Dr WOODRUFF - Minister, the final investment decision, I understand, for Marinus Link is still going to be made in December next year, December 2024?
Mr BARNETT - Yes.
Dr WOODRUFF - Yesterday, Jeremy Rockliff said that there would be some $7 billion investment.
Mr BARNETT - Some what?
Dr WOODRUFF - He said there would be some $7 billion investment in Marinus Link and Battery of the Nation. Minister, we don't believe in the investment fairy, it's not for free. We want to know what the debt will be for Tasmanians. Can you tell me exactly your understanding of the total cost to build Marinus Link and for Battery of the Nation as you understand them today?
Mr BARNETT - There's a number of questions in that very lengthy question. So, I'd like the opportunity to respond.
Dr WOODRUFF - Just two questions, Battery of the Nation and Marinus Link.
Dr WOODRUFF - Well, there's a number of questions, I'd like the opportunity to respond.
Dr WOODRUFF - Try to draw yourself to the one that I want you to respond if that's possible.
Mr BARNETT - You're firstly verballing the Premier and I don't accept that.
Dr WOODRUFF - No. Excuse me Chair, that was a direct quote from Hansard yesterday. I wasn't verballing the Premier, he did say some $7 billion investment in Marinus Link and Battery of the Nation.
CHAIR - Thank you minister, if you could please answer the question.
Mr BARNETT - Yes, I will. I will advise the member to look at Hansard to check what the Premier said, because the Premier would have said that it unlocks $7 billion of investment. He would have said that it delivers an increase in jobs of some 1400 people directly and several thousand jobs ongoing, and provide further energy security for Tasmania, downward pressure on electricity prices and a cleaner emissions profile. I'll just draw that to your attention.
Regarding Marinus Link, we can assist the member in the budget papers and Treasury's quotes that are in the budget papers of $6.4 billion for the Project Marinus and Battery of the Nation initiatives. The breakdown is as follows: Marinus Link and the north-west transmission, $3.8 billion; Lake Cethana, $1.5 billion; Tarraleah, $750 million, and the west coast upgrades, $300 million. They are set out in the budget papers.
Dr WOODRUFF - Tarraleah and west coast, what was west coast?
Mr BARNETT - West coast upgrades, $300 million.
Dr WOODRUFF - Okay. Of those amounts of money, in your announcement of 19 October last year, you said Tasmanian customers will pay no more than 15 per cent of the estimated total project costs towards the Marinus Link and North West Transmission Developments.
Tasmania has roughly 10 times fewer customers than Victoria. If Tasmanian customers pay 15 per cent of the total project costs, then individual consumers in Tasmania would in fact be paying in the order of 50 per cent more for the costs associated with those projects, than individual customers in Victoria. That's correct isn't it?
Mr BARNETT - Let's be clear. You made a reference in your first question to financial investment decision - and this is a really important point - by the end of next year, which is correct. Regarding the cost-benefit analysis it needs to be undertaken. It is very important that the Government won't proceed unless it's in Tasmania's best interest, and that's our focus at all time, and that will remain so.
Dr WOODRUFF - Chair, the minister hasn't answered that question. Could you please be relevant, minister, and answer the question? The question was, is it correct that in fact if Tasmanian and Victorian customers both pay 15 per cent of the total project costs, then Tasmanians, because there are fewer of us - I will just spell it out in simple terms - will, in fact, be paying 50 per cent more for the costs of the projects than Victorian customers?
Mr BARNETT - You're assuming that Victorians are paying 15 per cent. That's an unfair assumption. The letter of intent which was signed on 19 October 2022, made it very clear. In the announcement by the Prime Minister, the Premier, myself and Chris Bowen, it was very clear at the time - and the Government made it clear. As a result of the agreement the debt and the concessional financing and the support from the federal government, the cost would be significantly nearly close to half of what it would otherwise be for operating in Tasmania, for the cost of operating the link. As a result of that, the Government stated that Tasmanians would pay 15 per cent of the total project costs.
Dr WOODRUFF - Is it not true that Victorians will pay 15 per cent of the total cost? Am I incorrect in that understanding?
Mr BARNETT - Yes, you are.
Dr WOODRUFF - Can you tell us how much Victorians will pay of the total cost?
Mr BARNETT - I have told you what Tasmanians will pay and that is relevant to Tasmania, which is 15 per cent.
Dr WOODRUFF - I want to understand, on behalf of Tasmanians, what Victorians will be paying as their contribution to Marinus Link?
Mr BARNETT - That is a matter for the Victorian government.
Dr WOODRUFF - No, it is a matter for Tasmanians to understand if they're being dudded on this deal or not. How much are Victorians paying? You've negotiated a contract with the Government of Victoria. How much is Tasmania paying and how much is Victoria paying?
Mr BARNETT - We're fighting for Tasmania, we will continue to fight for what's in the best interests of Tasmania in getting a fair deal for Tasmania. We have 15 per cent which we think is a fair deal for Tasmania. We are pleased with that outcome. That is what we believe as a government is appropriate for Tasmanian consumers. We want our fair share and no more; that's what we've always said. We have negotiated hard with the federal government and as to the federal government's negotiations with Victoria, that's a matter for them.
Dr WOODRUFF - What it looks like to Tasmanians is either you've laid down to Victoria or you've been bullied.
Mr BARNETT - I hope you didn't use the word that I thought you did?
Dr WOODRUFF - Lied down, or laid down or been bullied into a bad deal. We want to know, and it is absolutely germane to know how much Victorians are paying and how much we're paying?
Mr BARNETT - The federal government has negotiated with Victoria, they have negotiated with Tasmania and 15 per cent is a very good deal for Tasmania, but it is subject to a financial investment decision by the end of next year.
Dr WOODRUFF - Do you know how much Victorians are paying? What their percentage is?
Mr BARNETT - Chair, I think I've answered that question a number of times.
Dr WOODRUFF - No. Do you know how much Victorians are paying?
Mr BARNETT - We have fought hard for Tasmania.
Dr WOODRUFF - Minister, can you please be relevant. Standing Order 45. Can you -
Mr BARNETT - We're out there to help them and support them and will continue to do so.
Dr WOODRUFF - Minister, when you talk about Tasmanians paying no more than 15 per cent of total project costs for Marinus, do you mean 15 per cent of the charges associated with it being a regulated asset, or do you literally mean 15 per cent of the project costs?
Mr BARNETT - Please repeat your question.
Dr WOODRUFF - You said Tasmanians will only pay 15 per cent of the total costs of Marinus. Do you mean 15 per cent of the charges associated with it being a regulated asset - or do you literally mean 15 per cent of project costs?
Mr BARNETT - It's the 15 per cent of the project costs that would have been for project Marinus had there been no concessional finance provided through the letter of intent.
Dr WOODRUFF - So, it's 15 per cent of $3.8 billion?
Mr BARNETT - No, that's not correct, and I won't be verballed.
Dr WOODRUFF - No, I'm actually seeking to understand what is going on. What is it 15 per cent of?
Mr BARNETT - I think I broke that down earlier in an answer to a question in terms of Marinus Link, in terms of the North West Transmission, in terms of Battery of the Nation, Lake Cethana, Tarraleah. I gave you that breakdown pursuant to the budget papers.
Dr WOODRUFF - No.
Mr BARNETT - I'll see if we can help you.
Dr BROAD - Maybe Mr Voss could just answer the question instead of the minister. He must have lost his voice.
Dr WOODRUFF - Minister, maybe, Mr Voss can answer the question.
Mr BARNETT - We are happy to assist. It's important that you hear the answers and then not try to interpret the answers in the way that you'd like. I will pass on to Anton Voss to assist the committee and to answer that question.
Dr WOODRUFF - I am sincerely interested in understanding, deeply, exactly what's going on.
Mr VOSS - Thank you, minister. The Government has made a commitment for Tasmania to pay no more than 15 per cent, as you say, of what the project costs for Marinus would have been had there been no concessional finance. When we’re talking about project costs, we're not talking about the total project construction amounts. We're talking about the maximum allowed revenue (MAR) that the Australian Energy Regulator will ultimately set - so, the annual requirement that is required to run the infrastructure.
Dr WOODRUFF - Through you, minister, does that mean the cost of it being a regulated asset? What are the annual running costs going to be, then? What does that mean in terms of real money? What are we up for in terms of the debt?
Mr VOSS - That's still to be determined. Obviously, it hasn't gone through a regulatory process as yet. That will still be going through the AER. That will be a fully open and transparent process.
With those maximum allowable revenues are the same as with any other regulated asset, such as TasNetworks now, through its distribution or transmission arrangements. The maximum allowable revenues cover things like operating costs. In the case of Marinus, it would include things like undersea cable insurance, cost of staff, and could include paying down the cost of debt, et cetera. It's the annual running costs of the infrastructure.
Dr WOODRUFF - Okay, so it doesn't cover the costs of the purchase of the cable, the laying of the cable. It doesn't cover those things.
Mr BARNETT - The CEO has tried to explain that it goes through a regulated process by the Australian Energy Regulator. It's an independent process, like other transmission projects around Australia. They are independently assessed as regulated projects and they get an asset base. They determine what those costs are for operating the project, and then share those with consumers across the country.
The CEO has outlined how that would work going forward. It hasn't happened. It has to happen going forward. It's subject to the financial investment decision by the end of next year. It's subject to getting costs on the tenders that went out towards the end of last year, as you might recall, and getting those costs so that there's an understanding of what those costs are and then those costs have input to the independent regulator. That is an independent determination that is assessed and a determination made.
Mr VOSS - The costs are ultimately a function of the final project costs, whatever those will be. They are currently out to tender for Marinus. The north west is still to come. It will be a function of the debt costs. It will be a function of the return on equity. It is a range of things that go through the standard building block that the Australian Energy Regulator uses which are in the National Electricity Rules. That will come down to the final review determination they make at the time.
Dr WOODRUFF - Thank you, Mr Voss. I don't appreciate being mansplained about the Australian electricity market. What I'm trying to do is get numbers out of you, minister. Thank you, Mr Voss. It is not intended to be directed to you.
Mr BARNETT – We're trying to assist if, you don't mind.
Dr WOODRUFF - You're doing everything possible to make it difficult for Tasmanians to find out what the debt will be. From what Mr Voss says, it is quite clear that there is a moving feast in terms of the cost. We have put tenders out and, as Mr Voss has said, the costs will be determined on the basis of what the tenders come back with with their costs. How can we be confident that even that $3.8 billion figure we had yesterday is going to be the amount that we have a debt to cover?
Mr BARNETT - That is a point that I have made already and Mr Voss's already made, that the tenders are going out. We have to get a response to those tenders. Subject to that and a review of those costs and the cost-benefit analysis, the final investment decision is by the end of next year. It needs to be carefully assessed. It needs to be in the best interests of Tasmania. We won't proceed unless it is. This a complex project. We are happy to assist the Committee in trying to respond to these questions. A lot of the questions were answered around 19 October when that announcement was made with the federal government. We can try to assist the committee in any other way but there is a process. It's important that we go through the process, that the cost-benefit analysis is undertaken and we progress accordingly.
Dr WOODRUFF - Minister, we understand that the Marinus cable is a very specialised bit of equipment. It is only made by a tiny number of companies, three or four worldwide. Can you confirm that there is a five-year wait to get a cable and in order to get on the waiting list you have to pay a $2 billion cable deposit?
Mr BARNETT - Thank you for the question. This is clearly a question for Marinus Link Pty Ltd. It would perhaps be relevant to TasNetworks. I can advise that a procurement process is underway, as I announced publicly at the end of last year. There is procurement process with tenders out for the cable and likewise the converter stations. There is a lot of work that needs to be undertaken to assess those costs and to get them in and then assess them. A range of experts is used to assess and analyse what is best for Marinus Link and/or TasNetworks, if you are talking about the north-west transmission.
All that work is underway. What is important from our point of view as a government is that we will only operate and proceed if it is in the best interests of Tasmania, that has always been our position.
Dr WOODRUFF - Thank you, minister. I am not interested in that; the question was is there a $2 billion deposit. We understand there is. The final investment decision isn't due until December next year, 2024. It would be utterly outrageous if we committed $2 billion towards the purchase of a cable prior to that investment decision being finalised. Can you give us an absolute guarantee that you will direct your GBEs - whoever they may be - to do no such investment prior to a final decision next year?
Mr BARNETT - Again, the Government will always do what's in the best interests of the state. We will put cost of living, cost of doing business, putting downward pressure on prices, at front and centre. If we can deliver that, deliver a growing economy, improved energy security - we all saw that in 2015-16, the impact on Basslink -
Dr WOODRUFF - Please just answer the question.
Mr BARNETT - and the energy security issues.
Dr WOODRUFF - Great.
Mr BARNETT - This is incredibly important to Tasmania's future and delivering environmental benefits in terms of reduced emissions.
Dr WOODRUFF - Will you please answer the question, minister? Will you give a guarantee that no investment will be made by a Tasmanian GBE of $2 billion, or any other amount, prior to a final investment decision being negotiated with the regulators and the Commonwealth?
Mr BARNETT - You are absolutely speculating -
Dr WOODRUFF - I just want you to give us an answer.
Mr BARNETT - You're providing a lot of speculation -
Dr WOODRUFF - You haven't confirmed it's not true.
Mr BARNETT - There is a procurement process. It's very important that that work is undertaken; those assessments are done; a cost-benefit analysis is undertaken and then, of course, decisions can be made in due course.
Dr WOODRUFF - Tasmanians are deeply outraged at nearly $1 billion being spent on a stadium. The idea that you might just slipping a commitment of $2 billion to an international company, without making that available to Tasmanians for an assessment, is utterly outrageous. Can you commit that you won't do that, and that you'll direct the GBEs not to make any investment decisions or commitments before December next year, when a decision is made?
Mr BARNETT - Thank you very much for the question. I won't be verballed; I won't be told what to do by the Greens member of parliament. We'll do what's best for Tasmania. We will consider all the information, analyse it carefully, review it carefully and ensure that cost of living, cost of doing business is a top priority; growing our economy, creating more jobs, delivering improved energy security and a cleaner world. And of course, the telecommunication benefits at Marinus Link should not be underrated.
Dr WOODRUFF - Would you allow a GBE to make a $2 billion investment decision, or any investment commitment, prior to an investment decision at the end of next year?
Mr BARNETT - I've answered this question three times; I'll go for a fourth and indicate that we'll do what's best for Tasmania.
Dr WOODRUFF - So, you would do that? Is that right, minister? You would allow $2 billion of Tasmania's money to be committed, when there is nothing.
Mr BARNETT - We now have a fifth question -
Dr WOODRUFF - You keep not answering them which is why we have to keep asking them.
Mr BARNETT - It's pretty much exactly the same as the first. I'm happy to indicate that we'll do what's best for Tasmania. I won't deal in speculation or hypotheticals.
Dr WOODRUFF - Minister, from what I understand from your earlier answer, $2.2 billion or $2.205 billion will be the cost of Marinus Link. You gave us a figure before of $3.8 billion the total of Marinus Link and Battery of the Nation and you said figures for the rest, which I take to mean the final figure you have at the moment is $2.2 billion. That is not my question, please correct me if that is not right. My question is on the payment for the costs of construction which will be split 80 per cent between a concessional loan and 20 per cent equity from the three partners, Commonwealth, Tasmania, Victoria split three ways, roughly 6.5 per cent each. Of the loan of 80 per cent, which GBE or Government department will service that debt?
Mr BARNETT - Okay. It is a lengthy question and in a number of parts. The first part of your question is wrong. You asked us to correct if - or I to correct you if we could, which we will do and I'll ask the CEO to do that correction and then I will answer the second part of your question.
Mr VOSS - Thank you, minister. Sorry, Dr Woodruff, I think you said $2.2 for the -
Dr WOODRUFF - You tell me, how much will Marinus Link cost?
Mr VOSS - As per the budget papers, the breakdown that in the number in the budget papers for Marinus and North West total combined project is $3.8 billion, I think that was in 2021 dollars.
Dr WOODRUFF - Okay. Which GBE or which Government department will be responsible for servicing that debt? Where will that debt sit?
Mr BARNETT - Thank you for the question. North West Transmission is with TasNetworks. Marinus Link is owned currently by TasNetworks, which is owned by the state Government. We have signed a letter of intent which was released and announced on 19 October last year. The details in and around that agreement were announced at the time and that would be owned, a third, a third, a third, between the federal government, Tasmanian Government, Victorian government, as to 20 per cent of the total cost and 80 per cent would be concessional finance from the federal government.
Dr WOODRUFF - You did not answer my question. Where will the 80 per cent concessional loan sit in the Tasmanian books as a debt? Maybe the CEO could answer that if it's going to be split three ways. Marinus Link might be owned by three parties, but that 80 per cent debt is not going to be split between the Commonwealth and Victoria and Tasmania unless I am wrong. I understand it is going to be a Tasmanian debt, in which case, which GBE or Government agency will be responsible for that debt? Where will it sit?
Mr BARNETT - Again, you are wrong in the question and I will ask the CEO to respond.
Mr VOSS - Just going back a step. As the minister said, with regard to the North West Transmission, that will be 100 per cent on TasNetwork's balance sheet.
Dr WOODRUFF - And how much will that be, that North West Transmission part of the debt?
Mr VOSS - It is around $800 million.
Dr WOODRUFF - Between $800 million and -
Mr VOSS - It is around that number. Ultimately it will be what the procurement comes out to be but yes, the combined projects were $3.8 billion for the two of them. I just have not got the breakdown with me, but I think it is around $3 billion for Marinus Link and around $800 million for NWTD at the time.
Dr WOODRUFF - And where will the $3 billion sit?
Mr VOSS - On that one, as you correctly said it is an 80 per cent debt from (indistinct) nation, 20 per cent equity split three way between the three governments. The state will own a one third share in the MLPL company. Where the debt will sit, the answer to that is it depends on how the structure of the joint venture exercise with the Commonwealth, Victoria and Tasmania is managed. Still to work through that one. I did discuss that with Treasury and Treasury said that would be something they would have to look at in the context of the arrangement going forward.
If I look at, for example, Woolnorth, on the Hydro balance sheet, they own a 25 per cent share of that and they, as I understand it, account for that as 25 per cent on their balance sheet - that's under the relevant accounting standards. Government finance statistics is something different again. It would depend on how that works forward, and ultimately that is a matter for Treasury; and we cannot answer.
Dr WOODRUFF - Thank you, Mr Voss. What would the repayments be per annum on that debt?
Mr VOSS - That will depend on what the debt ultimately is. That will be met through the maximum allowable revenue that is done through the Australian Energy Regulator, so that will ultimately be collected from customers through both Victoria and Tasmania.
Dr WOODRUFF - Sorry, I thought we were talking about the concessional loan now, not talking about the equity amount. The concessional loan will be payable through the Victorian and Tasmanian consumers - is that what you are saying?
Mr VOSS - Yes, as is the case now with TasNetworks transmission and distribution, or any regulated entity, the repayment of debt is captured as part of the annual bills that go out to customers and that will the same in this case but at a reduced rate because of the Rewiring the Nation Fund and being cheaper.
Dr WOODRUFF - But won't we be required, to pay. We have a concessional loan so there will be an interest rate, and we will have to make repayments on the basis of that. What is that rate at the moment?
Mr VOSS - Again, that is still to be determined. It is based on what the Australian Government's funding will be at the time so the Rewiring the Nation is based on the cost of the Australian Government debt which obviously less than Tasmania's costed debt and it is also significantly less than what a standard regulatory determination would be.
Dr WOODRUFF - In addition to the 80 per cent loan, the 6.5 per cent equity that Tasmania is taking out as part of its split of the 20 per cent, which GBE will service that loan? Where would that loan sit?
Mr VOSS - Again, yet to be determined.
Dr WOODRUFF - So, there are decisions being made about putting downpayments of $2 billion towards the purchase of a cable to be on a waiting list with a five-year time horizon, and no one knows yet where the debt is going to sit and how much it is going to cost us? That doesn't make any sense. Is that right? Who is making decisions when we don't even know who is going to be paying the debt, or who is responsible for it?
Mr BARNETT - The member is speculating again.
Mr VOSS - I don't want to comment on the assertion you are making of the $2 billion; but the equity can be contributed in a number of ways. The Australian Government has made and the Tasmanian Government have made large contributions to date. The Tasmanian Government has made contribution to NLPL [?] now, that is expected to be tipped into the business going forward, so part of the contribution that the company has already made through the state will go in to at least part of equity. But there are other ways of meeting equity as well; it could also be met through other means as opposed to from a debt management perspective; it could be met through the budget. Those things are yet to be decided.
Dr WOODRUFF - My final question is, minister, what makes you confident that if there are no answers to these questions about how much the debt is going to be and who is going to hold it, how are you so confident that you will be able to make profit out of Marinus to cover the debt. You are very confident of that; why?
Mr BARNETT - I totally refute your speculation with respect to the $2 billion. It's a made-up number; I don't know where you are getting it from, it is pure speculation. Having said that, the Government's position has been clear all the way along. It is subject to financial investment decision by the end of next year. There is a lot of work to do, a lot of analysis and assessments to be undertaken. There is a procurement process which started at the end of last year and in fact, before that. But in regard to the tenders for the cable and the converter stations, they have to be assessed and reviewed and analysed and then, no doubt, considered by Government.
There is a lot of ongoing assessment and analysis to be undertaken. We will only do this if it is in the best interests of Tasmania. Based on the business case to date, based on the cost benefits to date, it is a very good deal for Tasmania. There is more work to be done, and no doubt there will be more cost-benefit analysis to be undertaken. We look forward to assessing that and releasing those papers and documents when they are concluded.
Dr WOODRUFF - Either you are at the ‘back of the envelope’ stage or you have a lot of work to do. I agree.
Dr WOODRUFF - Minister, last October you announced an agreement between Tasmania, commonwealth and Victoria for Marinus Link. Can you please table that agreement, including the dollar figure for Tasmania's share of the equity of the project and the concessional interest rate agreed for the loan between the commonwealth and Tasmania?
Mr BARNETT - Thank you for the question. As was advised at the time, it's an agreement between the federal government and the state government. We have already discussed the dollar figures and answered that question earlier today.
Anton Voss, my CEO, has outlined the arrangements with respect to the equity, a third, a third, a third, making up 20 per cent in total and then 80 per cent concessional finance from the federal government, primarily through the CFC. Those arrangements are still to be consummated in terms of the terms and conditions. Again, the CEO has outlined that in some detail.
Other cabinet in confidence matters we will not be tabling, but we're happy to speak to those matters that are in the public arena.
Dr WOODRUFF - It is not a cabinet in confidence document, Minister, it's an agreement between the commonwealth, state and Victorian governments. That is not cabinet in confidence. That is an agreement between three governments. Will you table that? If you have nothing to hide, just table it.
CHAIR - Member for Franklin.
Dr WOODRUFF - I have asked a question Chair and Mr Voss was about to answer it.
Mr VOSS - The document you are referring to is with the commonwealth government as well. I understand it went through their Cabinet so there are a range of issues there with regard to that document and the public tabling of that, given those circumstances.
Dr WOODRUFF - Everything goes through Cabinet ultimately. Every plan, every thought bubble goes through Cabinet. That doesn't make it a cabinet in confidence document. It is an agreement between three governments. Can you please table it? I don't understand why you wouldn't do that.
Mr BARNETT - The answer is no.
Dr WOODRUFF - Why not?
Mr BARNETT - Because we have made it clear it is cabinet in confidence.
Dr WOODRUFF - Well, it is not. Is that because you don't want to tell Tasmanians what the concessional loan rate would be?
Dr WOODRUFF - Minister, when Peter Gutwein was premier, always said that Tasmanians should pay no more than 10 per cent of the cost of Marinus because we'll only get 10 per cent of the benefit. Why are we now going to be paying for a debt of 86.5 per cent - 6.5 per cent of the equity, 80 per cent loan?
Mr BARNETT - There are many parts to that question and they're based on false allegations and a false premise, which I reject, but I'll ask the CEO to explain.
Mr VOSS - Can you say that again, Dr Woodruff, the last part about the amount of the payment on the debt?
Dr WOODRUFF - The 80 per cent concessional loan and the 6.5 per cent of the upfront equity. We'll be paying the debt for both of them, yes?
Mr VOSS - No. As I was explaining before, with regard to the payment of the maximum allowable revenue that the AER will set, that will incorporate payment on debt and paying back debt. That will be met by both Tasmania and Victoria. As the Government has stated, the Government's policy regarding payment, as we discussed earlier today, there's a lot still to be worked through on the costs, what the allocations are going to be, and what the AER will ultimately determine. However, the payment that Tasmanians under Government policy is intended to make is 15 per cent of the original cost. It's not that just Tasmania alone who is servicing the debt that the MLPL entity will take on.
Dr WOODRUFF - Thank you, Mr Voss. In 2020, the Energy Security Board gave advice to energy ministers that a new transmission cost allocation methodology decision was expected that year. As I understand it, that decision hasn't been made yet.
Last year, Marinus Link Pty Ltd announced their intention to go through a different process and proposed a rule change to allow a cost allocation to be developed for Marinus Link individually. I understand they've lodged a proposed rule allocation proposal to allow a revenue determination to be made for an intending transmission network service provider. But that proposal explicitly doesn’t include rule changes for the cost allocation methodology. What is the regulatory framework that's going to govern this agreement? And how can any agreement that's been struck so far have any weight if there hasn't been a rule agreed to for a transmission network service provider and the cost allocation methodology? It's all going round in circles. Can you explain it, please?
Mr VOSS - There's two parts to that. The first one that you mentioned there, under the rules, Marinus Link Pty Ltd put forward a rule change which allows them, essentially, to participate in the regulatory process as an intending transmission network service provider. When the rules were done many years ago, conceptually, the Australian Energy Market Commission (AEMC) and the rule-setting hadn't dealt with the issue of a new business coming in that's doing transmission. That's what that rule change is referring to, [inaudible] regulatory process.
The second part you are talking about, there is a rule change which is to implement the agreement between the Victorian and Tasmanian customer payments. That hasn't been submitted as yet, that's still being worked through with the Commonwealth Government, Victoria and us.
Dr WOODRUFF - Minister, when do you expect pumped hydro to be completed and feeding into the grid?
Mr BARNETT - You're making reference to Lake Cethana proposed pumped hydro by Hydro Tasmania. It's really a question for Hydro Tasmania. However, as indicated earlier, it's a very substantial project with an estimated 750 megawatts, an estimate, based on the previous costs advised, of $1.5 billion. It's dependent on Marinus Link, specifically the second cable, to come on line with the second cable. So, there are many years of design, approval and construction. Hydro Tasmania is going through what's called a financial investment decision assessment.
It is the preferred pumped hydro site for Tasmania. I've been there many times. It's an absolutely brilliant site. Tasmania's geography and topography are excellent opportunities for pumped hydro. As you would have seen in the national media today, the requirement for reliable or dispatchable energy is absolutely going to be in demand between now and 2030 and 2040 and 2050. Tasmania is very much in the box position to become a key provider, which will deliver those financial benefits through Hydro Tasmania and back to the Tasmanian people through our expenditure on hospitals, schools, police and the like.
Dr WOODRUFF - Minister, no new method to allocate transmission costs between states has been struck by energy ministers yet. If no new rule change has been struck, then isn't it the case that the agreement made between the Victorian, Commonwealth and Tasmanian Governments last October that you announced then, is not based on a firm percentage cost to Tasmania? It is speculative, at the moment. It may change because that determination of costs hasn't been made by Australian energy ministers. Is that true?
Mr BARNETT - Thank you for the question. I will start the answer and then I will pass to the CEO or RecFIT. Marinus won't progress unless it is in the best interests of Tasmania and Tasmanians.
Secondly, you are referring to an independent process that's undertaken by the Australian Energy Regulator. Yes, it is consistent across the national electricity market. Yes, the Energy ministers are very familiar with it, we get updates at every meeting from our energy regulators, AMC, AER, the Australian Energy Market Operator, including the ACCC. The independent process is supported across the NEM by all the Energy ministers. We appreciate the Australian Government's Rewiring the Nation $20 billion fund, which we have progressed and have agreement with the Australian Government to progress Marinus and Battery of the Nation, subject to financial investment decisions by the end of next year and it being in the best interests of Tasmania.
I will pass to the CEO to outline more to that answer.
Mr VOSS - Thank you, Minister. There's a couple of pathways through which a rule change could be made. You were referring to all Energy ministers across the country, earlier. There are rule changes that can be made through Section 90F of the national electricity law; that's not what's proposed in this case. This is specific between two jurisdictions, Tasmania and Victoria. The Commonwealth and ourselves and Victoria are working through what the rule change process and submission will look like. The intention there is for us not to go through a 90F because we don't think other Energy ministers will be particularly involved with it. It is an agreement between ourselves, Victoria and the Commonwealth. That rule change will go through the Australian Energy Market Commission and that rule change process that goes through the AEMC is a very transparent process, open for comment. That is all still to come. The intention is to lock in the intent behind the letter of intent with regard to cost distribution across Victorian and Tasmanian customers.
Dr WOODRUFF - Thank you, Mr Voss. The proposed cost split is that no more than 15 per cent would be paid for by Tasmanian consumers and the rest by other states in the NEM. It is not really the case that the NEM, Victoria, we cannot just cut it off at Victoria because the agreement affects all states because electrons flow around the National Electricity Market. It is not just Tasmania and Victoria. Why are Tasmania and Victoria the only parties to that agreement?
The energy ministers' council has not been able to agree on a cost allocation. Is there a risk that other states may oppose the cost allocation that Tasmania and Victoria have agreed to because we haven't reached a final decision?
Mr BARNETT - Firstly, this is a budget Estimates. We are meant to be reviewing the Budget but this is very much to do with the Government Business Enterprises. Having said that, the CEO has made it clear in terms of the rule change. It is an independent, transparent process. It needs to be finalised prior to a financial investment decision. That is the aim, to finalise that prior to that decision. Having said that, I will ask the CEO to add to my answer.
Mr VOSS - Thank you, minister. The premise of your question, Dr Woodruff, is not correct. The intention of the rule change is to have the allocation between Victorian and Tasmanian customers. It will not be paid for by other jurisdictions in the NEM. Hence, going back to my previous discussion, that is why it is not going through a 90f process and one of the jurisdictions may not be engaged with regard to that.
Dr WOODRUFF - Minister, the Marinus Link Proprietary Limited website says the following about the cost agreement. It says:
Tasmanian customers will pay no more than 15 per cent of estimated total project costs for both Marinus Link and the North West Transmission developments. Customers in other states within the National Electricity Market, which comprises Queensland, New South Wales, ACT, Victoria and South Australia, will also contribute to the cost of the project.
Minister, that does not sit with what Mr Voss told us before. Will it just be Tasmania and Victoria that are paying? Is it true and why has Marinus Link made that claim?
Mr VOSS - So, that is not my understanding but -
Dr WOODRUFF - I am quoting from Marinus Link's website. That is what it is telling Tasmanians.
Mr VOSS - I would have to have a look at what part of the website you are looking at.
Dr WOODRUFF - It is a false statement is it?
Mr VOSS - I do not know because I would have to see -
Dr WOODRUFF - You told us before that the agreement was just between Tasmania and Victoria and no other states were involved. I asked you that question about the NEM and then you told me, that's right. No other states are involved, that is what you are saying. Therefore, what Marinus Link has on its website is incorrect. You can go and check it. Is that right?
Mr BARNETT - Budget Estimates are to deal with the budget. Clearly, this is a matter for GBE hearings and we are getting quotes from a member at the table.
Dr WOODRUFF - Chair, will you please ask the minister to direct himself to the question. This is about $3.8 of our budget money and I am asking him if that is the correct statement or not. Is it a correct statement? Is it true that other customers will be making a payment? This is on the community link update for Marinus.
If it is just Tasmania and Victoria, does that mean consumers in Victoria will be paying 85 per cent? Because you have said very categorically Tasmanians will only pay 15 per cent and if it is true, that Victorian consumers will pay 85 per cent of the costs, then why haven't you made that figure public?
Mr VOSS - Sorry, Dr Woodruff, as I articulated earlier, the payment as I articulated earlier is between Victoria and Tasmania as I understand it. I do not know what you are specifically referring to I would have to have a look at what it says and the context and so I understand what it is but -
Dr WOODRUFF - But you can confirm for the committee that the agreement for costs will only be between the Tasmanian and Victorian governments not between any other governments? Is that what you are telling the committee?
Mr VOSS - As per the rule change discussion we had earlier, yes that is the approach.
Dr WOODRUFF - That is agreed by all state energy ministers, is that agreed by all state energy ministers?
Mr VOSS - As I said before this does not have to be agreed by the energy ministers. It is not proposed to go through a section 90f under National Energy Laws (NEL) as currently proposed. It is going through the AEMC. Again, that will be an open and transparent process to implement the arrangements under the letter of intent between three jurisdictions.
Dr WOODRUFF - And by inference then just by obvious deduction, therefore Victorian consumers will be paying 85 per cent of the costs, Tasmanians will be paying 15 per cent. Is that what you are confirming?
Mr VOSS - It comes back as I said to go through the regulatory process and there is a difference between Marinus Link and the NWTD as well so.
Dr WOODRUFF - That is all gobbledegook to me. Could you please just lay that out for people who are listening?
Mr VOSS - As the minister was saying earlier, there is a difference between the Marinus Link rule change proposal when that goes through the AEMC. And as the minister was saying earlier, the North West Transmission Developments will be on TasNetworks' balance sheet. They are also subject to the rewiring the nation discounted funding. We are working through that real change now.
Dr WOODRUFF - And the Marinus Link part of it will be 15 per cent Tasmanian consumers, 85 per cent Victorian consumers?
Mr VOSS - The Government policy is Tasmanian customers will pay 15 per cent of the overall project which is both Marinus Link and the North West Transmission Developments.
Dr WOODRUFF - So it is a policy, it is not an agreement. It is not fair to say that if Victorians could hear the news they are paying 85 per cent of Marinus Link, you would walk away from that statement, would you? Is that an agreement that has been struck or is it only a policy of what you would like it to be because it is satisfactory for your narrative, minister?
Mr BARNETT - The Green member is totally opposed to more renewable energy and a major infrastructure project which will deliver renewable energy, to lower prices -
Dr WOODRUFF - We want value for money.
Mr BARNETT - more jobs, improved energy security, cleaner world, yet the Greens continue to oppose. There is an independent process, the CEO has outlined that. It has to go through that full transparent process and that has been made very clear.
Dr WOODRUFF - There is a reason why you are no longer the minister for Resources because you were slippery with the truth and it is pretty clear you are being very slippery with Tasmanians about the real costs they are likely to pay for Marinus Link because nothing I have heard today would suggest that anyone else in Tasmania would be paying for a link between Tasmania and Victoria. Obviously, we are going to be sharing the costs with the other states.
CHAIR - Thank you, Dr Woodruff. We are getting out in the time of questions.
Mr BARNETT - Chair, I would like to conclude with an answer to that.
Dr WOODRUFF - Are we out of time Chair, or not out of time?
Mr BARNETT - A very short answer that it is both speculation and insulting by the Green member for Franklin.
Dr WOODRUFF - Why do you get more time to speak? We do not get time to speak, minister. We ask the questions.
Mr BARNETT - You ask the questions, that is your answer?
Dr WOODRUFF - We ask the questions, you do not get the final say.