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Legislative Council - Fifty-Second Parliament, First Session (52-1)
2011-06-07 Daily Xml
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ELECTRICITY (MISCELLANEOUS) AMENDMENT BILL

Second Reading

Adjourned debate on second reading.

(Continued from 19 May 2011.)

The Hon. D.W. RIDGWAY (Leader of the Opposition) (15:51): I rise on behalf of the opposition to make some comments in relation to the electricity (Miscellaneous) Amendment Bill 2011. The initial feed-in legislation was announced some few years ago, I think, as a political stunt by the Premier at a Solar Cities conference. Over his time, the Premier has been obsessed with pushing his green credentials, and this has been done at the expense of presenting sensible, well-considered legislation. His priority was to be the first jurisdiction in the nation to have a legislated solar feed-in scheme.

To those who have been able to afford the capital cost of installing a photovoltaic system in their home, the scheme has been accepted with open arms, due mainly to its extreme generosity. The scheme has financially rewarded a handful of people who could afford the sustainability measure. It has been summed up to me as being one that has socialised the costs but privatised the benefits.

The initial scheme was legislated in 2008 and set a feed-in tariff of 44¢ per kilowatt hour. The government suggested at the time that the scheme should run for five years, but the Hon. Mark Parnell pushed for a time limit of 20 years. So, the opposition deliberated and decided that if this scheme was to achieve everything that the government purported it would then we would support the 20-year lifespan. Subsequently, the feed-in scheme will be open to existing entrants until 2028.

Coupled with various system rebates, a 44¢ tariff and rising electricity prices, the scheme's popularity has grown at an exponential rate. The government had said that it would review the scheme once the installed capacity reached 10 megawatts. The expectation had been that they would get 20 megawatts over about five years, and the government said that the scheme would be cut off at 60 megawatts.

The installations quickly exceeded the 10 megawatt capacity, but at that time there was no review. The opposition repeatedly asked for that review and the government finally succumbed to pressure at the end of October of last year. By this point, we were probably truly past the 60 megawatt capacity. I understand, from a government briefing provided to my office, that 59 megawatts is currently installed and a further 35 are approved for installation under the current scheme, although I have seen other estimates of far more than 35 megawatts of likely installation under the scheme, depending on when the scheme is cut off, or not.

For those who are not on top of the technicalities, the installed capacity of an energy network is the collective maximum energy production of all assets attached to it. A network operates at maximum capacity and there are a multitude of problems associated with exceeding that. The government has seemed to exercise little caution in preventing a solar uptake which could potentially cause problems for the network.

Solar energy's peak is provided in the heat of the day, yet in the middle of summer the peak demand comes when the solar energy is diminishing because of the sun being lower in the sky, so the network is constructed to, and has to, have the capacity to supply the maximum electricity required at the peak demand time. The bill also increases the tariff from 44¢ to 54¢ per kilowatt. This will be for existing customers and new customers who join before 1 October this year. It will continue to be paid for those customers until 2028. As mentioned, the scheme will cease on 1 October 2011 under this bill, rather than at the 60-megawatt cap.

As stated, the opposition feels that this legislation was flawed from the beginning. However, the increase in the tariff of 10¢ really defies common sense. It is interesting to note that the increase in the tariff from 44¢ to 54¢ was announced by the Premier when he gave the keynote address on South Australia's leadership within a carbon-constrained economy. Mr Rann said that an extra 10¢ was not the only benefit available to South Australians who invested in solar energy, and he went on to talk about a whole range of perceived benefits. He made this particular announcement on 31 August 2010. Members will certainly be aware that that was at a time when the state budget had been delayed after the election and the Sustainable Budget Commission was reporting where the government could either cut expenditure or raise extra revenue.

We saw significant cuts proposed by treasurer Foley and the government in relation to public sector jobs and, yet, at the same time, the Premier was suggesting that we should increase the feed-in tariff by 10¢—again putting another burden on those in the community who perhaps do not get the benefit of solar power but actually have to pay the extra cost for those who have it installed. Again, we see an example of the Premier making a policy announcement by press release rather than by having a well-considered sustainable structure in relation to providing some incentive for South Australians to install solar panels.

As mentioned in another place by my colleague the shadow minister, Mitch Williams, the current scheme, coupled with the ever-decreasing cost of photovoltaic cells, has seen most households cover the capital cost of installing a system well within 10 years. While I have always been a supporter of solar energy and photovoltaic panels on roofs, and I have followed the progression of payback periods, it does not seem very long ago that the payback periods were somewhere in the vicinity of 18 to 20 or maybe 25 years. Certainly, we are seeing the cost of the panels coming down and the cost of electricity going up, but the payback period now seems to be getting shorter.

The increase in tariff is simply continuing to shift the financial burden of power prices from a small group of South Australians to the majority who cannot afford solar systems. It was mentioned in a briefing with my office that the announcement of a 54¢ tariff excited many people—and justifiably so—but it has aroused very little interest within the non-solar community. Perhaps most people do not understand where the rebates are coming from. The scheme currently adds about $28 to the annual power bill of every consumer in South Australia. Not only does this group continue to feel the burden of increasing power prices but they are paying for the costs of an over-generous scheme and they will continue to do so for the next 17 years.

We should not forget that the tariff itself has no relation to the actual value of the solar energy produced. This is an additional 8¢ per kilowatt paid by the retailer to the solar producer. Solar feed-in schemes were designed to provide a modest reward for people who took the trouble to attempt to create sustainable households for themselves. As the cost of electricity rises dramatically, the financial reward of having a photovoltaic system is significant enough without this excessive payment. Arguably, within five to 10 years the cost of power will have increased and the cost of photovoltaic systems become so low, to the point where, as I said earlier, I suspect that they are self-funding because the benefits gained will pay for the capital cost without having to have any incentives provided.

From a South Australian industry and economy perspective, our concerns are obvious: the feed-in tariff scheme has been a major stimulus for the solar industry. Since the announcement of the 10¢ increase, 40,000 people have joined the scheme, obviously, many of these wanting to install solar systems. Arguably, the scheme has been the main driver for this industry over the past few years. Common sense would suggest that removing that scheme overnight will have a very significant impact on the industry.

This particular bill has raised a great deal of interest and opinions, and we have subsequently arrived at a point where there are several compelling alternatives to what the government is proposing. We have, obviously, a proposal from the Greens, and significant industry sectors have also provided us with a scheme that they think would provide a better solution. I did have some discussions with minister O'Brien just prior to lunch today in that very important place, the Blue Room, where he indicated that he was considering some further amendments which he thought were better than the Greens' proposal and better than the industry proposal.

In summary, the government scheme proposes to cut the scheme on 30 September and increase the tariff by 10¢, lock in the 54¢ tariff until 2028, and make it mandatory for retailers to pay a kilowatt price to solar producers, determined by ESCOSA. The Greens want to modify the government's proposal. Having said that, the minister indicated to me today that he has additional amendments that he thinks address some of the concerns that have been raised during this debate.

The Greens, by their amendments, want to modify the government's proposal. They want the retailer to pay the price for the electricity feed-in, determined by ESCOSA, but based on a broader assessment of the value of that energy. They want to include a retailer contribution in the new 54¢ tariff rather than it being additional, and after 30 September a transition scheme comes into play at 30¢ per kilowatt hour, including the retailer contribution and, as the cost of power increases, the tariff reduces. They want to exclude concession cardholders from paying the cost of the scheme. They estimate that to be some 200,000 householders (I assume); so that may well be some 400,000 (or thereabouts) South Australians.

Sadly, some concession holders are very needy in our community; but I am reminded of examples where some people on health-care cards a few years ago were travelling in the Himalayas and trekking in the Andes, and in other examples I know that some pensioners are having their 28th or 29th overseas cruise. So, I am not sure of a broad-based approach saying all concession card holders should be included, or excluded, from the scheme. The Greens also want to ensure that residents in retirement villages can have access to the scheme.

A senior industry identity who has spoken to the opposition suggested that an alternative version would be to close the scheme almost immediately, at 30 June, at an installed capacity of around 100 megawatts rather than, potentially, 160 megawatts under the government scheme, and continue a feed-in tariff at the rate of 44¢. The figures suggest that the annual cost of the scheme will be around $28 million less than the government's alternative, by 2028 saving some $481 million. The savings are based on the projected uptake of the systems within 30 June and 30 September.

Mr President, you can see that we have three potential options in front of us. As I said, the minister has already indicated to me that he has some other amendments which he thinks should address it. My colleague, the Hon. Rob Lucas, will make a contribution a bit later on in this debate; he is a former energy minister.

It was discussed yesterday in the Liberal Party party room that maybe a better approach to this whole process is that we have these options. I do not disbelieve the Hon. Mark Parnell figures, but we are now relying on his understanding of industry and energy. I know he has been provided with information by consultants. The government has had information provided to it, and we have industry spokespeople providing information to us. The suggestion from the opposition now is that we need a very quick independent assessment of what is on the table.

We think that one of the options going forward—and the minister has indicated that he is not opposed to this—is for the minister, the Hon. Mark Parnell and Mitch Williams (the shadow minister for energy) to lay their proposals before ESCOSA and get them (and maybe ESCOSA is the independent adjudicator) to give us a very brief but, I suspect, probably pretty accurate assessment of what all these schemes mean and the modelling in relation to the cost to the consumers, where the burden is spread across our community, and ask them to report back to us—to the parliament, to the Legislative Council, to the minister, to the opposition and to the Greens—on the Friday before the last sitting week in June. Effectively, we are giving them about a 10-day window to look at these issues.

I think we have seen from what we supported a couple of years ago that now the community has taken advantage of it, if you like, the horse is starting to bolt away. More and more burden is being shifted onto South Australians who are not able to afford the capital cost of these systems. Everybody has a particular view on how they might like to tweak the system, to even it out, and I do not think any of us are experts. There is an opportunity now to take a deep breath and get the main spokespersons from each of the parties to give a view and an opinion on which is the best scheme.

If the minister is happy, we ask ESCOSA to be the independent adjudicator and then report back to us so that we can make a decision in this parliament on an informed basis. I think previously the Premier announced that he wanted to be the first, and I think some of the other parties got somewhat excited by that. I do not think we really knew what the uptake would be, and I do not think that either we or the community really understood the increase in electricity prices, the impact it would have, or the impact it would have on those in the community who cannot afford the systems.

I also think a number of questions should be asked if ESCOSA is to be involved. What would the cost implications be for energy consumers of cutting the scheme off either on 30 June or 30 September? What would be the cost implications of phasing out the tariff as the energy cost increases, and at what time does ESCOSA see that those two points would meet? What network benefits accrue from energy fed into the network, such as transmission and network charges?

I also have a question that my colleague Mitch Williams has asked me to put on the record. He is seeking clarification in relation to clause 36AE(5)(a) and (b), on page 6, which refer to 'the holder of a licence', the entity which installs the necessary meter for a person to become involved in this feed-in scheme. The licence holder in this context is ETSA. I am informed that currently in the National Energy Market 'meter providers' (as defined in the National Electricity Act) install metering. ETSA indeed has that accreditation and can perform metering work on behalf of its distribution businesses. Retailers can become a 'responsible person' at a site and appoint their own meter provider. This is done without the distributor's involvement. If this amendment passes, will the distributor (ETSA) be able to deny customers the tariff where the meter provider installs the meter on behalf of the retailer?

I think members are now aware that the opposition is certainly not opposed to this feed-in tariff regime, but we think that we need to catch our breath and ask ESCOSA to look at the options that are on the table and report back in about 10 days so that we can make an informed judgement and decision in this place. If 30 June is the date that is potentially agreed by this chamber, then that can still all happen prior to 30 June. We are not delaying it to a point where it cannot be achieved, but it also gives a chance for an independent adjudicator and the independent experts to make a judgement without any political interference.

I am certain that if we were in government, rather than being in opposition, we would have had a detailed report done by an independent adjudicator to see exactly where this was heading, where the benefits were and where the costs were, so that we could make a fully informed judgement about the benefits or, in fact, negative impacts of such a scheme to the community. With those few words, I look forward to the debate continuing.

The Hon. M. PARNELL (16:10): This is a critical bill for the future of the solar industry here in South Australia. From very humble beginnings, it now looks as if some 5 per cent of households have solar arrays on their roof, and that is exciting. There are some 1,500 people employed in the solar installation industry, up from around 50 people just a few years ago. So, whilst this whole debate about solar panels and the appropriate level of public support for renewable energy is couched in terms of a problem, we should not lose sight of the fact that more and more South Australians are generating their own electricity from their own roof and feeding their excess power back into the grid. That is good on so many levels, both public and private.

The question we now have to address is: what is a reasonable transition for the solar industry to move from public support to being able to stand on its own two feet in the market? Let us not kid ourselves that the market is a level playing field, because it is not. Pollution is still free, and the energy we get from burning fossil fuels adds to the carbon load in the atmosphere, which, in turn, is driving climate change. So whilst the growing solar industry is seen as a problem, it is a good problem to have; nevertheless, we have to be smart about devising solutions.

I know that some members in this place are nervous about government intervention in markets. I do not share those concerns. Provided that we give appropriate policy and price signals, markets can deliver good outcomes. We know that markets have no morality, they have no ethical basis, and we would be fools to rely on markets entirely to deliver good social and environmental outcomes, but with appropriate direction and regulation we can promote and encourage the things we want in society—in this case, more renewable energy.

Just three years ago, before 2008, when the solar feed-in scheme was first introduced, the system was quite simple: if you had solar panels on your roof you got one-for-one. Your spinning disc electricity meter simply went backwards when you were producing more electricity than you were using. That meant, effectively, that you were being paid the same for your solar electricity as you were paying the retailer to buy electricity through the grid. Under the current bill, the payment from retailers could be as low as 6¢ so, arguably, the net impact of government intervention means that households would be worse off than if they had stuck with old-fashioned metres spinning backwards. That is not a good outcome.

This is not an argument against government intervention: it is an argument for appropriate, timely and targeted intervention. To be fair to government, when the original solar feed-in scheme was introduced—in fact, when this bill was introduced—the government did not know what changes were afoot at the federal level. In relation to this current bill, the government presumably did not know that the federal government was about to bring forward the phase-out of the solar credits multiplier; and that one change at the federal level significantly changes the economics of solar purchase.

I will shortly outline the amendments the Greens are proposing that will address the changed environment—the changed environment being the federal environment as well as the state environment. However, what we need to decide in this parliament, the question for us, is whether we will stay the course. Will we finish the job properly that we started three years ago? Are we in this for the long haul, or are we going to cut and run?

I would like to take this opportunity to acknowledge and personally thank the minister, Michael O'Brien, and his staff, who have been readily available to discuss this bill over the last several weeks. They have been open to taking phone calls and to receiving ideas from the Greens about possible amendments to the bill, and I appreciate the time they have taken to look through and consider our material. I also take the opportunity to thank the shadow minister in another place (Mitch Williams) and also the many other MPs, many of whom are in this chamber, who have taken an interest in this bill and who have approached the possibility of improvement to the bill with open and inquiring minds.

I will make some remarks briefly about the history of the solar feed-in scheme so that we understand how we have got to the position we are now in. When the original feed-in scheme was introduced, it was the first in Australia. I was at the International Solar Congress here in Adelaide when the Premier announced with some pride that we were the first state to introduce such a scheme. I think that pride was well placed.

It was a good scheme and it was good to be the first state to introduce it. It was about the right scheme for that time. It was not too generous when it was introduced, and the Greens were pleased to see it expanded to cover more eligible customers. The Legislative Council in its infinite wisdom extended the scheme to 20 years, which was a key request of the solar industry, but everyone back in 2008 knew that, over time, the scheme would inevitably change, and that is why the government committed to a review.

Not long after the scheme came into operation, it became apparent that electricity retailers were not playing ball. Those who had been paying a fair price for the electricity they received back into the grid either stopped paying for it completely or they reduced their payment to a token amount, preferring to rely instead on the community-funded statutory feed-in tariff. That is why the Greens commenced a campaign to stop what we were calling 'the great solar rip-off'. What we wanted was the retailers to pay a fair price for the electricity. The government recognised, as did the opposition, that that was a good call.

The Greens' bill, to give effect to stopping the solar rip-off, went through this chamber. It was taken up by the shadow minister in another place (Mitch Williams) and debated there. In the meantime, the 10-megawatt trigger for the review of the scheme was reached in May 2009, and in June 2009 the member for Light in another place (Tony Piccolo), representing the government, said:

It is anticipated that the government will be in a position to advise the parliament of the outcome of these deliberations [meaning the review] in September this year.

In other words, the government was telling us that, by September 2009, we would know the state of play and what changes would be made to the feed-in scheme. The government ultimately opposed the Greens and Liberal bill in the House of Assembly. On behalf of the government, Tony Piccolo said at that time:

At this point in time it is too early to agree to any new amendments to the feed-in scheme and they would be premature. Given that, the government will be opposing this bill but undertaking a review and will report to parliament shortly.

As things have turned out, it was not premature: it was the right time to do the review. It was most unfortunate that the review process was dogged by delays, and in fact it was not until over a year later—August 2010—that the Premier announced the changes that he thought were appropriate.

I say that it was unfortunate that this review and the response to it were delayed because a number of other things changed in the meantime, and the cumulative impact of those changes saw the solar industry grow exponentially: first, the price of solar panels plummeted; secondly, the value of the Australian dollar went up, which made the imported panels even cheaper; and, thirdly, the federal government made changes to its scheme. The combination of all those things produced cheaper solar power systems and much shorter payback periods.

The Greens convened a forum after the bill was introduced (in fact, we have convened a number of forums in Parliament House) to bring together representatives of the solar industry. We had some 35 solar retailers and manufacturers here in Parliament House. We also invited—and this is important—the South Australian Council of Social Service. The reason why that is important will become apparent shortly but, clearly, two key stakeholders in this whole debate are those who are in the business of installing renewable energy and also the representatives of the community that ultimately pays for that scheme, in particular, low income people.

Those consultations have gone on now for many, many weeks. I acknowledge the contribution of Craig Wilkins, in my office, who has spent almost every day for the last several weeks in conversation with various energy companies, consultants, customers, government officials and others, because we are determined to try to get the best outcome we can from this bill for the people of South Australia.

The most important consideration for people considering buying solar panels is, undoubtedly, the payback period. In other words, at what point do the savings that you make add up to the amount that you have paid for your solar system? The very early adopters of this technology—looking at the people back in the early 2000s, say, 2000 to 2005—had a very slow payback. In fact, it would have taken those early adopters something like 30 to 40 years to pay off their panels. The panels were expensive, they were less efficient and there were not the same public subsidies.

So, those people showed real commitment to green energy. They need to be acknowledged because, if you do not have early adopters, you ultimately do not have any adopters at all. In around 2008, with the introduction of the scheme, the payback period dropped from about 25 years to, perhaps, 15, maybe, 17 years. That was why it was important that this Legislative Council extended the scheme to 20 years when we first introduced it. It was important to the industry, to be able to encourage the take-up of solar panels, that the payback period was roughly equivalent to the warranty period of the panels, so people could see that it was a reasonable proposition.

By 2011, we find that the situation has changed dramatically. Now, some of the cheaper systems have a payback period of about four to five years. In fact, that is far more generous than the parliament originally intended. I think everyone agrees that some form of correction is required. Where the Greens disagree with the government's bill is that that correction is to simply close the scheme to new entrants. I think we can do better than that.

Under the government's plan—and the government has provided me with these figures, for which I am grateful—after 1 October, people buying solar panels to put on their roof will be facing a payback period of 24 years, possibly more. Now, given the warranty on these panels is only 25 years at most, all of a sudden, you have to be incredibly committed to the environment to make that investment. The government's figure was based on a federal solar multiplier of four and, since then, it has been reduced to three. So, the payback period is now likely to be much longer than 25 years.

The Greens have put forward an alternative that has a second, what we are calling a transition, solar feed-in scheme that would allow people who buy panels to pay them off in around 10 years. I think that is a reasonable amount of time. I might just make a comment at this stage. A number of people have said that these solar panels are only for the wealthy and that only rich people are putting up panels. Now, that is a claim, I think, that is easily challenged by talking to the people in the industry who are out there putting up solar panels.

The typical customer, I am told, is now an older person. Nearly all of the customers, I am told, are over 55 years old. Most of them are retirees, many of them are pensioners and the postcodes where these people live are not dominated by the wealthy suburbs. What we are seeing is that it is ordinary South Australians, older South Australians, who are investing in solar energy as a way of insulating themselves against future electricity price rises which, we all know, are around the corner. So, people are making the decision on economic grounds. Whilst I am sure they enjoy the warm inner glow that comes from helping the environment, for many of these new customers—in fact, for most of these new customers—that was not the driving force.

The government proposal in this bill proposes that people who are already in the system, or those who join up before 1 October this year, will see an increase in the feed-in tariff from 44¢ to 54¢ and the scheme will then close to new entrants. After 1 October, anyone who joins the scheme will only receive a small contribution from the retailers, which will be equivalent to about a quarter, maybe one-third, of what they are paying retailers for electricity they buy off the grid. As I said earlier, that is one of the perverse results of this bill: that consumers will in fact be worse off than they were before 2008.

The main problem with the government's approach has been well described by industry representatives in the various briefings here that members have attended and also in the media. It is best summarised, I guess, by the boom and bust problem: the idea that an industry can be given such a leg up that they are flat out meeting demand and then, at the next moment, the door is closed and they find that they have no work at all. Estimates vary but, of the 1,500 people involved in the solar installation industry, the industry has estimated that a fair chunk—the majority—are likely to go after 1 October. In fact, this bill could kill the domestic solar industry for a number of years.

Over the last few years, I have received correspondence from many hundreds of South Australians who are interested in renewable energy and in the solar feed-in scheme in particular. Many of them have written to me, so I took the opportunity to write back to them recently. I posed some of the dilemmas that are presented by this bill. I wrote to them and asked if they wanted the 54¢. If they were not to get the 54¢, would that be a major problem for them? If we could make some savings by not paying the extra feed-in tariff, would they be happy for that money to be used to fund a transition scheme for a period that is a bit longer?

Having sent out the email with all the different permutations and combinations, and with some trepidation as to the response, I was most pleased that the majority of people who wrote back to me made the point which has been made by industry, that they did not ask for the 54¢. They were happy with the 44¢, and they would be more than pleased to see the industry continue. If the price that they personally had to pay was forgoing the extra 10¢, then they were prepared to do that.

I might just refer to some of those emails. I should say at this stage that the Green's solution, which has now been filed, does involve the payment of 54¢, but it is structured slightly differently to the government proposal and therefore still delivers considerable savings. One of the emails that I got back from a solar household states:

Dear Mr Parnell, I am very much in favour of a proposal that offers an incentive to as many people as possible to take up the use of solar panels. From a financial point of view, I am not fussed at all if I don't get an increase from 44¢ to 54¢...I would rather an option that encouraged more people to take up this form of energy.

Another householder wrote to me saying:

...I would rather receive a slightly smaller feed-in tariff rather than jeopardise the entire solar industry by stopping all feed-in tariff for newcomers after October this year. After all, the system saves me money whilst giving me power, and no other gadget I own has these the dual benefits, as well as actually giving me an income. To me it's about paying a fair price. I did invest in power-producing infrastructure that ETSA doesn't need to maintain. If they do use the excess power that I create for profit, I should be paid something—a fair amount, whatever that is.

Another one wrote:

I entirely agree...even the payback of 44¢ is very generous and possibly should be dropped a little further to enable more people to participate and ensure that those on low incomes are not unfairly subsidising others.

Another one states:

Personally, I find the idea of the state government just closing off the scheme completely after 1 October 2011 to be morally abhorrent. As I have written to you previously, this would almost certainly guarantee the history of boom or bust cycles in the renewable energy sector, and contribute to our continued reliance on coal-fired power plants that are harmful to the environment.

There are a number of others, but I will not go through them all. The majority of people who wrote to me said that they were looking for another way. I am pleased to hear the Hon. David Ridgway report to this chamber, after conversations that he has had with the government, that the government is open to looking at another way.

The Green amendments that I have now filed, I will describe in groups. There are seven key issues that the amendments cover. By way of summary, what these amendments do is provide for a scheme that is $70 million cheaper than the state government scheme and that allows for a new transitional feed-in scheme to operate after 1 October. That additional scheme could provide for an additional 80 megawatts of power; in other words, approximately 40,000 extra households.

The payback period would be nine to 10 years for those panels, compared to more than 25 years under the government's scheme, and the average cost per household for this would be about $25 a year compared to the $29 a year that the government scheme locks in.

I also propose amendments to enable those in retirement villages to access the scheme. Currently, they are prohibited due to the way electricity is delivered to those villages. In addition to that, we have an amendment that provides for people on low incomes to be exempted, if you like, or excused, from having to contribute to the scheme.

The net sum of providing this benefit to 27 per cent of electricity customers—the 27 per cent who are already on energy concession cards, so not the health care cards that the Hon. David Ridgway referred to but people who are already in the energy concession system—the cost of exempting those people from having to contribute at all is that they will save probably $25 on their bill. The average cost for everyone else: two cups of coffee a year, maybe $6 a year, if we go down that path as well. So, however you look at it, that is an exciting scheme.

The first thing I want to refer to is the low income concession card holder exemption, and that is amendment Nos 1 and 3, which members will note when they go through it. The cost of the feed-in scheme is currently spread over all consumers. As I have said, if we can actually excuse those low income people from the scheme, the cost on everyone else is absolutely negligible but the saving to those low income people is quite considerable.

The information I have from SACOSS is that there are some 200,000 households that are already eligible for the state government energy concession scheme, and by excluding these people from the cost of the feed-in scheme that effectively increases their concession by 15 per cent while adding less than 1 per cent to the bill of other households. As I have said, if we do not go down this path—I hope we do—then overall the Greens' scheme is cheaper than what the government is proposing.

The second set is amendment No. 2, which is to get some clarity and hopefully increase the amount that retailers pay to solar panel owners for the electricity that they receive. Under the government's bill, it requires the Essential Services Commission to determine a fair and reasonable value to a retailer of electricity fed into the network, and having determined that fair and reasonable value that is the amount that the electricity companies will have to pay the householders.

The amendment that I think is needed to this section is one that takes into account the fact that solar energy has network benefits as well as individual retailer benefits. Part of the reason for that, if we are going to talk about electricity very simply, is that the excess electricity produced at one house is probably going to be going next door or maybe just down the end of the street. It is certainly not going back through any interconnector, back to power stations in Victoria or anywhere else.

There are real transmission benefits that need to be taken into account when determining this fair and reasonable price. There are not the same transmission losses with this solar power that you get from the long distance transportation of fossil fuel electricity. So the effect of the Greens' amendments would be to increase slightly the amount that the retailers pay households, which is currently estimated to be around 6¢ to 8¢. I think these amendments might add a few cents to that.

The magic of the Greens' new transitional arrangements is that if the retailer contribution increases then the contribution paid by the rest of the community is limited to a top-up to 54¢. So that is what the Premier promised South Australians—they would be getting 54¢—and this amendment does it, but it provides that the community-paid component will decrease over time as the retailer component increases.

The next series of amendments relate to what I have described as this new transition scheme. It is a less generous scheme than the one that we supported three years ago. In a nutshell, it provides that for the next four years new entrants to the solar feed-in scheme would be paid 30¢ a kilowatt hour, which includes the retailer contribution, and that that scheme would be limited to 10 years.

This less generous scheme recognises that the cost of solar power has substantially decreased over time and with it the payback period. The industry is confident that in about four years' time solar power will be able to compete with grid power on cost alone. So the transition scheme that the Greens are proposing ensures that the industry maintains a steady flow of work until that time of parity occurs. That will, as I have said, save a considerable number of jobs in the solar industry.

The Greens have commissioned comprehensive modelling on this alternative option, and it shows that it would cost about $42 million but, bearing in mind that there is still an overall saving of $70 million on the cost of the government's proposal, it is a good deal all around. The next amendments relate to ensuring that solar households can still receive at least the retailer contribution if they choose to install additional solar panels on their roof after 1 October.

As the legislation currently stands—and the minister might take this on notice as a question—if a householder with panels wants to increase the size of their system they are completely cut off from the feed-in scheme and they would not even be eligible for the retailer contribution, and that is a major disincentive to solar households increasing the size of their systems. You have to remember that many people, in fact, bought larger inverters than they needed so that they could add extra panels over time.

This amendment would ensure that a household could voluntarily choose to forego the public subsidy in order to install more solar panels and still get paid by the retailer for the electricity that they produce. We also have an amendment which ensures that the solar feed-in scheme becomes a standard part of electricity contracts rather than just an extra. What we do not want to see is the ability of electricity retailers to refuse to allow solar households to connect through them to the grid.

We also want to insert a comprehensive review scheme, and I think we need to include that in the legislation. The government has estimated that by 1 October there will be 110 megawatts of grid-connected PV solar installed in South Australia. The additional transition scheme we have modelled could add an extra 80 megawatts to that—about 20 megawatts a year for the next four years.

We think that it might be overambitious at the high end of estimates, given that the commonwealth's solar credit scheme multipliers are reducing and, in fact, will expire by 2013. However, we do want to make sure that the number of new solar installations does not increase too quickly, for example, if the panel price plummets even further. Therefore, we need a review period, reporting back to parliament so that we can avoid the problem of the past, which was largely driven by the tardiness of the review process.

The final series of amendments that the Greens are proposing is in relation to residents in retirement villages. We want to make sure that they can access the scheme. Under the government's bill, there will be new eligibility criteria, which include a limit of one generator per customer and a maximum of 40 kilowatt hours of electricity per day exported to the grid. This has the potential to rule out of the scheme community titled retirement villages operating under the South Australian Retirement Villages Act.

In many situations, as I understand it, only one meter is provided by ETSA for the retirement village, and from this meter private power distribution infrastructure is installed to each resident, who has their own meter and who is billed individually for the power that they use. ETSA refers to this as a 'bulk supply' arrangement with associated private distribution network.

When the residences of retirement villages have solar systems on their individual roofs, the net power generated from each individual residence that is a fed back through the single meter would quickly max out the daily limit. The Greens' proposal is for retirement village residences to be exempted from the 45 kilowatt hours per day cap in order to enable the residents of these villages to get the benefit of the scheme. As the bill currently stands, retirees, who are largely on fixed incomes, will be penalised and significantly impacted by increasing electricity prices without the ability to do anything about it themselves.

Another issue I think is worth raising is in relation to housing trust tenants. One piece of correspondence I received from a housing trust tenant, which I would like to share the chamber, states:

I am a resident in a Housing SA property and I recently made an application for permission to install solar panels on the roof of the property I am renting. Today I received a reply that it is against Housing SA policy to allow solar panels to be installed. Does this mean that it is the policy of the state government to continue to burn fossil fuels in order to produce electricity? Considering the federal government's apparent policy for a greener Australia, I would have thought that it would have become policy of the state government to not only allow solar panels to be installed on Housing SA properties but to make it mandatory.

Some years ago Housing SA adopted the policy of removing gas heating from their properties forcing tenants to switch to electric heating should they wish to remain warm in winter. Now it would seem that with the rises in the cost of electricity those of us who are tenants of Housing SA are not only not allowed to partake in producing environmentally friendly power, and will not be able to afford heat in winter. Most tenants of Housing SA are from the lower income bracket of society and struggle to pay the bills they currently incur, being allowed to reduce electricity costs incurred in trying to live a normal life would be of great benefit to not only tenants but also the state and the country.

I don't pretend to understand economics and I doubt that I will ever understand the economics of paying for the burning of fossil fuels in creating pollution which is killing the only home we have, but surely if all the low income people of the country have even, one dollar more each week to spend on food it would have to help the Australian economy, not to mention the positive effects of having solar panels on all Housing SA properties.

There is a range of issues that are not dealt with, but the government can pick this up through other policy responses. I am encouraged by hearing minister O'Brien talk about the need for a low income solar plan. This bill is not the place to be mandating solar power on Housing Trust homes, but I do hope that the government will step up to the plate and come up with a scheme.

It is not an alternative to what we are talking about here, but it needs to be an addition. In fact, I was prematurely excited when the government announced, a couple of years ago, that all government buildings were going to have solar panels. My first question was, 'Gee, how many thousand housing trust houses would that be?' only to find that the commitment was only to new and substantially refurbished government buildings, the number of which each year you could probably count without taking your socks off. So, there is a great deal of room to move for the government there.

As I have said before, part of the difficulty in developing the right policy mix at the state level has been that we have to look at it side by side with the federal changes. Now, because the federal scheme is the one that helps consumers with the up-front purchase of solar panels, it tends to be the one that people pay the most attention to in making that initial purchase decision, but the fact of the federal government now announcing that their assistance is going to be reduced at a faster rate means all of a sudden people in South Australia are facing a double whammy—and the industry is facing that as well.

In terms of the industry perspective, I have said that the intention of the Greens' amendments is to keep a chain of work going for the industry over the next few years until the economics kick in and the industry can stand on its own two feet. It really makes no sense to have 1,500 people working around the clock in a mad rush to put as many panels up as they can, only to line up for unemployment benefits after 1 October. We can and must do better.

I have no doubt that that very small number of what you might call fly-by-night operators in this industry will leave, and it is worth pointing out that there are far fewer fly-by-nighters, or cowboys if you like, in the solar panel industry because the installation is done by qualified electricians, compared to, say, the home insulation scheme, where it seems anyone could hang up their shingle and pretend to be an expert installer.

One of the comments that I received from industry, which I will share with the council and which reinforces the need for having a transition scheme, goes as follows. This is a longstanding member of the industry and he says:

The boom–bust cycles that are caused by policy changes and incentive programs starting and stopping are very destabilising for business and they create a difficult environment to employ staff or invest in a longer term business. It opens the industry to fly-by-night operators that are here for the quick buck and usually cause longer term industry damage.

It is my opinion that with the volumes of product that are being installed, resulting in falling product pricing, high exchange rate and expected increases to electricity prices, the value of solar energy will be on a par with conventional mains power in around three years. This will enable a sustainable energy industry which is viable without the need for any government support from rebate or feed-in tariff schemes. To achieve this transition our industry needs some ongoing support, albeit at a reducing level. It would be a tragedy at this stage to undo all of the progress our industry has made over the last 10 years. A marked fall in volume would have the effect of pushing product pricing back up again.

Another way of describing the government's scheme is that it has its foot on the accelerator and on the brake at the same time. It is proposing an increase in payment to those already in the scheme—that is the accelerator—and the brake is closing the scheme off to all new entrants from 1 October. The other analogy is it is like trying to land an aeroplane: you can either pull the throttle back fully and then nose-dive into the ground—that will stop an aeroplane—or you can glide it in to a more sensible stop within a defined runway period; in this case three or four years should be enough.

I would also like to comment briefly on a government briefing note that was distributed to members, as I understand it, from the Department for Transport, Energy and Infrastructure in response to the submission that was made by the Clean Energy Council and the South Australian Council of Social Service. I am not going to go through the whole briefing note, but I would like to just respond to some of the assertions that were made by the department, and I would also point out to members that the Greens' plan is actually different from the Clean Energy Council plan and the SACOSS plans. There are a number of essential differences which I think strengthen our alternative but do allow us to meet the needs of both those sectors.

One of the things the government says—and the minister has often repeated this—is that because the announcement was made back in August last year, when it foreshadowed its intention to close the scheme, that would bring forward in time a huge demand for panels. There are two responses to that. First, this is, in fact, part of the problem, in artificially creating the boom and bust cycle, which is not good for a stable or growing industry. Secondly, if, as the department thinks, there will not be a new cohort of customers to emerge, that is even more reason to be confident that the cost for the modest transition scheme the Greens have proposed to operate from October this year until October 2015 will, in fact, be even less than we have suggested. In other words, the risk of a cost blowout is extremely low, and to insure against this we have proposed a timely review mechanism.

The energy division does not support the exclusion of low income concession customers from the cost of the scheme, and I note that the Hon. David Ridgway expressed some concern about that as well. As I understand it, the government has two main arguments. First, it says that the cost of exempting low income concession card holders will be passed onto electricity consumers and, secondly, that it will increase the administrative complexity of the scheme.

Certainly those costs will be passed on—by our estimate, $6 per year when it is lined up against the considerable savings that will made by the 200,000 lowest income people in this state. In terms of administrative complexity, yes, there is some administrative cost, but even if it were as high as, say, $100,000 it has be recognised that it is on a scheme that costs around $30 million a year. There are always costs in having to administer an exception or exemption scheme, but those costs are outweighed by the benefits.

In fact, you could also argue, if you were trying to avoid administrative costs, that the complexity the government has built into the bill, in trying to administer or police the 45 kilowatt hours per day daily cap on the scheme, will be a far greater administrative impost. The question should be: does this increase in complexity outweigh the benefit of the low income exemptions? I think the answer is clearly no.

The last thing I want to say about the department's briefing paper is that it asserts that solar panels would become economic without the solar credits multiplier—that is, the commonwealth scheme—or a feed-in tariff in around six years' time. That is a very important acknowledgement. It is saying that in six years the economics will add up. What that says is that you would have rocks in your head to invest in solar panels before that day occurs; in other words, it is admitting that there will be an absolute drought in the take-up of solar energy in the 6 years that flow from 1 October. I am hoping it will not be six years; I am hoping that it will be closer to four, but the government is effectively admitting that it is killing the industry for that period of time.

I will put a number of questions on the record now before I close. First, in relation to the government's proposed prohibition on householders expanding the size of their system, my question is: how will the government know? I understand that the government says it has access to metering data through ETSA, but the point is that I do not think there is any way it will know whether a person with 13 panels has added an extra panel or an extra two panels. I cannot see how that will work.

In relation to the import/export meters needed, there was some discussion in the media recently that we had run out of locally produced meters; I think they are now being imported from Indonesia. My question is: why are they so expensive? My understanding is that in Western Australia these meters cost about $250, but in South Australia the cost would be much higher—in fact, as high as $650. The question is: is ETSA profiteering on this rush for solar power?

In relation to changes to solar systems, I would like the government to clarify the situation where someone sells their home and whether there is any risk at all that if, as part of that process the power may have been disconnected for some time, the new owners will not somehow be exempted from being able to receive the feed-in tariff.

Secondly, if a person's house is damaged—maybe by an earthquake or a fire in part of the house; the panels have survived intact but the power needs to be disconnected for a considerable period, will they be able to reconnect and still pick up where they left off in terms of their eligibility for the feed-in tariff? The concern arises from the wording in the bill in relation to disconnection. I would like the government to clarify under what circumstances disconnection will not result in the person being thrown off the scheme. I am particularly interested in disconnections that are through no fault of the householder.

Another question I have is in relation to the introduction of smart meters in South Australia. My question is: what price will be charged for the electricity that is generated, and will that price vary according to the time of day? We know that the spot price for electricity does vary according to time of day and demand, particularly in summer when air conditions are running. Is it a standard rate or will it respond to the different price of power that occurs at different times during the day?

Another question I have is in relation to people who may have added solar panels to their system after 1 September last year but before 1 October this year. There is a reading of the legislation which says that any person who added panels in that period have effectively disconnected themselves from eligibility for the scheme, and I would like the government to clarify that, because the transitional provisions refer to people altering in a manner that increases the capacity of the generator to generate electricity after 1 September 2010.

If that is the case, that effectively would be retrospective and, as members would know from the news today, retrospectivity was a major concern in relation to the New South Wales scheme, and the government there has effectively had to back away from its plans to retrospectively change the scheme. We are not looking at retrospectivity here in South Australia because, whilst the 54 cents the Premier promised might have been a government statement of intent, it certainly has not been legislated, and there is no intention in this bill or in the Greens' amendments to take away from anyone rights they already have under the legislation.

The other point that is worth making here is how we need to be economically responsible when we are dealing with this sector and with this bill. Members will know that the money we are talking about is not government money. We are not talking about an allocation for this scheme from consolidated revenue but a community contribution collected from all other electricity consumers. But that does not mean that we need to treat that money with any less respect than we would if the question before us was the wise spending of government money. The Greens' response we believe is economically responsible, and we are more than happy to have our figures, our consultants' reports, open to scrutiny.

At this point I will mention the review the Hon. David Ridgway referred to. I have not heard from the government whether it is interested in that approach, but the Greens are certainly happy to see the various options—the one put forward by the Greens; we have seen the Clean Energy Council's model and SACOSS has one as well—and to have them assessed by ESCOSA, because at the end of the day we can as a parliament put together a series of amendments that does satisfy all the stakeholders. I really think that, in this case, every player can win a prize.

This usually gets 'oohs' and 'ahs' from the chamber, but I will finish with an acknowledgement of a personal interest in this area. I have solar panels on my roof at home, as I am sure do other members of parliament. Along with thousands of other South Australians, I will be impacted by whatever changes this parliament makes to the Electricity Act.

It probably goes without saying that, if I were motivated only by personal circumstances, then I would just vote for the government's bill because that would give me more money, but I think there is a better solution for the State of South Australia. Along with many of the people who wrote to me, whose comments I read out before, I am happy to forgo overly generous payments, including those proposed by the government, in order to make the system fairer for all South Australians and to continue with a viable solar industry in this state.

The Hon. R.I. LUCAS (17:00): I can indicate that I do not have solar panels, so I do not have to declare an interest. I think that some of the models being proposed, which involve a winding back of the payments, may well involve an issue of interest to the Hon. Mr Parnell because some of the models that are being floated are talking about reducing the 44¢ for existing customers as well, so he and others in his position would obviously have a clear interest, I assume, in that issue—not only from a state viewpoint but also from a personal interest viewpoint.

In looking at my contribution, I note with some regret, I think, that I did not participate in the earlier debates in 2007 and earlier times in relation to this issue. I want firstly to look at some of the current views that are being expressed by regulators and other commentators about green energy schemes, go back to the debate of 2007 and then, perhaps, wrap it up with what lessons we should have learned from our own history here (and I include myself) in relation to how we as a state parliament and other state parliaments have approached these sorts of issues.

In terms of looking at the regulators, there are many regulatory reports you can look at, but the most recent one which is of some interest and, perhaps of some relevance, is the report by the Independent Pricing and Regulatory Tribunal, which is the New South Wales energy regulator, headed 'Changes in Regulated Electricity Prices for 1 July 2011', and it is based on a draft determination in April 2011.

Let me put on the record some of the quotes from that report. It talked about an increase of approximately 17 to 18 per cent in electricity prices being recommended by the independent regulator in New South Wales, and it looked at the reasons for those increases. Page 3 of the consumer summary states:

The 2 drivers of the 1 July 2011 price change are increasing network costs and the costs of complying with green schemes, which the retailers must pass on. We are recommending policy changes to limit the price increases flowing from these cost drivers. These recommendations are aimed at making electricity more affordable over the long term.

Further, our new customer impact analysis confirms that the most vulnerable customers are low income customers that consume a lot of electricity. These include customers in regional NSW. Therefore, the significant increases in bills set out in our draft decision are likely to have a significant impact on these most vulnerable customer groups.

I note that the analysis, in considering green schemes, is looking at a combination of the federal and the state-based green energy schemes, so the comments, by and large, relate to both, although there is a separate analysis of the impacts of each later on in the report. Further, on page 4 of the consumer summary, under the heading, 'Paying for small-scale solar technologies', it states:

We are concerned that these programs interact to increase electricity prices and promote relatively high cost abatement (or reductions in greenhouse emissions). For the same amount of money, better environmental outcomes could be achieved.

I will refer to that later in this report as well. I want to issue an invitation to the Hon. Mr Parnell—who I have to say is one of my two most favourite Greens in the state parliament—to respond to the particular issue. He obviously addressed a lot of issues in his contribution, but this issue of how energy efficient small-scale solar is in terms of achieving green goals is an important part of what ought to be debated in all of this. We have spent a lot of time on the costs of these schemes and the future of the industry, but the issue of how effective small-scale solar is in terms of greenhouse gas abatement is, I think, an important issue that needs to be addressed as well. The independent regulator and a number of others have addressed that issue as well.

Further on in the independent regulator's report, on page 86, the regulator talks about taking action to limit future increases in green-scheme costs. Obviously, time does not permit me to go through the whole report, but I just want to pick the eyes out of it, so to speak. The report states:

We consider that both the federal and NSW government's schemes that promote the installation of rooftop solar generation units promote high-cost abatement. The carbon reduction achieved by these schemes will cost electricity customers and taxpayers significantly more than if the same level of reduction was achieved by an alternative, less expensive means. The NSW government's proposed Solar Summit aims to identify opportunities for reducing the costs of the Solar Bonus Scheme. We support this action and recommend the NSW government use this summit to consider:

closing the NSW Solar Bonus Scheme to new participants—

etc. As you know, the New South Wales government has been taking action to reduce the extent and the cost of its state-based schemes as well. On page 87, under 'Close the current NSW Solar Bonus Scheme to new participants', the regulator quotes AGL's submission as follows:

Little attention has been paid to the welfare impacts of the [feed-in tariff] on retail electricity prices and social policy objectives.

The regulator then notes:

Coupled with the federal government's financial incentives for installing solar panels, the Solar Bonus Scheme has resulted in an expensive, cost-ineffective way of reducing carbon emissions. Its costs will be borne either by consumers or taxpayers for many years to come. We recommend that the scheme be closed because:

Small scale solar is an expensive option to promote renewable energy. The LRMC—

the long run marginal cost—

of the output of a 1.5 kW system over its 25 year life is $422/MWh, compared to $120/MWh for wind and $135/MWh for biomass. The difference in greenhouse gas abatement costs between small-scale solar and other forms of abatement is even larger because abatement could be achieved by, for example, improving the thermal efficiency of coal-fired generators at substantially reduced costs.

Then there are some further recommendations in relation to the closure of the New South Wales scheme. Further, on page 89 under the heading, 'Evaluate green energy schemes to ensure they remain cost-effective and complement any national carbon price', the report states:

Given the impact of green schemes on retail electricity prices and developments in green technologies, we consider that the New South Wales government should periodically evaluate all these schemes to ensure they continue to be cost-effective compared to other means of reducing carbon emissions. This would involve analysing the cost per tonne of abatement to ensure that schemes do not promote high cost abatement. The cost per tonne of abatement should also be compared to any carbon pricing mechanism.

In addition, if the federal government introduces a national price-based carbon reduction mechanism, it will be important to evaluate the state-based schemes to remove those that are not cost-effective in the context of this mechanism, and do not complement this mechanism.

There are further recommendations in relation to that. As I said, there are many other things that I and I am sure the Hon. Mr Parnell and anyone interested in the whole issue of the impact of green energy schemes on electricity prices would find interesting in that particular regulator's report.

There are a number of other reports by other regulators nationally which canvass similar issues. That is what has led to the commentators and the politicians around the country sort of launching, as the state government here is doing—and they are not alone—in terms of winding back green energy schemes, because the politicians are starting to feel the pressure from the 90 to 95 per cent of people in the community who are paying the higher electricity prices because of the less than 5 per cent or so of people who are benefiting from the subsidies being paid to green energy schemes.

So, governments of all persuasions, Labor and Liberal, are starting to respond, and I think that is a useful context. We are not having this debate in South Australia alone. This government is not the only pebble on the beach trying to wind back the impact of green energy schemes on ordinary consumers (the majority of consumers), it is reflecting what is going on nationwide.

The Australian of 1 June of this year, 'Backlash as power prices set to surge'—and again, I will not read all of it—quoted the Queensland Labor energy minister, Stephen Robertson, as expressing concern about an increase in electricity prices announced in Queensland. It states that the Queensland energy minister:

...pointed the finger at the federal government's solar subsidies for fuelling half the hike. 'We are all paying now for the schemes such as the solar hot water and solar PV (photovoltaic) rooftop schemes,' Mr Robertson said. 'Whilst the increased uptake of solar energy is important in terms of developing that industry, in terms of reducing our carbon footprint it does come at a price.' Reductions in the solar subsidies were announced by the federal and Queensland governments last month.

So, the Queensland government as well has announced, evidently, a reduction in its subsidy scheme in Queensland. In the Financial Review of 1 June 2011, 'Queensland power bills to rise', Labor energy minister Robertson says:

...the federal government's renewable energy target scheme accounted for half of the projected 6.6 per cent increase. 'Without it, Queenslanders would only be facing a price rise slightly lower than the current consumer price index of 3.6 per cent', he said. Other state regulators have criticised the federal government's scheme to increase power from renewable energy sources to 20 per cent by 2020.

The Financial Review of 26 May states:

New South Wales [Liberal] Energy Minister Chris Hartcher said on Tuesday he would push for an overhaul of the existing system of different feed-in tariff schemes across the country at the next meeting of the Council of Australian Governments in June. 'Absolutely, we're going to the ministerial meeting in Perth in June and one of the issues is to work for a national energy market', Mr Hartcher said.

'This fragmented system, which as you've seen right across Australia has simply not worked. Western Australia has reduced its solar rebate scheme only last week from 40¢ to 20¢ [per kilowatt hour]. In every jurisdiction, these rebate schemes have blown out massively.' West Australian Minister for Energy [Liberal minister] Peter Collier endorsed the NSW government's push for a national scheme. 'If a single harmonised feed-in tariff gives legitimacy to the scheme then I fully support it', he said. The federal Minister for Energy, Martin Ferguson, has said in the past—

and this is a Labor minister—

he opposes the government paying subsidies for solar power...

So, let us be clear about this. This is the federal Labor Minister for Energy quoted in the Financial Review as saying that:

...he opposes the government paying subsidies for solar power because the cost is recouped by spreading the cost across all electricity users, hitting the poorest the hardest.

This is a constant theme right across these commentaries, from the regulators to the governments, that it is a cross-subsidy from low income electricity consumers to relatively higher income people who can afford solar panels and solar power. That is not anecdotal—well, it is in relation to politicians, I suppose, but the regulators have made those particular judgements based on their customer analysis. The Financial Review article goes on to state:

Instead, the federal government says it will spend $5 billion focusing on large-scale solar projects which will feed electricity directly in to the nation's grid, a method it says is more efficient, especially as the stations will be built in areas in the centre of Australia that have more sunny days than Sydney or Melbourne. It says the price on carbon will also lead to greater use of renewable energy.

The federal Labor government is arguing that we can encourage solar but that it is much more cost-effective to have large-scale solar projects rather than what it sees as an ineffective mechanism of subsidy of small-scale solar in households. Further on in the Financial Review article, it states:

Energy retailers also supported the plan. AGL chief economist Paul Simshauser said he would welcome the cost savings on demonstration that a single national system could bring. But his main concern was that energy retailers not be forced to pay more to households than the current rate of 8¢ per kilowatt hour. State governments subsidise the rest.

That is in some states. He went on to say:

'To give you an idea of how generous that is, 8¢ a kilowatt hour means retailers are paying people with solar panels about $80 per megawatt hour, when the value of electricity on the spot market is about $40 per megawatt hour,' he said.

We need to bear in mind that we are talking about these 44¢ and 60¢ and whatever it is. It sounds relatively small, but what the AGL chief economist is pointing out is that when we are talking about 8¢ a kilowatt hour we are talking about $80 a megawatt hour, which is double the average spot price of electricity in the marketplace—double. That is at 8¢ a kilowatt hour; if you are talking about 44¢ and 54¢, you are talking about $440 or $540 a megawatt hour. You are talking about a price which is nearly 10 times the average spot price in the national electricity market.

That is what we are talking about in terms of subsidies to consumers. It rolls off the tongue—and I know because I have had discussions with promoters of the industry and the Hon. Mr Parnell and others that a fair price is this or whatever it happens to be, and it is inevitably in the 20s, the 30s or the 40s, or whatever it happens to be—but what we are talking about is a very significant price on what is the spot price in the national electricity market.

I know there are other comparisons, and the industry uses other comparisons in terms of what the average consumer pays, in essence, retail for electricity, and I can understand the arguments there. However, I think this analysis by the chief economist and a number of other commentators is cause for sober pause for thought and to just bear in mind that while we are talking about 44¢ and 54¢ we are talking about $440 a megawatt hour and $540 a megawatt hour, compared with an average spot price in the market of $40 or $50 a megawatt hour.

On 21 May, under the heading 'Minister will listen to solar sector', there is a table which I seek leave, as it is purely statistical, to have incorporated into Hansard without my reading it.

Leave granted.

Max size Rate c/kWh Duration years
NSW 10kW 20-40 gross* 7
Vic 5kW 60 net 15
Qld 30kW 44 net 20
SA 30kW 54 net 20
WA 5-10kW 20 net 10
ACT 30kW 45 gross 20

*now closed

Source: AGL Energy, Financial Review


The Hon. R.I. LUCAS: The source was AGL Energy and the Financial Review and, in looking at it, it purports to be, I think, the announced policy positions of various governments because for South Australia it has 54¢ per kilowatt hour net, which is of course the proposal from the government which has not yet translated into fact.

This table highlights the various schemes, and it shows that Western Australia has just (as I commented earlier) reduced its subsidy down to 20¢ per kilowatt hour net and that New South Wales has closed the 40¢ scheme gross and reduced down to 20¢ per kilowatt hour. Some of the other states are still much more generous—Victoria, for example, has 60¢ net and Queensland 44¢ per kilowatt hour net, a net price as well. That table, compiled by AGL Energy and the Financial Review, purports to be their assessment of the current state of play in relation to feed-in tariffs.

There could have been dozens of others, but the last of the more recent press commentary is an article that I want to quote by Keith Orchison, who was the chief executive of the Electricity Supply Association of Australia but is no longer; he now writes various articles on the electricity industry. His article is headed, 'Solar panels burn taxpayer dollars'. This refers in particular to the New South Wales scheme. It states:

The state's Independent Pricing and Regulatory Tribunal, chaired by Rod Sims, who is nominated to be the next head of the ACCC, in a report on [New South Wales] electricity affordability, has been blunt in its condemnation of the Keneally government. It says the 'solar bonus scheme', launched in January last year, was 'poorly designed and not subject to adequate cost-benefit analysis'.

That is a very important point, because it comes to what we should be doing at the moment and this whole notion of poorly designed schemes not subject to adequate cost benefit analysis or independent expert advice before we rush willy-nilly off as a state parliament in making changes, which seem plausible on the surface, but no-one has actually independently looked at what the impact might be, not just on the industry but on the rest of us who have to pay the subsidy for those who wish to use solar energy. The article goes on:

When taken with the federal government's own incentive scheme for solar power, the [New South Wales] program, says IPART, is 'an expensive, cost-ineffective way of reducing carbon emissions'.

As I said, that is a common theme from a number of regulators and commentators. It continues:

IPART adds: 'Its cost will be borne either by power consumers or taxpayers for many years to come.'

Further on, Mr Orchison, states:

The initial scheme—

this is New South Wales—

offered householders $600 per megawatt hour—

this is this 60¢ kilowatt hour—

for all the power their system produced—a crazy premium where the retail cost (including network and other...charges) at the time stood at $180/MWh. It paid for all power produced not just for the amount fed back in to the grid that a household couldn't use. In short, it was a licence to print money for some householders.

Finally, Mr Orchison quotes the Department of Climate Change. He states:

Last year, the Department of Climate Change estimated that, at the photo-voltaic costs then prevailing, fitting every home in the country with a 1.5 kilowatt array would have a capital cost of about $200 billion—five times the cost of rolling out the broadband network—and would deliver in 2020 less than 10 per cent of the national abatement target. In a nutshell, solar panel schemes drive up power bills while making minimal reductions in carbon dioxide. There are cheaper ways to reduce emissions.

That is the context within which we are debating this particular change today. As I said, the second issue that I want to address is how we as a state parliament addressed this issue back in 2007. Let me be quite frank and indicate that we—all of us, myself included—did not cover themselves with glory in terms of our contributions to the debate at the time.

The Hon. P. Holloway: I was going to remind you of that.

The Hon. R.I. LUCAS: Well, you won't find me personally having spoken, but I accept responsibility as a member of the Liberal Party. I should have participated and should have spoken at the time; but let me be honest: the extent of my knowledge at the time—expert knowledge in terms of impacts on electricity prices—would have been no better informed, I suspect, than anyone else who was speaking during that particular debate.

In particular, I wanted to go back to that debate 2007. I refer to one of my two very favourite Greens in the state parliament, the contribution from the Hon. Mr Parnell on that particular proposal. Hon. Mr Parnell referred to various expert commentators in terms of supporting his propositions, and support for the government's propositions—let's be frank, it was the government and the Hon. Mr Parnell. I refer honourable members to a discussion paper entitled 'Tariff implications for the value of VP to residential customers'. The paper was produced by the Centre for Energy and Environmental Markets at the University of New South Wales and VP Solar Australia. He quotes:

The appropriate tariff for PV in Australia may need to start at around 85¢ per kilowatt hour and decrease over 15 years. What we are looking at here is 44¢ per kilowatt hour. I was interested to hear the Hon. Sandra Kanck's contribution, when she talked about an appropriate tariff being in the vicinity of four times the market rate—even up to 5 times, I think she said. That is similar to what the University of New South Wales and VP Solar are saying that we need.

The tariff implications paper goes on to state:

If the cost is spread across all residential and commercial users it would add less than 2 per cent to electricity bills yet could result in the Australian PV industry roadmap target of 350 megawatts installed capacity by the year 2010.

One of the bits from the IPART report which I did not quote, and I should have, was that of the 17 or 18 per cent increase in electricity prices to apply in New South Wales from 1 July, IPART was saying that a full 6 percentage points, or a third of the total increase in the electricity price, was due to green energy schemes. So, IPART was saying that New South Wales consumers are going to have an 18 per cent increase in electricity prices, and 6 percentage points of that 18 per cent—or a third of it—is due to the impact of green energy schemes, both state and federal, as I indicated before.

That is why IPART was saying it is the more than 90 or 95 per cent of consumers who end up having to pay higher prices for those who enjoy the benefits of the subsidies of solar. That is why regulators and commentators are saying that it is a cross-subsidy from the low-income to the high-income. It is a good deal if you can get it. The Hon. Mr Parnell and others are in a position to be able to afford solar, and if you can get the subsidy and get somebody else to help pay the subsidy, then good luck to you, in relation to that cross-subsidy which occurs, but it is the low-income, the people struggling to pay the electricity bills, who have to pay the costs of these particular schemes, and we should never forget it.

The state government is endeavouring—we do not think in a very effective way—to make some changes to this. Other governments are making changes, as indeed they should, and we all, I think, are struggling as to how best we rein in the generosity of the current schemes, but at least now some people are belling the cat, singing loud and clear that it cannot go on in this way for much longer. The Hon. Mr Parnell in his 2007 contribution went on to say:

The South Australian government discussion paper also says: 'By contrast, householders could offset the cost of a feed-in mechanism by installing a single compact fluorescent light bulb which would reduce household electricity costs by around $6 per annum.'

Mr Parnell goes on to say:

If that is all that is needed—a single compact fluorescent light globe—to offset the cost of a feed-in mechanism, it begs the question: why not get households to put in two compact fluorescent light globes and then we can increase the tariff?

This was all part of his argument that the 44¢ at the time was not generous enough. In the committee stages of the debate, the Hon. Mr Parnell moved an amendment to delete '44¢' and to increase it to $1, consistent with his contribution to the second reading.

He quoted Mr Adrian Ferraretto of the Solar Shop Australia Pty Limited. I am not making any criticism of the solar industry, or indeed of Mr Ferraretto. I am sure this was his genuinely held view at the time. He has been a good operator in the industry and, as I said, I make it quite clear there is no criticism of the industry or Mr Ferraretto in any of the comments I am making. Mr Ferraretto is providing advice to us on some of the schemes for us to amend this particular bill at the moment. I think my colleague, the Hon. Mr Ridgway, and others may well have referred to the lobbying from the industry and Mr Ferraretto. The Hon. Mr Parnell quotes Mr Ferraretto as saying:

Solar Shop Australia therefore strongly urges the South Australian government to revise the proposed feed-in tariff upwards to $1 per kilowatt hour, and that it is paid on a gross export basis over a period of 20 years.

Another organisation called EcoSouth Solar, which is the trading name of Ecoway Pty Ltd, which sells solar panels as well, says:

EcoSouth fully supports the time frame extension and, whilst $1 per unit kilowatt hour for exported power would be fantastic, we believe 64 cents [per kilowatt hour] is more realistic.

Whilst in the very near future we may not have the benefit of the Hon. Mr Holloway's contributions on bills, due to his imminent retirement from this chamber, I will refer to his contribution during that particular debate. He said:

I reiterate what I said before: the figure chosen of 44¢ per kilowatt hour has to balance the benefit to photovoltaic owners with the cost borne by other consumers. This is a zero sum game; the benefit that is given will be paid for by the mass of other consumers, and the more you subsidise those with the photovoltaic cells the more it will cost ordinary households, which in some cases are very low income households.

I must say that I could not agree more with the statement of the then minister. He went on:

What the government has done here is to try to strike a good balance. The figure of 44¢ already represents close to 10 times the weighted average wholesale price for electricity traded in the national electricity market.

That is the point I was making earlier: the comparison with the $40 average spot price in the national electricity market. The Hon. Mr Holloway continued:

As I have stated here previously, at 44¢ per kilowatt hour, if the current 3 megawatts of photovoltaic systems grows to 10 megawatts by 2013, then the cost to be borne by other householders would rise from $1 million to $3 million per year. If on the other hand we supported the amendment and increased the benefit to $1 per kilowatt hour, then that cost could rise to at least $2 million to $8 million per year, and that has to be borne by other householders.

In case the Hon. Mr Holloway thinks I am unduly congratulating him, the government and its advice massively underestimated the uptake of the scheme, and that is why we are having to look at it. When one looks at the uptake—

The Hon. P. Holloway interjecting:

The Hon. R.I. LUCAS: That's right; that just extends it. That potentially extended it over a 20-year period. During this particular short period of time—less than three years, or whatever it is—there has been a massive underestimate of the impact of the scheme. That was the government, on the basis of the very best advice that it had available to it as a government, and there is no-one who enters a debate armed with more information and advice than the government. If you are in the opposition, the Greens or the minor parties, you do the best you can as an Independent, a minor party, or a party with the views that you are given by industry and other commentators.

The only other aspect of that particular debate goes to this issue of the extension of the scheme: that is, it was extended from five years to 20 years. That was an amendment moved by the Greens and supported by the Liberal Party and, I think, the Hon. Ms Bressington. The extent of the Liberal Party's contribution from its spokesperson was, 'The Liberal Party supports the amendment', so it was not an extensive or long debate about extending the scheme from five to 20 years. That brings me—

The Hon. P. Holloway interjecting:

The ACTING PRESIDENT (Hon. J.S.L. Dawkins): The Hon. Mr Holloway will have an opportunity to speak. The Hon. Mr Lucas has the floor.

The Hon. R.I. LUCAS: It may well pain the Hon. Mr Holloway, but I suspect that he and I may well be much closer in our views on this scheme than perhaps on most other issues.

The Hon. T.J. Stephens interjecting:

The Hon. R.I. LUCAS: He might change his opinion now, because he is agreeing with me. I now want to wrap up my contribution by asking: what are the lessons from all this? I think the lessons from all of this are that, if we are honest with ourselves, we are not experts on the impacts of these schemes. We are a little better informed now than we were in 2007 because we are armed with some regulators' analyses in other states, etc., on the impact of similar schemes on electricity pricing and on a range of other issues. There has not been a huge amount of debate on how effective small-scale solar is in terms of greenhouse gas abatement, and surely that should be a part of the debate as well. That is the view of the federal energy minister, Martin Ferguson, who I quoted earlier and who opposes these schemes.

That is the first confession that each of us ought to acknowledge. Whilst I did not participate, I was party to the votes in relation to the 2007 scheme, so I accept my share of the responsibility for the mess we are in at the moment. The first thing we need to acknowledge is that we are not experts, no matter what advice we get—again with the greatest respect to all of us, but in particular to the Hon. Mr Parnell and others. The Hon. Mr Parnell is passionate about solar—and he could sell ice to the Eskimos. It flows off the tongue that it will cost only two cups of coffee or whatever it might happen to be. The Hon. Mr Parnell I hope will be the first to acknowledge that that is based on the hard work of his staff—and I make no criticism of them—and the hard work of whoever it is who provides advice to them from the industry and others.

What we need to do is what Mr Williams and the Hon. Mr Ridgway have been talking about; that is, before we do what we did in 2007—namely, make decisions to extend the scheme, adjust the price or whatever it happens to be—we need some independent assessment and analysis of the impact of the various models. The shadow minister from our party has a number of different models that have been raised. The Greens have raised their particular model today. I know Mr Ferraretto has a model that is a bit different from the Greens' model and a bit different from some others from the solar industry. There are three or four versions of the model, and all will have potentially different impacts on a range of aspects of the scheme.

I understand that my colleague Mr Ridgway says that a meeting has been established with ESCOSA on Friday. I think that is great, but it is not sufficient. Hopefully, what happens after the meeting on Friday is what we need, namely, the intellectual grunt of the independent regulator—independent from us as a parliament and independent from the industry—to look at, in a dispassionate way, the impact of the three or four models that are being floated, and in particular t the continuing and ongoing impacts on electricity prices of some of these adjustments we will make to the green energy schemes.

I assume that our regulator, if it is worth its salt—and I am sure it is—like IPART and others already has a body of work in relation to the impact of green energy schemes on current electricity prices. In the last 24 hours, I have had my staff trying to go through their website, and it is almost impossible as a non-regular user of the site and a non-expert to find which of the hundreds of reports buried within them might be a section which says, 'Hey, of the current price of electricity in South Australia you can save'—whatever it is—'5, 10 or 20 per cent of it as a cost of the various instead federal and state energy schemes that apply in South Australia'.

I am sure there must be some of that information already available that does not require them to have to go off and do additional further work, at least in relation to that. Where the additional work needs to be done is in what the impact of the various proposed changes might be on electricity pricing if we were to go ahead, but also the impact that the Hon. Mr Parnell quotes that it is no more that two cups of coffee a week.

The Hon. M. Parnell: A year.

The Hon. R.I. LUCAS: A year. Okay; very plausible. Two cups of coffee a year is the impact of his particular scheme. So, we need the independent regulator to look at that information that has been before parliament and say, 'Okay. Yes, that's right. However, on the other hand, the impact will be this or this' in relation to the impact on others, the industry or whatever it might happen to be.

Now, there might be some restrictions in terms of the independent regulator being able to comment, obviously, on jobs in the solar industries. Personally, I do not suggest that we can expect the independent regulator to make commentary about the impact on the industry, jobs and employment. I am simply interested in the viability of the scheme, the impact on electricity prices and the costs overall. I think that is an area where the independent regulator should have expertise and could provide useful information to the state parliament. It does not have to come up with a recommendation to say it supports this scheme or that: it is really just responding to a request for information.

So, my view is that the proposed meeting on Friday sounds great, but it should not be the end of it. Again, the independent regulator's experts are sitting down with people and, in my frank view—not that I will be there—none of us are experts in the area. We are hardworking legislators, interested in the particular area. What ought to happen is that the range of work that ought to occur be identified and, over the next couple of weeks or so, the independent regulator should provide answers, information and advice through the minister or, if they prefer, do it directly to parliament. I am not sure what their act would require in relation to this.

I know that, under one of the models, there is a suggestion that this has all got to be done in the next 10 days. Now, that is the model that says we cut it off on 1 July or cut it off straight away. That is not the government's scheme, and I do not think it is the Hon. Mr Parnell's scheme. So, personally, I am not locked into the view that this all has to be done in the next 10 days. If it can be, that is fantastic but that is in the ideal world.

To me, as long as this is resolved during this session, then, yes, I understand the views of some in the industry that there will be a massive boom in terms of the numbers applying for the scheme but, ultimately, it is better, I think, to get this scheme change right rather than be pressured into making a change before we get answers.

So, if the regulator says to us, 'We can do the work but it is going to take us four weeks' or 'three weeks' then, personally, I think, that makes sense. The government and all involved ought to take that on board and we can then come back in four weeks armed with some answers to what are very difficult issues.

I support the proposition that the debate should be adjourned. It would seem that, if there is to be a meeting on Friday, the government is now prepared to accept that at least we adjourn consideration of the committee stage this week and that we will, hopefully, come back better informed after the work of ESCOSA or, indeed, anybody else, on the issue and then be in a better position to make a better informed judgment about which particular change we ought to support.

The Hon. P. HOLLOWAY (17:44): I would like the opportunity to make some comments in this debate. First of all, I declare a conflict of interest: I do actually have some solar panels on my house. It does raise the question: why should somebody on my income really be subsidised by low-income earners in relation to that? I would be happy to have those panels on the roof regardless of that, but I think that it does go to the heart of this issue.

When this scheme first came out, I had reservations about it because I think that any scheme that has subsidies inevitably—whether it is tariffs or subsidised water prices—tends to have problems of allocation. The Hon. Rob Lucas says that we are not experts in that. I think it is basic economics that, whenever you have subsidies for anything, you tend to get distorted allocations. I was happy enough to accept that in relation to the feed-in tariff scheme on the basis that this is a new industry, and the logic was that this would help the industry grow. The cost of solar panels was expected to come down, the take-up would increase and, therefore, eventually the scheme would, over time, become self-supporting and would not need the subsidy.

When the government first put this scheme up back in 2007—and, as the Hon. Rob Lucas mentioned, I actually handled the bill at the time; it is pleasing to agree with most of what the Hon. Rob Lucas has said—it came back a couple of times, I think, between houses and, ultimately, the government really had no option but to accept the amendments that were made. Of course, the real sticking point there was the fact that the scheme was originally designed to be a five-year scheme with a feed-in tariff of, I think, 44¢ but, with the amendment, it became a 20-year scheme. As I argued at the time:

The five-year period and the 44¢ is very carefully pitched at what we believe (it is a guess based on the information that we have in relation to the previous take-up of solar panels) will achieve the goal of 10 megawatt hours of solar generation from the current three.

I am not quite sure what the megawatt hours are, but my understanding is that the most recent figures I could get were about 120 megawatts of installed solar capacity. Presumably, it is more megawatt hours than that, but it has really been very much oversubscribed. Had it been a five-year period, we would now have a couple of years left. Given the fact that this country will be facing carbon pricing and so on, I think it raises the point that I made during that debate three or four years ago, that we were at a period of time when there was a lot of discussion and a period of uncertainty about what would happen in relation to issues such as carbon pricing. It was a volatile climate; things would change, and things have changed.

Given the debate we are now having on carbon pricing, it will mean that those people who have these solar panels will be even more advantaged in the future than they are under this scheme, which is why we really need to have a look at it again. When this matter came back between the houses back in, I think, February 2008, it was interesting that the Hon. Mark Parnell, who moved these amendments, said:

The government has no idea how many people this scheme will attract, but those of us who have spoken to people in the industry are saying that their customers are telling them that it is no incentive at all. They will not get any new people.

We can see how far off that statement was. He went on:

...If no new panels go up, it is a failure. All we have done is give a bit more return to people who have already done the right thing. In terms of the cross subsidy, it is simple to spread the cost of this scheme, even though we do not know what it will be—it is not likely to be high—across all electricity consumers, and you will find we are talking about a few cents or dollars a year. We are not talking of an extravagant cross subsidy between the rich and the poor.

My understanding is that, just for the feed-in tariff, it is about $30 a customer. If the Hon. Mark Parnell's amendments to this bill go through, that will increase up to $35 on my understanding, because, again, he wants to fiddle around with the pricing regime and put it on an even narrower base of people.

When you introduce these schemes, if relatively few people are being subsidised by the great majority, the cost is small, but the more people who take up these schemes, the fewer people the cost falls upon. So, it reaches the point that it has now, as we have seen in other states like New South Wales, where they have not only closed off the scheme at a moment's notice but also cut their subsidy on the feed-in tariff from 60¢ to 40¢ in recent days, contrary to a promise that was made before the election. So, they are the sorts of things that are happening elsewhere in the country.

I think it was a tragedy that back in 2007 that amendment was carried to make the scheme go for too long. Had it just been a five-year scheme, then I think, with the review that we had, it certainly achieved the objective of developing the industry. In fact, if anything now, I think one can put the point that the industry is overheated. Indeed, I saw on a television program last night that there were complaints about one particular solar installer who had been ripping people off.

I think that is the problem when you have too much growth too quickly. Rather than, as the Greens and others have claimed, that these measures will destroy the industry, I think what is doing it damage at the moment is the fact that it has been growing too quickly. That is why it is important that it be hosed down.

The Hon. Mr Lucas has already gone through some of the economic information that I wanted to put on the record, so I will not bother to do that now, in view of the time, but I want to make another point that the Hon. Mr Lucas did not make, and that is that it is not only the cost of the feed-in tariff that needs to be considered here but there are also costs that are associated with the network implication of photovoltaic cells.

The state's electricity network was not originally designed for diversified as opposed to centralised generation and the speed of take-up of photovoltaic power, if it is too quick, can have real implications for network management and the potential to require ETSA Utilities to bring forward plans for more staged investment in network upgrades to cope with the impact of this diversified generation. That, in turn, may impact network costs which will flow to all electricity users and be in addition to the costs of the photovoltaic feed-in rebate.

It is my understanding that with the current take-up—as I said, I think we are now at about 120 megawatts—there have been estimates about what that will be by 1 October. As I have said, I think the cost subsidy is about $30 that ordinary consumers who do not have solar panels will be paying to subsidise those who do.

The total cost of that over the remainder of the scheme, up to 2028 as it was set back in 2007-08, would be about $700 million, which is a very significant amount, but I understand that the network costs could be another $250 million over that period on top of that because, unfortunately, the small solar panel schemes, whereas they certainly reduce the fuel needed to generate electricity, do not save, necessarily, on installed capacity.

That cross-subsidy could be an additional indirect cost of about $250 million, which are, effectively, avoided network charges recovered from other electricity consumers. So, that also has to be put on to the debate. As I said at the start of my contribution, I certainly support solar power. I have it on my own property. I believe it was a very sensible thing to kickstart the industry to let it go through those early stages.

There is no doubt that as a result of that the cost of panels has come down, although I guess one should make the comment that one of the contributors to that has been the rising dollar. Origin used to make panels here in this state, or at least assembled panels in this state, but generally they are imported, so the higher dollar has reduced the cost. We have gone through that stage. I believe those arguments are no longer appropriate. I support the government's decision to close off the scheme. As I have said, we have seen similar decisions taken by other governments.

The Hon. R.I. Lucas: Supporting the increase of 54?

The Hon. P. HOLLOWAY: I have given you my comments in relation to how it affects me. In my view the focus of electricity policy in the future has to be very much on price overall and particularly for low income customers. I believe that should be the focus. There is no doubt that the impact of these schemes is starting to bite into the cost of electricity. It is certainly having a political effect but it is also, I believe, going to be an issue that governments have to address. Certainly, it was a smart thing to try to encourage the take-up of solar power, but there has to be some balance where the cost of those schemes to other consumers is reasonable.

As I said, speaking from my own personal point of view, as someone who has benefited from these schemes, I am not sure that I should be subsidised by people with considerably less income than I have. I am in the fortunate position where I can afford the capital cost of these networks, although that capital cost is reduced significantly by a grant from the commonwealth government. The capital cost of a 1½ kilowatt solar panel is about $8,000 of which there is a $5,000 subsidy, so when you see these advertisements in the papers at the moment, the $3,000 is net of the $5,000 subsidy from the commonwealth. So there is already a capital subsidy but that is being reduced from 1 July, but the question is: how much subsidy do we need for feed-in tariffs?

I think we are at the stage where we need to close off the scheme. There is an argument that jobs are going to be lost but, if anything, in recent days with the rush for people to take up these schemes, there has been a whole lot of problems created and that, in itself, has become an issue. I fully support what the government is doing in relation to the scheme, and I reject those amendments that have been put forward by the Greens because I believe that they will add a significant cost to what many low income earners are already paying to subsidise those who can afford to have solar panels.

In relation to the latter matter, I do not think the Hon. Mr Lucas covered the point, but AGL had some economists look at the sort of people who made up their customer base, as to who was actually taking up the solar panels. If you look at it, 55 per cent of the solar PV customers earn an annual income of greater than $62,000 per year, whereas only 15 per cent of customers would be classed as low income—that is an annual income less than $26,000 per year.

I think when they were looking at it they were looking at Sydney where 56 per cent of the sample hold real property worth $600,000 or more, so that data tends to dispel any suggestion that low-income households are somehow overrepresented in the feed-in tariff schemes, certainly in New South Wales. I think there are some serious equity issues around this scheme that need to be addressed and, with those comments, I indicate that I will support the bill.

Debate adjourned on motion of Hon. Carmel Zollo.

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