT).

As a consumer advocate, I would like to raise one particular issue in relation to the Australian Energy Market Commission Establishment (Consumer Advocacy Panel) Amendment Bill. In Minister Conlon's second reading speech, he referred to the extensive consultation undertaken in relation to the draft legislation. The Consumer Action Law Centre, being a founding member and convener of the National Consumers Roundtable on E Energy a grouping of community sector advocates who advocate the interests of domestic energy consumers), has participated significantly in this consultation.

The Bill aims to strengthen consumer advocacy arrangements in both gas and electricity through the establishment of consumer advocacy funding to facilitate consumer engagement with industry, government and regulators. The body will replace the current Advocacy Panel, which operates under the National Electricity Rules. The Bill, at section 30, provides that funding should be available to all consumers with particular regard for small to medium consumers. However, we are concerned about the proposed definition of 'small to medium consumers' which would be placed in the Regulations.

When the Advocacy Panel was first set up, its intention was to assist small to medium consumers. Quoting from the original report that proposed the advocacy panel: 'Small and medium end users, in particular, currently generally do not have access to sufficient human and financial resources to ensure adequate representation whatever those arrangements. They should not be left out of the decision-making process solely because of lack of resources. The diverse and diffuse nature of the customer base, however, and the individually small scale of the direct benefits to those end-use customers as a result of national market reforms means that it is unrealistic to expect self-funding coalitions of small and medium end users to emerge.' Large end-users by comparison, by virtue of the large financial stake in the outcomes of energy market regulations and reforms, have a direct incentive to engage in advocacy and the resources to do so.

The Regulations will define small to medium consumers as those that consume less than 4,000 megawatt hours of electricity and 100 terajoules of natural gas per annum. These limits equate to annual bills of around $350,000 for electricity and close to $1 million for natural gas. Thus they would effectively allow large businesses prioritised access to funding by defining them as 'small to medium consumers', and appear to be the result of effective lobbying by representatives of large end-users. We believe this definition will diminish the original purpose of the funding model that funds be redistributed to advocates who would not otherwise have a voice.

That is the correspondence to me from Gerard Brody, who is the Director of Policy and Campaigns with the Consumer Action Law Centre in Victoria. Really, for me, the question that arises from that communication is: where is the voice for those who are genuine small consumers? Perhaps more importantly: where is the voice for those whose desire is to consume less rather than more energy?

I think that there are omissions in the composition of the panel, not just in relation to the definition of small to medium consumers but also in the representation or the expertise on the panel in the areas of demand management, energy efficiency and renewable energy. I think that it is no longer possible to maintain the simple approach that electricity is one thing and greenhouse avoidance products are another, because they are intertwined, and consumers need much greater levels of guidance and protection because of the current complexity in dealing with different frameworks.

The world of energy products is changing continuously, and consumers deserve protection of their interests when they are purchasing renewable and low emissions energy, whether on a voluntary or mandatory basis, particularly now, as there are many different products in the market and as standard electricity becomes carbon constrained towards the implementation of the Australian emissions trading system or some form of carbon tax.

I had a private conversation with a government minister just last night about which products on the market are the best if you want to buy green energy in your domestic environment. I was pleased to refer the minister to a website operated by a number of conservation groups, where they rate the different energy products. Some of them I think you could describe as quite shonky in the performance that they deliver, while others are genuine, accredited green energy products. However, consumers struggle in the marketplace understanding these different systems.

The Australian Greenhouse Office and the Office of the Renewable Energy Regulator, as well as the state-based green power scheme regulators, have, I believe, to date failed to provide a robust framework to protect consumers' interests on the quality of renewable and low emissions energy products. Double counting of renewable energy benefits is flourishing, with just one example being the widespread rebadging of old hydroelectricity that dilutes the voluntary renewable energy market, despite the fact that the greenhouse benefits of old hydro and new renewables are still benefits that are being counted towards standard grid electricity emission factors. The consumer advocacy committee can play a vital role in reforming the industry to stop double counting and to represent consumer interests in renewable and low emissions energy matters, and also to support research into the best physical and market frameworks that will provide consumers with value for their mandatory and their voluntary renewable electricity and low emissions electricity purchases.

As well, the consumer advocacy committee could play an important role in driving better guidelines and transaction disclosure standards dealing with renewable energy certificates from user generators from households to large businesses. I have mentioned in this place before the problems with the ownership of those certificates not necessarily being in the hands of the person who would like to think that they are responsible for renewable energy, such as the owner of a domestic solar hot water service, such as the one that is on my roof. The absence of robust guidelines and acceptable disclosure standards has caused widespread confusion in the community, with many people and organisations believing that they are still using renewable energy that they have, in fact, sold or signed across to other parties as renewable energy certificates.

From households to large organisations, even to state governments, we find that embarrassing and damaging mistakes are being made. We find dubious claims of high renewable energy use when, for example, in South Australia most of the state's renewable electricity is sold as renewable energy certificates to the national market, and mostly sold interstate. That is partly a function, I believe, of the lack of a decent consumer advocacy panel that would serve to lobby for a clear set of rules and expectations to protect the changing interests of electricity or other low emissions energy customers.

In summary, whilst this legislation is welcome and supported, I think that it is capable of reform. I ask all honourable members to try to strike a balance between our role as state legislators, our special role as the lead legislating agency, but not lose sight of the fact that, at the end of the day, we would like to have some uniform standards. I will be looking at amendments to this legislation, but for now I am happy to support its second reading.

The Hon. R.I. LUCAS (11:26): I rise on behalf of Liberal members to repeat the position that was put down by the shadow minister, the member for MacKillop, in another place in relation to this legislation; that is, that the Liberal Party is supporting the second reading and the passage of the legislation for the reasons that he briefly outlined. My comments will therefore be relatively brief. As I indicated in the debate on the companion legislation (perhaps loosely termed; I refer to the national electricity law changes), most of my questions and comments in relation to the Australian national electricity market will be left to that particular bill rather than repeating them during the debate on this bill.

This bill is relatively specific. It is the result of a national agreement and is establishing a consumer advocacy panel. As I have said, the member for MacKillop has indicated that we are supporting that. One of the concerns that I have with the laudable goals that underpin the establishment of bodies like this consumer advocacy panel is the potential dilemma in terms of ultimately making a judgment as to how effective they are, and also where the money is ultimately spent. Whilst the budget has to be approved by the council of ministers, there must be some indicative idea as to what the budget is likely to be—not exactly, but some indicative idea of whether we are talking $1 million, $5 million, or something like that, and also whether or not the government contemplated or argued that there ought to be some limit on the amount of money spent on administration as opposed to expenditure on research projects and other such laudable projects.

I note in the drafting that there is a specific limit in terms of ensuring that money that is proposed to be made available for research projects initiated by the panel does not exceed 25 per cent of the panel's total budget funding projects. As I understand it, I think that is directed at trying to ensure that panel-initiated projects do not dominate the funding as opposed to projects that are being recommended by people other than those on the panel. In the real world, I am sure that panel members and/or others, if they needed to, would be able to get somebody other than a panel member to suggest a research project anyway, but let us put aside that nicety for the moment. I am highlighting there that at least some endeavour should be made to limit the expenditure of part of the budget.

I want to know whether the government actually discussed the prospect of trying to limit the amount of money spent on administration. One of the problems, as I said, with some of these bodies that we have seen in the past at the national and state level is that the administration grows like topsy, and a significant lump of the X dollars in the total budget for the consumer advocacy panel gets spent on staff salaries, entitlements, benefits and servicing the staffing needs of that particular body, as opposed to being farmed out to consultants and others for particular research projects.

If there is to be benefit from this particular panel, ultimately that is likely to be best served by as much money as possible being used on the delivery of services—in this case, the delivery of research information which might better inform debate on the national electricity market—and less money being spent on the administrative structures.

That is essentially the only question I leave with the minister: what is the indicative size of the budget and did the government take up the prospect of trying to limit the amount of money spent on administration? Given that there is no legislative limit, does the minister and the government have a view as to what level the administrative expenses ought to be kept to as part of the total budget? I accept that part of the minister's reply will be that the ministerial council ultimately approves the budget, and hopefully that will mean that it has responsibility to limit the amount of money spent on administration, but I am seeking the minister's view on whether, when he looks at the budget, he is prepared to canvass that aspect of it, and is he prepared to give an indication of what he might think is a fair expenditure on administration as part of the total budget? I indicate the opposition's continued support of the legislation.

Debate adjourned on motion of the Hon J.M. Gazzola.

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