Thursday, 12 September 2024

Bills

Constitution Amendment (SEC) Bill 2023

Jeff BOURMAN, Ingrid STITT, Sarah MANSFIELD, David DAVIS, Melina BATH, David ETTERSHANK

Constitution Amendment (SEC) Bill 2023

Second reading

Debate resumed on motion of Harriet Shing:

That the bill be now read a second time.

Jeff BOURMAN (Eastern Victoria) (16:28): I am going to make a very short contribution. I will be supporting the Constitution Amendment (SEC) Bill 2023 for a couple of reasons. One, it provides for jobs in the Latrobe Valley and Gippsland, which desperately need them.

David Davis interjected.

Jeff BOURMAN: You have had your chance, Mr Davis.

Members interjecting.

Enver Erdogan: On a point of order, President, there have been a number of interjections. Could Mr Bourman be heard in silence, please?

The PRESIDENT: I will uphold the point of order. Mr Bourman, you can start from the start if you like. You have got a bit of time.

Jeff BOURMAN: I would not worry too much, President. One of the things I have always believed in is that essential services such as electricity should be held by the state. Over the time of my life I have watched essential services being sold off. This will make it harder, though not impossible. I thank the Liberals for their salty responses.

Ingrid STITT (Western Metropolitan – Minister for Mental Health, Minister for Ageing, Minister for Multicultural Affairs) (16:29): Victoria’s energy system should never have been sold off in the first place.

Members interjecting.

Ingrid STITT: But the SEC is back, and this bill delivers on our election commitment to enshrine the SEC in the Victorian constitution, protecting it from those opposite and making sure Victorians can rely on publicly owned energy jobs and emissions reductions for decades to come. By safeguarding the SEC in Victoria’s constitution we can ensure this important future institution can continue to power our state for the good of all Victorians and for good. Under this bill the government will hold a controlling interest in its portfolio, renewables will replace fossil fuels, and new projects will be owned by every Victorian to benefit every Victorian. The bill provides that the SEC will have the following objectives: to support Victoria’s transition to net zero greenhouse gas emissions; to generate, purchase and sell electricity in Victoria; to own or operate or participate in the operation of renewable energy generation and storage systems and facilities; to develop or support or participate in the development of or invest in renewable energy generation and storage systems and facilities; and to supply energy-related products and services to energy consumers in Victoria.

After some very productive conversations with Legalise Cannabis, the government is moving a house amendment to insert a new section 105(f), which reads:

to develop and invest in strategic renewable energy generation and systems and facilities and strategic renewable energy storage systems and facilities necessary to maintain Victoria’s energy system security and reliability in the long term.

I would ask that we circulate my amendment.

Amendments circulated pursuant to standing orders.

Ingrid STITT: This expands the objectives of the SEC to include the development of and investment in emerging and less commercial technologies which are also needed to support Victoria’s energy transition and maintain energy security and reliability in the post-transition period. The SEC has already commenced building its portfolio of renewable generation and storage assets needed to accelerate Victoria’s progress towards its renewable energy targets.

The SEC is also ideally placed to play a leading role in investing in and developing emerging renewable technologies and systems and facilities which are not yet demonstrated as commercially viable in the Victorian market but which are critical to an orderly transition and maintaining energy security and reliability. For example, there is a particular need for accelerated development of long-duration energy storage systems, such as pumped hydro, flow batteries and mechanical and thermal storage systems. Long-duration storage systems will be critical to supporting energy reliability as Victoria transitions to renewables, but investment cases for these asset classes and technologies can be challenging under existing market conditions. This does not change the government’s commitment to the SEC operating under competitive neutrality for commercial activities but simply makes it clear that the SEC can consider these sorts of strategic investments that the market is unable to deliver. We thank the members of the Legalise Cannabis Party for the constructive conversations that have occurred over the last few months, and this amendment helps reinforce the role of the SEC.

The bill sets out that the state will always fully own and control the SEC or have a controlling interest in the SEC, with the balance of funding invested from like-minded entities, such as industry super funds, who are focused on a fair deal for Victorians, not just profits. This ensures that the state will always have ownership of the SEC’s operational and strategic decision-making processes, including control of appointments to the board. This requirement also captures the SEC’s successor entities, whichever legal form they might take.

In terms of prohibited activities to protect our SEC from those opposite, this bill prohibits a number of things. It prohibits the SEC from doing anything that would result in the state not having a controlling interest in the SEC. The bill also prohibits the SEC from owning, operating or investing in a fossil fuel facility – the SEC will always be 100 per cent renewable. The bill provides that any transfer of shares that is contrary to the state having a controlling interest in the SEC would be void. Similarly, any commercial arrangement for owning, operating or investing in a fossil fuel facility would be void.

There are a number of amendments, which we will speak in more detail about during the committee of the whole, but in summary, we will not be supporting any of the amendments moved by the opposition. As is their wont, it is a bit of a mixed bag. A lot of them are aimed at giving a future Liberal government the opportunity to sell off the SEC once again, but some go as far as expanding the remit of the SEC to own or operate fossil fuel infrastructure.

The government will be supporting one of the amendments moved by the Greens. Their proposed new clause 4 reinforces the government’s clear commitment that any or all profits generated by the SEC will remain with the SEC and be used to invest in further renewable energy and storage projects.

This is such an important bill, protecting the SEC for good so it cannot be sold off again. We cannot change what was done in the past, but we can ensure that it does not happen again in the future. We are getting on and building up the SEC, putting power back in the hands of Victorians and accelerating our transition to cheaper, more reliable renewable energy. We know privatisation has not worked. We are returning power into the hands of Victorians because it is what Victorians deserve and it is what they voted for. I commend the bill to the house.

Council divided on motion:

Ayes (23): Ryan Batchelor, John Berger, Lizzie Blandthorn, Jeff Bourman, Katherine Copsey, Enver Erdogan, Jacinta Ermacora, David Ettershank, Michael Galea, Shaun Leane, Sarah Mansfield, Tom McIntosh, Rachel Payne, Aiv Puglielli, Georgie Purcell, Samantha Ratnam, Harriet Shing, Ingrid Stitt, Jaclyn Symes, Lee Tarlamis, Sonja Terpstra, Gayle Tierney, Sheena Watt

Noes (15): Melina Bath, Gaelle Broad, Georgie Crozier, David Davis, Moira Deeming, Renee Heath, Ann-Marie Hermans, David Limbrick, Wendy Lovell, Trung Luu, Bev McArthur, Joe McCracken, Nick McGowan, Evan Mulholland, Richard Welch

Motion agreed to.

Read second time.

Instruction to committee

The PRESIDENT (16:44): Dr Mansfield’s amendments on sheet SMA14C, circulated by Dr Mansfield, in my view are not within the scope of the bill. Therefore an instruction motion pursuant to standing order 14.11 is required.

Sarah MANSFIELD (Western Victoria) (16:44): I move:

That it be an instruction to the committee that they have the power to consider amendments to the Constitution Act 1975:

(a) to prohibit the construction of fossil fuel facilities in Victoria; and

(b) to constrain the power of the Parliament to make laws repealing, altering or varying the provisions of the Constitution Act 1975 relating to the matters set out in paragraph (a).

Council divided on motion:

Ayes (37): Ryan Batchelor, Melina Bath, John Berger, Lizzie Blandthorn, Gaelle Broad, Katherine Copsey, Georgie Crozier, David Davis, Moira Deeming, Enver Erdogan, Jacinta Ermacora, David Ettershank, Michael Galea, Renee Heath, Ann-Marie Hermans, Shaun Leane, David Limbrick, Wendy Lovell, Trung Luu, Sarah Mansfield, Bev McArthur, Joe McCracken, Nick McGowan, Tom McIntosh, Evan Mulholland, Rachel Payne, Aiv Puglielli, Georgie Purcell, Samantha Ratnam, Harriet Shing, Ingrid Stitt, Jaclyn Symes, Lee Tarlamis, Sonja Terpstra, Gayle Tierney, Sheena Watt, Richard Welch

Noes (1): Jeff Bourman

Motion agreed to.

Committed.

Committee

Clause 1 (16:51)

I do not intend to drag this committee stage out, but I have a number of questions. Will the minister confirm that the SEC, in its former days, had more than 20,000 employees?

I know it was a large and proud institution back in the day. We will take that on notice and get you an accurate figure as to how many employees it held at its height.

I can inform the minister that it did have well over 20,000 employees. I ask the question now: how many employees are there at the SEC today?

As the member would know, we are in the process of establishing the SEC, and I will seek some instructions from the box, but obviously we have publicly stated that we will be creating many, many jobs. There are currently around 50 employees at the SEC, but as you know, Mr Davis, there are plans to expand the SEC’s recruitment, and all jobs are advertised in Morwell and in Melbourne.

I ask the minister: how many are employed in the Latrobe Valley at the moment? My understanding is that the number is one. The minister may well wish to confirm that.

What I can confirm at the moment is that is a matter that is technically outside the scope of the bill, Mr Davis, but the total number of employees is 50. I do not have a breakdown currently between Melbourne and Morwell, but of course those figures will rapidly change once we establish the SEC and the work of the organisation continues to expand. There is one in Morwell at the moment, but of course that will not stay the same for too long. Jobs are advertised in both locations, as I have already indicated.

With the leave of the committee I may just ask a couple of quick questions before I talk about amendments. The first of those is: will the government mandate or require government agencies to order their power through the SEC?

I do recall you raising this in your second-reading contribution some while ago now. The government electricity contracts, as you would expect – like all government utility contracts – are managed centrally to allow the government to achieve the best value for money through the scale of the contract. We are committed to powering all government operations with renewable electricity by 2025. The best value for money to achieve this commitment is through 100 per cent renewable electricity for government, and that would be through engaging the SEC to power government. The government will achieve much better value for money from a public institution rather than private companies whose biggest goal is maximising profit. Importantly, this will ensure the SEC can quickly secure a large customer book and a firmed renewable energy generation portfolio so they can scale faster and rapidly secure their role as a significant participant in the Victorian energy market.

Essentially the minister has confirmed that the government will require all government bodies, entities and agencies to go through the SEC in some centralised process. That is what you are saying, isn’t it, Minister?

Well, no, that is not quite what I said, Mr Davis. What I said was that in order to provide best value for taxpayers, the government centralises its energy contracts – that is what I said – and there are benefits that flow to the SEC and to the community through doing so.

Well, there is a little bit of sophistry here, but let me ask it a different way. Will a government entity be entitled to go through another government agency – perhaps in another state – or through a private agency to secure energy if it is able to do so more cheaply than what the government is offering?

I think the way that I would answer that question, Mr Davis, would be to point out that the bill that is before us today does not relate to government energy purchases.

I will take that as a very clear indication that the government is going to centralise its purchasing and prohibit agencies from purchasing externally and in doing so will force agencies to pay a higher price for electricity through the government’s central purchasing or central requirements system.

I do not accept the assertions that you are making. I have been pretty clear. That is speculation, Mr Davis, and it is speculating about price, amongst other things.

The financial accommodation levy applies to government-owned entities declared to be leviable authorities for the purposes of the Financial Management Act 1994. The purpose of the levy is to remove the competitive advantage that government entities may experience in borrowing and is consistent with the competitive neutrality principles as prescribed by the national competition policy framework. The bill does not contain legislative prohibition on the government applying a financial accommodation levy, but can you make a commitment that the Allan Labor government will not be applying this levy on the SEC?

Essentially the financial accommodation levy is a payment that can be required of a public entity in circumstances where they have accessed financing from the state at rates below what a private entity would access from private finance from an otherwise similar project. The financial accommodation levy is added to the cost of capital to close that gap. Some aspects of competitive neutrality, such as not passing laws specifically favourable to a public entity over their private competitors, simply have to be complied with. There is not really any room for discussion about it. However, a financial accommodation levy is only payable under certain circumstances, and if those circumstances do not arise, then competitive neutrality principles are met even in the absence of any levy being imposed. The government believes that the circumstances in which a financial accommodation levy would be needed to comply with competitive neutrality can be avoided, so we do not see the need to impose a levy on the SEC for the foreseeable future.

Minister, on the purpose clause, clause 1(a) says:

to require that the State always has a controlling interest in the SEC …

And the SEC is about investing in renewable energy generation. Assuming, Minister, that there will be multiple generators of different aspects – solar, wind, whatever – can you explain to the house how that controlling interest exists? Does it exist as an overall percentage – that is, 51 per cent in its entirety – or does the state anticipate having that share, and I am just using 51 per cent as an example, in each of those multiple energy generators and/or batteries et cetera?

One hundred per cent, essentially, is the answer. The new section 104(2) provides several definitions of a controlling interest, depending upon the corporate form of the structure of the SEC or any of the SEC successor entities at any given time. So it is 100 per cent.

If I just, for example, move to – and we have not moved this amendment in clause 4, but let us continue the discussion on this – developing or investing in strategic renewable energy generation systems and facilities, does your 100 per cent mean that the government will have a 100 per cent controlling interest in each of those particular facilities?

It is a 100 per cent controlling interest in the SEC. It is about control of the entity, not necessarily the broader description you have just given.

In short, you are controlling the SEC because it is a government entity, but I guess my further point to that is: does the minister in this entity that will be the new SEC look to have any interest in energy generation systems, facilities et cetera? Will the SEC in its 100 per cent have any interest in investment, whether it be whatever percentage, in these systems?

Perhaps if I can explain it in this way. The distinction is the SEC is a company and the projects are an asset of the company. The company must be 100 per cent government owned.

Would the government own those assets or would they have any share in those assets or would they have nil share in those assets?

It is difficult, Ms Bath, to be absolutely definitive in answering, because it will vary depending on the project, with the goal of a majority ownership share across the portfolio. It is going to be on a project-by-project basis that you would have to assess things, but I think you are conflating projects with the entity.

I understand, but you have also just said that you will own assets, and those assets will be storage, generation et cetera. I just think it would be good for the public to understand, separate to the entity, what the involvement of the government is. If the answer is ‘varied’, then that is your answer, but what do you foresee in establishing the new SEC as being the government’s involvement or ownership or part ownership of the assets?

I think I have answered this already, Ms Bath. The government will own a share of each asset. The level of ownership will vary depending on the project, but the SEC as an entity will be government controlled.

I am going to withdraw my amendments 1 to 3 and 10 and 11. They are the amendments that are under group B on the running sheet, on SMA13C. That group B set – I will be withdrawing those.

The DEPUTY PRESIDENT: Dr Mansfield has withdrawn her amendments 1 to 3 and 10 and 11 on her sheet SMA13C. I invite her to move her amendments 1 to 3 on her sheet SMA14C.

I move:

1. Clause 1, line 1, omit “Purpose” and insert “Purposes”.

2. Clause 1, line 2, before “The purpose” insert “(1)”.

3. Clause 1, after line 11 insert –

“(2) The purpose of this Act is also to amend the Constitution Act 1975 –

(a) to prohibit the construction of fossil fuel facilities in Victoria; and

(b) to constrain the power of the Parliament to make laws repealing, altering or varying the provisions of the Constitution Act 1975 relating to the matters set out in paragraph (a).”.

These are the out-of-scope amendments we are seeking to put forward. These are to prohibit the construction of fossil fuel facilities in Victoria. It is reasonably self-explanatory. We would like to take this opportunity to get in the constitution a prohibition on the construction of fossil fuel facilities in Victoria. We know according to the science that to avert the worst impacts of dangerous climate change we must keep fossil fuels in the ground and rapidly move to 100 per cent renewable energy, while supporting people and communities as we do it. Getting more renewables is only part of the equation. We need to stop using fossil fuels. That means no new coal projects, including things like the Hydrogen Energy Supply Chain, and no new gas projects, like are being proposed at the moment – it is really disappointing to see that new offshore gas project. The Greens have had a consistent record of opposing new fossil fuel projects, and we would like to see this enshrined in the constitution.

The government does not support this amendment. The Allan Labor government is leading the nation on climate action. We have got the most ambitious renewable electricity targets, and we are delivering on these each and every day. Not only are we moving away from coal-fired power generation, but we are doing that work to electrify Victorian homes and businesses and reduce our reliance on fossil gas. But the transition does not happen overnight. There is no magic button we can press. Production is falling faster than supply, which means we need some transitional interim supplies to meet our needs. On our way to 95 per cent renewables, we need to keep the lights on, we need to protect consumers and we need to support industry, so we will not be supporting this amendment.

The opposition will not be supporting this amendment.

Council divided on amendments:

Ayes (7): Katherine Copsey, David Ettershank, Sarah Mansfield, Rachel Payne, Aiv Puglielli, Georgie Purcell, Samantha Ratnam

Noes (31): Ryan Batchelor, Melina Bath, John Berger, Lizzie Blandthorn, Jeff Bourman, Gaelle Broad, Georgie Crozier, David Davis, Enver Erdogan, Jacinta Ermacora, Michael Galea, Renee Heath, Ann-Marie Hermans, Shaun Leane, David Limbrick, Wendy Lovell, Trung Luu, Bev McArthur, Joe McCracken, Nick McGowan, Tom McIntosh, Evan Mulholland, Harriet Shing, Ingrid Stitt, Jaclyn Symes, Lee Tarlamis, Sonja Terpstra, Gayle Tierney, Rikkie-Lee Tyrrell, Sheena Watt, Richard Welch

Amendments negatived.

Clause agreed to; clauses 2 and 3 agreed to.

Clause 4 (17:18)

I move:

1. Clause 4, after line 14 insert –

“Division 1 – Entrenched provisions”.

Amendment 1 is a test for my amendments 9 to 12. These clauses deal with the competitive neutrality of the SEC and the requirement of the SEC to comply with state and Commonwealth competitive neutrality requirements. The government has given various commitments, but none of these are worth the paper they are written on. They are worth nothing. The minister told us in the early part of this proceeding that they intend to force every single government agency to go through the SEC. I have no doubt that the government will also begin the process of requiring this of those who contract with government, including builders and including anyone else who supplies government. They are going to sweep them all up in a forceful way to say, ‘You will go with a government agency.’ They are going to start, we have heard today, with every single government entity being forced to go through the SEC – even if they have to pay more, even if the government agency sought to go with another provider that might have a better renewable profile than the government. That is quite possible because the government is going to, in a Stalinist way, actually force every single agency, every school, every hospital, every government department – the whole lot – to come through the SEC. That is what they are going to do, and that is what we have heard the minister say, in effect, today. She tried to manoeuvre around the fact. This seeks to simply put in place competitive neutrality arrangements. The amendments state:

SEC must always comply with all requirements of a Registered participant in the national electricity market.

The SEC must comply with directions of the minister. The SEC must be open to freedom of information. That seems to me to be a very reasonable request. Another amendment states:

SEC must not prevent Victorian electricity consumer choice

Consumers must be able to choose and must not be able to be forced. I have asked for an annual report of the SEC in one of these clauses as well. Another amendment states:

SEC must publish information about Victorian domestic customer electricity consumption costs and greenhouse gas emissions produced by Victorian domestic customers

This is a very reasonable set of points, as is:

SEC must annually publish information about permanent full-time equivalent employees in the Victorian energy sector

And:

SEC must annually publish information about the amount of electricity supplied to Victorian consumers …

These are base-level accountability mechanisms for the SEC, ensuring that it behaves as a proper market participant. I have no doubt this bill will go through today, and I have no doubt the government will vote against this, because the government’s intention is that the SEC will not behave as a competitively neutral participant but the SEC will behave as a government-overarching body that will have the power to do whatever it wants with every single government entity. It is going to force them all, without exception, to purchase their electricity through the SEC, even if it is more expensive and even if it has got a superior renewable profile.

Thank you for that embellishment, Mr Davis. If I could just, firstly, indicate that the government will not be supporting this amendment. Firstly, in relation to competitive neutrality, we have been very clear that the SEC will comply with its competitive neutrality obligations, and it is not an option to do otherwise. Competitive neutrality requirements are set out in legislation. They are consistent with Australia’s national competition policy. Victoria has a competitive neutrality policy that ensures government entities engage in significant business activities and that they operate fairly within the market and do not have a net competitive advantage because of being publicly owned. The competitive neutrality policy applies to all federal, state and local governments. This is just an attempt by the opposition to create hooks for endless legal and administrative challenges to the operation of the SEC. Furthermore, proposed section 108(2)(b) creates risks for the Victorian government as it purports to require the SEC to comply with a potential corresponding Commonwealth policy even if the Victorian government has not agreed to or endorsed the policy. The Victorian government should retain discretion over the competitive neutrality policy its agencies are required to comply with.

On the question of consumer choice, the government will also not be supporting this amendment. No household is being forced to buy electricity from the SEC – it is not even a retailer. There are extensive legislative and regulatory protections in place to ensure that electricity consumers have a choice over who they choose to purchase electricity from. The Essential Services Commission Energy Retail Code of Practice 2022, the Electricity Industry Act 2000, the national energy consumer framework and the Australian Consumer Law offer protections to energy consumers in the national energy market. The Victorian government has committed to powering government operations with 100 per cent renewable energy by 2025 through our Victorian renewable energy target auctions. The best value for money for taxpayers to achieve this commitment can be delivered through the SEC managing these VRET contracts and retailing to government.

The DEPUTY PRESIDENT: The question is that Mr Davis’s amendment 1 to clause 4 on his sheet DD129C, which tests his amendments 9 to 12, be agreed to.

Council divided on amendment:

Ayes (16): Melina Bath, Gaelle Broad, Georgie Crozier, David Davis, Moira Deeming, Renee Heath, Ann-Marie Hermans, David Limbrick, Wendy Lovell, Trung Luu, Bev McArthur, Joe McCracken, Nick McGowan, Evan Mulholland, Rikkie-Lee Tyrrell, Richard Welch

Noes (23): Ryan Batchelor, John Berger, Lizzie Blandthorn, Jeff Bourman, Katherine Copsey, Enver Erdogan, Jacinta Ermacora, David Ettershank, Michael Galea, Shaun Leane, Sarah Mansfield, Tom McIntosh, Rachel Payne, Aiv Puglielli, Georgie Purcell, Samantha Ratnam, Harriet Shing, Ingrid Stitt, Jaclyn Symes, Lee Tarlamis, Sonja Terpstra, Gayle Tierney, Sheena Watt

Amendment negatived.

I move:

2. Clause 4, page 4, line 4, before “The” insert “(1)”.

3. Clause 4, page 4, after line 20 insert –

“(2) The purpose of this Part is not to restrict the ability of Victorians and Victorian government entities to choose who will supply electricity to them.”.

Amendments 2 and 3 are straightforward. Amendment 3 on my list inserts a new provision in clause 4. This is one of the entrenched provisions. This is a provision that seeks to ensure that this whole bill is not misused and that choice is protected.

As I have already outlined, the government will not be supporting Mr Davis’s amendment.

Council divided on amendments:

Noes (22): Ryan Batchelor, John Berger, Lizzie Blandthorn, Katherine Copsey, Enver Erdogan, Jacinta Ermacora, David Ettershank, Michael Galea, Shaun Leane, Sarah Mansfield, Tom McIntosh, Rachel Payne, Aiv Puglielli, Georgie Purcell, Samantha Ratnam, Harriet Shing, Ingrid Stitt, Jaclyn Symes, Lee Tarlamis, Sonja Terpstra, Gayle Tierney, Sheena Watt

Amendments negatived.

I move:

4. Clause 4, page 6, line 7, before “The” insert “(1)”.

5. Clause 4, page 6, line 14, after “and” insert “subject to subsection (2)”.

6. Clause 4, page 6, after line 30 insert –

“(2) The SEC must sell electricity at the least cost consistent with –

(a) the long term viability of the SEC; and

(b) its objects.”.

On these amendments 4 to 6, the essence is that the SEC must sell electricity at the least cost, consistent with the long-term viability of the SEC and its objects. I will be frank. One concern I have here is that the government uses the SEC as a cash cow, as a milk cow, to actually tax people by stealth, putting additional layers of charge onto government agencies and those who are contracted to the SEC, and in doing so steals money back into consolidated revenue. We know what is happening with the water authorities – there is a billion dollars being torn out of the water authorities. That is the feel. My concern is that the government will tear money out of the SEC after it has scooped the money across. This is a simple provision that says the SEC must sell electricity at the least cost, consistent with the long-term viability of the SEC and its objects.

I have to say that that is a very weird conspiracy theory, Mr Davis. Needless to say, we will not be supporting this amendment. The cost at which the SEC sells electricity to customers is a matter for the SEC and its board, and it will be determined consistent with the SEC’s strategic and commercial objectives, including its objectives to accelerate Victoria’s transition to affordable and reliable zero-emissions electricity systems. Furthermore, the SEC as a state-owned company is required to perform its functions, including the setting of prices for electricity, as efficiently as possible and consistent with prudent commercial practice. It is not appropriate for the Victorian constitution to regulate the SEC’s commercial and operational decision-making at this level. I completely reject the assertions that Mr Davis has made, and the government will not be supporting the amendment.

Council divided on amendments:

Amendments negatived.

I move:

1. Clause 4, page 6, line 30, omit “Victoria.” and insert “Victoria;”.

2. Clause 4, page 6, after line 30 insert –

“(f) to develop and invest in strategic renewable energy generation and systems and facilities and strategic renewable energy storage systems and facilities necessary to maintain Victoria’s energy system security and reliability in the long term.”.

As I indicated in my summing-up comments, the new section 105(f) expands on the objects of the SEC to include the development of and investment in emerging and less commercial technologies which are also needed to support Victoria’s energy transition and maintain energy security and reliability in the post-transition period. Whilst the SEC has already obviously commenced building its portfolio of renewable generation and storage assets needed to serve government load and accelerate Victoria’s progress towards its renewable energy targets, the SEC is also well placed to play a leading role investing in and developing emerging renewable technologies and systems and facilities which are not yet demonstrated as commercially viable in the market but which are critical to an orderly transition and maintaining energy security and reliability. We thank the Legalise Cannabis Party for their constructive engagement on this matter.

The opposition will not oppose this amendment, but I would ask the minister one question alone on this: how will the financial viability of these investments be tested?

The SEC will remain bound by its obligations, Mr Davis, to operate its business efficiently and consistently, and that will obviously include prudent commercial practice. With its commitment to earning sustainable returns across the portfolio, that would enable the SEC to reinvest returns into the system on behalf of the Victorian people. Ultimately these are questions for the board.

I just wish to make a brief statement. Legalise Cannabis Victoria believes that the SECV should be using its significant capacity to enable parts of the state’s electricity infrastructure that would not necessarily be given priority in the private sector. This includes investment in new and emerging or less commercially viable technologies. So we welcome the government’s amendment, which importantly adds a goal to the justification for the SEC’s existence. It expands the objectives of the SEC to include the development of and investment in those emerging and less commercial technologies, as I mentioned earlier, which are needed to support Victoria’s energy transition and to maintain energy security and reliability into the future. With this amendment in place, Legalise Cannabis is happy to support this bill. It will ensure that the SEC will be able to invest in and develop innovative technology in the state’s very necessary transition to renewable energy. Finally, I would like to thank Minister D’Ambrosio and her staff for their assistance and patience in accommodating our request for this amendment. I commend the bill to the house.

Amendments agreed to.

I move:

7. Clause 4, page 7, line 2, before “Despite” insert “(1)”.

8. Clause 4, page 7, after line 8 insert –

“(2) Despite subsection (1), the SEC may own or operate or participate in the operation of a gas storage facility or gas distribution facility, or distribution pipeline, if to do so would be consistent with, and would support, Victoria’s transition to having an electricity system operating in Victoria in respect of which net zero greenhouse gas emissions are attributable to the electricity system’s operation.

(3) In this section –

distribution pipeline has the same meaning as in the National Gas (Victoria) Law.”.

The Liberals and the Nationals understand the importance of the energy transition, but in doing so we believe that gas has a very significant role. That is in stark contrast to the state government, which has declared war on gas at every turn – in stark contrast to the federal government, which has admitted that gas has got a significant role, an interim role and a firming role. Consequently, amendments 7 and 8 seek to insert some new aspects into this set of provisions, to the effect that:

Despite subsection (1), the SEC may own or operate or participate in the operation of a gas storage facility or gas distribution facility, or distribution pipeline, if to do so would be consistent with, and would support, Victoria’s transition to having an electricity system operating in Victoria in respect of which net zero greenhouse gas emissions are attributable to the electricity system’s operation.

This is an amendment that says gas has got a role in getting us there. If that is the case, it should not be counted out.

This is a backwards amendment from the opposition. For a party that purports to be opposed to government ownership, this is an interesting move, Mr Davis. The SEC’s purpose is to accelerate the transition to renewable energy, which we know is the cheapest form of new energy there is. We have always said that gas-fired generation will have a place in our energy system, but the reality is that it is very expensive and it is not getting any cheaper. We have to reduce our reliance on it, which is exactly what the government’s plans outline. Building more renewable energy, particularly firming storage, is the best way to bring down the cost for Victorians, and the SEC will do just that and not get stuck on the fuels of the past. It is important that we take a sensible approach, so the government will not be supporting this amendment.

Council divided on amendments:

Ayes (15): Melina Bath, Gaelle Broad, Georgie Crozier, David Davis, Moira Deeming, Renee Heath, Ann-Marie Hermans, Wendy Lovell, Trung Luu, Bev McArthur, Joe McCracken, Nick McGowan, Evan Mulholland, Rikkie-Lee Tyrrell, Richard Welch

Amendments negatived.

I move:

4. Clause 4, page 7, lines 4 to 6, omit all words and expressions on these lines and insert –

“(a) if it is a body corporate in which shares have been issued –

(i) do anything contrary to section 104(2)(a); or

(ii) pay any dividend, or make any other distribution of profits to the shareholders of the SEC or the State; or

(b) if it is a body corporate established by or under an Act in which shares have not been issued, pay any dividend, or make any other distribution of profits to the State; or”.

5. Clause 4, page 7, line 7, omit “(b)” and insert “(c)”.

6. Clause 4, page 7, line 14, omit “104(2)(a)” and insert “104(2)(a)(i)”.

7. Clause 4, page 7, after line 14 insert –

“(2) A payment of a dividend or a distribution of profits that contravenes section 106(a)(ii) or (b) is void.”.

8. Clause 4, page 7, line 15, omit “(2)” and insert “(3)”.

9. Clause 4, page 7, line 17, omit “106(b)” and insert “106(c)”.

These are constitutional amendments to ensure that the SEC’s profits are always directed into further investments in renewable energy projects and cannot be ripped out of the organisation by the current or any future government in the form of dividends. We know that governments frequently like to pull billions of dollars out of public corporations – for example, the TAC – but for the SEC to fulfil its stated function of consistently accelerating renewable investment it cannot be used as a cash cow whenever the government is strapped for money.

Absurdly, the government could actually in theory even direct any dividends received from the SEC into funding new fossil fuel projects. So a key government promise at the time of the announcement was that all SEC profits would be invested back into more renewables, but there is currently nothing in the bill that would hold the government to that promise, or any future governments, which is probably the bigger concern: that any future government would abide by this commitment. This amendment really just fixes that oversight and assists in fulfilling the stated intention of some of the commitments around the SEC.

The government will be supporting this amendment. We were very clear during the election campaign that any profits that the SEC may generate will stay with the SEC and be used to invest in further renewable energy generation and storage projects. I think that this amendment makes that abundantly clear, and it was always the case. I think it also demonstrates pretty strongly that Mr Davis’s conspiracy theories are just that. Given this amendment reinforces the public commitment already made by the government, we are very happy to support it.

Council divided on amendments:

Ayes (22): Ryan Batchelor, John Berger, Lizzie Blandthorn, Katherine Copsey, Enver Erdogan, Jacinta Ermacora, David Ettershank, Michael Galea, Shaun Leane, Sarah Mansfield, Tom McIntosh, Rachel Payne, Aiv Puglielli, Georgie Purcell, Samantha Ratnam, Harriet Shing, Ingrid Stitt, Jaclyn Symes, Lee Tarlamis, Sonja Terpstra, Gayle Tierney, Sheena Watt

Noes (15): Melina Bath, Gaelle Broad, Georgie Crozier, David Davis, Moira Deeming, Renee Heath, Ann-Marie Hermans, Wendy Lovell, Trung Luu, Bev McArthur, Joe McCracken, Nick McGowan, Evan Mulholland, Rikkie-Lee Tyrrell, Richard Welch

Amendments agreed to.

Council divided on amended clause:

Noes (16): Melina Bath, Gaelle Broad, Georgie Crozier, David Davis, Moira Deeming, Renee Heath, Ann-Marie Hermans, David Limbrick, Wendy Lovell, Trung Luu, Bev McArthur, Joe McCracken, Nick McGowan, Evan Mulholland, Rikkie-Lee Tyrrell, Richard Welch

Amended clause agreed to.

Clauses 5 and 6 agreed to.

Reported to house with amendments.

Ingrid STITT (Western Metropolitan – Minister for Mental Health, Minister for Ageing, Minister for Multicultural Affairs) (18:13): I move:

That the report be now adopted.

Motion agreed to.

Report adopted.

Third reading

Ingrid STITT (Western Metropolitan – Minister for Mental Health, Minister for Ageing, Minister for Multicultural Affairs) (18:13): I move:

That the bill be now read a third time.

David Davis: On a point of order, President, this is a bill that entrenches a series of provisions which I think Victorians should be very concerned about. The minister has indicated that there is nothing to prevent the government compelling every government agency and wider fields, and I would be very concerned if that were to occur. So I just want to put that on record. I also note that clause 4 was not passed with an absolute majority or with a special majority, and I think that that is significant.

Council divided on motion:

Ayes (24): Ryan Batchelor, John Berger, Lizzie Blandthorn, Jeff Bourman, Katherine Copsey, Enver Erdogan, Jacinta Ermacora, David Ettershank, Michael Galea, Shaun Leane, Sarah Mansfield, Tom McIntosh, Rachel Payne, Aiv Puglielli, Georgie Purcell, Samantha Ratnam, Harriet Shing, Adem Somyurek, Ingrid Stitt, Jaclyn Symes, Lee Tarlamis, Sonja Terpstra, Gayle Tierney, Sheena Watt

Motion agreed to by special majority.

Read third time.

The PRESIDENT: The question is:

That the bill do pass.

Council divided on question:

Question agreed to.

The PRESIDENT: Pursuant to standing order 14.28, the bill will be returned to the Assembly with a message informing them that the Council have agreed to the bill with amendments.

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Thursday, 12 September 2024

Constitution Amendment (SEC) Bill 2023