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Legislative Council - Fifty-First Parliament, Third Session (51-3)
2009-04-07 Daily Xml
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STATUTES AMENDMENT (ENERGY EFFICIENCY SHORTFALLS) BILL

Second Reading

Adjourned debate on second reading.

(Continued from 24 March 2009. Page 1663.)

The Hon. J.M.A. LENSINK (16:28): I rise to indicate support for this bill, which enacts through the statutes what has been operating in regulation in line with a policy of this government, as well as operating through the particular licensing conditions for electricity and gas retailers.

The stated purpose of the bill is to reduce greenhouse gas emissions, particularly through households, by assisting them to achieve some energy efficiencies. These have been listed as incentives and special offers, which may include any one or more of the following: installation of energy-saving light globes; low-flow showerheads; persuading people that they do not need a second refrigerator or freezer; the installation of energy-efficient hot water systems; ceiling installation; draught proofing; and the installation of energy-efficient heating and cooling systems.

There is also a provision for energy audits to be conducted in what are called 'priority households'. I think it is fair to say that those priority households are lower-income households comprising pensioners and those who hold concession cards—and the target is for 35 per cent falling within those criteria. I find this scheme somewhat amusing, and over time it will be interesting to see how it travels.

It is my firm belief that people in that position (that is, self-funded retirees, pensioners and those on low incomes) would already be doing everything they can to reduce their power bills, for obvious reasons. It depends on what is the primary aim of this bill: whether it is to reduce power bills or to reduce greenhouse gases. If it is the latter, the target ought to be applied more towards larger families. I read with some amusement some of the contributions made in the House of Assembly, particularly from those people who have teenage children, who need to be persuaded of the merit of turning off lights, appliances and so forth, and I think we would all be familiar with that. I have had that experience myself with my nieces, who are in the 'tweeny' category, coming into their teenage years. They are quite oblivious of the need to turn off lights. So, when they come to stay, my power bill goes through the roof.

However, I digress. The greenhouse gas savings made by retailers will be measured in tonnes of carbon dioxide equivalent. The scheme is due to expire in 2014, with the targets being reviewed every three years. The government believes that, over the next six years, some 2,000 households will be targeted by retailers to benefit from that scheme.

I have mentioned one of the concerns, that is, whether the principal aim is to reduce greenhouse gases or to assist those on low incomes. One of the other concerns we have is that the fines that will be applied to retailers will be directed to the Consolidated Account rather than into a specific fund which would be applied to encouraging new technologies and that sort of innovation. Our energy spokesperson (the member for MacKillop) had amendments drafted to this effect, but he did not move them because I think he was awaiting advice about whether or not that changed it into a money bill. However, the Liberal Party is broadly supportive of that going to some sort of hypothecated fund, so that it does not just get soaked up into some account by the government—a 'hollow log', so to speak.

We will be supporting the Hon. Ann Bressington's amendments, which are similar to the amendments we had envisaged. I note that those amendments will direct the funds towards assisting people who may have failed to benefit from activities, which is a laudable aim, and to support other programs or activities to promote or support energy efficiency or renewable energy initiatives within South Australian households. So, I commend those particular amendments.

On the point of whether the ultimate aim is to reduce greenhouse gases or to assist people on low incomes, I also note that the debate advanced by the member for MacKillop that the Victorian government, I think it was, had received some advice that these sorts of measures which are targeted at households, which, relatively speaking in volume terms, are smaller emitters, would, in fact, let industries off the hook, and that is of concern.

I see that the current edition (April/May 2009) of the COTA regular magazine, entitled myCOTA, has advised its members that it believes that it will be some months before energy providers work out their various schemes. COTA believes that participating householders can save around $80 a year on their power bills and, in some cases, a great deal more, which I think would be welcome news for many people on fixed incomes. With those comments, I endorse the bill.

The Hon. D.G.E. HOOD (16:35): I rise to indicate that Family First supports the second reading of the bill. The bill imposes a new penalty regime on electricity and gas suppliers that fail to meet more than 90 per cent of one or more of their targets per year, under the Residential Energy Efficiency Scheme.

The scheme is the sort of proposal that looks good on paper, but I have a number of concerns about it. Indeed, in his report to the Labor Party, Professor Gaurnet said that emissions trading would be a 'big hit' on families and that energy prices would rise initially by some 16 per cent for electricity and 9 per cent for gas, with inflation being pushed up almost 1 per cent as a result. He also said that electricity might cost some 40 per cent more. My question is: how do people cope with that sort of rise?

South Australia and Victoria have decided to let energy companies increase their prices even further to subsidise energy savings initiatives to their lower income customers. As far as I know, only one or two states have rolled out such a scheme, with Victoria being the other state.

I note from the scheme's website that bill payers will subsidise lower income users for a number of things, including changing light bulbs to energy-efficient light bulbs; changing shower heads to an energy-efficient shower head, which saves water and costs less to heat the water because it uses less water; installing ceiling insulation when there is none currently; sealing gaps in doors, windows, fireplaces and exhaust fans in order to stop drafts and improve insulation; getting rid of old fridges and freezers, particularly second fridges and freezers; and upgrading heating and cooling systems to more efficient systems, or installing duct work which makes them more efficient while using less energy. Another of the examples given was to install a more efficient water heater. Where this is not already required by law, it was stated that the new water heating standards applying in South Australia were relevant in this situation.

The press releases surrounding this issue have been very interesting. One early press release stated that the scheme would lower costs for 'all types of households'. A later press release stated that lower income households could save between $60 and $80 a year; and the most recent press release trumpeted savings of 'over $80 per year'. This scheme is getting more efficient by the day, it would seem. The reality, as Professor Garnaut stated, is that energy costs will go up and not down. AGL, in February, raised supply charges for its 250,000 customers to pay for this scheme, which it says it needs to do in order to subsidise the energy audits for some of its 10,000 low income customers.

The scheme compels electricity and gas suppliers who make their money from selling electricity and gas to make their customers use less electricity and gas. This is a strange paradigm when we consider that the purpose of a business is to create these products to sell at the best price they can get for them and ultimately to reward their shareholders and allow further investment infrastructure. My view is that these sorts of schemes do not work very well at all. When social policy initiatives are in conflict with industry's imperative—and we should remember that we require companies to make a profit in order to please their shareholders and indeed fine or even gaol directors of companies who do not act in the best interests of their shareholders—those initiatives should be driven by the institution endued with the backing for social policy initiatives, and that is a government. They should not be outsourced to an industry that clearly has other motives and issues driving its operation on a daily basis. That is why I believe this scheme will struggle to work effectively in the medium to long term.

To give a few illustrations of how little regard industry has paid to this scheme to the present, David Nankervis—a well respected journalist from the Sunday Mail—recently published an article on the scheme in the Sunday Mail. He telephoned TruEnergy for a comment before publishing the article. When TruEnergy was asked about the REES scheme, he reported that its Director of Corporate Affairs, Kate Shea, said, 'It's coming in on 1 July, isn't it?' In fact, the scheme was already meant to have started on 1 January, and when the story ran in late February TruEnergy should have already been running the scheme for several months. Its Director of Corporate Affairs did not even care enough about the scheme to know that it had started.

I have looked at the website of the major energy providers in the past 24 hours and none, as far as I can see, has any dedicated phone numbers or ways to apply easily to participate in the scheme. Indeed, when calling AGL on the number provided on its REES webpage, I hit a telephone service asking me to press various numbers, and it did not even give the option for the REES scheme information. I was given an option to speak to an operator regarding a general inquiry—and perhaps they could have directed me further—but there was no simple way to get the information or apply for the scheme, even when calling the number listed on the relevant webpage.

Origin's website talks about low income earners being able to apply for the scheme 'shortly', despite the fact that it should have already been in operation since January. Clearly, confusion reigns. Perhaps some energy companies are quite willing to pay the $100,000 maximum base penalty specified in the bill for failing to meet the targets rather than seriously implementing these schemes. It is highly likely that the $100,000 maximum fine would be well and truly less than the potential loss of revenue to them over the longer term of implementing the scheme.

I have some reservations that this scheme will have the impact it is desired to have. Under the current scheme, it cannot have any serious impact on our total greenhouse gas emissions. For example, if you buy a Toyota Prius, change all your light globes to energy efficient fluoros, and even go to the trouble of setting up a wind turbine in your backyard, install solar panels and do all the things designed to make us more energy efficient, your efforts would not make one iota of difference to Australia's total greenhouse gas emissions because the federal government decided to use an annually reducing cap to reduce our total emissions by 2020 to between 5 and 15 per cent; that is, the total amount will be how our performance will be judged rather than by sector. When we reduce our own emissions all we do is potentially allow greater scope for emissions by other pollutants, including industrial pollutants.

I put a few questions on notice last week regarding South Australian energy production, and I am certain they will become more focused concerns for all South Australians over the years to come. To put it one way, there is an elephant in the room when it comes to power generation in South Australia. Keep in mind that Adelaide operates with a gas power station at Torrens Island that was constructed in 1967, and that is before man even walked on the moon. Around 2014 to 2016 I understand we will reach a major turning point. Somewhere around that time South Australia will not be able to fuel its major power plant on its own any more. The South Australian side of the Moomba gas fields will be dried up, or almost dried up, and the Electricity Supply Industry Planning Council Annual Planning Report for 2008 says that supplies have been diminishing since 2003. We have no other major tapped supplies of gas in the state, so it looks as though we will rely on interstate fuel from now on through the SEA Gas line from Victoria and also from Queensland.

What will South Australia's energy future be like? Are we destined to become a perpetual receiving state? We are already begging the eastern states for water; and soon will we be in a situation where we are doing the same to Victoria for natural gas? The other states have no hesitation, it seems, in turning off our water supply and electricity supply when it suits them, as we have seen particularly with electricity supplies over the summer recently, when they want it instead of us. So what will happen when gas supplies get low in South Australia? Is South Australia facing a future with the finger of the Victorian Premier or senior bureaucrats on the power switch button? I certain hope not. According to the annual planning report, Leigh Creek is also down to about 10 years of readily accessible coal remaining. Will we start importing coal from other states for our other large power plants to run on coal? Possibly.

In summary, I have some concerns about South Australia's energy future that I have touched on here. I do not think this scheme will do as much as it is intended to do. Given that the scheme is already in place and that legislation is required consequentially, Family First will support the second reading, and we believe that more serious steps need to be taken in future in order to secure South Australia's energy supply.

The Hon. M. PARNELL (16:45): The Greens support this bill which is part of the implementation of the government's residential energy efficiency scheme (REES). We think it is appropriate that energy retailers are given clear reasons and incentives to invest in demand management on behalf of their customers. Traditionally, the more electricity and gas that was used, the more income there was for the energy providers. We now know that we need to break that nexus so that it is in the interests of the retailer for their customers to use as little energy as possible. From an energy security perspective, reducing energy bills for people on a low income makes sense; and, from a grid management perspective, the approach taken in this bill makes sense.

The main difficulty I have with this legislation is to understand how it fits into the overall scheme for greenhouse gas reductions, given that that is one of the stated objectives of the bill. I believe that this bill will not make a jot of difference to greenhouse gas emissions. The reason for that is that the federal government's carbon pollution reduction scheme will undermine any effort that is taken by the state government through legislation such as this, as well as measures taken by individuals at the household level. We also have in the commonwealth's carbon pollution reduction scheme a woefully inadequate non-science based headline target of a five to 15 per cent reduction in emissions, and that is a major flaw of the commonwealth's scheme.

Richard Denniss, the Executive Director of the Australia Institute, has been very vocal about this flaw in the commonwealth's scheme. In his Research Paper No. 59 (November 2008) entitled 'Fixing the Flaw in the ETS: The role of energy efficiency in reducing Australia's emissions', he said the following:

Emissions trading will impose a 'floor' below which emissions cannot fall as well as a 'cap' above which emissions cannot rise. That is, once the government has decided on an acceptable level of pollution, it will issue a corresponding number of pollution permits. If households use less energy and create less pollution, they will simply free up permits to allow other families or other industries to increase their own emissions.

If, for example, it is decided that Australia needs to reduce its carbon emissions by 15 per cent on year 2000 levels by 2020, emissions will total 85 per cent—not 84 per cent or 86 per cent. Under such an arrangement, there will be little scope for Australian households and small businesses to take deliberate action to reduce their emissions because whatever they do, Australia will continue to emit greenhouse gasses at a level corresponding to 85 per cent of its emissions in 2000. The only varying factors will be who pollutes and what price they pay to do so. As a result, concerned households and businesses will not be able to make any meaningful contribution to greenhouse gas abatement.

Later on in the same research paper, Dr Denniss says:

Some state governments have expressed interest in the notion that they may set more aggressive targets for emissions than those fixed by the federal Government. However, under a national CPRS, if one state government establishes a higher emissions target for polluters in their state, it just frees up more national permits to be purchased by polluters in other states.

Richard Denniss also continued this theme more recently in an article in February this year entitled 'An idea whose time never came' in which he said the following:

It is important to highlight that voluntary action doesn't just mean the efforts of individuals. One of the most exciting examples of collective voluntary action is the ACT Government's commitment to pursue an emissions reduction target of about 30 per cent by 2020. If the residents of the ACT are willing to pursue such a goal, and it can be shown that they are achieving it, why shouldn't the pollution cap be sliced accordingly?

The CPRS in its present form is deeply flawed. If the Government wants to see the legislation passed, it is going to have to amend its proposal. The irony is that if the legislation is amended to fix the problems outlined above, the CPRS will end up working the way that most Australians thought it would work in the first place.

The problem we have is that, if the commonwealth's pollution reduction scheme legislation is passed with the current flaw still intact, nothing the state government does, nothing in this bill, no spending program or any policy will make one jot of difference to our overall greenhouse gas emissions, and that is bizarre. It is horrible; it is shocking; and it has to be fixed.

The Premier has trumpeted long and loud his leadership on matters greenhouse, and he has brought before this parliament legislation to deal with emissions. We have this current bill before us, but it will not make one jot of difference if the commonwealth's scheme passes in its present form, and that is why, even though people in the conservation community and energy experts have been slow to come to this realisation, every community rally that you now see looking at the question of climate change and greenhouse gas reductions is focusing on this commonwealth scheme because the penny has dropped and people realise what a sham it is.

It is now being called the 'carbon polluters reward scam' because that is all it will do. Every time we put panels on our roof, every time we fix or replace an inefficient refrigerator, or we insulate our homes, all we will be doing is putting extra money in the pockets of the big polluters.

That gives me no reason to oppose this legislation (which on its face is good legislation; it encourages people to use less energy and it puts some of the burden back on the electricity and gas retailers). But unless the Premier has some inroads in dealing with his commonwealth counterparts, then, whilst we might feel good about passing this legislation, it will make not one jot of difference and we will have been part of perpetuating a fraud on the entire Australian community.

Debate adjourned.

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