Wednesday, 5 February 2025

Department of Treasury and Finance

Budget papers 2024–25

David DAVIS (Southern Metropolitan) (17:29): I want to today draw the attention of the chamber in this report section to the section of the budget that deals with the energy output. That section looks at increasing activity around the transition to low-emission technologies, but it also should be focused on the security and reliability of the network, ensuring that we have a stable, reliable supply of electricity and gas, and that is what we do not have at the moment. The Australian Financial Review has been working hard in the recent period trying to highlight some of the deficiencies in our energy system – in our gas supplies and in the security and reliability of our electricity supplies. Price in both cases is an important consideration too. We need energy that is affordable, that is reliable and that is secure.

We have seen a number of significant steps by the government in recent months concerning solar energy. Solar energy has a very important part. It is a natural source of energy and can add to the supplies in the grid more generally through a larger scale but also through the provision for homes. I sought through FOI the Jacobs modelling, the energy market modelling of Victoria’s minimum demand trajectories and the impacts of potential policies. This is a Department of Energy, Environment and Climate Action final report. It is a chilling report in many respects because it does point to the insecurity of our system on days when there is massive solar kicking into the system. The government has recently put a backstop in place. It is true that this is in other states, but it is done in a way that impacts some of those who would have legitimately thought they could get better feed-in tariffs and better security of putting electricity into the grid. Part of this is the inability of the government to plan and look ahead. Part of this is the inability of the government to actually have a secure and reliable supply. We saw the feed-in tariffs cut to virtually nothing – cut by 99 per cent – just a few months ago, so the feed-in tariff is now almost worthless. The truth of the matter is with the backstop in place the government can switch off the arrangements people might have to put feed-in tariffs into the system in any event. All of this is again a sign of chaotic modelling. People, for example, in the domestic situation have put in solar panels in good faith with an understanding that there would be a lengthy period when they got genuine feed-in tariffs. In good faith they have put this in and the ground rules have now been changed from under them because the system had become unreliable and insecure in its supply.

The state government has also with gas been unable to ensure that supplies are coming forward. There are the chaotic and difficult arrangements put in place by the government on gas – first of all banning gas exploration, then putting the matter into the constitution to ensure that there would be no fracking. But much beyond that, there is conventional onshore gas and gas within the 3-mile zone going offshore, and there should be significant exploration occurring. The government’s solution to that: put up the charges by 300 per cent this year and another 150 per cent next year, a cumulative increase of 450 per cent in the charges that are in place – the regulatory charges – for gas exploration and licences. You could be a small firm wanting to get into this market. There is a huge cost barrier that has just been erected by the government, to get worse on 1 July. That is already put in place. It is coming; it is set. So this is a 450 per cent increase in the charges to even get an exploration permit – massive barriers. This is because of the ideological approach of the minister, who has got a hatred of gas and is determined to push forward with her particular views no matter the consequences for businesses, no matter the consequences for households, no matter the consequences for reliability and no matter the consequences for price. Victoria is fast phasing itself out of competitiveness with other states and jurisdictions.