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Legislative Council - Fifty-Second Parliament, First Session (52-1)
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ELECTRICITY (MISCELLANEOUS) AMENDMENT BILL

Committee Stage

In committee.

Clause 1.

The Hon. M. PARNELL: First of all, I would like to thank the minister for responding to some of the questions that were posed in her summing up of the bill, but I have a few more questions. I will raise some of them now at clause 1 and others as we get to the clause that it relates to. In relation to clause 1, I want to ask the minister about the cost of meters. Customers in South Australia are being asked to pay between $425 and $640 for a new time-of-use meter to be installed by ETSA. My first question is: why are those costs so much more than the cost of meters interstate?

The Hon. G.E. GAGO: I have been advised that ETSA Utilities charge for installing an import-export meter. It is, I should say, a regulated service charge which recovers the cost associated with the meter from the customer: labour costs mainly associated with the installation and hard-wiring of the meter, travelling time, vehicle costs and overheads. That is why the costs are as they are.

The Hon. M. PARNELL: I accept that. If the minister does not know why it is so much cheaper interstate, she does not know; that is fine. Is there any obligation to have one of these meters installed if you are to export power to the grid, or are there still people exporting to the grid with old-fashioned metres where the dial simply spins backwards as you produce more electricity than you consume?

The Hon. G.E. GAGO: I have been advised that you will be required to have an upgraded meter, or some meters can be reconfigured.

The Hon. M. PARNELL: Does that mean people who are currently effectively receiving the same price for the electricity they produce as they pay for the electricity they purchase will be unable to do that if they are forced to go from a spinning disc meter to an import-export meter?

The Hon. G.E. GAGO: I have been advised that, in relation to the new meters, they will receive the price for the energy that is offered by their retailer, and that is going to be somewhere between 6¢ and 8¢.

The Hon. M. PARNELL: That does not answer the question. The preamble to that is: under the government scheme—and we will get to the obligation on a retailer to pay a very reasonable price in the bill—for some people in the future, that will be all they get. My question is: if someone happens to be on an old-fashioned spinning-disc meter where they are currently getting a much better deal, will they be forced to go to a new import-export meter and get a worse deal?

The Hon. G.E. GAGO: I am advised, yes.

The Hon. M. PARNELL: Another question about billing. As I understand it, currently meters are read quarterly and consumers are charged an administrative cost that includes meter reading. One person wrote to me from over on Eyre Peninsula saying that they are in credit. They are $369.94 in credit. They are not getting any interest on that payment, but they are still being charged quarterly fees; yet, when it comes time to settling the balance sheet and paying them out, they only have to be paid out once a year. So, my question to the minister is: is it fair that people who are in credit should be paying quarterly meter-reading charges whilst they do not receive any interest on the credit that is held by the retailer on their behalf?

The Hon. G.E. GAGO: I have been advised that, to minimise the overall complexity of the system and to minimise administrative costs, the obligation is to pay the credit once a year because most people will not be in credit over a year.

The Hon. M. PARNELL: I accept that the minister says that most people will not be in credit for a year, but if you are in credit for a year, is it fair that the electricity company keeps the interest on that credit amount, yet is still able to charge you quarterly meter reading fees? Would it not be fairer for those people who are in credit for a prolonged period to have their meter read once a year, rather than four times a year?

The Hon. G.E. GAGO: It is really a balance between cost and fairness. We have tried to pitch it at a fair and reasonable place that also minimises administrative costs that, in effect, are passed on to consumers, anyway. I guess the other thing is that, in fact, most people prefer more regular or quarterly readings because they like to keep tabs on their power usage. So, in fact, generally speaking, there is a preference for quarterly readings.

The Hon. D.W. RIDGWAY: I want to make a couple of comments more so than ask questions on clause 1, if I may. In particular, I would like to comment on what has transpired since we last debated this bill. I would like to thank minister O'Brien in another place and the minister in this place. I also want to thank ESCOSA for taking the time to do the comparison between all of the schemes that were on the table to be debated because it is a complex issue. The work that ESCOSA did in a very short period of time has, I think, helped all of us get a better understanding of what we are talking about.

The opposition's shadow minister, Mitch Williams, asked the library to do some work, and at 2.25pm today it was emailed to Mr Williams' office. Everyone has been concerned about the ongoing costs of any scheme we have, whether that be the increase from 44¢ to 54¢ or the type of transition scheme we have post 30 September this year, starting on 1 October. The library was requested to calculate what the actual cost per annum was to all the other customers. Often, people get a little confused and think that it is a cost to state government, but it is not; it is a cost to other energy consumers.

I might, if I may, read the advice from the library into Hansard, because I think it is relevant to the debate, and I think it encapsulates some of the concerns the opposition has with the ongoing cost to consumers of any scheme we choose. It states:

In answer to your question on the likely impact of [photovoltaic] Feed-In Rebate on Customers in 2012-13, I have prepared an answer that is consistent with the previous model of possible PV costs that you have been provided with from ETSA Utilities. There are a number of assumptions in this answer, and they need to be documented.

1. The scheme will have approximately 45,000 customers installed and metered by 30 June 2011.

2. The other 28,000 customers who had approval for PV installations in mid-June 2011 will also be connected and metered during 2011-12.

3. The output of the grid (PV export) will be in proportion to the increase in size that these recent approvals have sought, i.e. the average size of PV installation will rise from 1.5kW at December 2009 to 2.2kW when the scheme closes. Note that the approvals in 2011 have averaged 2.5kW in size for the approvals issued so far in 2011.

4. The scheme will pay 44 cents per kWh for feed-in, which will increase to 54 cents/kWh on 1 October 2011.

That is assuming that we pass this bill today.

5. No allowance has been made for an alternate scheme.

So it is just that particular set of circumstances.

6. No allowance has been made for addition approvals to 30 September 2011 that could join the scheme, nor for those approvals that may not proceed to installation.

7. The cost per residential customer assumes that the additional recovery is applied as a percentage uplift on network tariffs. This method was used in 2009/10 when initial PV Rebate costs were recovered. It results in about 50% of the cost of PV rebates being recovered from residential customers and 50% from business customers. If the additional costs were applied on a per customer basis, the impact on a residential customer would nearly double, and a lower impact would result on business.

ETSA Utilities forecasts that the annual payments under the scheme will reach $61M, totalling a nominal value of $1,050M over the 20 years.

ETSA Utilities has about $11M pa already provided for PV Rebate payments. ETSA Utilities will commence recovering the shortfall in payments in 2012-13, including a carry-over in excess payments from 2010-11 and 2011-12. This matter will be submitted to the [Australian Energy Regulator] for approval. ETSA Utilities expects it will need to recover an additional $70M in each of the 2012-13, 2013-14 and 2014-15 tariff years based on these estimates. This equates to a 6.4% uplift of the network prices in 2012-13. In subsequent years from 2015-16, about $61M will be recovered from business and residential customers to pay for the [photovoltaic] feed-in rebate.

The likely cost on average per residential customer under these assumptions is about $48 per annum excluding GST, or about $53 per annum including GST. Business customers will see their network charge rise by 6.4%.

Members would say that a figure of about $30, I think, has been provided by the government for the likely increase or cost to residential consumers, and clearly this work here shows that that figure is much closer to $50.

I just wanted to read that into Hansard. I think it is important. As I said, I certainly do appreciate, as I think we all do, the work ESCOSA has done and indicate that the opposition is looking forward to completing the committee stage of the bill this afternoon.

The Hon. R.I. LUCAS: I too join with the Hon. Mr Ridgway in thanking the Essential Services Commission for the work that it has undertaken. As I have outlined at length and I do not propose to repeat, I think it makes sense that we get expert advice on these changes before we proceed down the path that we were going to proceed down.

The one issue that I did want to refer interested readers of Hansard—all 30 of them— to is pages 25 and 26 of the Essential Services Commission report to all members of parliament. That section of the report refers, in essence, to the reason why we are even debating this. It notes that when the bill was introduced into South Australia in 2007 the purpose of this regime was to address the issue of climate change. The Essential Services Commission notes, on page 25 that:

In Particular, the Commission notes that, as a means of abating carbon emissions as a form of climate change response, there are serious questions as to whether or not feed-in schemes are an efficient proposition from a whole-of-society perspective.

Further on, on page 25 it states:

In addition, the cost of solar PV technology, in terms of capital costs and cost of subsidies, is relatively high. It is an expensive means of achieving greenhouse gas abatement.

On page 26 it goes on:

Moreover, feed-in schemes essentially involve a wealth transfer to effect the carbon abatement; under the current scheme (and under each of the proposals before the Commission) [that is all the amendments that the Greens, Liberal Party, government and others were contemplating] all customers pay (whether via distribution charges, retail charges or a combination thereof) for the benefit which is provided to those who are financially able to install PV generation plant.

Further on the commission notes that in the IPART report it states:

Both the Federal and New South Wales Government's schemes have encouraged the installation of rooftop solar generation units that promote very high-cost abatement.

I will not go through the rest of the quote but those who want to go to page 26 can see it. ESCOSA then notes the report from the Productivity Commission on carbon emission policies and key economies and notes:

Subsidies for solar-photovoltaic systems were found to be a relatively very costly way of achieving abatement and generally very little abatement resulted...

Then the commission concluded:

The Commission concurs with those views [that is, the views of the Productivity Commission and IPART]. While not offering any opinion on the merits of carbon emission abatement as a policy aim, it notes its preference for policy in this area to be reconsidered on a broad basis, taking into account the current existence of multiple and sometimes contradictory approaches, with a view to harmonisation of these approaches in the long-term interests of all consumers. It is imperative that, in pursuing greenhouse gas emission policies, governments facilitate the development of the most economically efficient options.

I conclude by saying that the Essential Services Commission does us all a service because it says, 'We are going to talk about the costs and equity and all those things but the purpose of the scheme, as announced in the second reading, was to address the issues of climate change.' The commission, in quoting other bodies and itself, is providing advice to us and saying, 'Hey, these schemes are very expensive ways of doing it; there are many better ways of actually achieving it.'

I left a little challenge to the Greens to respond to this because I am sure this should be an issue of great concern to them. At this stage, they have not yet taken up that challenge but perhaps this committee stage may not be the place to do it. However, certainly over the coming 12 months or so—we do not want to delay the committee stage—I think that is an issue that I would be interested in hearing about from the Hon. Mr Parnell and the Greens and others, in relation to how these schemes are actually achieving the goal in terms of climate change and greenhouse gas abatement in a cost-effective way for South Australian consumers.

Essentially, that is what we were debating in 2007. That is what we are debating now, even though we are talking about all these other issues about cross-subsidies and those sorts of things. Is this policy actually doing what it was meant to do? We now have expert advice from a number of bodies raising very significant questions about the whole purpose and reason for these particular schemes which we are about to add to by whatever amendments we pass this afternoon.

The Hon. M. PARNELL: I am not rising to the challenge, because I was proposing to address this issue at some stage and I might as well address it now. I do not, for one minute, accept the Productivity Commission's analysis—and I will explain why: because it is based on flawed assumptions. The honourable member talks about climate change being a primary driver of this policy. The response of our economy and our community to climate change is going to be a long process. It involves many things; it is not just about the actual generation of a watt of electricity from one source rather than the other. There is also industry policy in here as well including giving a boost to clean green renewable energy in South Australia.

That was part of the intention of this legislation. Whilst primarily framed as a climate change response, it was also part of industry policy to give the solar industry a boost. What the Productivity Commission does is state the bleeding obvious, if I can put it that way. What they are saying is that there are always cheaper ways of doing things that we are not doing, rather than the things we are doing. Now, to give an example, if we accepted that philosophy on life, no-one would have a rainwater tank and you would not bring up your own children; you would send them out to a children farm, because it would be more efficient to do it that way. That is the Productivity Commission's thinking.

Let us have a look at exactly what they did in coming up with their conclusion which, not surprisingly, made the front page of The Australian not long ago. The first thing they have done is understated the emissions abatement from solar power by using what has been described as 'grade 1 mathematics'. I am not talking about top grade: I am talking about year 1, primary school, mathematics.

They assumed that every solar system in Australia was 1.5 kilowatts in size. Clearly, they are not. They also then overstated the subsidy that was provided to solar power by 'guesstimating'—and that is all they did, it was a 'guesstimate'—that 50 per cent of generated solar power attracted a feed-in tariff, whereas a typical 1.5 kilowatt system if that, in fact, is what you have, typically receives a premium on only 17 to 28 per cent of its generation. That analysis was provided by Mr Ged McCarthy, the President of the Solar Energy Industries Association.

The solar costs that were used by the Productivity Commission are nearly twice what they currently stand at, and those costs are still falling rapidly. Those costs are then compared to the wholesale electricity price, and they ignore some of the considerable economic benefits that solar power can provide, in relation to reducing costs in terms of electricity transportation.

We will get on to that topic later but, certainly, the transmission losses that come when you transport energy vast distances from, say, the brown coal power stations of Yallourn in Victoria to South Australia do not exist when it comes to solar power, because chances are that any excess solar power that you produce goes next door or down to the end of your street. It does not go all the way back to Yallourn or all the way back to some interstate power station. So, the Productivity Commission, by their shoddy analysis, have been particularly unhelpful and I do not think that members should take that report as, basically, justification for opposing all small-scale renewable energy because that, in effect, is what their report says.

Clause passed.

Clauses 2 to 5 passed.

Clause 6.

The Hon. M. PARNELL: I move:

Page 3—

Before line 10 [clause 6(2)]—Insert:

(2aa) In making a determination, the Commission must (in addition to having regard to the factors specified in the Essential Services Commission Act 2002) fix different prices for the sale and supply of electricity (including the standing contract price under section 36AA and the default contract price under section 36AB) in accordance with the following requirements:

(a) the requirement that prices fixed for small customers who are concession card holders do not incorporate any costs associated with compliance with Division 3AB;

(b) the requirement that prices fixed for small customers who do not fall within the ambit of paragraph (a) incorporate the costs referred to in paragraph (a).

As well as explaining my amendment, I want to pose a number of questions to the minister. This is an important section in the bill, because it goes to the question of who should pay the cost of the feed-in scheme and how those costs are shared through the community, including how they are shared amongst residential and business customers.

Members should know but, I think, most members of the community do not know, that the South Australian solar feed-in scheme, as well as the commonwealth solar credit scheme, are currently entirely paid for by electricity consumers, not by government. So, when we are talking about how much something costs, we are not talking about how much it costs the government: we are talking about how much it costs the community. As members would know, you do not find line items in the state budget allocating amounts to the solar feed-in scheme. So, that is the first point to make.

If the cost is paid for by electricity consumers, then it is going to be borne disproportionately by those in the community who are least able to afford it. For people who are on low incomes, the combined support that is provided, not just to solar PV but also to massive air conditioners (and I will get onto that later), is not negligible. What might be a small impost on most people is, in fact, a more considerable one for low income people.

That is why the South Australian Council of Social Service and a number of their member groups, including UnitingCare Wesley, want those with the least capacity to pay to be excised from the pool of consumers who fund the scheme; and that is effectively what my amendment does, and I will get to the detail of that shortly.

Already we have the benefit in the regulations under the electricity legislation of an appropriate description of low income people that we can use to excise them from a requirement to contribute to the cost of this scheme. As I understand it, there are 200,000 households—so that is 27 per cent of the 700,000 households in South Australia—who are already eligible for the state government energy concession scheme.

If we were to exclude those people from the cost of the solar feed-in scheme, from having to contribute to it, we would effectively increase their concession by 15 per cent, and that would be a very welcome increase for low income people. At the same time, it would add less than 1 per cent to the average bill for other households. This would deliver a direct saving into the pockets of those who are struggling the most with the rising cost of electricity.

As I said before, if people are nervous about any form of cross-subsidy, just remember that these massive air conditioners that are going in represent an incredible cross-subsidy that, in effect, adds about $100 a year to the electricity bills of those who either do not have those big air conditioners or cannot afford them. That is because, for every $1,000 invested in these big air conditioners, another $3,000 is required to upgrade the network to cope with the extra demand.

If we are going to talk about cross-subsidies and how bad they are, let's put it in perspective. Some cross-subsidies actually make sense, and a cross-subsidy that helps low income people to be better able to afford the price of essential utilities I think is one we should support.

The minister, in responding to this issue in her earlier contributions on this debate, has talked about the extra administrative costs that would come from having to separate these people, who we already know because they are already on an energy concession scheme—but there would be an administrative cost associated with that. I accept that there would be an administrative cost whenever you do anything administrative. Therefore, my question to the minister is: what is the government's estimate of the administrative cost that would accompany exempting these 200,000 low income households from having to contribute to the scheme?

The Hon. G.E. GAGO: That level of detail is not available at the moment. I am happy to take that on notice and bring back a response.

The Hon. M. PARNELL: I think that would be good, because it is one thing to say that the government is worried about the extra administrative costs but I think it would be great to find out whether there is, in fact, anything to really worry about, bearing in mind that these costs would be over a scheme that is in the tens of millions of dollars.

I have another question and, if the minister needs to take this on notice, she will. Apart from the administrative costs, are there any other barriers to including this amendment? In other words, are there any other barriers to excising these low income people from the scheme other than administrative cost?

The Hon. G.E. GAGO: I have been advised that it is in fact the retailer who is the one who deals with concession holders so that ETSA does not know who concession holders are. Of course, they vary over time and keep changing; therefore, a system would need to be developed that would advise ETSA who the concession holders were and would be able to keep those changes updated continually. I am advised that the IT platforms to do that are currently not in place, and there would be costs associated to develop those and put them in place, and then costs of maintaining that system.

The Hon. M. PARNELL: I thank the minister for her answer. I take it to mean that the retailers know who these people are, they have to keep their databases up-to-date, and they have not worked out how to share it with ETSA. I will accept that is not an insurmountable barrier in the electronic age.

If the minister would take on notice: is the cost of administering a scheme, such as proposed by this amendment to excise the low income people, any more complex or any more costly than the complexity of dealing with the 45 kilowatt per day export limit, which is already in the government bill? Perhaps if the minister could take that on notice, because it is a technical question, but behind it is the fact that you have some extra administration you will have to do anyway in keeping a track on the upper limit of electricity. It seems to me to be no more difficult with low income people.

I make the point in passing because members have already referred to the ESCOSA report. ESCOSA identified that they thought there might be some administrative costs, but they made no attempt—fairly, in the one week that they were provided—to quantify what any of those costs were, and certainly there was no attempt to compare even a ballpark guess of costs in relation to a scheme that costs tens of millions of dollars.

If I can, I want to move on to another question of the minister, and this is a fundamental one. My question of the minister relates to who actually pays for the cost of the feed-in scheme. Is it just households, or is the cost of the scheme smeared across all electricity customers? It is an important question because ESCOSA assumed in their analysis that the cost was only shared amongst householders rather than amongst all electricity consumers. Just to make it crystal clear, we know that business consumers are a large group of consumers. They are smaller in number obviously, but they are much larger in terms of the actual amount of energy that they consume. Who is actually paying for it?

The Hon. G.E. GAGO: I have been advised that the cost is shared across all electricity customers.

The Hon. M. PARNELL: I thank the minister for her answer. I hope that is right because that basically shows that the ESCOSA figures, which determine what they say is the increased cost to householders, are wrong because they worked on the assumption that it was only other householders who are paying for the scheme.

Another question related to that same topic is: whilst that might be what ETSA Utilities does, whose decision is it as to the pool of consumers over whom the cost is spread? Is it in the legislation that all consumers have to pay, whether they are domestic or business consumers? If it is ETSA's decision alone, what guidance can or should the government provide ETSA?

The Hon. G.E. GAGO: I have been advised that it is not covered in the legislation, that it is, in fact, the utilities who determine the tariff and how costs are allocated and that they then, in turn, submit it to the AER for approval.

The Hon. D.W. RIDGWAY: I just indicate that the opposition has considered the Greens' proposal, but the 200,000 households that receive an energy concession is just too big a pool to exclude, in our view. We had some sympathy for what the Greens were trying to achieve, but it was just too big a pool and it would unfairly shift the burden of the scheme onto other consumers, bearing in mind that there are a number of anomalies in that pool of 200,000 people. There are a number of cases where those households may not be in financial stress and are at least able to pay, as the Hon. Mark Parnell indicates. To break it down into much smaller subsets to be able to get a group that the opposition would be comfortable with is, I think, too difficult, so we are not prepared to support the Greens' amendment.

The Hon. G.E. GAGO: The government opposes this amendment. I have already put some of the issues on the table, but ESCOSA has indicated that there may be practical and administrative costs arising from the proposal to exempt concession holders from paying the costs of the solar feed-in scheme. Concession cardholders were excluded from contributing to funding. The cost of the scheme and the number of customers funding the scheme would then fall by approximately one quarter, so the cost to remaining customers would increase by approximately one-third, I am advised. To successfully implement the proposal it is likely that the administrative costs of the scheme will increase, which would be passed on to remaining customers.

The Hon. R.I. LUCAS: The only other point I would make is that governments have the option of assisting those with the greatest difficulty in terms of paying their utility bills—in this case, electricity—through direct and explicit subsidy. Some of us prefer an open and transparent way of counting the cost of what it is to provide a subsidy to those most in need.

The government and the opposition have indicated their unwillingness to support this particular cross subsidy to be woven into the complicated nature of this particular scheme. The government can speak for itself, but an alternative government, for example, does have the policy lever available to it, should it so wish, to assist those most in need in terms of their electricity bills by a direct and transparent subsidy paid by the taxpayers to that particular area of need. If a government is going to provide a subsidy, I personally prefer that as opposed to a complicated, hidden and perhaps costly way of administering a cross subsidy being woven into this particular scheme.

The Hon. M. PARNELL: I would just like to make a few closing comments in relation to this amendment. I can see that I do not have majority support, but this is one of the important amendments that we have been asked as a parliament by the peak welfare bodies to incorporate into the legislation, so I will be dividing on this one. I just say that in case other members want to get any comments on the record, rather than just their names. I just make the point again that the analysis that the minister gave, that if you remove one quarter of the people from the pool of householders, somehow you add a third to the cost for everyone else. Well, that is the government falling into exactly the same trap that ESCOSA fell into, and it contradicts the answer the minister gave previously that the cost is smeared over all electricity consumers, not just households. So, those figures do not add up.

I want to follow up what Hon. Rob Lucas said about alternative ways of helping low-income people—and I was going raise this, anyway, before the Hon. Rob Lucas mentioned it. Minister O'Brien, in the media, has been talking about different ideas the government has had, including the idea of putting solar panels on the roofs of all Housing SA properties. I would like the minister to explain to the committee, if she can, what the government has in mind in relation to other ways of helping low-income people cope with rising electricity prices and, in particular, how the government intends to help low-income people join the solar revolution.

The Hon. G.E. GAGO: I have been advised that the minister recently announced that he is looking into measures to assist low-income people to access alternative energy, such as solar, and that work has only just commenced. Also, of course, in this budget, an increase in concession payments was announced for those people who are required to use electricity for medical purposes, such as ventilators, respirators and such like. So, they are a couple of measures that have been put in place.

The committee divided on the amendment:

AYES (6)
Bressington, A. Brokenshire, R.L. Franks, T.A.
Hood, D.G.E. Parnell, M. (teller) Vincent, K.L.
NOES (13)
Dawkins, J.S.L. Finnigan, B.V. Gago, G.E. (teller)
Gazzola, J.M. Holloway, P. Hunter, I.K.
Lee, J.S. Lensink, J.M.A. Lucas, R.I.
Ridgway, D.W. Stephens, T.J. Wade, S.G.
Zollo, C.

Majority of 7 for the noes.

Amendment thus negatived.

The Hon. M. PARNELL: I move:

Page 3—Line 14 [clause 6(2), inserted subsection (2a)]—After 'Division 3AB' insert:

, including the extent to which such electricity enables a retailer to reduce costs associated with network services and the value to the retailer of any such reductions in costs

The legislation before us requires the Essential Services Commission of South Australia to determine a fair and reasonable value to a retailer of electricity that is fed into the network.

Amending this so that it refers to a fair and reasonable value to the electricity market fed into the network recognises that solar energy does have some network benefits that accrue to market participants other than the retailer but including the retailer, such as avoided losses, transmission and network costs.

This amendment that I am moving now is aimed at making sure that the ESCOSA determination of the fair and reasonable price (or any subsequent review of a fair and reasonable price) is as wideranging and thorough as possible, and that it considers what the real value of consumer-generated solar is by allowing ESCOSA to take everything into account.

At the very least, ESCOSA's review should take into consideration the costs for large-scale transmission across state borders (which is estimated at about 10 per cent) and savings from not having to purchase extra electricity from generators to allow for network losses (which is estimated at about 6 per cent).

It is a bit like knowing that when you drive your truck from Melbourne to Adelaide, a certain number of boxes are going to fall off the back, so you actually load a few more boxes on before you start so that you end up with the amount that you want. That is how network losses work, and they should be incorporated into the calculations. These calculations should be on top of the savings to retailers that are made by their not having to purchase the electricity from wholesale generators.

The effect of these amendments would be hopefully to increase the amount that retailers are obliged to pay households. Retailers are currently paying just 6¢ to 8¢ per kilowatt hour and then they are onselling that electricity to your neighbours for a premium. If the retailer contribution increases, then under the scheme that the Greens will be moving later on, the community top-up payment automatically decreases. As a result the overall cost of the South Australian Solar Feed-In Scheme will decrease and the savings will then be passed on to other consumers.

It is worth pointing out that these amendments do not dictate to ESCOSA what it should come up with as a fair and reasonable price. They simply tell ESCOSA that it should take everything into account because otherwise there is a risk that it might view its brief very narrowly and take into account only the wholesale price of electricity.

It may well be that, when ESCOSA does take into account the avoided transmission losses and other avoided losses, it might decide that they do not add up to much so they might not, in fact, have much of an impact. It is not the job of the parliament to dictate to ESCOSA what the price should be, but surely it is within our power to make sure that it takes into account all relevant considerations—and that is the effect of this amendment.

The Hon. G.E. GAGO: The government opposes this amendment. The requirement for ESCOSA to have regard to the fair and reasonable value to a retailer of electricity fed into the network does not appear to prohibit the consideration of the value of reductions of costs associated with the network services; therefore, this amendment does not appear to be necessary.

The Hon. D.W. RIDGWAY: The opposition will also be opposing the amendment.

The Hon. R.I. LUCAS: My question is to the mover of the motion, the Hon. Mr Parnell: is it your argument that the result of your amendment is that it will lead to an increase in subsidy paid by electricity retailers from the 6¢ to 8¢ that currently exists? I think that is what I heard him say.

The Hon. M. PARNELL: The 6¢ to 8¢ is being used as a range because that is what most people are guessing ESCOSA will come up with as a fair and reasonable price. It will be something in that range. What I am saying is that I want to leave open the possibility that that amount might be a bit higher because this parliament has given ESCOSA a little bit more guidance as to what it should take into account when it is working out a fair and reasonable cost.

The simple thing is that, if you produce excess electricity, it does not flow back to Yallourn or back across Bass Strait to some hydro scheme: it basically goes next door or down to the end of your street. In fact, having a more distributed network can lead to savings in terms of the necessity to upgrade some of the large-scale, long-distance distribution. So there is a saving that comes from having a more distributed production system. It is not just one power station providing everyone, for example:, it is a range.

I know that people will say, 'Well, there are other costs as well because you might have to upgrade the power lines down a certain street if everyone puts solar panels on their roof.' You have to do that if everyone puts a big air conditioner in, as well, so it sort of cuts both ways. All this amendment does is that it basically requires ESCOSA to take into account more than just the wholesale price of electricity, which does not include any of these other benefits which are known to accrue from solar power.

The Hon. R.I. LUCAS: The only point that I make is that—and the Hon. Mr Parnell has clarified that he sees this as potentially a way of the retailer paying more—the inference is that, in some way, that is a good thing; it just hits the retailer. Ultimately, if the distributor is paying more or if the retailer is paying more anywhere in the system, in the end they do not take a hit to their bottom line: the system operates as such that all the consumers still end up paying. The inference of what the Hon. Mr Parnell is arguing is that this is a good thing because the retailers are going to pay more, and the electricity users are not going to.

Ultimately in this system, with a national electricity market, if the costs go up for distribution or if the costs go up for retailers, it flows through to all electricity consumers. I think it is just a fundamental misunderstanding of the way the national electricity market operates in terms of its costing. However, we are not going to delay; the numbers are not there to support it.

The Hon. M. PARNELL: I need to quickly respond to that. It may well be regarded as a fundamental misunderstanding of how the entire economy works. The consumers always end up paying at the end of the day for everything. I just do not see that the argument really prevails. The advantage, as I see it, is that it does give the potential to share the costs slightly differently. We are not talking about pauper companies here. We are talking about very wealthy companies that have been getting either free or very cheap electricity which is why—and I want to remind members of this—in response to a Greens bill, the Legislative Council voted to stop the 'great solar rip-off', as we were calling it. Last year we in this chamber voted for a bill to make the electricity companies pay a fair and reasonable price for the electricity they produced. That bill, as I understand it, is still languishing in the lower house.

So, let us not get confused here. We collectively support the idea of the electricity companies having to pay a fair and reasonable price. All my amendment does is remind ESCOSA that they do need to take into account all costs—either actual or deferred costs—when they are working out what a fair and reasonable price is. It is a simple amendment. Whether it adds 1¢ or 2¢ to the retailer contribution, I do not know, but it seems to me that we are being more honest with the South Australian public by trying to sheet home costs where they lie, notwithstanding the fact that in the economy, as in life generally, ultimately, we all end up paying, one way or another.

Amendment negatived.

The Hon. M. PARNELL: I move:

Page 3—After line 14 [clause 6]—Insert:

(3) Section 35A—after subsection (4) insert:

(5) In this section—

concession card holder means a person who—

(a) is a recipient of the South Australian Government Energy Concession; or

(b) falls within a class of persons who are experiencing hardship determined or approved by the Commission for the purposes of this Act.

This is consequential on the failure of my low income protection amendment earlier, so I will move it for the record but I will not be dividing on it.

Amendment negatived; clause passed.

New clause 6A.

The Hon. M. PARNELL: I move:

Page 3, after line 14—Insert:

6A—Amendment of section 36AA—Provision for standing contract with small customers

Section 36AA—after subsection (4) insert:

(4aa) The fact that a small customer feeds electricity into a distribution network in accordance with Division 3AB is to be taken not to be a basis on which an entity may refuse to sell electricity to the customer at the entity's standing contract price and subject to the entity's standing contract terms and conditions (and the standing contract terms and conditions of an entity must be consistent with the requirements of this section).

This amendment makes it clear that an electricity retailer cannot refuse to allow a solar household to connect through them to the electricity grid. We have heard anecdotal evidence of retailers trying to claw back the cost to them of the solar feed-in scheme by charging a higher contract rate for the electricity that they supply to the household. In fact, I was sent a spreadsheet from one solar panel owner who worked out that they would have received more money overall, after 12 months, from an electricity retailer who did not pay anything for the electricity that was exported than a retailer who did pay them 6¢ or 8¢ because the first retailer charged a lower rate for the electricity that they supplied.

This amendment also seeks to prevent price gouging, if you like, by making it clear that solar customers must, in fact, be accepted. The government will say that such a provision is already in the legislation, but solar customers must not be refused to be able to buy electricity at the retailer's standing contract price, subject to their standing contract terms and conditions. Basically, it prevents the retailers from using the fact that someone is a solar customer to bump them up to a more expensive contract.

The Hon. G.E. GAGO: The government rises to oppose this amendment. In South Australia, only one retailer is a declared electricity retailer and, therefore, has a standing contract price and standing contract terms and conditions. The Electricity Act states that this entity must, at the request of a small customer, agree to sell electricity to the customer at the entity's standing contract price and subject to the entity's standing contract terms and conditions. Therefore, this amendment is not necessary.

The Hon. D.W. RIDGWAY: I indicate on behalf of the opposition that we oppose the amendment.

New clause negatived.

Clause 7.

The Hon. M. PARNELL: I will not be moving my amendment No. 5. It is one of a number of amendments that relate to both the current scheme and the transitional scheme where the Greens will be supporting some aspect of the government's proposals in that area. So, I will not be moving my amendment No. 5, but I will be supporting the minister's amendment and moving, later on in committee, some amendments to the minister's amendments.

The Hon. G.E. GAGO: I move:

Page 3, line 20—Delete the definition of designated day.

This amendment is in response to the solar industry, which has expressed concerns in relation to a boom or bust industry. The new category of qualifying customers will provide the solar industry with an increased transition period away from public support. The decrease in feed-in tariff payment for this category of qualifying customers is required to manage the cost of the scheme to all electricity consumers.

The Hon. A. BRESSINGTON: I indicate that I will be supporting this amendment. However, I also think that it is very important for it to be on the record that, if it was not for the efforts of the Hon. Mark Parnell pulling together the information session that he did, there would have been no transition scheme and there would have been a boom and bust situation with the solar industry. As a member of this council, I would like to make sure that Mr Parnell gets the credit for at least encouraging the government to take a different approach to this.

The Hon. D.G.E. HOOD: Family First supports the amendment.

The Hon. D.W. RIDGWAY: I indicate the opposition also supports the amendment.

Amendment carried.

The Hon. M. PARNELL: I move:

Page 4, after line 14 [clause 7, inserted section 36AC]—Insert:

retirement village means a retirement village within the meaning of the Retirement Villages Act 1987;

This amendment relates to the predicament that the residents of retirement villages find themselves in as a result of the inflexibility of this scheme. Under the bill and the new regime, there are going to be some limits to eligibility in terms of who can benefit from a feed-in scheme. They include, first, a limit of one generator per customer; and, secondly, the solar feed-in bonus being limited to the first 45 kilowatt hours a day exported to the grid. Those two things together, in fact, make it very difficult for retirees living in retirement villages to access the scheme.

In many situations, community titled retirement villages operated under the Retirement Villages Act have only one meter provided by ETSA for the whole village. From this meter, a private power distribution infrastructure is installed, which complies with Australian and ETSA standards, but it is a private distribution network to each residence and each residence then has its own meter. They are billed individually for the power that they use. The meters are read and billed by a private meter-reading organisation. ETSA terms this a 'bulk supply arrangement' with 'associated private distribution network'. It is also called an 'embedded network'.

The problem arises when retirement village residences have photovoltaic systems on their individual roofs with an associated dedicated inverter, which means that the net power generated from each individual resident is then fed back to the grid via the single meter that applies to the whole village. This scenario means that the entire retirement village, in effect, has one generator which is in the name of the company or the entity running the retirement village. Consequently, it is limited to receiving the feed-in tariff bonus to only the first 45 kilowatt hours produced per day.

The impact of that is that each residence—for example, if you had 86 homes in a village—would receive just a very small amount because the whole village would very soon reach and surpass the cap that has been reached. On the figures that I have been provided with, in that scenario each residence would be entitled to half a kilowatt hour each or 30¢ a day compared to $2.40 a day, which they would otherwise get if they were separately metered.

An 86-home retirement village would generate in the order of 350 kilowatt hours of energy exported per day. That is based on a 1.85 kilowatt system on each residence, producing 4 kilowatt hours of net export electricity. That would mean that, of that 350 kilowatt hours, 305 will not attract the feed-in bonus and, in effect, that penalises retirees who are largely on fixed incomes and, therefore, they are significantly impacted by ever increasing electricity prices, so they are not able to benefit from solar energy.

I should point out that we are not looking to the owners of retirement villages making a profit from the scheme because the bulk purchase of electricity, whilst it may result in a slightly reduced cost to residents, when it is combined with a feed-in tariff, could actually significantly offset the cost of electricity to residents. So, it is in fact about benefiting people—older people, generally—on fixed incomes. We think amending the scheme to enable the residents of retirement villages to access the scheme is a fair change to make, and I think it warrants the support of all members.

The Hon. G.E. GAGO: The government rises to oppose this amendment. ESCOSA has indicated that there may be practical and administrative costs arising from this proposal. Some retirement villages are inset networks whereby the electricity infrastructure belongs to the village itself rather than ETSA Utilities. In these circumstances, ESCOSA notes that the costs incurred by the operator of the inset network in administering the scheme would be recovered from other residents in a retirement village, resulting in higher electricity prices than would otherwise be charged.

The Hon. D.W. RIDGWAY: I indicate that the opposition has some sympathy for what the Hon. Mark Parnell is trying to achieve but, for the reasons outlined by the minister, unfortunately it would be impractical to do this and, therefore, the opposition will be opposing the amendment.

Members interjecting:

The ACTING CHAIR (Hon. J.S.L. Dawkins): Order!

Amendment negatived.

The Hon. G.E. GAGO: I move:

Page 5, line 29—Delete 'the amount of $0.54 per kWh' and substitute:

The feed in price

I understand this is consequential.

Amendment carried.

The Hon. G.E. GAGO: I move:

Page 6, lines 13 to 29—Delete subsections (5) and (6) and substitute:

(5) A person is not eligible to receive a credit under this section—

(a) on or after 1 October 2013 in respect of a generator (being a qualifying generator) unless the person is a Category 1 qualifying customer or a Category 2 qualifying customer in relation to that generator; or

(b) on or after 1 October 2016 in respect of a generator (being a qualifying generator) unless the person is a Category 1 qualifying customer in relation to that generator.

(6) If a generator is, on or after 1 October 2011—

(a) altered in a manner that increases the capacity of the generator to generate electricity; or

(b) disconnected and moved to another site,

a credit under this section will not be payable from the date of the alteration or disconnection.

This amendment sets the date that solar customers in the transitional scheme will cease to receive the feed-in tariff.

The Hon. D.W. RIDGWAY: I indicate that the opposition discussed this at length, and we have agreed to support the government's amendment to provide a transitional period to the date mentioned in the amendment.

The Hon. D.G.E. HOOD: For the record, Family First also supports the amendment.

The Hon. M. PARNELL: I am supporting the amendment.

Amendment carried.

The Hon. G.E. GAGO: I move:

Page 6, after line 39—Insert:

(9) For the purposes of this section—

(a) a Category 1 qualifying customer is a qualifying customer in relation to a qualifying generator where—

(i) the generator is a qualifying generator before 1 October 2011; or

(ii) a person, before 1 October 2011, has received permission to connect the generator to a distribution network from the holder of a licence authorising the operator of the network and has, within 120 days after 1 October 2011, made arrangements with the holder of the licence for a new meter to be installed on account of that connection; and

(b) a Category 2 qualifying customer is a qualifying customer in relation to a qualifying generator where—

(i) the person does not qualify to be a Category 1 qualifying customer under paragraph (a); but

(ii)—

(A) the generator is a qualifying generator on or after 1 October 2011 and before 1 October 2013; or

(B) a person, before 1 October 2013, has received permission to connect the generator to a distribution network from the holder of a licence authorising the operation of the network and has, within 120 days after 1 October 2013, made arrangements with the holder of the licence for a new meter to be installed on account of that connection.

(10) In this section—

feed in price means—

(a) in relation to a Category 1 qualifying customer with respect to a qualifying generator—$0.54 per kWh;

(b) in relation to a Category 2 qualifying customer with respect to a qualifying generator—$0.16 per kWh.

This amendment introduces the new category of 'qualifying customers' that will provide the solar industry with an increased transition period away from public support.

The Hon. M. PARNELL: I move:

Amendment to Amendment No. 4 [Gago-2]—Inserted section 36AE(10)—Delete the definition of feed in price and substitute:

feed in price means—

(a) in relation to a Category 1 qualifying customer with respect to a qualifying generator—the price per kWh from time to time that, when added to the prescribed amount as determined from time to time under section 36AD, results in a total price of $0.54 per kWh (and if the prescribed amount is equal to or greater than $0.54 per kWh, the price for the purposes of this paragraph is to be taken to be $0.00 per kWh);

(b) in relation to a Category 2 qualifying customer with respect to a qualifying generator—the price per kWh from time to time that, when added to the prescribed amount as determined from time to time under section 36AD, results in a total price of $0.30 per kWh (and if the prescribed amount is equal to or greater than $0.30 per kWh, the price for the purposes of this paragraph is to be taken to be $0.00 per kWh).

This is the absolute guts of the bill, and we are going to have to spend a little time working our way through this, because we have several models and various permutations and combinations of those models. Certainly, the Greens' position, for example, on the Liberal amendments may well hinge on the government's attitude to my amendments.

In this amendment No. 4, as I understand it, this is the section that sets out the two feed-in scheme. There is the scheme for the existing customers and those who join the scheme before 1 October, and then there is what we are calling the transitional scheme for those who join the program after 1 October.

As I understand the amendment, the government is proposing that those who are in the schemes now or who join before 1 October will be paid the sum of 54¢ per kilowatt hour net for exports of electricity to the grid and that, on top of that, they will get the fair and reasonable price set by ESCOSA that we have already talked about earlier.

First, can the minister clarify that the discussions that I have had with the minister over the last week about incorporating the ESCOSA established fair and reasonable price into the feed-in tariff has amounted to nothing and we are now looking at 54¢ per kilowatt hour net to 2028, plus the ESCOSA set fair and reasonable price? Can the minister clarify that that is the intent of the first part of this amendment?

The Hon. G.E. GAGO: I am advised that the intent is to deliver the 54¢ plus the retailer component.

The Hon. D.W. RIDGWAY: I move:

Amendment to amendment No. 4 [RegDev-2]—Inserted section 36AE(10)—Delete '$0.54 per kWh' and substitute:

$0.44 per kWh

That has the effect of reducing the price of 54¢ down to 44¢. I think one of the issues that have been of concern, especially to the opposition, is: what does this additional 10¢ mean to the consumers across South Australia? From the latest figures that have been provided to me by the shadow minister, Mitch Williams, it appears that over the life of the scheme this extra 10¢ to 2027 will equate to $190.8 million, so effectively $10 million a year so that every cent is $1 million a year.

It was the Premier who announced the 10¢ after the review was done. It does impact significantly on consumers, notwithstanding they will already receive the 44¢. The opposition thinks that 44¢ which, of course, will have the fair and reasonable price of about 6¢ to 8¢ added back in on top of that is a reasonable compromise. While people have been promised the 54¢ by the government and by the Premier, and some would argue that this is somewhat retrospective, they actually have not received that particular benefit yet. It is a benefit in the future, so we are wanting to maintain the existing customers at 44¢ going forward.

The Hon. M. PARNELL: I need some more clarification from the minister. She has clarified that the 54¢ is a fixed amount going forward to the year 2028. Can I ask the minister to also clarify that, under this regime, the transitional scheme—that is, for those who join after 1 October—will be the sum of 16¢ and that will be fixed for the sum of 10 years? I ask her to make it clear that the government is not proposing that that 16¢ includes the retailer contribution. It is simply a feed-in tariff paid for by other consumers, but that it is a fixed amount for 10 years.

The Hon. G.E. GAGO: I have been advised that it is in fact fixed at 16¢ plus the retailer's component for five years, not 10.

The ACTING CHAIR (Hon. J.S. L. Dawkins): The Hon. Mr Parnell, are you going to move your amendment?

The Hon. M. PARNELL: I do need to say a fair bit more about this because, as I say, this is the crux of the bill. What the minister has told the chamber by her comments is that the government's intention is for the government to ask the Legislative Council to support the most expensive scheme that will add the most to the power bills of ordinary South Australians of all the models put forward, and I am just got gobsmacked that that is what they want to do. I seek leave to incorporate into Hansard a statistical table.

The ACTING CHAIR: Is it purely statistical?

The Hon. M. PARNELL: It is purely statistical. It has numbers in squares.

Leave granted.

ESCOSA Modelling of Cost of SA Solar Feed-in Scheme

(based on figures taken from Table 7 and 8 from Appendix 3 of the ESCOSA Report: Proposed Amendments to the South Australian Photovoltaic Feed-in Scheme)

Distributor Retailer Total
Government (no carbon price) 268.4 73.9 342.3
Greens (no carbon price) 251.2 79.0 330.2
Government (with carbon price) 268.4 117.4 385.8
Greens (with carbon price) 240.0 125.3 365.3

Note: assumes Discount Rate of 8 per cent


The Hon. M. PARNELL: I will just refer to it before I hand it over. Basically, using the figures that ESCOSA provided in their modelling of the various schemes, they worked out how much the Greens' proposal cost—and that is the amendment that I have moved—and how much the government's scheme would cost, and they did it under two scenarios.

They did it under the current scenario where the price of pollution is effectively free—where we do not have a carbon tax, so it is free—and they did it with the price of electricity affected by a carbon price. When they modelled the two schemes, the price of the government's scheme with no carbon tax was $342.3 million. The price of the Greens' scheme was $330.2 million. So, the Greens' proposal was $12 million cheaper, but the great tragedy of what the government is now doing is that the Greens' proposal actually had more solar panels being put on more roofs in South Australia in the future. So not only is it cheaper for all households but you get more solar panels. I just cannot for the life of me understand why the government is going down that path.

When ESCOSA factored in a carbon price, the Greens' scheme is $20 million cheaper. This just astounds me, because when the public get wind of what this parliament is doing, they will realise that the electricity bills that are going to hurt them on an ongoing basis have been beefed up by the government ignoring cheap options and going for expensive options purely on the basis of a comment that the Premier made in August; that is, he thought that existing people should get an extra 10¢ a kilowatt hour, when those people did not ask for it and the solar industry was not calling for it. It was simply, in many ways, a throwaway line. The government will say it was on the basis of a report that was produced, but clearly it was an irresponsible announcement.

The Greens' amendment proposes to have the 54¢ still in as a number but we were not going to calculate that number the way the government has, which is 54¢ ad infinitum. Our 54¢ was going to include the ESCOSA determined fair and reasonable price. The Greens' model is: if we take the fair and reasonable price of 6¢, the retailer would pay 6¢ and the rest of the community, the other electricity consumers, would pay 48¢, and that is how it would be calculated.

However, people would still get what the Premier told them they would get, which is 54¢. The government's proposal is for the most expensive scheme with the least benefit to anyone other than those who are already in the scheme, and they are going to get a windfall that they did not ask for and that, in terms of people who have signed up in the last year or two do not need, because the payback period for solar panels was already cheap.

The government's proposal locks in a very large public subsidy until the year 2028 which will be long after the majority of solar households have paid off their panels. That might have made sense back at the start of 2008 but it makes no sense in 2011. If electricity prices rise as high as many commentators estimate, the solar households will be getting a big financial windfall well beyond what parliament originally intended, and this financial windfall will be at the expense of other households without solar panels.

Let it not be said that the Greens do not want people with solar panels to get a great return on their investment—we do—but we want to be economically responsible about how we do this. We want to keep a lid on the price of electricity for all consumers. We can do that in a way that enables a transition scheme that will give even more solar households a chance to be established—and on the Greens' estimate we could get an extra 40,000 households with solar panels on their roofs for less cost than what the government is proposing. That is why I think the sensible model is to phase out the community top-up, to reduce it over time as electricity prices rise and the retailer contribution increases.

The way we are going, if the Greens' model is not supported, then it is just going to be a massive impost. We will hear what other speakers have to say, but I might ask the indulgence of the house just to briefly get some advice on this because we are now faced with the dilemma that the government is proposing to do something that is incredibly economically irresponsible and, all of a sudden, the opposition's amendment starts to become much more attractive.

I will take some advice quickly. I do not need the debate to stop if other speakers want to continue but I would appreciate it, if there are not any other speakers, if I could have a minute to get some advice. My tendency is to support the Liberals because, whilst that is less generous to existing solar panel owners, it certainly is more economically responsible, given that we represent all electricity consumers in this state.

The Hon. D.W. RIDGWAY: Can you explain the process? A few of us have had discussions with parliamentary counsel, but I think it would be useful for you to explain how we will proceed forward, given that the opposition's amendment is the most economically responsible and probably the most sensible of all the amendments.

The Hon. M. Parnell: It is the second best.

The Hon. D.W. RIDGWAY: The Hon. Mark Parnell says it is the second best. Having said that, I think it makes sense. We have all moved our amendments.

The CHAIR: I will be putting the Hon. Mr Ridgway's amendment first. If that succeeds, I will then be putting the minister's amendment as amended.

The Hon. G.E. GAGO: The government rises to oppose the Ridgway amendment. The government is cognisant that over 45,000 customers have joined the scheme since the announcement on 31 August 2010 of the intention to increase the feed-in tariff to 54¢. It needs to be assumed that a substantial proportion of those customers have based their purchasing decision on that 54¢. For those reasons, we will be proposing the amendment.

The Hon. D.G.E. HOOD: There are three amendments, aren't there? We will be supporting the government's amendment and opposing the other two, and I will explain why. The simple reason is this: the minister quoted 40,000 households. In fact, I am informed that something like 70,000 households will come in under this scheme by the time it expires. The truth is that those people have signed up under the full expectation of getting 54¢ a kilowatt. I just do not think it is reasonable for us to then change the amount that they are expecting to get, albeit they are currently only eligible for 44¢.

The Premier made a very public statement which, I think, most people out there would assume would pass into law although, of course, that is not always the case. They would assume it would pass into law that that would, in fact, be 54¢ a kilowatt. Now, that being the case, I do not see that it is fair to those people who have signed up in good faith, expecting those conditions, to then change the game on them at a later stage. So, we will be supporting the government's position on this one.

I also think the 16¢ for the so-called category 2 group of people is a very reasonable amount for a transition scheme. Let us be clear about this: people have had a long time to join the solar scheme. It is not like it is new. There have been many, many months where the solar companies have been advertising most aggressively to get people into this scheme. So, I do not think it is fair, firstly, to change the rules on people who have already joined the scheme. Secondly, I think 16¢ is a very fair transition amount. So, for that reason, we will be supporting the government's position on this one.

The Hon. M. PARNELL: I just want to make some observations. It is not often that I am lost for words, but I am struggling with this one. Two things: first of all, I think that the government and, perhaps to a lesser extent, the Hon. Dennis Hood assume that the good citizens of South Australia pay more attention to the Premier's pronouncements than we know they do. Now, the reason I can say that is that, when I talk to the people in the solar industry about what is driving the uptake in solar electricity, it is not, 'We heard the Premier on 22 August last year say that he was going to introduce legislation to bring the feed-in tariff to 54¢.'

The reason it is going gangbusters is the very generous commonwealth scheme which helps people with the up-front purchase price. When people are buying big capital items, it is the up-front cost that is driving the purchase. That is the first consideration. The second consideration is: how long before I pay back my panels? Ultimately, what is driving this current boom is the federal scheme and the fact that they have announced it is going to be wound back over the next couple of years. I do not accept, firstly, that the 54¢ has been the driving factor and therefore we somehow owe it to people, who may have heard the Premier say that, to legislate to do what the Premier said.

The Hon. Dennis Hood—and he and I agree on many aspects of this—talks about changing the rules. The rules are what we are writing. The Premier will say what the Premier says out there in public but the Premier doth not, by proclamation, legislation make. The fact is that he said he wanted the tariff to go up to 54¢ for existing customers, and I can hear his press conference tomorrow: 'The government wanted to be generous to people with solar panels. We wanted to give them more money'—that they never even asked for and, as a result, we are blowing out the electricity costs for everyone else in the community. He is going to blame those naughty Liberals and the Greens for having stymied his ill-thought-out policy proposal to increase the feed-in tariff when it was not asked for.

Had the government adopted a more sensible approach of tailoring off the scheme—

The Hon. P. Holloway: You were the ones who wanted 20 years. Come on! Let's have some reality here.

The Hon. M. PARNELL: The Hon. Paul Holloway talks about the 20-year scheme. I do not recall seeing him at the international solar congress, where the Premier got to his feet in front of hundreds of people from around the world and announced what a fantastic solar feed-in scheme we had, and he personally thanked me and the Greens for putting it up to 20 years, because that is what he knew and that is what the industry knew the solar community needed in order to drive take-up. If you look at the take-up rates, you will find that, even with that 20-year scheme, in those early days the take-up was not that great because the panels were still expensive and it took a long time to pay them off.

The only reason it has gone gangbusters recently has been a combination of factors, most of them outside our control, such as the Australian dollar, the price of panels and the commonwealth announcement. Had the government done what it said it would do and reviewed this scheme promptly, we could have, in a sensible way, managed a transition away from subsidies, but the idea of actually increasing it at the same time you chop it off makes no sense at all.

Therefore, I do not accept that somehow we have an obligation as a parliament to give effect to something that the Premier announced that was ill thought out. People are going to say, 'Mark, you have got 54¢ in your amendment.' We have, but we have constructed it in such a way that it declines over time and is economically responsible. What the government has now put forward is going to be rued by South Australian electricity customers for many years because there will be an extra chunk on the top of their bill that will come from this ill-thought-out scheme.

So, whilst I will be moving my amendment if I get the chance, if it is not made redundant by the passage of other amendments—

The CHAIR: You have moved it.

The Hon. M. PARNELL: But what I am saying is that you may well decide, as a result of previous decisions that are made, I am not allowed to. I will leave that to your call.

The CHAIR: You have already moved it.

The Hon. M. PARNELL: Yes, but you said you will consider it after the other two. Once those two have been—

The CHAIR: No, if the Hon. Mr Ridgway's amendment is defeated, then we consider yours.

The Hon. M. PARNELL: Only if that is defeated?

The CHAIR: That is the way they were filed.

The Hon. M. PARNELL: That is good. Thank you for your guidance. Given the indications I have had from both sides that the Greens amendments are not going to succeed, we will be supporting 44¢.

The Hon. D.G.E. HOOD: If I can have an opportunity to respond to that. I do not accept, either, that the only reason people are jumping on board the latest solar schemes is purely because of the capital cost. I do not accept that. Certainly, I think that is a significant component of people's decisions but, also, there is no question that people do their sums and they realise that the feed-in tariff helps them pay these things off over time, hence, that becomes part of their arithmetic in working out whether or not it is worthwhile in their individual circumstance to proceed.

I will give you a quick example. When somebody goes to buy a car, you take into account the cost in outlay of that vehicle and the running costs of that vehicle. We all do that because we know that the cost is not just in purchasing something, it is also in owning it and running it. That equally applies to this scheme as well, and that is why I feel strongly. People I know have actually done this and have taken into account very much what the return will be in terms of the reduction in their power costs and also the potential to receive money back through the feed-in scheme. I think people have considered both of these aspects and I do not think it is fair to change the rules on them, and that is why we will not be supporting anything that does that.

The Hon. A. BRESSINGTON: I am going to support the Hon. David Ridgway's amendment. I think we have a bit of a dilemma here. We are worried about people who already have committed to solar energy on the 54¢ feed-in scheme, but we are not even talking about the other side of the coin where the most disadvantaged people in our community are subsidising that for everybody else. They are the least able to participate in the scheme and the ones that are actually expected to subsidise it, and I think that is quite a perverse situation for us to have.

I am supporting the Hon. David Ridgway's amendment because I think he may have the numbers. I prefer the Hon. Mark Parnell's amendment—scales are down more, and I think that would be more effective, more cost-effective and more fair over time—but for fear that the Hon. Mark Parnell's will not get up, I am going to support the Liberal amendment.

The Hon. K.L. VINCENT: I would like to echo the sentiments of the Hon. Ms Bressington. It is my primary intention, if you like, to support the amendments of the Hon. Mr Parnell; however, in light of the fact that these are very unlikely to get up, I will support those of the Hon. Mr Ridgway.

Hon. D.W. Ridgway's amendment carried; Hon. G.E. Gago's amendment as amended carried.

The Hon. M. PARNELL: My amendment No. 12 is a review clause. Basically, it is ensuring that the scheme is reviewed in a reasonable time, but I will not be moving this amendment because now that the transition scheme is so short, there is no real advantage to having a statutory review. I withdraw that amendment.

Clause as amended passed.

Clause 8 passed.

Schedule 1.

The Hon. G.E. GAGO: I move:

Clause 1, page 7, line 40—Delete paragraph (d) and substitute:

(d) disconnected and moved to another site,

The government's intention was for the disconnection clause to only apply to substantive disconnections such as moving a solar system from one place on the network to another. The amendment clarifies this intention.

The Hon. D.G.E. HOOD: Family First supports the amendment.

The Hon. D.W. RIDGWAY: The opposition is supporting the amendment.

Amendment carried.

The Hon. G.E. GAGO: I move:

Clause 2, page 8, after line 9—Insert:

(ab) will be taken to be a Category 1 qualifying customer under section 36AE (as enacted as part of new Division 3AB) with respect to a qualifying generator; and

This is consequential.

Amendment carried; schedule as amended passed.

Title passed.

Bill reported with amendment.

Third Reading

The Hon. G.E. GAGO (Minister for Regional Development, Minister for Public Sector Management, Minister for the Status of Women, Minister for Consumer Affairs, Minister for Government Enterprises, Minister for Gambling) (17:41): I move:

That this bill be now read a third time.

Bill read a third time and passed.

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