Second Reading

Mr VAN HOLST PELLEKAAN ( Stuart ) ( 12:07 :00 ): Let me say first of all that the opposition will not oppose this bill going through this house, but we will consider it in great detail between the houses. It will not surprise anybody here to know that, essentially, we have no choice but to take that position.

We want the very best for all South Australians, but we were given absolutely no notice that this bill was coming into this place—none whatsoever. We were not even given a copy of the bill and there was no discussion between the whips. There was no advice whatsoever that this was happening. Do you know why that has happened, Deputy Speaker? Because the government is running scared on this issue. The government is running scared on this issue and they are trying to rush it through this parliament.

This bill is actually a plan for failure. The government is doing nothing that it says is actually going to fix the electricity crisis, which it created. The first thing it brings into parliament is a bill that seeks the right for emergency intervention powers for the failures that it predicts lie ahead of us. How absolutely ridiculous is that? What is worse is that they want the Minister for Energy to have those powers—the same minister who created the mess. This is the same minister who, on 21 October this year, will have been the Minister for Energy for six years.

He has been the Minister for Energy for 5½ years at the moment, soon to be six years. He is the one who has created the problem, along with all his government colleagues. They want him to have the authority to fix the mess. This is a plan for failure. It is an absolutely disgraceful situation. The government should be out there trying to fix problems so that they do not occur in the future, not giving themselves power to call emergencies in the streets of South Australia when the problems continue to occur, as clearly they predict will happen.

Absolutely none of this was necessary. After 15 years of Labor government and another year to go—do not worry about us, but I hope for all South Australians it is soon to be over—the government has created these problems, first under premier Rann and, secondly, under Premier Weatherill. They have created this absolute mess. It is not as if they were not warned; the government was warned.

The government was warned back in 2009, when it had a renewable energy target of 20 per cent and was contemplating moving that renewable energy target up to 33 per cent. It paid for external advice from two different consultants and asked those consultants, ‘Tell us what might happen if we go from 20 per cent to 33 per cent.’ The government was told by both consultants, ‘Don’t do it.’ Both consultants said, ‘If you move from a 20 per cent to a 33 per cent renewable energy target, you will destabilise the grid, and when you destabilise the grid you have wildly fluctuating prices and risk blackouts.’

They were given all of this advice. They received this advice and within a very short period of time moved from 20 per cent to 33 per cent anyway. There is no record of any other advice that contradicts the first advice. There is nothing that the opposition has been provided with by the government under freedom of information requests that says that it received any different advice that overruled the first advice. The only advice they had was, ‘Don’t do it,’ and they did it anyway. They were warned; they were well and truly aware of where they were going. Subsequent to that, the government has moved from 33 per cent to 50 per cent renewable energy target, and that has made things much worse.

It is interesting that the government says that Danny Price of Frontier Economics is an independent person of national repute who supports what they are doing at the moment. Let me read you a quote from 25 January 2016, when Danny Price said on radio:

It’s fine if people want more renewable generation t hat’ s all okay, it’s just that it costs a lot more. It’s more unreliable and it costs a lot more.

This is another quote from the same radio interview:

The options that South Australia have got are very limited now… simply because the Government keeps on driving towards a greater quantity of more expensive generation as part of their policy. The … South Australian government is to blame for electricity prices, not things that are outside their control.

This is the same person who the government says is a respected national economist and expert in energy. It is a shame that it did not listen to him back in January 2016. It is a shame that the government did not listen to the warnings that it received way back nearly 10 years ago. It is a great shame that the government seeks advice and that, if the advice does not suit its own political imperatives, it then just drives ahead and does what the government wants to do anyway in contradiction of that advice.

Do you know what the great shame about that is? All South Australians suffer. All South Australians are labouring under the highest electricity prices in the nation and the most unreliable electricity in the nation. Do you know what the worst part of it is? We have the highest unemployment in the nation. It is no accident that they go together. In South Australia, our largest electricity consumers are also our largest employers, so this goes right to every single household in the state.

There are households suffering from outrageously high electricity bills, suffering from blackouts and suffering from the fact that they do not have an income from a job coming into their household. The government has knowingly created this problem. Now what does the government want to do about it? The government wants to spend $550 million of taxpayers’ money—keep in mind that South Australian taxpayers and electricity consumers are all the same people—and we have heard the Treasurer on the radio say, ‘That’s okay. Don’t worry about where the money is coming from. We’ve got surpluses in the forward estimates, so you don’t need to worry about the money.’

Those surpluses in the forward estimates belong to South Australians. This is not the government’s money, it is not the opposition’s money and it is not the Treasurer’s or the Premier’s money. That money belongs to South Australians. The government is going to spend South Australians’ money to fix a problem that the government created for South Australians.

This electricity crisis that we are in at the moment has, conservatively, already cost our state half a billion dollars—$500 million just in the last 12 to 18 months. It is not very hard to add up numbers in excess of that. So, roughly half a billion dollars created by the government’s policy and now the government wants to spend in excess of another half a billion to fix it. That is just absolutely ridiculous.

I heard the Leader of the Opposition refer to a comment by the Premier in a radio interview when the Premier said he gets bored easily. Maybe this is his recipe for his boredom: create a massive problem and then challenge himself to fix it. That might be okay for him, that might be okay for the government, but it is no good for South Australians who are caught up in all of this. Every single South Australian, from the smallest household to the largest employer, is suffering under the mess that the government has made.

We know this government is responsible for this mess for another reason as well, another reason shared with us by the energy minister. The energy minister, not very long ago, came into parliament (in question time, I think it was) bragging about the fact that the South Australian parliament is the lead parliament in the nation when it comes to energy policies. He was bragging about the fact that South Australia had experts advising it, experts who have contributed to South Australia leading the creation of the NEM.

The energy minister’s words at the time were, ‘We built it.’ That is what he said: ‘We built it.’ Now, of course, the government wants to blame the NEM. Now the government says it is everyone else’s fault. It is the federal government’s fault, it is the Victorians’ fault, it is the retailers’ fault, it is the generators’ fault, it is the NEM’s fault. The South Australian government has created this issue and the South Australian government now wants to be given the authority to oversee emergencies when they occur. As I said, this legislation is a plan for failure.

We have seen, very recently (I think it was Friday), AEMO put out a report forecasting that over the next two years there will be 125 days when South Australia will not have a sufficient reserve supply of electricity. That reserve supply is an amount of electricity determined by AEMO itself. In fact, it is 570 megawatts under an LOR1 rating. Just to be clear, AEMO is not saying that we are going to have blackouts on 125 days; it is saying that on 125 days in the next two years we are at great risk of a blackout. It would mean that if something outside of the forecast went wrong then we would not have enough electricity, our reserve supply would not be sufficient.

Maybe it is a bit hotter than expected, maybe a generator is not available when expected, perhaps the interconnector is not available when expected, perhaps there is an unexpected weather event, or perhaps the government dreams up another energy policy unexpectedly and that creates all sorts of problems, too. AEMO is saying that on 125 days over the next two years we are at risk. Let me tell you, we will have blackouts, very unfortunately for South Australians, for South Australian households and for South Australian employers, whose businesses risk going belly up if they do not have electricity and cannot produce their goods on time and on cost, as they have committed to do for their customers.

Those businesses are at risk of going under. If those businesses go under, those businesses cannot employ people. If they do not go under and business gets tougher and tougher, they will employ fewer people. This goes right back to every single household in the state. That is why that is such an important issue and that is why we in the opposition are so frustrated with the government but so determined to fix this issue. We are determined to contribute to fixing it from opposition, and determined to contribute to fixing it from government, if we are elected.

The Liberal opposition has put forward many very positive and constructive suggestions. We have said all along that of course we need to have a sensible, well planned transition away from fossil fuels towards renewable energy. For anybody from the government to try to paint us as opposed to that is completely false and flies in the face of everything that myself, the Leader of the Opposition and my colleagues have said on the record very publicly.

We know that we need to make that transition. We want to make that transition, but we also know we cannot make that transition overnight in an overzealous, philosophical approach by the government trying to paint itself as ultra green and ultra good for the environment and hoping to pick up extra votes from that. We know that what actually needs to happen is for it to be done in a sensible, well planned and well managed way—not to try to do it overnight in a vote-grabbing exercise as the government is trying to do and has been trying to do for over a decade now.

We said very clearly, when it was obvious that government policy was going to force the closure of the Port Augusta power station, that they should not do that. We do not want coal burning in South Australia for ever and ever, but we do know that reliable base load electricity of any form is imperative to make that transition. Until we can store renewable energy at scale we must have fuel-generated base load reliable electricity being generated in our state. We do not want coal for ever and ever—far from it—but we know that we needed to have the Port Augusta power station operating for two or four or six years (or whatever the right amount of time is) longer than the government allowed it to operate, so that we could have that sensible, well planned and well managed transition.

The government has very seriously impeded that transition. It has made it tougher than it needed to be. It has significantly extended the time frame of when we can actually get to it by taking that base load electricity out of the market and by forcing through its policy in the closure of the Port Augusta power station. Not only did the government policy force the closure of the Port Augusta power station, but the government very deliberately rejected approaches from Alinta to keep their power station operating for a while. The government has done everything it possibly could to refuse the opposition access to any of that information.

I put a freedom of information request in in May 2015—that was after being rejected and rejected and rejected. Finally, the Ombudsman said, ‘You cannot reject this any longer. Take it to court if you don’t want it.’ At the last possible minute, the government released that information with enormous amounts of key detail blacked out. So, the government released information and said, ‘Yes, an offer was made back in January 2015 by Alinta to try to keep the power station open.’ However, it is continuing to refuse to share any detail whatsoever with the opposition about what the offer was, the details of it and how it was constructed.

They have refused to give us anything through freedom of information, despite many requests for well over a year and a half to try to get that sort of detail. They just refuse to give it. Do you know why? Because they are ashamed of it. They are ashamed of that information. But do not worry, Deputy Speaker, we will eventually get there. The Ombudsman, I am sure, will eventually—it might be months or years from now—force the government to share that information. The government could easily have contributed to easing the burden on South Australians, but it deliberately chose not to by forcing through its policy of the closure of the Port Augusta power station.

When Alinta went to the government and said, ‘But if this happens, these will be the really serious consequences for the state,’ the government said, ‘That’s okay, we don’t care. Bad luck, we’re not going to help anyway.’ I say again: I am not suggesting the Port Augusta power station should have stayed open forever, but it should have stayed open temporarily to make that sensible, well planned and well managed transition.

There are other positive things that the opposition has contributed. We have said very clearly that wind farms are fine and renewable energy is fantastic, but that there are only so many of them that we can have in this state until the energy they generate can be stored and then dispatched on demand, as necessary. We are way beyond the saturation point whereby we can create electricity when it is windy or when it is sunny and hope that the market will accept it at that point in time, but also not accept it and hope that, in fact, the market does not need it at another time when it is not windy and it is not sunny.

We know that renewables are fantastic, absolutely right, but there are only so many you can have until you can store them, otherwise you have too great a share and your generation throughout the state becomes intermittent. Some of it intermittent, fine, no problem at all, but you get beyond a certain point where too great a share of it is intermittent and that starts to destabilise the market, and that is the advice the government got way back in May 2009 and chose to ignore.

So, through that we have said that we should have an electricity market impact assessment statement attached to every new wind farm development application, keeping in mind, as the energy minister very often likes to say, that the federal government provides the renewables subsidies to the builders of wind farms, but the state government provides the permission to develop. The state government is the one that says, yes, a development application can proceed, or rejects it. The federal government provides the financial subsidies, but the state government controls 100 per cent how many of them are built in South Australia, and they have approved too many, and that is clear for everybody to see by the destabilisation of our market.

We are not saying no more wind farms; we are just saying that every wind farm development application should have a market impact assessment statement attached to it. For example, if a wind farm can show that it is going to be built in a different corner of the state where it has a wind resource that blows at a different time from the rest of the state so it will put electricity into the grid at a different time from the rest of the wind farms, we would say, ‘Fantastic, that would be great: more renewable energy at a time when we need it, not more renewable energy at a time when we don’t need it.’ We have been very firm that the government must not allow any more base load generators to leave until we have this large, grid-scale storage, that the government cannot allow any more base load to leave the state.

We have said that Australia must have one jointly agreed, between the federal government and all the states, renewable energy target. It does not make sense for different states and the federal government to all have different targets. Some are developed quite sensibly with regard to what is appropriate for that state, some are essentially just bidding wars for green fancy. Some of them, which are pushed way, way too high—far, far beyond anything practical—are literally just out there so the state government can say, ‘Oh, look how green we are, look how special we are; please vote for us’, which is certainly what has happened in South Australia.

We are not saying that it should be an incredibly low target; we are saying that there should be one jointly agreed target across all the states—one country, one environment, one target. It does not make sense to have different ones when the states, particularly in south-eastern Australia, are all interconnected through the National Electricity Market.

We have said for a very long time that the government should support, and in fact incentivise, the development of large-scale battery technology. We have some really smart people in South Australia and some very high capacity companies in South Australia that are really good at this stuff, and they need to be helped. I am not suggesting that we do not share this information with other states, the rest of the nation or the rest of the world—far from it, we would want the opposite—but we want to support and incentivise South Australian companies to contribute to the development of large, grid-scale storage options that unlock all that renewable energy so that it can be generated when the wind and the sun allow it, but it can be stored and then dispatched on demand. We have been right there, right from the beginning of this debate, suggesting that that is what has to happen.

Another thing we have suggested very positively is that we must utilise the spare generation capacity we already have in our state. We already have surplus capacity. We do not need to go off and dream up new ways of creating electricity: we need to start to use the generation capacity we have at the moment, not because—and this is very important—we are opposed to new ways of doing it (that can come), but if we can utilise the spare capacity we have in our state at the moment we can help solve the problem immediately. The capacity is already here, so let us enable it, let us start using it straight away.

Let us not wait for new technology, let us not wait for new generators, let us solve the problem today and use the capacity that we already have in our state. We have been contributing constructively and positively to this debate for a very long time and we will continue to do so. We have regularly released policies in the energy space. We will continue to do so. After the next state budget, we will release a fully comprehensive policy. That will be much closer to the next state election, but we will not stop contributing in many ways to positive, constructive debate on this topic between now and then.

The government’s suggestion, which they announced two weeks ago to the day, includes large-scale batteries. We have been supportive of that all along. Whether the government is going to do it exactly right, we will just wait and see what comes back from their tender, but we have been constructively and positively supportive of large-scale batteries for a very long time.

We will see what the government actually decides to do in that space. The government has also announced a peaking gas power plant. As I was saying just a few minutes ago, we have five open-cycle gas turbine peaking plants in South Australia already—one at Hallett, one at Mintaro, one at Penola and two in metropolitan Adelaide—and they operate under capacity. We should be doing what we can to get them engaged before contemplating building anything else.

One great concern about the government’s suggestion to spend $360 million of taxpayers’ money on building a new peaking plant is that the government cannot tell South Australians whether they have included in that the operating cost. Is that all capital and some other operating costs are still to come, or is that partly capital and a certain time frame’s worth of operating money is included in that? They do not know. They cannot tell South Australians. Does that include the gas pipeline to get to the plant? They have not thought about it; they do not know that.

The government, of course, will say, ‘We’ll wait and see what tenders we get back.’ They have thrown out that they want to have 250 megawatts and they want to have $360 million spent on it, but they do not know exactly how it is going to work. That flies in the face of statements made by the Premier and the energy minister many times in this place when we asked for some of the detail. We ask, ‘What is it you are actually going to get for the money you’ve said you are going to spend?’ or ‘How much are you actually going to spend to get the product that you’ve outlined you want?’ They say, ‘We can’t tell you that. That could disrupt the market. We’re going out to tender.’

I have heard the energy minister say many times, ‘We don’t want to signal how much we’re willing to spend on this project.’ Guess what? That is exactly what they have done this time. They have said that they want to spend $360 million of taxpayers’ money for a 250-megawatt gas peaking plant. It is extraordinary that the government would so often say that they cannot provide those details because it might thwart their efficient expenditure, but apparently on this occasion it actually does not matter.

The own-use contract is another component of the government’s program. They are offering their 480 gigawatt hours of electricity (I think it is; I need to check this number) for the government’s own-use contract to a private generator—75 per cent for a new generator, 25 per cent for a renewable generator. The government’s own-use is approximately 4 per cent of the market, so I am not sure how they think that, by offering 4 per cent of the market, they are going to change the whole generation market in South Australia.

Let them have a go, but this is not new. This is something the government announced last September. Last September, they said they were going to do this, but then two weeks ago they tried to reintroduce it as part of their grand new plan to solve the energy crisis they created. Let’s see how that goes, and I hope it works, but it is definitely not new.

Another component of the government’s plan announced last week is $24 million of taxpayer money to subsidise the exploration and development of new gas resources. That is not new either. That was announced in October last year, I think. What they have done is decide that they are going to have another component. That was new two weeks ago. So, they are now going to spend another $24 million of taxpayers’ money to help solve the problem that the government actually created.

Another component of the government’s plan, announced two weeks ago, is an energy security target. That is not new: that is just the government wrapping up a price on carbon with a different set of words. I heard one of the government speakers talk about it as if it were a fault of the opposition for not wanting another tax from the South Australian government on the people of South Australia. Guess what? Whichever member of the government said that is absolutely right: we do not want another tax on the people of South Australia, not at all.

We are completely in support of reducing pollution. We are completely in support of a well-planned, well-managed transition away from fossil fuels towards renewable energy in a sensible time frame, to get there as quickly as we can without making every South Australian household and business pay a completely unsatisfactory price, as is happening at the moment. We are fully in favour of supporting our environment the best way we possibly can, but not through a tax.

Those last three components—the government’s own-use contract, subsidy for new gas production and a tax on carbon—half of the things announced two weeks ago by the government, which it says are part of that solution to solve the energy crisis that the government created, are not new. Half of them were already out there.

The last component, the sixth component, is the one the government has put on the table today—the Emergency Management (Electricity Supply Emergencies) Amendment Bill 2017. As I said before, that is a plan for failure. That is exactly what it is. This is the government saying, ‘We know we’ve created this problem, we know we can’t fix it any time soon, so we want to have emergency powers to deal with these issues when they occur, as we know they will.’

In the last two weeks, since this government’s plan was announced, the Australian Stock Exchange forward base contract prices have gone up by, I think, 7.65 per cent. We have heard the energy minister say, here in this house, that the very best indicator of future electricity prices is the ASX forward base futures market, the prices that the ASX actually publishes. There are other deals done, but nobody other than the buyer and the seller have access to that information. The only information publicly available is this ASX information, and the energy minister has said that is the best indicator of where electricity prices are going.

Guess what? Comparing the most recent information available at the moment with the information available immediately before the government announced its plan two weeks ago, prices have gone up. So the market, buyers and sellers, have looked at the plan—these are capable, smart, intelligent and well-resourced organisations, that have their electricity trades listed on the ASX—and have said, ‘Oh, we’d better start buying at higher prices now than we were offered before the plan was announced, because we don’t think it’s going to work.’ That is what the information tells us. That is the market saying that the market does not think the plan is going to work.

To be really fair about this, if you look at the increases—I think one month was a 25 per cent increase over two weeks and one month was a 30 per cent increase over two weeks—they are in the next few months, and nobody could expect the government’s plan would have an impact in the next few months. Those are trades that have been done based on the failures of government policy up until the plan was announced. Those were deals that were done where consumers willingly bought electricity at 25 per cent and 30 per cent higher than the prices available in the market two weeks ago. They willingly did that. That is all based on the failures of government policy before the plan was announced.

Let me take you to prices released by the ASX for March 2020. I need to check this number because I was not prepared for this debate, because the government brought it on, but for March 2020 I think there was an 18 per cent increase. I think there is at least one consumer—a large consumer—who, since the government’s plan to solve the electricity crisis, which the government created, was released two weeks ago, has said, ‘To purchase electricity three years from now, I will pay 17 or 18 per cent more than I would have before the plan was released.’

What does that tell you about the market’s response to the plan? The market does not think that this plan is going to reduce electricity prices. When the Premier is asked in press conferences or anywhere else, ‘When is this plan of yours going to start to take effect? When will South Australians see lower electricity prices or fewer blackouts?’ he cannot say. He is not really sure. He says some aspects of it might be in place by next summer and some will not be in place by next summer. Guess what? The market thinks that in three years’ time this still will not help. The market now thinks that electricity will be more expensive in three years’ time than it did two weeks ago, just before the plan was released.

Another interesting component of the plan is hidden pretty deep. It is not one of the six headline components of the plan that the government put out in the main, easy to access part of the documentation, which is the only information the vast majority of people would read. This component of the plan is diesel generators.

How absolutely ridiculous is this? We have a government that says it is putting South Australians through all this pain so it can be clean and green and save the environment. It says that it wants to reject the warnings it gets from its external consultants that say, ‘If you do all this, you are going to create a lot of pain for South Australians.’ ‘It doesn’t matter. We don’t care. We are going to do it anyway because we want to save the environment,’ says the government.

The government then releases its six-point plan because things are going so catastrophically badly. After costing the economy well in excess of half a billion dollars, it says it is going to spend another half a billion dollars trying to fix it all and then, deep down in the plan, it actually says, ‘Since we are not really sure if or when this is going to fix it, we are going to import diesel generators so that we can help South Australians in the meantime.’

How ridiculous is that? It is absolutely preposterous. This government has created a problem. It has cost the economy well in excess of half a billion dollars. All South Australians, from the smallest households to the largest employers, are paying an outrageously high price. The government says it wants to do this to save the environment and be clean and green, but now it is going to import diesel generators because the plan may not work at any time and certainly will not be working anytime soon. This is ridiculous.

The government coming in here with this bill, giving absolutely no notice to the opposition that it is going to debate it, is a sign that it has absolutely no faith in itself. The government was not willing to go through the standard procedure and table a bill and give everybody the opportunity to read it and look at it. The media would know about it. The opposition would know about it. We could ask for government briefings in good faith. We could go to external advisers and get advice. The government did not want any of that to happen. It does not want anybody to know about it.

Either the government is ashamed of this bill or there is another option: it expects these powers to be necessary. It expects to have to use these powers before the normal time that would have elapsed—a few weeks or a month—to go through the normal consultation and debate process. I guarantee you, Deputy Speaker, we would have said to the government, ‘We understand how important this is; we will go through it quickly. We will get advice quickly. We will deal with it quickly.’

The government must think it needs these powers tomorrow or the day after for it to have tried to rush this through, giving the opposition, the public and the media absolutely no opportunity to deal with this bill properly. Not even the whip was consulted. Not even the Opposition Whip was told, ‘This is the plan for today. This is what we are going to do. We are going to throw the schedule that we have on the Notice Paper out, and we are going to do this.’ The government has tried to hide this and the government should be ashamed of itself.

The opposition takes this issue so seriously that we will not oppose the bill in this house. We will do all our due diligence and we will get advice. We will do everything that we possibly can on behalf of South Australia to go through this bill appropriately, thoroughly and diligently. We will not oppose it today, but the government should be ashamed of itself.