Jodie Campbell (Bass, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Resources and Energy and Minister for Tourism. How will the government’s Carbon Pollution Reduction Scheme ensure Australia’s energy security?

Martin Ferguson (Batman, Australian Labor Party, Minister for Resources and Energy) Share this | Link to this | Hansard source

I appreciate the question from the member for Bass, because, as the member for Groom and I appreciate, any strong economy is very much dependent on the reliability of the electricity system. I can also advise the House that it is a matter that has fully occupied the government and the opposition over the last month of detailed negotiations about potential revisions and refinements of the Carbon Pollution Reduction Scheme. In that context, I am pleased to advise the House of six key amendments to the Carbon Pollution Reduction Scheme that go to the endeavours by both the government and the opposition to make sure that, as we transition to a low-carbon economy, we have a fully operational, reliable electricity system. I can also say that, in the context of making the transition, reliability is required to bring on new investment, and the initial transition is going to be very much dependent on a growth in dependence on gas.

The key refinements are therefore as follows. Firstly, the government will increase the assistance under the Electricity Sector Adjustment Scheme from 130.7 million permits to 228.7 million permits, a significant increase of 75 per cent. Secondly, the government will extend the period of the Electricity Sector Adjustment Scheme from five years to 10, meaning that generators will be required to comply with the power system reliability test over this period to continue to receive government assistance. Thirdly, the government will introduce a Low Emissions Transition Incentive by amending the power system reliability test further to allow generators to receive credit for their own investments in low-emissions replacement capacity. That is about reliability plus new investment for the purposes of the transition. Fourthly, the government will establish—and this is a very important proposal going to the issue of reliability and transition—an Energy Security Assurance Mechanism with an advisory board that will advise the government on whether there are any remaining low-probability systemic problems with respect to electricity market security and, if so, what further actions are necessary to address these risks. Fifthly, the government will delay the windfall gains test that applies to ESAS assistance to apply to the last three of 10 years of assistance and to only half of a generator’s allocation in this period. Sixthly and finally, the government per the proposed agreement with the opposition, will provide a transitional measure to address the working capital costs of market participants and, in doing so, allow generators to defer payments for future year permits.

I believe this package represents a coming together of people who understand the complexities of the electricity system and the huge challenge to maintain reliability during this transition. I say that because, without a reliable electricity system, you do not have a fully functioning economy and strong economic growth foundations for Australia. The outcome of these negotiations represents an endeavour by both parties to act in the national interest and, in doing so, to guarantee energy security, which is the key to protecting jobs and the economy from climate change.

I can also advise the House that, on the finalisation of these measures, the secretary to the Department of Climate Change sought advice from the energy market institutions who have written to the secretary in support of the final arrangements as proposed in the CPRS document released this morning. These letters are available publicly. I refer, for example to comments by the Chairman of the Australian Energy Regulator, Mr Steve Edwell, who said there are ‘low risks of energy shortfalls as a result of the introduction of the CPRS’. I can simply say in conclusion that that is a very important statement by the chairman of the Australian Energy Regulator because estimates of Australia’s electricity infrastructure investment needs between now and 2020 are in the order of $100 billion in generation and network costs, including for renewables. This is an investment comparable to Australia’s current asset base of $120 billion in power generation, transmission and distribution, so it represents a huge challenge in terms of the transition and the introduction of the CPRS.

In terms of the energy market, the finalisation of a CPRS, side-by-side with a renewable energy target as previously approved by the parliament, potentially establishes, if approved by the Senate, a clear framework at long last in which to plan to meet that huge challenge on electricity investment so key to our economic future.

Russell Broadbent (McMillan, Liberal Party) Share this | Link to this | Hansard source

Mr Speaker, I rise on a point of order. Can the minister table this very important document from which he was reading?

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

Was the minister reading from a document?

Martin Ferguson (Batman, Australian Labor Party, Minister for Resources and Energy) Share this | Link to this | Hansard source

Yes, Mr Speaker.

Harry Jenkins (Speaker) Share this | Link to this | Hansard source

Is the document confidential?

Martin Ferguson (Batman, Australian Labor Party, Minister for Resources and Energy) Share this | Link to this | Hansard source

It is confidential in nature.