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Legislative Council - Fifty-Third Parliament, Second Session (53-2)
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Bills

Emergency Management (Electricity Supply Emergencies) Amendment Bill

Introduction and First Reading

Received from the House of Assembly and read a first time.

Second Reading

The Hon. K.J. MAHER (Minister for Employment, Minister for Aboriginal Affairs and Reconciliation, Minister for Manufacturing and Innovation, Minister for Automotive Transformation, Minister for Science and Information Economy) (15:28): I move:

That this bill be now read a second time.

The national energy market is failing South Australia and the nation. The events of 8 February 2017 are a key example of how the system is letting down South Australians. Rather than directing an offline generator into service to meet supply shortfall, the Australian Energy Market Operator decided that a large part of the South Australian community should be denied electricity in a time of extreme heat.

Another example is the events of 28 December 2016. In the lead-up to the statewide blackout, we contacted the Australian Energy Market Operator (AEMO) to express concern over the Bureau of Meteorology's forecast of severe weather conditions. However, no direct action was taken by AEMO to reduce the risk of outages from any damage to the South Australian power system.

There has also been a distinct absence of national leadership on energy policy, particularly over the question of a price on carbon. This uncertainty has led to a lack of investment in new electricity generation, and we now have a small number of power companies with extraordinary control over the market, pursuing profits at the expense of reliable, affordable power.

South Australians have faced blackouts throughout our history, and networks with above-ground infrastructure will always be vulnerable to weather interruptions. Consequently, no government can guarantee the power will never go out. However, South Australians have the right to expect the highest possible levels of electricity reliability and security.

On 14 March 2017, the South Australian government released a comprehensive energy plan to take charge of the state's energy future and deliver reliable, affordable and clean power for South Australians. Our plan is designed to put South Australians first and give our state greater control over our local energy security.

The Emergency Management (Electricity Supply Emergencies) Amendment Bill 2017 is an essential component of the energy plan. It will ensure that, in times of an electricity supply emergency, the minister responsible for energy will be able to make directions to protect the needs of the South Australian community. The minister responsible for energy will be provided with the power to declare an electricity supply emergency if it appears, on reasonable grounds, that the supply of electricity to all or part of the South Australian community is disrupted to a significant degree or there is a real risk that it may be disrupted to a significant degree.

There is an urgent need to enact these powers. We have seen a year of extreme weather events in South Australia testing the power system. On top of this, we are seeing coal-fired power stations closing, which reduces supply in the National Electricity Market. Without clear national policy settings, little or no investment is occurring to replace the generation that has exited the system. Relying on existing provisions for the management of emergencies is not an option. Electricity supply emergencies occur very swiftly.

Currently, where severe or prolonged electricity supply shortfalls occur, there are legislative provisions under the Essential Services Act 1981 (ESA) which enable the South Australian government to impose directions. The Attorney-General has responsibility for the administration of the ESA and the process requires the Governor to declare a period of emergency and declare energy as a specified essential service for that period of emergency.

On 8 February, there was less than two hours between the notice of a lack of reserve and the instruction by the Australian Energy Market Operator to the network operators to shed load. Under the current process, it would not have been possible to act quickly enough to avoid load shedding. This bill establishes an efficient process for the declaration of an electricity supply emergency, which gives responsibility to the minister responsible for energy and allows the government to rapidly respond to scenarios as they emerge.

The bill also provides that the minister responsible for energy may refer matters related to an electricity supply emergency to the Essential Services Commission of South Australia and the Technical Regulator for inquiry to ensure that South Australians are provided with transparent and efficient reporting on the management of these events. Exercising these powers will require the government to monitor conditions, to have information available to determine whether electricity supply is insufficient or likely to become so and to have information to inform the issuance of directions.

It is likely that persons holding information relevant to the exercise of the powers under this bill will be willing to share information. However, they may question whether they have the right to provide such information. To provide certainty, the bill includes the right to require information from any person to support the minister's functions, and at any time, not only when an electricity supply emergency declaration has been made. Electricity supply emergencies will be for a limited period of time. The bill recognises this and provides that an electricity supply emergency declaration can only apply for a maximum of 14 days. A declaration can only apply for a longer duration on the approval of the Governor.

During an electricity supply emergency, the minister responsible for energy may issue directions to a generator, retailer or the Australian Energy Market Operator. It is only intended that issuing directions is used as a last resort. The government expects that both market participants and the Australian Energy Market Operator will take all action available to them to ensure that the community's needs are met in a potential or actual electricity supply emergency.

An important feature of the bill is that it removes any doubts which may have arisen under the ESA that the minister may, in the context of an electricity supply emergency, issue specific directions to the Australian Energy Market Operator. This will include directions requiring AEMO to restrict the flow on the interconnector, requiring AEMO to direct other market participants in accordance with the National Electricity Law or requiring AEMO to suspend the spot market in South Australia. Providing these directions is a function the government should perform, if necessary, in an electricity supply emergency.

This is in fact complementary to the national electricity framework, which expressly contemplates governments performing such a role, with the National Electricity Rules requiring the Australian Energy Market Operator to liaise with jurisdictions in relation to the use of emergency service powers.

This bill represents one component of the government's energy plan. Overall, the energy plan will make our power supply more reliable and secure with the introduction of battery storage into the power system and increased energy security services such as inertia to help manage frequency disturbances. It is therefore considered appropriate that the bill provides a review and a report on these powers after five years of operation.

South Australians are calling for action to ensure reliable, competitive and clean power supply for all into the future. This bill represents an essential component of delivering these requirements to South Australians. I commend the bill to members and look forward to the second reading stage and to moving through the committee stage today. I note that the Leader of the Opposition, the member for Dunstan, committed this morning on radio that, 'We'll make sure that their legislation passes the parliament today.' I seek leave to have the explanation of clauses inserted in Hansard without my reading it.

Leave granted.

Explanation of Clauses

Part 1—Preliminary

1—Short title

2—Commencement

3—Amendment provisions

These clauses are formal.

Part 2—Amendment of Emergency Management Act 2004

4—Amendment of section 2—Objects and guiding principles

This clause amends the objects to reflect the inclusion of the new provisions relating to electricity supply emergencies.

5—Amendment of section 3—Interpretation

This clause inserts a definition of electricity supply emergency.

6—Amendment of section 4—Application of Act

This clause provides for extra-territorial operation.

7—Insertion of section 26AA

This clause inserts a new section clarifying the interaction between powers relating to declared emergencies and powers relating to electricity supply emergencies.

8—Insertion of Part 4 Division 6

This clause inserts a new Division as follows:

Division 6—Electricity supply emergencies

27A—Interpretation

This section defines terms used in the Division.

27B—Minister may declare electricity supply emergency

This section allows the Minister responsible for the administration of the Electricity Act 1996 to declare an electricity supply emergency if it appears to the Minister, on reasonable grounds, that the supply of electricity to all or part of the South Australian community is disrupted to a significant degree, or there is a real risk that it may be disrupted to a significant degree. A declaration lasts for an initial period of up to 14 days and may be extended once, with the approval of the Governor, for a further period of up to 14 days.

27C—Minister's power to give directions

On the declaration of an electricity supply emergency, and while that declaration remains in force, the Minister may give directions to any market participants that the Minister thinks are reasonably necessary to respond to the electricity supply emergency.

27D—Minister's power to require information or documents

The Minister may require a person to provide a document that the Minister reasonably requires—

(a) to determine whether there is, or is likely to be, an electricity supply emergency; or

(b) to plan for the future exercise of powers under the proposed Division; or

(c) to otherwise administer or enforce the proposed Division.

27E—Obligation to preserve confidentiality

The Minister must preserve the confidentiality of commercially sensitive information.

27F—Manner in which notices may be given

This section sets out how a direction is to be given or a requirement made under the Division.

27G—Delegation

This is a power for the Minister to delegate.

27H—Inquiries relating to electricity supply emergencies etc

This section allows the Minister to instigate an inquiry by the Essential Services Commission or by the Technical Regulator.

9—Insertion of section 28A

This clause inserts a new section as follows:

28A—Offences against Part 4 Division 6

This section sets out offences for the purposes of proposed Part 4 Division 6.

10—Amendment of section 32—Protection from liability

This clause provides protection from liability in respect of acts or omissions in making a declaration, giving a direction or carrying out a direction or requirement under proposed Part 4 Division 6.

11—Review and report

This clause provides for a review of the operation of the amendments after 5 years and a report to the Parliament.

The Hon. M.C. PARNELL (15:36): The Greens are pleased to support the second reading of this bill. After a year of mudslinging and some of the most appalling public debate and misinformation on a topic of national and global importance, it is good to finally have something concrete before us in the form of this bill. What has characterised the energy debate over the last year has been a convenient amnesia that invites us to forget why we need to change the way our economy functions. It invites us to forget why the world community agreed in Paris to slow our carbon dioxide emissions and move to decarbonise our economies, especially in the energy sector.

In its place we have seen grinning federal ministers passing around lumps of coal in parliament. Anyone who happens to agree with the consensus of the world's climate scientists is pilloried for being ideological. When a state like South Australia decides to take that consensus seriously, we are attacked for being reckless and irresponsible.

I have no doubt who will be judged by history as reckless and ideological. It is those who deny the reality of climate change. They are kidding themselves if they think propping up fossil fuels for a few more decades or longer is good public policy. It is not. It is disastrous for the environment, it is bad for the economy and it is certainly irresponsible for future generations.

The earth's atmosphere is not a rubbish dump for carbon emitted by burning fossil fuels: it is actually our planet's survival blanket, and we need to maintain it in a stable state if we are to have a stable climate, rather than the alternative, which is runaway global warming which will have irreversible impacts on all species, including us. That brings us to this bill, which is part of the state's new energy plan.

I have some serious reservations about some parts of the plan, but other aspects of the plan are deserving of support, and this bill reflects one of those aspects. The bill seeks to reassert a level of state control over a broken electricity market. It will not fix the market but it will provide an emergency power so that incidents such as the 8 February load-shedding incident will not happen again.

The ability for a state government to intervene in the market in emergency situations makes a lot of sense. It is not foolproof and it is not a fail-safe mechanism, but it is a sensible back to the future device. I say it is a back to the future device because back in the day the government owned all the generators, transmission, distribution and retail operations, therefore directing part of that network to behave in a certain manner was as simple as giving a direction.

Privatisation, on the other hand, has given the whip hand to large energy companies whose only objective is to maximise the return to its shareholders. It is not their objective to look after the interests of South Australia. Unless they are going to make a profit from us, they owe us nothing. We have seen that principle in operation with the owners of gas generators refusing to switch on even when it was clear that the power was needed. Unnecessary blackouts or load shedding was the outcome.

I would like to make a few remarks about the South Australian government's energy plan. I will start by saying that it is important to have a plan. It is important to have a state plan, but it is just as important, or even more important, to have a national plan. But we have seen on this issue that the federal government is absolutely hopeless. Their lack of a plan has resulted in a halt to new development, in particular, new electricity generation.

The Hon. K.J. Maher interjecting:

The PRESIDENT: Order! The Hon. Mr Parnell has the floor.

The Hon. M.C. PARNELL: If you do not know where government policy is heading, it is much harder to get finance. The federal national Liberal government has been incredibly dishonest in its repeated claims that just about everything that ever goes wrong in the energy field must be the fault of renewable energy. But it is not all bad news because in spite of the policy vacuum at the national level, the economics of renewable energy is changing at such a rapid rate that new projects are being advanced, including new solar, wind and storage projects.

Recent domestic solar installations have broken records in many parts of Australia and this is happening in spite of the fact that the feed-in tariffs are no longer available. People are putting up panels on their roofs because it makes economic sense to do so. At the grid level, we have seen the announcement from the Lyon Group of a $700 million battery and solar farm at Morgan in the Riverland, and that is on top of their smaller $250 million Kingfisher project in the state's Far North. The Riverland project would provide 330 megawatts of solar PV and 100 megawatts of battery, which would store 400 megawatt hours of energy.

Even as recently as today, the online news service InDaily is reporting that renewable energy generators are racing to get large-scale projects financed and built in time to fill the supply gap created by the closure of coal-fired power stations around the nation. Apparently, just today construction began on the 300-megawatt Bungala solar farm just outside of Port Augusta.

It is also reported today that a new 59-turbine, 212-megawatt wind farm, also just outside Port Augusta, is very close to financing and construction. There were six components in the state's energy plan. The first component was in relation to battery storage and a renewable technology fund. The government is promising to build a grid-connected battery of 100 megawatts—that is a good announcement. That is a good use of public funds.

There is also $150 million, half in grants and half in loans, to help support future renewable energy and storage projects. It is my sincere hope that one of the successful bidders for that money will be the solar thermal plant at Port Augusta. That is a project whose time has well and truly come. It is quite advanced. It has overwhelming support in the local community and it would be a brilliant project that would demonstrate to South Australians that renewable energy can generate electricity day and night.

The second component of the state's energy plan relates to government contracts for electricity used by government agencies. The government intends to use that buying power to attract new electricity generation to increase competition. According to the government's announcement, 75 per cent of that contract will go to a new generator and 25 per cent will go to dispatchable, renewable energy initiatives. I am not sure of the exact details of the tender arrangements, but projects like solar thermal at Port Augusta are crying out for government support.

The third component of the state energy plan, the state-owned gas power plant, is dubious at best. According to the announcement, this incredibly expensive $350 million or $360 million plant will only operate during emergencies and therefore it will not compete in the market with other generators. That begs the question of whether we are talking about a white elephant.

Having said that, we do need to acknowledge that there are other services that need to be provided to the electricity network, including inertia and grid stabilisation. The question remains, and I think I am in agreement with the government on this, the market is broken because the market does not properly value those services. The government, instead, is stepping in and using taxpayers' money to provide those services.

My feeling is that there is a better way of doing it. All of the states involved in the National Electricity Market should look at pairing contracts for supply of energy with secondary contracts for grid stabilisation, attach them to each other and make the generators provide these additional services as well, rather than taxpayers having to build a gas-fired power plant that will not generate a lot of electricity.

While we are waiting for that plant to be built, the government has talked about bringing in temporary generators, up to 200 megawatts worth. The talk has been around diesel-fired generators, such as the ones used in Tasmania. Again, I think the government could have looked at other options, especially when you had people like Elon Musk promising that he was going to get the batteries in within 100 days or it would be free. He was promising, I think, 100 megawatts, which is half of what the government is proposing to bring in in the form of temporary generation.

The fourth aspect of the state energy plan, gas exploration incentives, is probably the one part of the plan that I am most critical of. It is completely unnecessary. It is a complete waste of money. The government is giving $24 million of taxpayers' money to gas companies to help them explore for gas, and this is on top of the original PACE grant of $24 million—$48 million of taxpayers' money handed over to some of the biggest fossil fuel companies in Australia. We are giving the big end of town a huge amount of money to help them make extraordinary profits for their shareholders.

The question is: who got this money? When you look at the recipient list it is the big end of town, it is the big donors to the old political parties, in particular. Santos has received most of the money: $5.82 million for the Senex Santos Cooper Basin pipeline project; $3.96 million for the Santos Cooper Basin refracture stimulation project; $6 million for the Santos Cooper Basin under-balanced drilling project; and $2 million for the first phase of the Strike Energy Cooper Basin deep coal project. On top of that, and one which is likely to be incredibly unpopular, is the $6 million for Beach Energy's Otway Basin exploration project, targeting conventional reservoirs.

The reason they have referred to conventional reservoirs is because they know that fracking is a dirty word in the South-East. I think the government is going to get a bit of a shock, because as people are looking at the gas industry in general, they are realising that it is not just fracking that is bad for their community, it is the whole of the gas industry. That $6 million—when you look at the Beach Energy statement to the stock exchange, they are hoping to get a 33 per cent or 32 per cent chance of success—a one-third chance of success. We have a two-thirds chance of blowing all of our money on a project that the people of the South-East do not want and are sure to object to in strong terms.

The Hon. R.L. Brokenshire: No social licence.

The Hon. M.C. PARNELL: The Hon. Robert Brokenshire interjects that they have no social licence, and that was the finding of the Natural Resources Committee. The point that I think all people in the South-East are well aware of is that just because the government says that any well is not going to be fracture stimulated does not mean that that is not going to happen. You think about it, Mr President: you drill a hole 3½ kilometres underground, and the gas, after a while, stops flowing, are you going to abandon that well or are you going to bring in Halliburton, with their fracking machines, and start fracture stimulating that well? Of course that is what you are going to do. You have sunk so much money into digging one of the deepest holes around, you are not going to abandon it just because the low hanging fruit has disappeared.

However, what is most remarkable about this aspect of the government's energy policy is that when you look at the government's own review of the PACE project—the PACE project is the one under which this money has been granted—they looked at it as recently as 2014, the review found that there was no evidence of market failure in oil and gas exploration and, therefore, no need to give taxpayer money to this industry. The review found that there was no evidence of market failure in conventional oil and gas exploration and it was considered that the funds available would not have changed company priorities.

The review found that exploration investment was already at high levels and companies reported that there were already 12 drilling rigs operating in the Cooper Basin and, therefore, funding was allocated to other projects and not to drilling. So, we have come a long way from a review of the government's funding of mining exploration projects deciding that there was no point putting money into oil and gas, to just a few years later giving them, in the most recent case, $24 million on top of the $24 million previously allocated.

The fifth government energy policy item was the energy security target, and this will force retailers to source a percentage of their energy from local generators rather than from interstate through the connector. We have no particular objection to that. That brings us to the sixth and final component, which is what this bill is all about. This bill provides the energy minister with emergency powers to intervene in the market in the manner described just a few minutes ago by the minister. I think most of us hope that this power will never need to be used. We hope that the participating jurisdictions in the National Electricity Market will get together and fix that market.

We hope that the federal government, either of this persuasion or the next, will develop a national policy that focuses on reducing carbon emissions in the economy and focuses on renewable energy and storage, and I hope that we get better state policies, ones that grasp the nettle and are not just half-hearted in relation to renewable energy but fully supportive of the energy revolution, which is going to be renewables plus storage. You only have to look at the expert commentary from think tanks around the country: the future is in renewable energy plus storage. The only people who are saying that fossil fuels have a long-term future are those who are wedded to it through investment or through obligation.

With those brief remarks, the Greens are happy to be supporting the second reading of this bill. We look forward to the committee stage and I will have some questions to ask at that stage, as I am sure other members will, not the least of which will be how likely it might be that South Australia going it alone does not trigger other states deciding that they want to do the same thing. We could end up—if our Victorian and New South Wales colleagues had similar emergency powers—with an unholy tug of war over the interconnector.

It is very unclear who is going to win that battle, especially since, as I understand it, the interconnector is jointly owned by the transmission operators in South Australia, ElectraNet, and the transmission operators in Victoria. That is my understanding. I will certainly be asking the minister, when we get to that part of the debate, how this particular stand-alone state mechanism is going to fit into the national system. It is not a reason to not vote for it—in fact, it is a good measure and we will be voting for it—but I think there are some serious questions that mean that this should be probably a short-term measure rather than being seen as a long-term solution to the country's energy problems and the failings of the National Electricity Market.

The Hon. G.E. GAGO (15:53): I rise to support this bill. This bill is an important step in securing South Australia's energy future. It shows that the government is serious about taking control of our energy future and putting South Australians first. The events of 28 September 2016 and 8 February 2017 have shown that we can no longer rely on the Australian Energy Market Operator to ensure accurate forecasts of electricity demand or timely responses to emergency situations.

In the lead-up to the blackout on 28 February, I am advised that the government contacted AEMO to flag concerns about severe weather to come. However, these concerns seem to have gone unnoticed by AEMO, which did not take appropriate action to reduce the risk of outage. Their failures contributed to unnecessary blackouts in parts of the state.

The facts are clear, the national energy market is not working for South Australia. This government will no longer accept South Australia's energy security being at risk. It will not accept a national market that pushes prices up for consumers in South Australia. We are in this position because the federal government has wholeheartedly failed to develop and implement a coherent, effective national energy strategy. All we have seen at the federal level is the removal of any effective mechanisms to transition our electricity infrastructure to a 21st century system.

The federal Liberal government has tried to abolish the Clean Energy Finance Corporation. They abolished a market-based mechanism to address carbon pollution. They attacked the renewable energy target and then proceeded to cut that as well. All of these policy mechanisms were in place to help bring about certainty to the market, that Australia was a place that you could invest in in terms of the energy market.

Instead, we saw investment in both renewable energies and electricity infrastructure plummet. We have seen little or no investment in new power generation to supplant the loss of old, ageing and dirty power stations, the inability of the federal government to enforce a carbon emissions scheme, or price on carbon, and the lack of fairness and efficiency in the national market has led us to where we are today.

We can no longer expect companies to act in goodwill. Electricity companies that are constraining our supply are reaping profits from high power prices that South Australian homes and businesses can no longer accept. That is why the South Australian government has announced a thorough and comprehensive response to securing our energy future. Our response will secure our energy future while ensuring that households and businesses in South Australia are no longer reliant on the whim of the energy market operator, private companies or the shameful inaction of the federal government: a federal government that has demonstrated that it has absolutely no interest, I have to say, in supporting South Australia.

Time and time again, the federal Liberal government has sold South Australia out. We can see that with the way they would not support Holden and also the River Murray. It is disgraceful that the Liberal federal government has washed its hands of South Australia.

The Hon. I.K. Hunter: Don't forget the canoes.

The Hon. G.E. GAGO: And canoes. Under current legislation, in order to declare South Australia to be in a state of emergency there must be a meeting of the Executive Council, followed by the assent of the Governor of South Australia. We seek to remove the cumbersome process that is currently in place and replace it with an efficient procedure for engaging emergency powers in the future.

The amendment before us will give the relevant minister powers of direction over the market in the event of an electricity supply emergency. The minister can also issue directions to a generator, retailer or the Australian Energy Market Operator. This will ensure that every available measure is taken to secure our energy supply. This amendment is only one component of the government's plan to secure our energy future. Our plan will deliver a new state-owned gas-fired power plant to provide energy security for South Australia, as well as adding hundreds of new jobs to the state.

Our plan provides South Australia with the largest battery in the Southern Hemisphere, which will allow our state to store energy from our renewable sources of wind, solar and hydro. This electricity can be provided at peak times when demand exceeds production, adding stability to supply. Our government will also offer incentives to source more gas for use in South Australia and create more electricity generation, which will increase competition and put downward pressure on prices.

This amendment is an important tool within this plan to make sure that South Australians are put first. The production of cleaner, cheaper and more reliable energy is what a state needs, and this bill will ensure that our energy generation will be stable through times of emergency. It is a bold and urgent measure that this government is taking, and that is why I commend this bill to the chamber.

The Hon. K.L. VINCENT (15:59): I would like to briefly place on the record the Dignity Party's support for this bill and thank the government for the briefing that we received on this. We know that the government is, of course, fast-tracking this bill and urging compliance by the Legislative Council to pass this bill this week, when it has only been introduced to this chamber today. Of course, this is a far cry from usual procedure, but we are happy to do so when the circumstances call for it. Given the number of electricity debacles, for want of a more eloquent word, we have faced in this state in recent times, this is well justified, but we certainly would not want to see this become a habit.

The Dignity Party certainly supports the second reading of this bill and also confirms support for some of the comments by previous speakers, particularly surrounding the need for more holistic and comprehensive planning around South Australia's energy needs, especially when it comes to the need for increasing the use of renewable energy sources, given the real issues around climate change not only in this state but globally, of course.

However, we would also like the government to acknowledge that during the statewide blackout on 28 September 2016 one of us received calls and inquiries quite specific to another constituency, that is, people with disabilities and alternative communication needs, which demonstrated quite clearly to me that the government did not have an adequate procedural plan in process for the provision of that particular support.

During the briefing on this bill I also asked questions surrounding the safeguarding of electricity supply to houses where residents rely on electricity not only for convenience and comfort, but for life-sustaining equipment such as ventilators. I am awaiting answers from the minister and government on those localised solutions and would appreciate it if those answers could be provided at the committee stage.

In closing, while it is not specific to the nature of this particular bill, I think that we can gather from the events of the September blackout—where we had ministerial advisers knocking on the door of my office asking me to help them locate an Auslan interpreter, despite the fact that we had, of course, passed a change in this place to make sure that Auslan interpretation would be available for televised emergency broadcasts—that without the necessary planning and resourcing we can pass as much policy and legislative change as we like, but we need to have that backed up by real resourcing and support. I hope that this will be the case with this particular change and would like to see that continue to happen in areas such as Auslan interpretation. With those few words, we support the bill.

The Hon. R.L. BROKENSHIRE (16:02): I rise to support the second reading of this Emergency Management (Electricity Supply) Bill. However, I am not going to be so generous to the government because it is time that quite a few facts are put on the table when it comes to issues around electricity and the determined and direct intent of this government over many years to ignore what was going on with the lack of an electricity plan in South Australia—ignoring the fact that people are battling to be able to put heaters on in the winter and air conditioners on in the summer for the simple fact that our power has become so expensive. For quite a period of time it was the most expensive electricity in Australia and, arguably, in the world, if not in real terms.

Also, from a business, industry and agricultural point of view—and I always put on the table the fact that my family are agriculturalists and irrigators, so we see firsthand just what has been happening with power costs—what this gets back to is that this government is now spending a lot of taxpayers' money on media propaganda and publicity to try to make it look like they are going to be the saviours of the big, bad failed plan of a national electricity grid and of a national electricity plan.

The unions have a fair bit to do with this as well, I might add. I will not let the unions off on this either. Unions like to say that they are the friends of the workers. Where has the union been over the years when it comes to applying pressure to the people in government who have failed to deliver reliable, sustainable, affordable electricity to the workers of those unions and to the businesses of those unions? People in South Australia have lost their jobs as a result of the fact that the Labor Party and the unions are so far in bed together that they would rather keep that bed relationship close than look after the workers. It is a fact, and I look forward to debating with the new member very often how I see a lot of the union movement in this state.

An honourable member interjecting:

The Hon. R.L. BROKENSHIRE: Yes, I have seen it firsthand. I have seen union delegates come in here and take seats in this council, and then they do everything other than work for the people they used to work for, because it is more important to look after the government. Let us get back to this debate and argument. I will not be deflecting too much at this point in time on that.

When the Liberals were in office, the fact is that there was a sale, a privatisation of electricity from ETSA to an overseas company. That is a fact. There is no denying that, and there is no denying the fact that I was part of that at that time, although if you listen to the Hon. Mr Hunter, it was me, me personally and alone, who privatised ETSA. That is what he says when he gets a chance. It was actually the parliament that privatised ETSA, democratically. Some of the former Labor members were part of the support of that democratic process.

The reason I raise that is that what happened afterwards when Labor got into office is they deliberately decided that they could win at least two elections by blaming the Liberals for the privatisation. This is factual. They did not care if it was going to cost the South Australian community a lot more money, as long as they could blame the Liberals and get back to another four years of the power and glory. That is what it was about.

At the time when they started this campaign, people said to me, 'Well, you privatised ETSA.' Yes, that is true, but this government, in a private market, can actually go ahead at any time it wants and build a competitive power generator. There is no law stopping them from doing that. I have said that time and time again, and the Labor ministers of the day said, 'No, no, it's all privatised now. We can't get involved,' only because it suited them not to get involved.

Let us just go back one more step. It was Professor Hilmer, with the Hilmer report, and the then prime minister, the Hon. Paul Keating, who set up the national grid and demanded that monopolies in states, government or private owned, were broken up into sections: generation, power and poles delivery, and retail. That was a federal agreement signed off by COAG.

I could see the intent of what the Hon. Paul Keating was trying to do then, and it made sense, providing there was cooperation and providing the politics was taken out of it. We ran an effective and efficient national power grid, with the exception of Western Australia, of course, which is too isolated. It is to their benefit. As it is now, they have probably done better in many ways from that.

I know what the intent was, and it was an honourable intent, but did it deliver what it should have delivered? The short answer is no, it did not in entirety. When Pelican Point was being built I happened to be the minister for police, and I was briefed on what was going on down there, because there was protest after protest, to the point where on at least one occasion several police paddy wagons went down to Pelican Point and arrested people.

You will see that a coalition, a committee, or an action group was set up down at Pelican Point at the time. I understand that the Labor Party had a fair bit to do with that. In fact, they had a lot to do with that, because they wanted to cause what is often called absolute mayhem, again to suit their strategies when it comes to the privatisation. I could name the members involved, but I will not do that. I do not have to, but I can tell you that a lot of the people in that committee were direct members of the Liberal Party and were affiliated with this particular plan.

The point was that the government did not even want Pelican Point to exist because it did not suit them. Now, of course, when they get into trouble, 15 years later, and they do some polling that shows that on the issue of electricity they are going to get smashed at the next election, just on that one issue (and, believe you me, I do not think what we are debating today will fix that problem for the government), they come up with a plan, a rushed plan, a very late plan and a plan now that has a lot of question marks and a lot of 'please explains', some of which other colleagues and myself will question during the committee stage of this bill.

Pelican Point is now starting up the second phase of its generation plant. That has come since this plan for this $360 million stand-by gas turbine, government-owned, taxpayer-funded plant. We also hear AGL now saying that it will stop what it was going to do to increase some base load generation in this state because of this plan, and answers need to be put to this parliament on that. We also hear what my colleague the Hon. Mark Parnell said about the amount of money being put into urgent incentives to get more mining done.

Minister Koutsantonis, on this occasion, thinks it will not affect him and his government in the voting situation down in the South-East, but it may well because there are a lot of connections between the South-East and people who live in marginal Labor seats. The fact is that minister Koutsantonis, on behalf of the government, has ignored in its entirety a report from the Natural Resources Committee—ignored it in its entirety. While we were out there finalising the report, and once it was tabled, he was running around throwing money at mining companies interested in gas extraction and saying, 'Let's get on and frack in the South-East'.

In fact, when the Victorians put a moratorium on fracking over there, he said, 'Well, bring those mining companies over here and frack the South-East.' That is what minister Koutsantonis said, and totally ignored the fact that there is, first, no social licence for fracking in the South-East, which does not mean that you could not look at further fracking and gas exploration in the north where there are not the sensitive arguments that there are in the South-East, and I believe not the risk to the complex, sophisticated, pristine, multifaceted aquifers of the South-East.

What we have now is a lot of money being thrown at a problem. It is a plan, I acknowledge that, but it is a short-term, kneejerk reaction plan where a lot of pressure has been applied on certain officers who are public servants and others to get something up and running as quickly as possible because the qualitative and quantitative polls that the Labor Party do all the time are saying that people are blaming them now and not the Liberal Party for the situation with electricity.

Whether or not people think that it was right or wrong to privatise ETSA at the time, the fact is that we have seen the deliberate deterioration of alternative electricity supplies other than renewables—and I acknowledge that: other than renewables. In fact, we have gone ahead of the pack in renewables, and the left of this world and those who are totally focused on the greener side of the debate think it is wonderful that South Australia has 53 per cent.

In fact, they said only this week that they are already ahead of where they were planning to be, with 50 per cent renewables in the early 2020s, but at what cost? It will be at a massive cost for individuals and a massive cost for business, and people are saying to me that, if they were looking at setting up a business in Australia at the moment, they would have to question whether or not they could come here based on what has happened with the cost of power and the unreliability of electricity in this state.

Just to give you a subset example of that, there are five of us who dairy farm on the Fleurieu Peninsula. For the first time ever, my family—and I expect the other four families too, as best I know—has had to put significant investment in to get 80 kVA generators because, when it comes to animal welfare, we can no longer run the risk of just relying on electricity availability through the network. We five dairy farmers are just one example. There are hundreds, if not thousands of businesses. Why should we have to make that investment when we should be able to rely on the government to oversee and manage?

We have the proof in the pudding here. If what we are doing here now is legal—and there is argument about that, whether it is acceptable with respect to agreements that have been signed with the national energy market, the regulator and the national energy plan—and I assume it is, it does put question marks over how we are going to get goodwill to continue the reliability needs from the Eastern States.

All of a sudden, we are going to be so-called self-sufficient and we are being told that we will not necessarily need the national grid in the future. We are going backwards in a way. Hopefully, it will prove to be of some worth. There are a lot of question marks about whether there is real long-term worth in what is being done here or whether it is more about getting over the March 2018 election.

Coming back to renewables, it is good to see thermal power and solar farms in Port Augusta being debated. I think there is now the possibility of a further $450 million injection into wind turbines with batteries to be able to help offset the infrequencies of power supply availability through wind farms. Why are we not discussing, as some people have discussed with me, other base load power opportunities? For some time, people have been raising with me the issue of nuclear energy. It used to be something they did not want to talk about.

I have been told stories about France. People have told me that you can go into a home in France where the lights are on and no-one is very concerned about the fact that those lights are on, even if maybe they should be turned off at that time, because nuclear energy in France supplies some of the cheaper electricity in First World countries. People have also told me that nuclear energy assists in the prevention of climate change.

We are looking at a waste repository. Most of us are open-minded about that and have been cooperative with the government, but we have not heard whether the government is into renewable energy and sustainable energy and limiting the issues around climate change, and what some people are now raising, and that is nuclear energy. Make no mistake, after being in office for 15 years, this government could have been working on an interconnector for at least the last 14 of those years. They blame the Hon. Rob Lucas because he wanted to get a better price for the privatisation.

There is one other aspect that I forgot to put on the public record in this debate when I spoke of Professor Hilmer and the then prime minister Paul Keating and his government's push for a national power grid and interconnectors and everything that goes with that, and that is that, over and above all of that, and the demand for breaking up monopolies like ETSA, is something called the State Bank. Because the opposition procrastinated for so long in privatising ETSA, one could say that at least $1 billion (and possibly quite a lot more) was not available in that sale because, to a fair extent, the horse had bolted by the time the then government got the chance to sell that power.

Further evidence of that is when the Hon. Jeff Kennett, who was the premier of Victoria at the time, got on with the privatisation of electricity there and reaped a massive return on that, which has helped to grow Victoria and Melbourne ever since. So, politics has played a very big part in why we are now debating this legislation. That is the history, but turning to the future, there is at least now some recognition of the fact that we have to do something.

We will support the opportunity requested by the energy minister to give him more powers, but we will keep absolute pressure on this government to make sure that they are serious now about doing something about one of the major impediments for South Australians. At the moment, people's contracts are finishing and they are on 17¢ per kilowatt hour off peak, and they are now going to 30¢ and 34¢ per kilowatt hour, seeing over double the cost of power at a time when most businesses are having to pull back on what they can get for their product.

This is a serious issue. I just wish the government had been far more proactive, far more into governance and far less into politics than they have been over the period. Wherever I go over the next 12 months, I will ensure that I put all the facts on the table to every possible person that I can talk to, to ensure that they understand that the problems with electricity that we all have in South Australia are put right back at the Labor government, because they deserve to cop the blame.

The Hon. J.M. GAZZOLA (16:21): I believe the majority of South Australians will be glad that action has been taken to secure South Australia's energy sector. We have been at the mercy of generators and the Australian Energy Market Operator, but this plan—an amendment bill—will minimise the potential of households and businesses facing or trying to cope with South Australia's power going out.

I welcome and support the Premier's plan, which is a multifaceted approach ensuring that we have energy stability in our state. This plan assists South Australia in having renewable energy available 24/7 through the battery storage of wind and solar, building our own gas-fired generator, providing backup power and the important assignment of new powers to our energy minister. The Emergency Management (Electricity Supply Emergencies) Amendment Bill will allow the energy minister to swiftly take control in emergency situations, as declared by the powers of the Governor. It is a vital key in achieving a more reliable and more secure power supply.

In 1995, I was elected the secretary of the South Australian and Northern Territory branch of the Australian Services Union. The ASU, along with energy unions nationally, opposed the privatisation of electricity assets. We were confronted in South Australia by the Olsen Liberal government's plan to privatise ETSA. The privatisation was wholeheartedly supported by The Advertiser and big business on the basis that competition in the energy sector would drive down prices and secure the energy sector. In the campaign leading up to the 1997 election, the Olsen Liberal government said to all that they would not be privatising ETSA. Having been returned to government, there was a backflip and the privatisation of ETSA was back on the agenda. As we know, ultimately it was passed.

Within 12 months of ETSA being privatised, the ASU alone lost hundreds of members through redundancies. The other energy unions also suffered significant job losses through redundancy. If my memory serves me correctly, in early 1999, 40,000 homes in Adelaide lost power so that the privateers could take advantage of prices in the market reaching the maximum cap of approximately $5,000 per megawatt hour.

To this end, it gives me no comfort to stand here and say to the Hon. Mr Lucas and now the Hon. Mr Brokenshire and the Liberal party, 'We told you so.' We argued that privatisation would lead to job losses, and we did not believe the claims of cheaper electricity for South Australians. Nor would it deliver energy security. It is always about profits over people.

We were of the view—and I still to this day strongly believe—that the privatisation of public assets is bad policy and bad law. Households and businesses in South Australia should not have to face a repeat of what occurred in the past six or seven months. In the absence of a coherent national energy policy, the Weatherill Labor government is delivering what the coal fuel Turnbull coalition government has failed to provide leadership on. I commend the bill.

The Hon. T.T. NGO (16:24): There has been a lack of national leadership on energy policy, particularly over the question of a price on carbon. The federal government has been missing in action. This uncertainty in the energy market has led to a lack of investment in new electricity generation and we now have a small number of power companies, with extraordinary control over the market, pursuing profits at the expense of reliable, affordable power. Throughout history, there have been blackouts. Networks with above-ground infrastructure will always be vulnerable to weather events.

Consequently, no government can guarantee the power will never go out. However, South Australians do have the right to expect that we have the highest possible levels of electricity reliability and security. On 14 March this year, the South Australian government released a comprehensive energy plan to take charge of our state's energy future to deliver reliable, affordable and clean power to South Australians. Our plan puts South Australians first and gives our state greater control over our local energy security. We are already in the process of implementing it.

The Emergency Management (Electricity Supply Emergencies) Amendment Bill 2017 is an essential component of the energy plan. It will ensure that, in times of an electricity supply emergency, the minister responsible for energy will be able to make directions to protect the needs of the South Australian community. Under the bill, the minister will have the power to declare an electricity supply emergency if it appears, on reasonable grounds, that the supply of electricity to all or part of the South Australian community is disrupted to a significant degree or there is a real risk that it may be disrupted to a significant degree.

During an electricity supply emergency, the minister responsible for energy may issue directions to a generator, retailer or the Australian Energy Market Operator. It is intended that directions be issued as a last resort. The government expects market participants and the Australian Energy Market Operator to take all action available to them to ensure that the community's needs are met in a potential or actual electricity supply emergency. The bill requires a review of the changes after five years of operation and a report be tabled in parliament.

Overall, the energy plan will make our power supply more reliable and secure. It includes building Australia's largest battery to store renewable energy as part of a $150 million renewable technology fund. There has certainly been interest in the government's battery storage project, with 90 expressions of interest from more than 10 countries so far. These submissions are currently under evaluation. The fund is also to support other renewable energy projects that make renewables available 24/7. Half of the fund is for grants and the other half is for loans to eligible projects to support private innovative companies and entrepreneurs.

Building a gas plant is a crucial part of the state government's energy plan. The gas plant will be built and owned by the government and be able to provide stand-by power in times of emergency. This has become necessary as investment in new thermal generation has stalled. The generator will provide up to 250 megawatts of generation and will provide the inertia needed to stabilise local supplies.

This policy is backed up by the state government's goal to source more South Australian gas to increase our own self-reliance. South Australia has vast untapped gas resources. It is estimated the Cooper Basin alone could potentially supply Australia's energy needs for more than 200 years. This is why the state government is providing an extra $24 million through its Plan for Accelerating Exploration (PACE) scheme to incentivise companies to extract even more gas and create more jobs. This will increase the supply of South Australian gas into the local energy market, with South Australian energy generators, industry and households having first offering. The plan also includes an energy security target. The target's goal is to create new investment, to increase competition, put downward pressure on price and to provide more energy system stability.

To increase South Australia's self-reliance, retailers will be required to get a certain percentage from local generators instead of from Victorian coal through the interconnector. This target will come into operation on 1 July 2017. South Australians are calling for action to ensure reliable, competitive and clean power supply for all into the future. This bill represents an essential component for delivering these requirements to South Australians. I commend this bill to members.

The Hon. J.E. HANSON (16:31): As many members who have already spoken today have made clear, currently we have a national energy market that is failing South Australia and, indeed, I would say, the nation. As a rule, of course, it is not really unusual for blackouts to occur during, for instance, severe weather events. South Australians have experienced occasional blackouts throughout our history and I would wager that is the same for just about every jurisdiction around the world. However, every South Australian has the right to expect the highest possible levels of reliability and security.

What I would like to see from this debate today is some bipartisanship on this issue of critical importance to our state. I would hope to see some acknowledgement of the deep problems that embracing a 'business as usual' approach to our national energy market can pose for South Australia. I hope to see the opposition support this government's plan in the interest of providing the certainty that we failed to see from the federal government on this issue.

As we witness coal-fired power station after coal-fired power station closing across this nation, the expectation of South Australians that we have a plan for the future is not only an expectation of their state government, but also at the federal government level. Sadly, of course, the federal government has no energy policy. It has no policy on carbon beyond grandiose stunts with lumps of coal that perhaps it would prefer, these days, we all forget. It is ruinously beholden to the interest of those who want to maintain the status quo in energy generation.

This has created uncertainty, not only for South Australians, but also for those businesses which may seek to invest in the energy market. This uncertainty has led to limited investment in new electricity generation and we now have a small number of power companies with extraordinary control over the market, pursuing profits, I would say, at the expense of reliable and affordable power and to the great detriment of the South Australian people.

Only a short time ago, in my work prior to coming to this place, I represented workers in large companies in this state who rely upon a consistent power supply: workers in Nyrstar in Port Pirie, Arrium in Whyalla and Adelaide Brighton Cement in Port Adelaide, just to name a few of those industries. A loss of power to these industries can have catastrophic consequences to the business beyond one day's trade or only a few hours of lost production. These industries support hundreds of workers and their families and would affect thousands more if they were to cease operations for weeks, months or forever.

During the blackouts of late last year and early this year, many workers and their families approached me and spoke to me about their concerns about the blackouts and how they were being affected. Many expressed concern to me for their jobs, some for the wellbeing of their aged parents or young children, and still others expressed concern for the future of the state itself. They were not interested in waiting any longer for a solution; they wanted action to be taken by the government now.

I am aware of a report by Business SA into the cost of blackouts to South Australian industry. This report stated that one four-hour blackout in this state incurred a cost of around $360 million in damage. While I cannot speak to the precise accuracy of the report by Business SA, it is clear that the grave nature of its conclusions underlines the seriousness of the concerns of the workers who spoke to me.

On 8 February 2017, we saw a key example of how the national market does South Australians over. Put simply, rather than directing an offline generator into service, the Australian Energy Market Operator decided that day, on a day of extreme heat for our state, that a large part of the South Australian community should be cut off from having access to power. This was, of course, entirely preventable, and we know that: we know that because the next day (9 February) AEMO decided to take preventative action and did order Pelican Point power station into effect to prevent load shedding in South Australia.

This patchwork approach to energy provision in this state by the national market cannot be allowed to continue. It is reckless and it is wrong. I am proud to be a member of a government that is seeking to take control of the energy future with a comprehensive plan that will deliver reliable, affordable and clean power for South Australians.

An honourable member: Crickets. That's all I can hear.

The Hon. J.E. HANSON: Crickets, indeed! Crickets in regard to plans. Based on the predicted regularity of failures in the national market, South Australians cannot continue to rely on existing—

Members interjecting:

An honourable member: Crickets.

The ACTING PRESIDENT (Hon. A.L. McLachlan): Order! The Hon. Mr Hanson, sit down for a moment. Can the members please behave, particularly the two leaders of the government and the Leader of the Opposition.

The Hon. D.W. Ridgway interjecting:

The ACTING PRESIDENT (Hon. A.L. McLachlan): Will the Hon. Mr Ridgway just calm down. The Hon. Mr Hanson has the floor. Show respect for your own member, the Hon. Mr Kyam Maher.

The Hon. J.E. HANSON: Normally I like crickets but not this time. Based on the predicted regularity of failures in the national market, South Australians cannot continue to rely on the existing provisions for management of emergencies. Electricity supply emergencies can occur very swiftly. This plan will ensure that in times of electricity supply emergency, the minister responsible for energy will be able to make directions to protect the needs of all South Australians. The minister responsible for energy will be provided with the power to declare an electricity supply emergency. This will allow the minister to act quickly in response to failures of the national market.

Furthermore, I am particularly proud to be standing behind a plan that has as one of its key features a plan to help resolve system reliability through stabilising South Australia's energy with an inertia supply and a new gas generator. The businesses and their workers that require stability of supply will rest easier knowing that in times of peak demand energy can be supplied to our state without the concerns of overseas or private profit being relevant considerations. This is a generator that will be owned, run and managed by South Australia. It will not be privatised by this government and it will not be subject to the whims of federal politics.

I also take pride in standing behind a plan that takes seriously the giant strides that are now possible in clean energy technologies. These are the new, sustainable and game-changing innovations in energy generation that this government continues to endorse and that until recently the Prime Minister of this nation was very happy to endorse also. South Australians look forward to our uptake of new energy technologies with excitement and anticipation. Indeed, we have seen the world take great interest in this government's openness to innovative energy solutions.

Of course, it is not all just buzz associated with certain prominent international entrepreneurs. We have already seen private investment in new energy solutions in the Riverland, previously referred to by other members, through the Lyon Group's investment in battery storage. This is the biggest project of its kind anywhere in the world and I have no doubt there will be more to come. That is what happens when you have a government that is genuine in its desire to support and attract investment in renewable energy generation.

It is clear that South Australians expect their government to act swiftly and decisively on the energy crisis that faces the state and South Australian businesses know that now is not the time to back away from the technologies of the future which have the capability to disrupt the existing order of the broken national energy market. Certainly not for the first time and certainly not for the last time, we have a conservative federal government that is absolutely determined to look backwards.

They insist on clinging to coal despite the undeniable reality that there is no future for coal power generation in Australia. We have a national energy market that could not be less concerned about honouring their obligations to South Australia and meeting the needs of our people and our industries. These circumstances demand that our forward thinking state government look to the future and take swift action, not just to embrace but to pursue and implement the technologies and solutions that will provide a secure future to the people of South Australia. I urge all members to support our plan, which will do exactly this.

Debate adjourned on motion of Hon. S.G. Wade.

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