Second Reading – ARENA Repeal Bill

Wednesday, 27 August 2014

Mr PITT (Hinkler) (10:57): It is always good to follow the member for Charlton. It demonstrates just what is wrong with the Australia Labor Party, which was once a great party, I must say.

Before I commence, I would like to inform the House that I am an electrical fitter mechanic and was a registered professional electrical engineer in Queensland for many years, until I entered this place. And at the outset, I must say that I fully support targeted government assistance for power solutions for remote area power supplies, or RAPS units as they are more commonly known.

However, I do not support a renewable energy industry which is subsidised so substantially by the taxpayer and the electricity user. At its simplest, my position is this: effectively, renewable energy projects are subsidised for up to half of their capital costs and are then guaranteed a market price at least twice that of their competitors. Add to that a further guarantee that they can supply an already oversupplied market to the detriment of all other employing providers. I know plenty of businesses in my electorate—every single butcher, every baker and every newsagent—who would love to have such a great deal from the federal government.

The purpose of this bill is to abolish the Australian Renewable Energy Agency, ARENA, by repealing the Australian Renewable Energy Agency Act 2011. The management of existing ARENA projects—around 200 worth over $l billion—will then be moved into the Department of Industry. Abolishing ARENA will return uncommitted savings of almost $1.3 billion to the budget. This government has committed to return the budget to surplus. Savings of $435 million were already achieved when ARENA funding was reprofiled as part of the carbon tax repeal package in July 2014.

ARENA supported all renewable energy technologies and projects across various stages of the innovation chain from research in the lab to large-scale technology projects, regardless of the likelihood of success, it would seem.

According to its website, ARENA was established by the Australian government to make renewable energy solutions more affordable and increase the amount of renewable energy used in Australia. It had a budget of approximately $2.5 billion of the taxpayers’ money to fund renewable energy projects, support research and development activities and support activities to capture and share knowledge.

ARENA’s projects span solar, marine, biofuels and energy storage. In Queensland, ARENA is responsible for 11 projects worth $63 million. For example, $11 million of taxpayers’ funds were committed to a high-penetration solar project worth a total of $23 million. This will allegedly displace diesel generators in a community, port and bauxite mine at Weipa in Far North Queensland. According to the ARENA website, almost $4 million was committed to the Oceanlinx greenWAVE device in South Australia, which is now sitting off the South Australian coast, damaged beyond repair, not recoverable and never to operate.

I also note an article recently published in Climate Spectator by Arena CEO Ivor Frischknecht and Dan Sturrock:

ARENA strategically provides funding support to renewable energy projects during the development stages. This will greatly reduce the time it would have otherwise taken for the renewables industry to flourish to the point where it no longer requires long-term government support.

The deployment of renewable energy solutions in remote communities and businesses is considerably less than that in urban and metro areas. This is due partly to the increased cost of constructing and operating projects in remote areas, but also due to the lack of experience in assessing, planning and developing off-grid projects in Australia.

At this point, I would like to note the work done by organisations such as Ergon Energy, who have been supplying remote area power supply systems and solutions to remote areas of Queensland for decades. Furthermore, the article says:

It is ARENA’s role to find ways to overcome such barriers. In 2013 ARENA launched the Regional Australia’s Renewables program, which is developing local know-how and reducing the cost of renewable energy projects in the off-grid mining, fringe-of-grid and remote community sectors.

RAR … represents an opportunity to displace a significant amount of the comparatively expensive diesel generation that currently powers remote Australia, with the installation of up to 1 GW of off-grid renewable energy capacity.

With a budget of $2.5 billion to invest, it is only now that ARENA thinks to start providing more opportunities for regional Australia. On what basis? So they can replace existing diesel systems. Why? Because they are diesel. This could simply be an outline for the latest program from Utopia on ABC. I am sure it is something they could pick up.

If these units are due for replacement or if there are no systems then I can understand a need to invest the taxpayers’ money, but to knock them out simply because they operate on diesel is more of the same thinking that has led us to an oversupplied electricity market in which renewables are heavily subsidised to the detriment of all users of electricity.

The article goes on to say that ARENA’s off-grid projects will displace certain percentages of diesel usage in particular communities. Once again, we are building systems which are incapable of replacing the existing system in its entirety, resulting in two sets of supply, both of which need to be maintained, operated and managed. Is it any wonder that electricity user-pricing continues to rise? Just imagine how long we could have supported cheaper electricity prices for low-income households and our age pensioners with the $2.5 billion that ARENA had at its disposal. The article also states:

ARENA expects all its projects to be viable without subsidy within five years due to cost reductions and efficiency Improvements.

That is good news. Unfortunately, it would seem they cannot supply 100 per cent capacity in most cases, so the need for other sources will continue. They provided $5 million to James Cook University—a great university, not in my electorate—to establish a demonstration-scale facility that produces biocrude from seaweed, an innovative and renewable resource that does not compete with arable land, potable water and food production. When I look at how difficult it has been to get environmental approvals for a boat ramp or to have tourists swim with the whales, I can just imagine the explosion of indignation a commercial seaweed harvesting process would result in in the Great Barrier Reef Marine Park, especially given the high volumes of product that would be required.

The previous Labor government spent $19 million supporting 82 fellows and PhD candidates focused on applied research, at approximately $232,000 each. The renewable energy industry has received billions of dollars of support in recent years through the RET and other federal and state government schemes, such as financing for renewable energy projects through the Clean Energy Finance Corporation, state based feed-in tariffs and various grant programs to provide community support to install renewable technology. This has resulted in an industry almost completely reliant on user subsidy. It makes no practical sense to continue to increase capacity into a system which is already 30 per cent oversupplied, nor into a network which is not designed for multiple-generating sources at what should be the final point of distribution. No-one with any knowledge of network distribution would build a system like this.

Businesses, families and every user of electricity in my electorate are desperate for a reduction in the cost of energy. They cannot continue to pay the exorbitant prices, and they are being disconnected at an increasing rate due to non-payment. Electricity pricing is hurting farmers, businesses and families. The median weekly personal income in Hinkler is just $411. They need cost of living relief and they need it now. At a federal level, there are three things which we can do to reduce the price of electricity, and we have done one already. We have repealed the carbon tax. Well respected and successful businesses in my electorate have had a lot to say about the coalition keeping its promise to repeal the carbon tax. Wayne Edwards, manager of Bundaberg Sandblasting, said:

In a bid to combat spiralling electricity costs, we invested some $200k into newer equipment to bring down our operating costs. Increasing our charges to cover the cost of the tax would have been a nail in the coffin for our business. The repeal of the Carbon Tax will help ensure we get a return on our investment. It has given us confidence for the years ahead, to keep employment strong.

Larry Burch, owner Aquavue Cafe Watersports, said:

When the carbon tax became a reality we made the decision not to pass the costs associated with it to our customers, as we believed that it would negatively affect our bottom line. Its repeal is a big relief for small, family-owned and operated businesses like ours.

Teena Mammino, owner Mammino Gourmet Ice Cream, said:

Our small, family-owned boutique ice-cream business operates multiple freezers 24hrs per day, seven days a week. Any reduction in our major operating costs, such as electricity and refrigerant gasses, will greatly enhance our long term viability.

Stephen Murphy, manager of Hervey Bay Cold Stores, said:

Our family business operates a fleet of fishing vessels and a cold storage facility in Hervey Bay QLD. Repealing the carbon tax will save our business tens of thousands of dollars over the year on our power bills and refrigeration gas costs.

Secondly, we can get the RET under control. Those who have invested in good faith need to have those contracts honoured, but that does not mean we should continue to throw buckets of taxpayers’ money at renewable energy.

Thirdly, the government will prepare an energy white paper that will set out an integrated and coherent position on energy to support a stable and predictable policy environment to give households and businesses confidence about their energy future I would like to see the white paper closely examine the N-component, the network component, set by the Australian Energy Regulator. It makes up around 50 per cent of the cost of electricity in Queensland.

This government has given a commitment to the people of Australia that it will get the budget under control and reduce the cost of living for all Australians. This bill is one step of many in achieving that goal. I told the people of my electorate that I would be a common sense voice on government policy. This is one place where we can start.

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