Wednesday, 8 June 2022

Motions

Gas supply and prices

Mr ONDARCHIE (Northern Metropolitan) (15:28): On behalf of Mr Davis, I move:

That this house notes the:

(1) Victorian gas supply crisis;

(2) upward pressure the gas supply crisis is putting on Victorian gas prices and its impact on Victorian households and businesses;

and calls on the Andrews Labor government to act immediately to ensure adequate gas supply and manage the cost impacts on Victorian businesses and households.

Before I get into the substantive part of this motion, I want to note how delusional this government is when it comes to power and gas prices. They know absolutely nothing. Under a month ago those opposite were congratulating themselves while staring down the barrel of this crisis. Industry was warning them. Constituents were warning them. The market operator warned them, as did the ACCC. And the response from the government at the time is best summed up by the Treasurer in his own budget speech, when he said:

Some said our strategies would increase power prices! How wrong they were.

Well, well, Mr Treasurer, guess what, the power prices have increased, and the ramifications for every Victorian are going to be felt for months and years to come. The Victorian government sat back and watched this crisis unfold. The minister has been sitting back for several years as everyone around her was warning her that a day would occur just like this. Now she wants to blame everybody else but herself. Victorians do know who is responsible for this crisis, and it falls squarely at the feet of Minister D’Ambrosio.

It took them years to lift the moratorium on gas exploration. In fact I recall a call by the then Shadow Minister for Energy and Renewables, Ryan Smith, on 16 June 2020, two years ago, when he said that ‘Daniel Andrews’ failed gas policy leaves Victorians out in the cold’. They were let down on that day, Victorians were, because Labor failed to support the Liberal-Nationals amendments to the Petroleum Legislation Amendment Bill 2020. Those amendments were aimed at getting industry back on its feet as quickly as possible and showing respect to landowners by recognising they have ultimate rights over their own land. By voting against those amendments at the time, the Andrews Labor government showed that they have no regard for rapidly escalating gas prices, which continue to be an ever-increasing burden on Victorian businesses and Victorian households. That is what they did two years ago.

While the Liberals and Nationals have been calling for this moratorium to be lifted for years, the Andrews government sat on its hands appealing to environmental groups, and they were demonising gas as a vital energy source. Only after being dragged to the table did Minister D’Ambrosio finally act, noting multiple warnings from the ACCC and the industry experts. Every single day that this minister fails to act is another day Victorians are paying higher gas prices. Those opposite think you can just pull the trigger on a day like today and everything will be fine. The moratorium on gas exploration is the first of many bad decisions this government has taken, and we are now feeling the repercussions of them.

If we look at the budget, the latest budget that those opposite have been talking about just this week, there is no money for gas infrastructure or investment. As I said earlier, the government were congratulating themselves on the budget. ‘What crisis?’, they were saying on the other side of the aisle, ‘What crisis?’. Well, it is no surprise the government allocated no money in this budget for gas infrastructure, because they did not think there was a crisis. But look here today at the front page of one of the biggest selling daily newspapers in the country. Victorian businesses and Victorian households are feeling this gas crisis and gas pricing increases. They put in the budget a power saving bonus. They will say in their responses to this motion today, ‘But we’re providing $250 for the power saving bonus’, or 68 cents a day, and I agree it will assist some households. Unfortunately it has been absorbed by the high gas prices right now due to their years of incompetence.

But on top of that there are some pretty big unintended consequences of doing this in the current environment. If you ask industry experts about one of the worst things you can get during a gas shortage, they will say it is the mass migration of customers to a new retailer. For those who do not know how this works, let me just explain it to you. Gas retailers are able to supply the gas that they sell to customers once they sign up a new customer. They source that from a gas wholesaler, and the gas shortfalls in this state make it almost impossible for companies to compete for the minimal amount of gas that is available. So what happens? The price goes up. The government are encouraging 1 million households to change gas supplier at a time when the gas suppliers cannot even get the gas supply they need and, as it has turned out, a lot of these retailers do not even want these new customers.

Unlike this minister I have some experience in the energy industry. I have been engaging with stakeholders, and they have told me the same thing time and time again: October this year will be the D-day when people start to get their bills for the July quarter, and they are expecting there is going to be a huge spike in customers going to hardship plans or indeed not even able to pay their bills. All we have to do by way of example is look to the UK to see what that means. Over 30 gas retailers went out of business in one year. That had a massive knock-on effect on customers and the market as a whole. If we think it was bad there, imagine how it is going to be here where this Labor government has created this regulatory minefield. So in good faith I will propose something to the government: focus on the cost-of-living support; give every household the $250 regardless of whether they compare and switch. Once October comes around, it is already going to be too late and Victorians will hold this government to the fire—that is, if we have got any gas left to be able to do that.

The gas substitution road map is something that the minister and the government have been talking about for such a long time: ‘The gas substitution road map—we’re going to electrify the state. We’re taking gas away from your hot-water service, we’re taking gas away from your cooktop and we’re taking gas away from your ducted heating, and we’ve got a plan to do that’. That gas substitution road map was due in December 2021. It was due in December 2021, and there were lots of excuses about why it has not been able to be released. In fact they were going to release it in June this year—now—as part of an update. Well, guess what has happened: they know they are in trouble, and just like they jump at any crisis—in the health system, in the education system—they have jumped again today and they are going to hold back the gas substitution road map until after the November election.

Let us just clarify what I mean by that: they are not going to tell Victorians what they are going to do with the gas system until after the election. Well, let me warn you now, Andrews government: if Victoria is unfortunate enough to have you re-elected in November this year, you will not have a mandate. You do not have a mandate to do anything with the gas system. This is typical of this government—the same government that went to an election saying if they broke a contract it was not going to cost Victorians any money; $1.3 billion it cost them to break that contract. Now Minister D’Ambrosio is saying today, ‘We might just tell you all about this—the final report into gas substitution in this state—after the election’. What have you got to hide, Minister? What have you got to hide, Premier? There are some things in that road map they will not tell us about. They want to turn off people’s gas ducted heating. They want to turn off their hot-water services. They want to turn off their cooking. They are nervous today because they have played games with Victorians, and what is going to happen? More and more, because of the ineptitude, because of the lack of experience and because of the lack of planning from the government, Victorians will see higher power prices—because this government continues to play politics with energy.

This secret plan they are not going to release will increase the cost of living for households and for small businesses and put a signal to the market, put a signal to energy suppliers, to reduce supply, because they will wait for the price to spike up. You can imagine that from suppliers: ‘Let’s just wait and see what this government will do. We might hold back some capacity and watch the price go up’. This government are not thinking about Victorians. They are not thinking about the cost of living for householders or for older Victorians who rely so heavily on heating. You know, there are stories around that people cannot afford to turn on their gas heating, because the price has gone so high, and elderly people are going to bed at 12 midday because it is the only warm spot in the house.

Ms Stitt: Have you done a survey about that?

Mr ONDARCHIE: This is irresponsible. Minister, to pick up your interjection, I do not need to do a survey about this. Victorians are suffering because of the ineptitude of your energy minister, who today, if you will pardon the pun, has gone cold on the gas substitution road map because she knows and Daniel Andrews knows this is going to hurt them. Higher gas prices, lack of supply, lack of forward planning—we have been telling them this for years, the industry has been telling them for years, small business has been telling them for years. People have been writing to them and households have been writing to them about this, and they have not been listening. And suddenly they have woken up, saying—like in every other crisis they have had to deal with—‘We need to do something today’. So what are they going to do? Shelve the secret plan: ‘We’re not going to say anything about this until after the election’. And they can run around blaming everybody they like, but we know that because they have failed to act Victorians are paying higher gas prices. This Labor government have been asleep at the wheel for a long, long time. Despite being warned by the energy market operator, Daniel Andrews did nothing. He did nothing to encourage new investments. Instead he chose to actively campaign against it. Delaying this road map is going to increase gas prices. It was always going to. As they cut off barbecues, as they cut off stove tops, as they cut off hot-water services, as they cut off ducted heating, it is going to hurt.

One of the other sad things about this is the minister for energy supports developing gas resources in Queensland but not here in her own state. But we know the consequences of that decision-making: the gas line is full and Victorians are paying more for their gas. It is a lose-lose scenario brought on by the member for Mill Park. The truth is developing gas resources closest to the market is the cheapest and most efficient way of getting gas to market. It is a no-brainer. The Premier and the minister want a national gas reserve, but they refuse to develop Victoria’s own abundant gas resources. This state was built on gas—and they cannot commit to backing Victorian industry by backing Victorian resources. It is outrageous. They have no plan to fix the gas crisis in Victoria. They are trying to hedge their bets and sit on the fence when it comes to gas. They admit that gas is vital for Victorians, yet they have no investment for gas exploration, for gas storage or for gas infrastructure. The only plan this government has is to set ridiculous legislated demand targets which will drive up the price of gas and disincentivise new investment—a clear tax on low- and middle-income families.

Dan is of the view—the Premier is of the view, before Ms Shing gets excited—that even with the early closure of coal-fired power stations, solar and wind will satisfy all of our energy needs in a cold winter. That is his view. The Premier’s lack of decision-making and planning has stymied any new gas exploration in this state, any new investment in gas production and any new investment in gas infrastructure. I am calling for further gas exploration, more gas storage and more gas production, as is the energy market operator. And because the Premier was so late to the table, it has left this state in a very precarious position.

We are working with the gas industry and business to ensure there is a well-defined path to keep prices stable as we transition away from coal to cleaner energy sources. This Labor government will blame everybody else for their crisis, as they do with every crisis in this state. It is always somebody else’s fault. But they are the ones who refuse to allow new investment. It is now too late, and every Victorian is going to feel the repercussions of this decision. But there is more to this, and it is very sad. It would not be an expectation in 2022 in Victoria that hypothermia would be a killer in a state like Victoria. As a First World country we still record deaths from hypothermia, predominantly of those who are unable to afford gas and electricity. The situation is now a lot worse, and our hospitals are seeing people present with hypothermia, particularly older Victorians who are financially unable to turn on the gas heater. That is ridiculous in Victoria in 2022. These are all avoidable circumstances. I do not have the data, but there has been some suggestion made to me today that people have died from hypothermia living in homes where they have been unable to turn on their heating source. If that is the case, these are avoidable deaths—and they are certainly not helped by a government who says people should just use less gas and electricity. How about some interest from government? How about you do your job and ensure there is adequate supply of energy to those Victorian households and businesses that need it? These are all issues that stem from nearly a decade of this Labor government’s failed state policy—policy they congratulated themselves on until it caused this mess. Now they hide and they blame everybody except themselves. Well, I am here today to call on the minister to actually do something to stem the bleeding for so many households and businesses across Victoria, but the reality is that she probably will not.

This is a time when Victorians actually need this government—in a time of crisis when it comes to the health system, when it comes to education and certainly when it comes to the energy system, but what do they do? The first thing they do is engage a PR team to spin it a different way. Victorians are sick of this government’s spin. They are sick of this Victorian government’s blame. They are sick of this government not making appropriate decisions because they are too busy trying to put a spin on how they position themselves. We cannot trust this government to manage the gas market in Victoria. They have failed time and time again, and they will lie straight to the faces of Victorians while holding a knife in their other hand. Holding the gas substitution road map back again and again is an admission that this government has failed. It is an admission that they are up to something behind the door. It is an admission that they have failed, and Minister D’Ambrosio should be held totally accountable for this—something that she has been talking about for a long, long time. It was originally due in December 2021, and then she said that it would be presented in June 2022; they are now going to hold it back until after the election. Clearly they are up to something, clearly they are conning Victorians, clearly they have mismanaged the system and clearly this minister has failed. She has failed all Victorians, and she has failed this government. If there is one substitution that should be made in this state, it should be replacing this energy minister. Only a Matthew Guy-led government after November this year will implement practical measures to ensure Victorians have access to clean, affordable energy as we transition to our 2050 goal.

This government are inept, this government have failed Victorians and today we see, as we have seen time and time again, they will try and spin their way out of this one. They cannot spin their way out of this. Victorians are suffering with higher costs of living and no heating, businesses are hurting as a result of this government and this minister’s ineptitude and suddenly today they pack everything away in a cupboard—and she will say, ‘It wasn’t our fault’. I commend the motion to the house.

Ms SHING (Eastern Victoria) (15:48): I am going to correct a number of the outrageous slurs that Mr Ondarchie has put onto the record today, and in doing so I want to give a little bit of an explanation and some context for the way in which the gas market operates in Australia and the way in which Victoria provides gas to the energy market across the eastern states. I want to put in context the role of Victoria as a producer of gas for other parts of Australia and the way in which spot prices operate, as has been the case for a really long time. I also then want to address the fact that Mr Ondarchie seems to want to actually attribute to the Minister for Energy, Environment and Climate Change, Ms D’Ambrosio in the other place, the war in Ukraine, the reluctance of global markets to purchase and acquire liquefied natural gas from Russia, the challenges associated with a particularly cold autumn and winter, outages in coal-fired power stations around Australia and indeed challenges associated with retailers and large-scale producers not doing the right thing around default offers, around pricing and around retail offerings to consumers.

So Mr Ondarchie would have us believe that it is in fact the energy minister’s fault—that is his cute line of attack here today—that we see a complete disintegration of global gas markets, that we see continuous exporting of gas to other jurisdictions from Australia, that we see a shortage in Victoria and higher prices and upward pressure on prices being occasioned by, somehow, an intransigence from Victoria and from the government here, and that indeed it is up to government to fix global and national issues of significance on energy market pricing and availability. What a sloppy, sloppy narrative from Mr Ondarchie. What an easy, easy race to the bottom he has on contributions like this.

I note that it was only yesterday we heard a contribution from the other side of the chamber, albeit a different party, seeking to impugn the same minister and her reputation in relation to a completely different matter. This is something which those opposite are really, really good at, and that is scapegoating, because scapegoating is far easier to do than turning your mind to resolving the problems. What we did not see in the federal space before the election, before the change of government, was any commitment to resolving this burgeoning gas crisis, this issue of supply. What we did not see was any proposal to actually effect a mechanism that would take place and could take place sooner than six months into the future—which was the mechanism developed by the Turnbull government back in 2017. What we did not see from the former Liberal government was any preparedness to actually do anything to apply downward pressure on energy markets around Australia.

We saw that through a range of different shortcomings: (1) the abject failure to develop a national energy policy, (2) a refusal to engage in any sort of discussion around reducing the volume of export in order to meet domestic supply issues and (3) any sort of preparedness to discuss the importance of renewable energy to meet the challenges occasioned by climate change but also to make sure that we have a more reliable mix—through a greater uptake, for example, of PV, of hydro and of wind energy. We have seen a litany of failures from a government in Canberra that has refused to even look at the problem.

It is really interesting that we are on our feet today talking about this particular motion, which of course we oppose, when I think about a tweet—I am going to bring it up because it is worth actually quoting verbatim—from the new Leader of The Nationals, Mr Littleproud. He has just today tweeted the following:

I’ve written to the Prime Minister asking him to consider nuclear power as part of our energy mix.

Can we make it safe, affordable and reliable in Australia?

We need to have this conversation and if opportunities exist—back ourselves.

Right? That is from one-half of the flailing federal opposition, the former government, the ones who pulled the strings again and failed to do anything in relation to energy policy, failed to do anything associated with investments in renewable energy and failed to talk—unless you are talking about the former member for Brighton—about the importance of renewable energy in the context of climate change until, what, a handful of days out from the poll when figures showed that they were disastrously at risk of complete annihilation, annihilation which of course, as we know, happened for reasons which include their denial of climate change and their inaction on renewable energy and support for renewables overall. So now we have a commitment in writing from Mr Littleproud, the bloke who is heading up the Nats, saying that nuclear energy really should be considered.

Well, here is a little bit of a ready reckoner on nuclear energy: it is consistently falling out of favour across global markets. It has been overtaken by renewables in relation to cost, time frames, social licence and efficiency. It is, again, something that I would like to put as a hypothetical to people listening today. Because of its reputation—and we only have to look at various sites around the world to know that there are grave concerns around sites which previously were areas where nuclear power was developed, delivered and generated—nobody wants it in their backyard. Mr Quilty has stood here in this place and he has talked about how it is that we should be building nuclear power plants. He would not be prepared to have one in his backyard, and I wonder if Mr Littleproud would be prepared to have one in his backyard.

The point that I am making with all of this is that everybody is happy to talk from the opposition benches about what it is that is not being done well or right. And when I think about what it is that Minister Chris Bowen has said around needing to commit to freeing up supply and needing to commit to putting downward pressure on gas prices, that to me constitutes the first meaningful sign of a commitment to facing the very real challenges of skyrocketing gas bills alongside the idea of providing long-term supply and indeed reliability across the network. But renewables are another really big part of this equation.

Mr Ondarchie was quivering at the thought of anyone from this side of the house raising the power saving bonus, and well may he do so, because this is a bonus which applies for concession card holders between now and 30 June and for every Victorian from 1 July to the tune of $250. This is not everything, but it is something. And it is part of a jigsaw of responses to energy supply issues and the price of these commodities. It is things like retrofitting houses to become more energy efficient. It is things like incentives and rebates for solar power, for batteries and for storage. It is things like working alongside industry to incentivise them to embrace and indeed invest in renewable energy. It is projects such as Star of the South. It is work such as Solar Victoria. It is discussions such as creating pathways for people to get into renewable energy industries to be able to provide the services that consumers are looking for, and there is appetite and there is social licence for these sorts of initiatives. They will demonstrate a reliability and a capacity to form a useful part of an energy mix now and into the future. Shame on those opposite for being so grubby as to raise these issues in a context which does not recognise the contribution we have made and indeed seeks to rewrite history around the LNP’s last-minute commitment to renewables.

Debate interrupted.