Tuesday, 16 August 2022
Bills
Victorian Energy Efficiency Target Amendment Bill 2022
Victorian Energy Efficiency Target Amendment Bill 2022
Second reading
Debate resumed on motion of Ms STITT:
That the bill be now read a second time.
Mr DAVIS (Southern Metropolitan—Leader of the Opposition) (18:07): I want to make a contribution on the Victorian Energy Efficiency Target Amendment Bill 2022. This bill reforms the Victorian Energy Efficiency Target Act 2007, the principal act, and the Essential Services Commission Act 2001. It sets out a regulatory framework for the state government’s Victorian energy upgrades program, which is overseen by the Essential Services Commission. The bill purports to strengthen regulation of the Victorian energy upgrades program through transparency, provider competence, a code of conduct and general governance measures.
I just want to say one thing: by God this area needs reforming. My goodness. We have seen the fridges. You know, there are some businesses with up to 40 fridges outside their premises, others with only 20 or 10 fridges offered to them—quite bizarre outings, when you think about it. This program has been hopelessly maladministered by this government. Programs of good intentions are one thing; programs that are incompetently administered, whatever the intentions, are not what taxpayers need. They are not what the government should be delivering.
How is it possible that we could get to the situation where a business has 40 fridges lined up outside it—40 fridges on offer, 40 fridges delivered and 40 fridges where rebates have been provided to people? I mean, honestly, this fridgegate is an emblem for the incompetence of the Andrews Labor government—fridges lined up outside business premises. I mean, who would have thought you would have 10, 20, 40 fridges lined up outside businesses? Look, a lot of businesses are very happy to get one or two fridges—low-energy fridges, new fridges, clean fridges. In they go, but then the other 18 are lined up outside the door. I mean, honestly, what a complete circus.
I think the minister should have been moved on. She is clearly deeply incompetent. I know the minister at the table today, Minister Tierney, does not administer this program, so I am not saying that about her. I am saying it about the Minister for Energy in the other place, who clearly does not have a fundamental about what is going on and has been forced to freeze this program.
The funding offered for these certificates came to completely outstrip the commercial value of the appliances themselves. Reports allege that this led some providers to dump unneeded appliances. And it is not just reports, we have actually seen the pictures of the lined-up fridges outside the businesses. It is not a matter of reports; it is a matter of hard figures and hard facts and hard photos—I mean, what a circus.
This amendment process began before the fridges controversy. The provisions contained in the bill could have perhaps prevented the inefficient and environmentally counterproductive outcomes that have been reported in the media. I mean, that is the other point to remember about this fridge-gate thing: how is it energy efficient to deliver 40 fridges to one business? How is that in any circumstance a sensible thing to do? They have been brought into the country almost certainly over the recent period and trucked around—honestly.
This bill does put in place a fit and proper person test for an accredited person. It assesses, in new section 10B, findings of guilt in relation to offences under the Victorian Energy Efficiency Target Act or findings of guilt in relation to an indictable offence. This applies to other jurisdictions. It looks at conduct. It looks at revocation or suspension of accreditation certificates and behaviour with respect to the energy efficiency program, insolvency and other obvious matters, court records and so forth. The competent and capable person test—I mean, why wasn’t this in place from the start? But that is a rhetorical question.
There will be, they say, an auditing and code of conduct framework. There will be strengthening of reporting requirements. The bill extends the scheme and its targets from January 2030 to January 2031. There are some general governance amendments. The bill, I guess, is in one sense largely uncontroversial since it tightens the regulation from the current clearly inadequate position, and in that circumstance the opposition will not oppose this bill. I think the conclusion is that it is an unexceptionable bill, but the fact that it is going through now, with fridge-gate large in everyone’s mind, leads to a series of questions. The opposition will not oppose the bill, but we will ask a few questions.
Dr KIEU (South Eastern Metropolitan) (18:13): With great pleasure I rise to speak to the Victorian Energy Efficiency Target Amendment Bill 2022. Energy is crucially important—actually it is fundamental to all of our activities and in fact to our lives—but the way we have been, for hundreds of years, using fossil fuel has created a lot of problems. We have seen climate change. We have seen the consequences of climate change very recently and concurrently in Spain, in southern France and everywhere else in the world—indeed in our own country as well. We need to manage climate change but at the same time have energy for our activities. Victoria is very proud to be leading the country in delivering climate change action and transitioning to renewable energy. The form of energy for the future is a renewable one. We have set a national target, a nation-leading target, to reduce emissions by 50 per cent by 2030 and 100 per cent by 2050, and we have delivered the largest annual increase in renewable generation of any of any state ever. The thing is that we are going to be the home of big batteries.
Mr Finn: ‘Home of Big Batteries’—I think we should put that on the numberplates, I really do.
Dr KIEU: That would be a good way to promote the big batteries, Mr Finn. We will have the largest big battery in the Southern Hemisphere. We also have a program of offshore wind targets. We are leading the country in bringing online 2 gigawatts of offshore wind by 2032. I just want to digress a little bit. One gigawatt would be enough to support about 700 000 households. The population of Victoria is about 6 million. Let us say we have two or three people per household—that would be about 2 or even 3 million households. By the year 2040, when we achieve the target of 9 gigawatts, offshore wind energy will more than supply the number of households in Victoria. In fact we will have enough energy to export to other states. Also, we could use that energy to create more renewable energy, for example, green hydrogen, which can be easily transported, stored and so on. It is not just the energy, but through our programs of support for energy technologies we have created thousands of jobs while at same time cutting power bills and slashing our emissions. We are also leading the nation in helping to reduce the amount of energy we use through various schemes to have more efficient light bulbs and efficient electrical equipment.
The Victorian energy upgrades program is our flagship energy efficiency program. It has delivered incredible outcomes, helping more than 2 million households and businesses to cut their bills, saving the average household about $120 per year and businesses an average of $3700 a year. It has supported more than 2200 jobs a year across our state, both in the metropolitan area and in regional areas. Importantly, it also has had a huge impact on our carbon emissions, reducing emissions by over 73 million tonnes since 2009, which is the equivalent of taking 22 million cars off the roads each year.
The Victorian energy upgrades program has been highly successful. We, the government, were ambitious and set very high emission reduction targets, but as part of preparing for an expanded Victorian energy upgrades program in order to reduce further emissions and deliver even more benefits to Victorians, the government have identified that the consumer protections were not fit for the scale of the program to be expanded. The Essential Services Commission, which is the regulator of the program, was only able to regulate the creation of certificates within the program. However, community expectations were far broader, with an expectation that the Essential Services Commission could regulate the behaviour of participants in the scheme and ensure that those selling products were suitably qualified. That is the reason for this bill.
This legislation will make sure that the Essential Services Commission have the powers they need to manage the Victorian energy upgrades program and protect consumers at the same time. It will also allow the ESC to enforce the newly established code of conduct and ensure that accredited providers are appropriately qualified. It will strengthen consumer protection by introducing penalties for all businesses providing services under the program, including subcontractors, telemarketers and installers. The bill, further, will also empower the ESC to take strong action to ensure compliance with the program. These expanded powers under this bill are vital to maintaining community confidence in the VEU scheme and ensuring that consumers are protected as the program continues to deliver massive savings for Victorians and helps slice our carbon emissions and create jobs for Victorians. I commend the bill to the house.
Mr FINN (Western Metropolitan) (18:20): In rising to speak on the Victorian Energy Efficiency Target Amendment Bill 2022 I have to say that the greatest contribution the government could make to fixing the mess that this legislation is aimed at fixing would be to remove the minister, because she is a disaster. Wherever she goes she stuffs up. Quite frankly I think Victorians have had enough and they need a new minister. That would be a giant step in the right direction. Quite frankly I am quite sick of all this nonsensical stuff about climate change and this carrying on about how we are leading the world—‘Don’t worry about the pensioners who can’t afford to heat their homes. Don’t worry about the people who can’t afford to heat their homes. Don’t worry about them, forget them, because we’re leading the world’. The fact that Australia contributes 1 per cent of the world’s emissions has nothing to do with it of course. The fact that Victoria is a minute part of world emissions is nothing to do with it. If we stopped every form of emissions tomorrow—every form—it would have zero impact on the climate or anything else except how our society functions, because the fact of the matter is that these renewables are in fact unreliables. That is the fact of the matter.
If we want strong business, if we want strong industry, if we want strong jobs, we have got to have reliable, cheap power, and at the moment we do not. I know myself, living where I do, we have gas tanks which are filled up at this time of the year once every two or three weeks. I know over the last couple of months a tank of gas has gone from $200 to $500. It is unbelievable that that could happen. In this state, which has more gas and more coal than just about anywhere else in Australia, there is no need for those sorts of prices. There is no need for people not to be able to afford to heat their homes in this particularly cold weather. There is no need for that, but it is happening.
It is worth noting that members of the Andrews government are chortling about it as I speak. They think it is highly amusing that pensioners and those who are struggling, battling, cannot heat their homes. I thought that the Labor Party or the ALP was the battlers’ party. Obviously I was wrong. The teal voters in Brighton can afford to heat their homes. They can afford to do whatever they like. It is the battlers in the western suburbs who are the ones who cannot heat their homes. They are the ones who have to try and calm their kids when they are freezing because they cannot turn their heaters on. They are the ones who are hurt by these policies.
So do not come to me saying that we have to lead the world, because what you are doing is you are hurting Victorians. That is what you are doing—you are hurting Victorians. For that you stand condemned, and for that I sincerely hope you will pay a very heavy price in November, because Victorians deserve better than an ideological government pushing its own barrow for international acclaim ahead of what is the best thing to do for Victorians. That is what we are in here for—for Victorians. That is what I am in here for—for the best deal for Victorians. At the moment, when it comes to energy, that is not happening. It is not happening, and it is something that just appals me. It disgusts me.
If this government had any integrity at all, it would open up the gas supplies and it would open up the coal supplies, and we would have cheap, reliable power yet again. We can do it. There is no climate emergency, but there is an energy emergency.
Mr FINN: I notice Ms Taylor over there is having a small breakdown—or maybe a big one, maybe a major one. But the fact of the matter is there is an energy emergency—man-made—made by this government. It could be fixed tomorrow—or tonight if the government really wanted to do it. If they open the supply and allow people to use the gas and to use the coal, they could provide the electricity that people need to cook their meals, to heat their homes, to run their factories and to provide the jobs that we need here in Victoria to allow battlers, in particular, to have a reasonable standard of living, rather than what we are seeing now.
This bill is not going to do much for anybody, as far as I can see. I really hope that we will put common sense before ideology and come 26 November—or maybe 27 November—we will have a government that actually cares about the battlers of Victoria and the people who are actually struggling to pay these appalling, monstrous bills that continue to come their way.
Ms TAYLOR (Southern Metropolitan) (18:26): Well, who knew that energy efficiency actually saves money? So when you are thinking about pensioners and you are thinking about everyday Victorians, energy efficiency puts downward pressure on bills. Who knew? And this is part of the reason why we are investing so heavily in energy efficiency but also clean energy as well. I do not know what planet Mr Finn is on, but it is certainly not this one—that is for sure—because I do not really get where he is coming from.
Mr Leane: A scary planet, a very scary planet.
Ms TAYLOR: A very scary one. The Victorian energy upgrades (VEU) program, just to speak to that point, is our flagship energy efficiency program. It has delivered incredible outcomes, helping more than 2 million households and businesses to cut their bills and saving the average household $120 and the average business $3700 a year. In anyone’s language that is saving on energy bills, so I hope maybe we have cleared up some misconceptions that have been perpetuated around the chamber in the last few minutes. Have we cleared that up?
Mr Leane: Yes, you have.
Ms TAYLOR: Good. We can move on.
Mr Leane: It’s simple.
Ms TAYLOR: Simple—that is right. Since the program commenced in 2009 it has supported more than 2 million residential lighting upgrades; more than 530 000 low-flow shower roses; more than 398 000 homes have been weather sealed to reduce drafts; 365 000 homes have an in-home display unit to better monitor their energy use; almost 120 000 businesses have installed energy-efficient lighting and a range of high-efficiency appliances, including 23 000 high-efficiency televisions and nearly 900 high-efficiency pool pumps; and more than 230 businesses have been approved to undertake bespoke upgrades. Is that not terrific? Is that not wonderful? Is that not putting downward pressure on power bills? Is that not also helping the planet?
We know that the VEU is also having a huge impact on our carbon emissions. Since it was established in 2009 it has reduced emissions by over 73 million tonnes, which is the equivalent of taking 22 million cars off the road for a year, which is four times the number of cars that there are in Victoria. It would seem like common sense to me to continue this program. We know that the program is shifting from supporting relatively straightforward upgrades like lighting to supporting a wide range of technologies—reverse-cycle air conditioners, energy monitoring tools and heat pumps. Hence this legislation is here today. This bill will make sure that the independent regulator has the powers it needs to manage the VEU program and protect consumers.
Business interrupted pursuant to sessional orders.
Mr TARLAMIS: I move:
That the meal break scheduled for this day pursuant to sessional order 1 be suspended.
Motion agreed to.
Mr LIMBRICK (South Eastern Metropolitan) (18:30): The Liberal Democrats will not be opposing this bill today, but I do have serious concerns about the Victorian energy upgrades program itself. Ms Taylor just claimed 73 million tonnes of carbon savings through this program. Before I came into this place, like many Victorians, I had people knocking on my door giving me all sorts of upgrades and offering them to me.
Mr Leane: Very generous of them.
Mr LIMBRICK: Very generous of them—very generous of the taxpayer indeed.
Mr LIMBRICK: I did not get a fridge. But many years ago one of the first devices that was offered to me—it was just handed to me by some guy who knocked on our door—was a stand-by power unit. It is a thing that you plug into a power board and it is meant to turn off your television or video or PlayStation, or whatever you have got, when it is on stand-by power and save some power. That device did not really work very well. It took me a while to figure out how to use it properly, and once I figured out how to use it properly, I, like pretty much every other person in Victoria, figured out that it was so inconvenient that I did not want to use it. In fact every single person that I met that was given one of those never used it. They might have fiddled with it and had a play with it, but they never used it. However, they are part of the 73 million tonnes in carbon savings. That is incredible.
Later on I had another guy knock on my door and offer me LED lighting upgrades. It just so happened that at the time I was looking at lighting upgrades myself because I was looking to save power. Anyone who is making rational decisions as a consumer would say, ‘Well, if there’s something more efficient and it’s going to save me some power, I might purchase that item’, so I was looking at that myself. This guy just gave it to me. But what happens in these situations is the government crowds out the market.
I will give you another example: chimney pillows. This is part of the draught savings and, again, part of this 73 million tonnes. I know a few people who have these chimney pillows. It is like a balloon that you stick up your chimney to stop air coming through so that it makes your house more efficient. It makes sense. The chimney pillows burst for a number of people I know that had them. Because the government basically crowded out the market and was giving them away for free, where could you go to buy a replacement chimney pillow at the time the government was giving them out? Well, nowhere, because who is going to sell something that the government is giving away for free? Again, the chimney pillow that burst is part of the carbon savings.
In fact we have been so concerned about what this program is doing and these claimed carbon emissions savings that we have been in discussions with the Auditor-General about this. I think they really need to look at what is going on here, because I really do not trust this carbon accounting. Similarly with those fridges that Mr Davis was talking about before.
Mr Leane: It has stopped.
Mr LIMBRICK: Yes, it has stopped now, but who knows how many carbon emissions were claimed through that. I have got very serious problems with this. I applaud the government’s attempt to clean this up. Lord knows how many grifters and stuff have been involved in this system. It has been pretty awful to see. But these claims of carbon emission savings are totally wrong. There is no way that they—
Ms Taylor: Totally wrong?
Mr LIMBRICK: They are totally wrong, and we know that they are wrong because people have not used some of these devices that have been handed out. Many people have not used the devices or the devices have failed or the government has interfered in rational decisions of consumers that would be purchasing these products anyway without government interference. LED lights are the classic example. Before LED lights I was given fluorescent lights. Just after we got the fluorescent lights we were looking at LED lights and we never used the fluorescent lights. Government cannot make these decisions on behalf of people. People making them themselves is a far more sensible thing to do.
It is even more crazy when you look at businesses. A business has to make rational decisions. They have to look at their energy consumption. Anyone that has been involved in the private sector will be very familiar with how they look at the accounting—they look at all their energy consumption and if there is some investment, companies will come and make proposals to them. They will say, ‘We’ll replace all your lighting. It’ll cost you this much and you’ll save this much over the long term. Make that investment’. But when government interferes in these markets and goes to businesses and says, ‘We’ll just give it to you’, of course a business is going to do it. But is that actually a rational decision for the business? It might be rational for them to get something for free, but we do not know the overall effect that this is having on the market. We do not know that the 73 million tonnes of carbon emissions that they claim have been saved have actually been saved. We know that it cannot be 73 million, but what is the actual number? I do not think anyone knows.
I am happy that the government is concerned about this and trying to fix it up, but I have got very big concerns about the energy upgrades program overall. I will leave it there.
Dr CUMMING (Western Metropolitan) (18:35): I rise to speak on the Victorian Energy Efficiency Target Amendment Bill 2022. This bill improves consumer protections and the operation of the Victorian energy upgrades program, and I do support measures to increase energy efficiency and ways to reduce our carbon footprint in our environment.
When we look at programs such as this, we need to learn from history and look at similar programs that have operated. We had the home insulation program, a federal program; we had the changeover to LED globes; and we had the fridge replacement program. Every one of these programs had problems. The big issue with all of these programs is getting it right at the front end—having the right people with the right experience certifying them and auditing them. They must have the skills to understand the training requirements and make sure that they are all ticked off. This government must make sure that people understand the work, including subcontractors, and that they are trained and endorsed. This is the only way we can actually avoid disasters. A lot of people who implement these programs are willing to take risks, to cut corners and to make what they see as some quick money from the government. When an issue arises or is seemingly likely, the business quickly closes down. They set up another one, and then they sign up to the program with a different name. There is not any cross-referencing to the principal when signing up organisations to take part.
Another point I would like to make is around the energy industry itself. Programs such as the Victorian energy upgrades are just a bandaid solution to a much bigger problem. The closure of Hazelwood power station took 1800 megawatts out of the market, and traditionally coal-powered generators have provided the base load of our energy market simply because they could not be turned off and on like gas or hydro. That is 1800 megawatts we have to find from somewhere else when we have our gas being shipped offshore and prices rising in the domestic market. We have people with solar panels, which is great, but there is a lack of control on their requirements concerning inverters and batteries, so people are feeding dirty power back into the grid and/or having to buy power back from the grid at peak times and high prices. And what are we going to do with the solar panels and batteries that are breaking down? Where are we going to store them? Are we going to recycle them? Where is the waste management plan, and where is the waste management levy set aside for this to occur?
We are telling developers building houses that they do not have to provide a gas connection to a home, forcing people onto electricity and hoping obviously to have solar. But let us be real, they are using electricity because that is the base, and then we have a market that can hardly cope with demand as it is. We are telling people to buy electric cars—again, adding to the demand for electricity, because solar panels will just not cut it for charging your electric car. We are increasing the demand for electricity when we do not have a real plan in place for expanding the generation of it or for ensuring the reliable distribution of it, and we are certainly not encouraging organisations to invest in areas such as renewable gas when we are reducing the domestic demand for it.
And what has happened to the production of biofuels in Victoria? Ten years ago Victoria was being touted as the competitive destination for investment in biofuels and bioenergy. I can expand on that. That is like using old vegetables and cane and all those kinds of things. Where is that market? Where is that demand? Where is the government doing this work?
Mr Leane: There are a couple of plants.
Dr CUMMING: But it is not enough. It is not enough.
Mr Leane: A couple of water companies have invested.
Dr CUMMING: I am taking the interjection from the government at the moment. I had a biofuel refinery in Altona, in the west, and they are closing down. Why has there not been more investment in biodiesel or biofuels? Where is it?
Dr CUMMING: I could actually go on for hours about this, but I have got a 5-minute speech. At the end of the day we have the opportunity to have waste to energy. Where is the investment? I have not seen that since I have been here. The government is great at talking about these things, but where is it on the ground? This is the point I would like to make within this debate—that you need to have those things in place. As other speakers have said, handing out and changing LED lights and giving power boards are absolutely a drop in the ocean of what needs to be done to make a serious commitment to the environment of Victoria and actually look at different ways we can create energy for the grid.
You cannot just say, ‘Everyone buy electric cars’. Okay, so tell me what you are going to be doing with all the petrol stations out there if you have not got biofuels and hydrofuels. There is only one hydro station; that is in my area of Western Metro, again. I want a more complex plan on how we are going to get into the environment and do all the things that the Victorian community want for the environment. You cannot just say, ‘Okay, we’re getting rid of coal. We’re not going to explore gas. We’re not going to do nuclear here in Victoria’ and have one solution, of handing out some panels—which you stopped during COVID. Currently I have people who are putting on solar panels who are virtually saying that they are only getting a $1000 rebate now and there is more rebate—roughly $3000—for a battery. More needs to be done. This government cannot give lip service to this; there needs to be a proper commitment. When I speak about waste to energy, the money is sitting there from your waste levy. Where are our waste-to-energy facilities? Where are our biofuel facilities—which is pretty much changing waste such as cane and all the other things into an energy source? I digressed from what I had planned to say. Australia’s largest renewable producer of biofuels is based in Victoria, but what are we doing with it?
My other concern is about the Essential Services Commission (ESC). This bill puts more workload on them, but they are managing their current workload and the industry properly. I raise this as some of the issues came to light during the storms over the last couple of months. Serious storms hit parts of Melbourne on a Friday, but residents were left without power throughout the weekend and for days, for weeks and for months afterwards. And they were running on generators. I do not know if the government was listening on the radio when people were trying to get generators to people. I am going to digress one more time today. What are generators run on? Are they run on solar? No.
One of my residents, when I told them that I was doing this bill this week, told me what they saw in Moonee Ponds or Essendon on the weekend. An electric vehicle had stopped working, and this RACV vehicle turned up, pulling a trailer with diesel, to get it going. It is mind blowing. We need to have the infrastructure in place before we go to new sources. I raise this as some of the issues came to light during the storms. This certainly is not meeting what this government guarantees as service levels.
Another resident contacted me about their energy company, which was the only one that provided a rebate after asking. Their next-door neighbour, who did not ask for the rebate as he did not even realise he was eligible for one, did not receive one. This does raise questions for me as to the ability of the ESC to properly administer this scheme if they are not ensuring that the energy distribution network itself is being run correctly. So I have grave concerns. I will have some questions to ask later, but we do need programs like this. Something is better than nothing at times, but we really need a real plan in place. We need to get our ducks in a row to ensure that we can generate and supply the power to meet the demand before we create more demand or launch more bandaid solutions to our energy problems here in Victoria. I look forward to the committee stage and asking my questions.
Mr LEANE (Eastern Metropolitan—Minister for Commonwealth Games Legacy, Minister for Veterans) (18:47): I will be very, very brief in summing up. Thanks to all the members for their contributions on this bill. Just to respond to one contribution, listening to Bernie Finn I am convinced that one day he is going to sail off the edge of the earth. I am absolutely convinced that that will happen. But moving on to substantive concerns that were raised by Mr Davis, can I just say that the Victorian energy upgrades program is already extremely carefully regulated by the Essential Services Commission. Last year the Essential Services Commission only received 13 complaints out of 1000 upgrades, which is a very small number in a program that has delivered over 650 000 upgrades. The Essential Services Commission has also directly assisted with over 57 000 certificates, which is a 36 per cent increase on last year. Last year the Essential Services Commission’s compliance and enforcement efforts resulted in the payment of over $1.8 million in penalties from energy retailers and the surrendering of over 38 000 certificates by accredited providers.
As far as the fridge cabinet program is concerned, in this case the investigations revealed a gaming of the Victorian energy upgrades program by some unscrupulous providers, which we as the government agree is completely unacceptable and undermines the community’s confidence in the program. The government acted swiftly to protect Victorians by removing incentives for these refrigerated cabinets. The swift action means we have maintained the integrity of the Victorian energy upgrades program, ensuring the community can maintain confidence in what has been a highly successful program. The removal of incentives builds on actions taken by the Essential Services Commission, the regulator and the administrator of the Victorian energy upgrades program, to pause the processing of the Victorian energy certificates for multiple installations of refrigerated cabinets while investigating any wrongdoing. Can I restate that this particular program has been paused until we find out what went wrong, so we have taken that swift action. The Essential Services Commission is taking a risk-based approach to processing certificates as quickly as possible while ensuring only legitimate certificates are issued. I will leave it at that.
Motion agreed to.
Read second time.
Committed.
Committee
Clause 1 (18:51)
Mr DAVIS: With the leave of the committee, I have a small number of questions regarding the purposes clause. They relate to the fridge program and the recent freezing of the program. I was pleased to hear the minister admit to some of the serious failings of the program. I just have a couple of questions, and the first is: is the program going to be independently, externally reviewed?
Mr LEANE: The Essential Services Commission (ESC) is the body that is doing the independent assessment of the fridge program. They have not finished that process, but they are getting on with the process as we speak.
Mr DAVIS: Are there terms of reference for that inquiry, that review? If so, can we have a copy of them? My second point is: will that report to be publicly released? The third point is: when?
Mr LEANE: There are no terms of reference, but the outcomes of the investigation will be publicly released by the ESC.
Mr DAVIS: I thank the minister for his response. Can the public submit to that inquiry? Is it possible? Is this an open process, or is it a closed review where businesses and individuals are unable to provide information?
Mr LEANE: My understanding is the ESC will seek that advice from different stakeholders as they do their review.
Mr DAVIS: Does ‘seek information from different stakeholders’ mean there will be public advertisement of this so that the public—businesses, households—will be able to submit to that review?
Mr LEANE: The ESC will determine whether that is necessary to be able to fulfil their investigation. As I stated, Mr Davis, there are some glaring examples of how this program, which has a very good intent, was gamed by some unscrupulous providers, and they have the evidence and the understanding of those particular events.
Mr DAVIS: Is it the case, Minister, that the ESC was involved in regulating the program in the first instance?
Mr LEANE: As I stated, Mr Davis, the ESC have carefully regulated the Victorian energy upgrades program. We are happy to put on the record that they have only received 13 complaints out of every 1000 upgrades. That is a very small number when you consider the program has delivered over 650 000 upgrades. They have taken their responsibility very seriously in this area, to the point that their efforts of enforcement have resulted in payments of $1.8 million in penalties and also the surrendering of 38 000 certificates from accredited providers.
Mr DAVIS: I thank the minister for his response, but it does not fill me with confidence that this is an independent arms-length process. What it seems to me is going on here is that the ESC are going to review the failings and problems in an area which they themselves were involved in regulating, and I would put it to the minister that this is essentially the ESC in part reviewing their own homework.
Mr LEANE: Thank you, Mr Davis. I will take that as a comment. As I said, the ESC have taken the responsibility of monitoring this program very seriously. I will not requote the figures about the amount of certificates that were surrendered or the amount of fines that have been delivered through their efforts. I will just take Mr Davis’s last contribution as a comment.
Mr DAVIS: I thank the minister for that, and I will make one further reflection, and that is that this actually needs an independent review. It needs someone external, somebody who is seen to be independent, and it needs a public process here, not the ESC reviewing their own success or otherwise. I would put it to the minister that complaints at the rate of 13 per 1000 is actually quite a lot given what is going on here, and in many of the cases that we saw so spectacularly in the media, where 10 or 20 fridges et cetera turned up outside businesses, I am not sure that many of those people have actually made a formal complaint, but that does not mean that the performance was good. I will leave that as a comment and note that in my view it is not satisfactory that the ESC are the ones doing the review. It ought to be an independent review of some type. The government could well have appointed an esteemed person of some type or one of the large agencies, one of the large consulting firms or others, to have looked at this truly independently and taken public assessments. I think it should, because I think if this program is to maximise its outcomes it needs public confidence, and public confidence will be enhanced by that external review, that objectivity, that independence.
Mr LEANE: Thank you, Mr Davis, and I will take it as a comment. Can I apologise on the figures that I did quote in that previous answer? It is actually 13 complaints out of every 10 000 upgrades. I know Mr Davis quoted it back as 1000. I apologise. I misquoted that original figure. I will take Mr Davis’s contribution as a comment, but I will add that the object of the bill and the intent of this bill, and we are confident that it will, is to enhance consumer protections for households and businesses participating in the Victorian energy upgrades program.
Dr CUMMING: Minister, could you give me the total number of complaints? Obviously you have just expressed that you made an error in the figures that you gave. I heard the same—it was 13 times 1000; now you are saying 13 by 10 000. What was the total number of complaints—what was the total, the larger figure that you gave? If you could do that. Otherwise I have got a calculator on my phone, but I would love the government just to give me the total number of complaints, because it obviously sounds great—‘I only got 13 out 10 000’. What is the total number?
Mr LEANE: Thank you for your cooperation. You have got a calculator on your phone, so you might be able to assist me further. I did misquote that number, insofar as it was 13 complaints out of 10 000, and the amount of upgrades delivered was over 650 000. So I will rely on your good mathematics and your calculator to get the total.
Dr CUMMING: I would love the total from the government, so if you could ask your advisers or your boss to give the total number of complaints, I would be feeling more content with my direct question.
Mr LEANE: Out of that, over 650 000 upgrades resulted in 845 complaints being made.
Dr CUMMING: Thank you, Minister. That should have been done at the very start. So regarding the amount of money that has been lost due to people defrauding this scheme, what is the amount that the government estimates has been defrauded through misappropriation of this scheme?
Mr LEANE: Via the work of the ESC, it has actually resulted in the payment of over $1.8 million in penalties by energy companies. Also, there has been the surrender of 38 000 certificates accredited by providers. Those certificates were not honoured as far as fulfilling what they were intended to be accredited for goes.
Dr CUMMING: Thank you, Minister. I have just got a couple of other minor questions, and I would like to acquit them here on clause 1. Section 55K refers to an audit every two years. To have this in the legislation is asking for trouble. It needs to be a closed position that does not allow assignees to run and to hide on a whim. This refers to the previous comment regarding the cut and run. Why has the government actually chosen to provide that:
The audit schedule must provide for the conduct of an assurance audit of an accredited person at least once every 2 years.
How did they come up with that two-year figure? They could have done a year or six months. Why?
Mr LEANE: The level of auditing was determined by the level of risk, liability and fraud, so that is where they determined that two-year span.
Dr CUMMING: Minister, does the government believe that this is just asking for trouble? It needs to be a closed position. Otherwise it allows the assignees to run and hide on a whim. And this refers to the previous comments around the cut and run that I made in my contribution. Do the government believe that they are opening themselves up for more trouble?
Mr LEANE: Thank you, Dr Cumming. I think I rely on the fact that the compliance and enforcement efforts from the Essential Services Commission have resulted in the payment of over $1.8 million in penalties by energy companies and also the surrendering of those 38 000 tickets. I think we have relied on that. The compliance and the authority over this scheme are giving us confidence that it is working.
Dr CUMMING: New section 55L refers to the ESC publishing and maintaining a list. Does this actually happen? Where do we find that list? And how do we know that that list is an independent list?
Mr LEANE: Thank you, Dr Cumming. The list will be administered by the Essential Services Commission. As part of the bill, we are implementing that they have to publish that list on their website. It will be on the Essential Services Commission website for people wanting to view that list.
Dr CUMMING: I am taking on the points that the opposition just made. Why has the government not chosen to have an independent review and have a public report on what has just occurred? I understand, Minister, that you have just said there is heaps of information about the misgivings and how this system was defrauded and misused. Will there be an independent review? Will there be an independent report?
Mr LEANE: Thank you, Dr Cumming. The report will be made public. It will be a report from the Essential Services Commission. We are happy for different points of view, but we believe that the Essential Services Commission is the right group to be doing this work, considering the compliance they have already achieved in the program. But also we believe that they are at arm’s length and have some independence from the people delivering the program.
Dr CUMMING: What time frame has the government given the ESC to conduct this review and make that report public?
Mr LEANE: The report and the investigation are proceeding, so I do not want to give a time frame that is unreasonable for the ESC, but we believe that easily within the time frame of the next year it will be made public.
Dr CUMMING: Is there a reason why you have just explained that the ESC has got all of that information, because I heard the questioning from the opposition, wondering whether the community is going to be notified if the public are able to contribute. What I understood, Minister, from what you said was that you have got all of that information from all of the complaints and you understand where you have gone wrong. Why couldn’t the ESC do this report before the state election—in the next couple of months? Why are you giving a time frame of a year or two—within the year? I am sorry, Minister; I do not want to misquote you.
Mr LEANE: It is not the government’s time frame; it is the Essential Services Commission’s time frame. As I responded to Mr Davis’s question, the Essential Services Commission may decide that they want to hear from different members of the public. They are working through the issues now. We hope that their response can be swift, but they have determined that time frame, and it is not for the government to interfere to get something earlier or later or in between.
Dr CUMMING: Thank you, Minister. I guess the community would love to have updates from the ESC rather than just waiting a full year for the whole report—even if there were quarterly updates or what have you. From what I understand, my community would love transparency and accountability, and they believe that by the ESC providing that information regularly they will get that. I will leave that as a comment. I understand the minister’s answer.
Just to go back to the previous point that I was trying to make around clause 55K, the government’s audits will be every two years. I guess, as an example, there could be a provider that folds up their corporation or their business within 18 months, so they would not even have to go through an audit. The way that the legislation is actually written, you could set up an organisation for 12 months or 18 months and then fold it, because there is a two-year requirement for the audit. What are the checks and balances in place to guarantee that this two-year framework, which this government has put into this legislation, is not rorted again?
Mr LEANE: Thank you, Dr Cumming. Look, the government is not completely reliant on the biennial audit; it will continue to act on complaints. As I said, 13 complaints out of 10 000 are taken seriously and are followed up, and that has resulted in the Essential Services Commission’s compliance and enforcement efforts, which resulted in the payment of $1.8 million in penalties by the energy retailers and also the surrender of 38 000 certificates by accredited providers. So they will not be waiting for the biennial audit to act if there are complaints around a particular provider. Those complaints will be taken seriously, and if retailers are found to be gaming the system, as has been proven in recent times, then there will be action taken.
Dr CUMMING: I will ask one final question, because I know there are other members here that wish to ask questions. In new section 55N, what is the definition of ‘body corporate’? A business or sole trader can come and go, thus creating a windfall for those who do not do the right thing and see this as another quick grab for cash, knowing that they will not have to be audited for two years within this legislation. Reading the fine print about the point that I was making earlier, it says:
The audit schedule must provide for the conduct of an assurance audit of an accredited person at least once every 2 years.
Minister, I understand that you could possibly do this audit earlier. Are you only going to rely on complaints? After a problem has been identified, are you going to rely on a complaint? I am not quite sure if you have touched on the proper checks and balances within this scheme. The more checks there are at the start of a scheme you would believe that you would come up with the problems earlier. Anyone who wants to get around the scheme can look at these targets and will be able to wiggle around the requirements. So my question, Minister, is: what is the definition of ‘body corporate’?
Mr LEANE: I rely on the previous answer. This scheme is not completely reliant on audits. This scheme involves acting on complaints. If someone is acting improperly, there will be complaints made and they will be followed up. The proof of that, as I said, is that there has been $1.8 million in penalties imposed on energy retailers in the work that the Essential Services Commission has done around compliance and enforcement, and 38 000 certificates have been surrendered. So I think we are probably in disagreement, but that is where the confidence of the government is in making sure the scheme is held in the light that it should be as being a very good scheme.
Dr CUMMING: I agree with the minister that it seems that this is a point of disagreement between me and the government. I do not believe a good business model is to actually rely on complaints and then take action. I believe a good business model or good legislation would actually have checks and balances in place and audits at the right time—whether it is 30 days, 60 days, 90 days, six months, 18 months, whatever—for it to work and operate. Otherwise we create problems for the future because people will read it and go, ‘Okay, after 18 months I can fold up this corporation, or after 12 months, because we have received a couple of complaints’. I will leave my contribution at that.
Mr LEANE: I appreciate that Dr Cumming and I can disagree. We do not believe this has been an unsuccessful scheme or, for that matter, overly open to fraudulent behaviour, but we have conceded that the fridge cabinet program was stopped because there was unacceptable behaviour by some unscrupulous providers. That is why that particular scheme has ceased and is being looked at.
Mr LIMBRICK: The minister has spoken a number of times about these complaints. Could the minister please describe how a complaint is actually lodged?
Mr LEANE: Thank you, Mr Limbrick. It is quite a simple process to call or email through the website of the Department of Environment, Land, Water and Planning (DELWP) or, for that matter, the Essential Services Commission.
Mr LIMBRICK: I thank the minister for his answer. If a consumer had someone knock on their door, for example, and give them an upgrade of something, how would that consumer know that this upgrade is actually related to something by the Essential Services Commission or DELWP and therefore have the knowledge to make a complaint in the first place? I note that in the second-reading debate I spoke of my own personal experience and also experiences of other Victorians that I have spoken to who were unhappy and had no idea that this was something related to the ESC. They would not have known where to complain. How would consumers know where to do this?
Mr LEANE: The retailer or the representative of it that is doing this work has to show an accreditation and also hand over a fact sheet which will have on it where you can complain if you are unhappy.
Mr LIMBRICK: Thank you, Minister, for clarifying that. The minister spoke a number of times about this $1.8 million in fines and surrendered certificates. Can I clarify: my understanding is that in large part those fines were around energy retailers not purchasing the required number of certificates and therefore being in breach and getting fines. Is that the situation? What is the nature of these fines?
Mr LEANE: Thank you, Mr Limbrick. It is in relation to surrendering certificates where it has been proven that the retailers were not following the proper intent of the program; therefore they were penalised in surrendering those certificates and incurring a monetary penalty as well.
Mr LIMBRICK: I thank the minister for his answer. Does the government concede that there must be some margin of error in these carbon emissions savings calculations that they are doing? I gave some examples in my second-reading speech of devices that simply would not have resulted in any savings. The government is aware of some fraudulent things such as what we talked about with the fridges. Undoubtedly there are other things that have been undetected. Normally when you report any sort of measurement in the scientific world—I do not often talk about science in here, even though my background is science—you talk about a margin of error. Does the government have any idea of the margin of error in its claimed carbon emissions savings on this scheme?
Mr LEANE: Thank you, Mr Limbrick. The estimation is on the actual actions that have been taken, as far as the actions that have been through this particular scheme go. We do not concede that our estimation of saved carbon emissions is incorrect, so we stand by that via the calculation of the savings in emissions from a number of actions through this particular scheme.
Mr LIMBRICK: I thank the minister for his answer. It is my understanding that a large proportion of the government’s climate change commitment targets would actually be achieved through this scheme. What proportion of the government’s climate change commitments will be achieved through this scheme?
Mr LEANE: Thank you, Mr Limbrick. I think we would not completely agree with your statement about this being the prime area or the only area where we seek our emissions reduction target. There are a number of facets to that as you can see, as far as moving to different types of generation goes and so forth—a number of other ways—so we would not completely agree with the position that this is our main way to achieve that target.
Mr LIMBRICK: I thank the minister for his answer. That $1.8 million figure that you quoted before, how much of that was related to the fridges?
Mr LEANE: Thank you, Mr Limbrick. None of that $1.8 million is part of penalties for the fridge scheme. The ESC investigation could well result in further penalties for those retailers, as we have admitted, that worked in an unscrupulous way to undermine the scheme.
Clause agreed to; clauses 2 to 69 agreed to.
Reported to house without amendment.
That the report be now adopted.
Motion agreed to.
Report adopted.
Third reading
That the bill be now read a third time.
In doing so can I thank the Deputy President, Mr Davis, Dr Cumming and Mr Limbrick for their contributions in a very important and interesting committee stage.
Motion agreed to.
Read third time.
The PRESIDENT: Pursuant to standing order 14.27, the bill will be returned to the Assembly with a message informing them that the Council have agreed to the bill without amendment.