You are here

Electricity Supply Industry Amendment (Cap Power Prices) Bill 2022

Dr Rosalie Woodruff MP

Dr Rosalie Woodruff MP  -  Wednesday, 23 November 2022

Tags: Legislation, Cost of Living

Dr WOODRUFF (Franklin) - Mr Speaker, I have listened very closely to the contribution by Mr Winter, the member for Franklin, and the minister for Energy, Mr Barnett. I would not be surprised if Tasmanians who are watching would be confused. We are having, essentially, the same discussion we had four months ago. I agree that the year dates have changed and this is for a wider number of years.

The last bill that came through, brought in by Labor, to put a price cap on was for one year. This is for three financial years. Nonetheless, I do not see other than that that there are any other changes to the bill.

I have the same questions that Ms O'Connor asked on behalf of the Greens in August. I would like to hear Mr Winter's current response to why Labor did not introduce in this bill the powers that were in the 2017 and 2018 bills introduced by Mr Gutwein? The one in 2017 gave the minister the power to set wholesale electricity prices. The 2018 bill made several amendments to the Electricity Supply Industry Act 1995 and continued to give the power to set wholesale electricity prices to the minister.

That power expired in 2020. This bill by the Labor Party is an attempt to provide power pricing relief to Tasmanians in their power bills. It does not reintroduce the provisions into the Electricity Supply Industry Act that Peter Gutwein, as treasurer, brought in in 2017 and 2018. It is not about a cap on wholesale or a capacity to cap wholesale electricity prices, it is about a cap on retail electricity prices. Is that right?

Mr Winter - Yes, we had this debate last time with Ms O'Connor. I said in a contribution - I am not sure if you were in the Chamber - that there needs to be action on the wholesale prices as well. You are quite right and that could be dealt with separately.

Dr WOODRUFF - Yes. Ms O'Connor made these points but I will make them for people who are watching. The problem that Aurora has identified in its online material for its customers to explain whether or not people will need to prepare for a price increase next year relates to the fact that we are part of the National Electricity Market. Aurora says:

Because Tasmania is part of the National Electricity Market, we don't only use and buy power generated by Tasmanians. This means interstate and overseas events and pressures can have an impact on our prices.

Obviously so. Aurora's statement makes it very clear, this is not Tasmanian power generated by Tasmanians. This is not what is reflected in the price of electricity because we are in the National Electricity Market. Aurora makes this point. Unless Labor is calling for Tasmania to be cut from the National Electricity Market, I would like Mr Winter to make that clear. The Labor Party messaging is really unclear in some of the way they talk in this area. I think its speaking to a parochial narrative in certain circumstances, and in other circumstances Mr Winter will talk about us being part of the great big united Australian electricity market and being part of the great whatever actions that the Labor Party might be trying to bring with regard to renewable energy. You cannot have both ways.

We are not always comfortable with the impact of being part of the National Electricity Market. When things are going badly, you wish you had responsibility for your own house, because it would be great to be able to batten down the hatches and not be affected by the winds of what is happening in Ukraine and the cost of electricity price increases and how they are passed on to Tasmanians.

The bottom line is that we made the decision to be part of the National Electricity Market. It has advantages and disadvantages. The most important thing for Tasmanians is we understand who is going to pay. The problem with the Labor Party is they are not being clear about who is going to pay. We support the retail cap, we support a reduction in electricity prices. The cost of living is crippling, for 120 000 Tasmanians who are living below the poverty line. That is a fact. Any tiny increase in power prices along with petrol prices, rental prices, the cost of food at the supermarket and all the other costs of simply paying for the undisposable costs that people have to come up with every single week to survive, every increase to people who are already living below the poverty line is insupportable. But the point is that by far the biggest driver is the wholesale electricity price. This bill does not deal with that, so it is essentially not being honest with Tasmanians, who I feel will cover the costs.

Mr Winter - I covered that in my contribution - Hydro Tasmania.

Mr Barnett - No, you did not.

Mr Winter - Hydro Tasmania - you can check the record. I do not think you were in the Chamber when I said it.

Dr WOODRUFF - Today? I have been sitting here the whole time.

Mr Winter - Apologies, then.

Dr WOODRUFF - Perhaps run through it again, if you would not mind. I am sorry if I did not hear what you had to say. From Aurora's point of view if and when wholesale prices do go up, and there are swings and roundabouts - and that is the point. The electricity wholesale price in 2022-23 is 6.5 per cent lower than it was in 2019-20, so it is lower than it was three years beforehand, which was set by a wholesale electricity price by the former treasurer. The following year there was a 7 per cent increase in all residential standing offer tariffs, and an 11 per cent for business standing offer tariffs by Aurora. That was in 2021-22.

In the longer-term context, the financial year before this one, 2021-22, represented a significant price dip in the wholesale electricity price. There is variability in the costs, and it highlights a significant issue with retail price capping, which is what this bill seeks to do. When prices are capped at the CPI every time there is a substantial decrease in costs like we saw in the last financially year 2021-22, prices would be permanently lowered significantly, with no regard for the increasing input costs. That is not a sustainable model because someone has to pay.

Ultimately it will either be electricity consumers or taxpayers who have to pay. We do necessarily have a problem with smearing the costs across the Government. The Greens support a progressive system where people who are living in poverty ought to be able to be subsidised. We support that and we are open to public subsidies but it has to be clearly identified who is paying the costs. You cannot just leave it to build up as a debt on Aurora's books. They have very few opportunities; they do not own kit they can sell off. They do not have opportunities to deal with a debt like that other than possibly by laying off Aurora staff. Is that really the best outcome?

Or should we not be having a more open conversation about having a way of reducing people's cost-of-living pressures. The better way, the way that Labor never talks about, is what we have done under a Greens' minister in the Labor-Greens government which gave people in poverty - 9500 households had energy efficiency upgrades. That is what real support looks like. At the time, it represented a cost saving of about $800 a year. That was nine years ago now. That is a really good cost-of-living relief policy. We want to hear more from the Labor Party, but more especially from the Government about what can really be done to support people who are struggling.

I will wrap up now so Mr Winter can make a response because I would like to hear his answer as to why we are not dealing with the wholesale issue.

I will leave this for the minister: the minister is responsible for an agreement to introduce a massive $3.5 billion debt onto Tasmania's books without being clear with Tasmanians about where that is going to sit, what the interest rate is that has been negotiated with the Clean Energy Finance Corporation and who is going to pay for that. The minister is not being honest about who is going to pay.

The Treasurer refused to hand over the cost benefit analysis for the Marinus Link. The minister has been talking about this for five years and has never told Tasmanians what the real cost will be for Tasmanians. We are deeply concerned that a big project that the Liberals have been talking about for five years when no information has been given to Tasmanians about where that enormous debt will fit, how it will affect our credit rating and what the interest repayment is with the Clean Energy Finance Corporation, which I believe will be providing that huge loan. And how can we possibly be talking about adding an extra $752 billion debt in the form of a stadium on top of that.

Someone has to pay. It is the poorest people who are struggling in Tasmania and we have a right to know, who is going to bear these costs.