15 December 2022

Second Reading Speech, Treasury Laws Amendment (Energy Price Relief Plan) Bill 2022

This Bill and this Government recognises that Australian households and businesses are confronting unsustainable, unacceptable energy price rises.

We respond with urgent, targeted, meaningful action – to take some of the sting out of these price rises, and to provide direct energy bill relief.

And in doing so, we reject the fib that a functional and fair gas market must also mean the hollowing out of our manufacturing industry, or the destruction of jobs, or the sacrifice of living standards.

It cannot mean that. We will not let it mean that.

The Government respects the important role that the gas industry plays in our economy – and the role it’s playing in our transition to net zero.

We support a strong industry that delivers returns on investment and an economic dividend to the Australian people – because it is an Australian resource.

Gas companies have the right to make a profit, and we want them to.

They have a job to do, and we have a job to do as well.

It’s our job to find a reasonable and balanced, common‑sense solution to these extraordinary events –

To defend our national economic interests –

And to protect the welfare of the Australian people.

Speaker, Australians are paying a hefty price for more than nine months of Russian aggression in Ukraine –

And nearly nine preceding years of energy policy chaos here at home.

The costs are clear –

Electricity prices are rising by 20 per cent this year – something the previous government knew about, but kept hidden.

Without intervention, next financial year retail gas prices are expected to increase by a further 20 per cent, and electricity prices by a further 36 per cent.

That’s why urgent action is needed – including through this legislation.

And when we vote today, every Member of this place will make a choice.

To help Australians with rising energy bills – or to make it even harder for them.

To save Australian jobs – or to surrender them.

To support Australian manufacturing – or send it to the wall.

The Albanese Government has made its choice.

We choose to protect households and small businesses.

We choose to defend our local industries.

And we choose to save local jobs.

That’s why we must pass this Bill, and pass it today.

The Bill contains two schedules.

One directly addresses gas prices –

The other provides direct assistance to struggling households and small businesses.

Schedule 1 amends the Competition and Consumer Act 2010 to create an enabling framework for two new instruments – to be implemented through regulation.

The first will enable me to make an emergency order for a 12‑month price cap on new contract sales of gas by producers, sourced from developed fields in the east coast wholesale market.

This is designed to provide short‑term relief from the current energy crisis.

The legislation contains a sunset clause so that the power to make these orders ends 12 months after the commencement of any order made – or if no order is made, 12 months after the commencement of the Bill.

Through this instrument, the Government intends to implement a temporary price cap of $12 per gigajoule.

The ACCC has identified this price based on the costs of production and a reasonable return on capital.

And it is still a high domestic price by historical standards.

In 2021, the ACCC found that there were 289 domestic offers made by producers and retailers –

With 96 per cent of offers below $12 per gigajoule, and the average price $9.20 per gigajoule.

The Bill also includes measures to detect, deter and address any non‑compliance with the price cap.

For transactions that fall under the scope of the emergency price order, prices above the cap will be subject to enforcement action.

The price cap will be reviewed in mid‑2023, to ensure it is having the intended effect, and to consider whether adjustments are needed.

The second instrument allows for a mandatory gas market code to be prescribed to address systemic issues in the market.

The purpose is to ensure that a fair and transparent process applies in the negotiation of gas contracts.

A code can prescribe matters including negotiations between suppliers and buyers, as well as addressing and resolving disputes.

Through this instrument, the Government will introduce a mandatory code of conduct for the wholesale gas market.

The code will be an enhanced version of the existing voluntary code, based on the advice of the ACCC.

This includes strengthening requirements for transparency and reporting, pricing, negotiation timeframes, and dispute resolution.

The code will include a longer‑term reasonable pricing provision, again on the advice of the ACCC.

And this is based on the clear expectation that the price of Australian gas for Australian customers should have a connection to the cost of producing it, allowing for a reasonable return on capital –

Rather than being solely subject to the war‑time whims of the international market.

For the first 12 months of the code, while the emergency temporary price cap is in place, the reasonable pricing provision will only apply to gas outside the scope of the price cap: gas contracted for delivery later than 2023, or from currently undeveloped fields.

After this, the reasonable pricing provision will apply more broadly to the types of contracts previously covered by the cap.

It will remain in place until the ACCC advises the Government that domestic gas prices better reflect the cost of production, and that there is adequate supply at these prices.

Importantly, the code will include a dispute resolution framework, including binding arbitration.

The Government will consult on the mandatory code in the coming months ahead of its commencement in early 2023, including on the most appropriate way to define reasonable pricing.

Schedule 2 amends the Federal Financial Relations Act 2009 to introduce a new type of payment to the states and territories, in order to provide temporary and targeted relief on energy bills for eligible households and small businesses.

The Bill provides for an appropriation of $1.5 billion to be paid to the states and territories for this purpose.

The states and territories will jointly fund the bill relief, and they will administer the payments through the new funding agreement.

The relief will be applied to energy bills, rather than as direct cash payments to households.

It’s written in black and white – this legislation will take some of the pressure off power bills.

Speaker, the measures in this Bill are crucial components of the Government’s broader Energy Price Relief Plan – which also includes action to limit coal prices, and investments in cleaner, cheaper, more reliable energy for the future.

This is a plan agreed by National Cabinet – endorsed by every Premier and Chief Minister, from both sides of politics, and we thank them for their cooperation.

They, like us, know that action is needed now.

Our collective measures to address gas and coal prices are estimated to reduce the impact of forecast electricity prices next financial year by 13 per centage points –

And reduce expected inflation in 2023‑24 by around an estimated half a per centage point.

And our direct assistance will provide hundreds of dollars of energy bill relief in addition to these measures.

And that’s what this choice – this coming vote – really comes down to.

Higher power prices or lower power prices?

Relief on energy bills, or no relief?

Protecting Australian industry and jobs, or abandoning them?

Speaker, on this side –

We believe that Australian households and small businesses deserve this support.

We believe that Australian manufacturing deserves a future.

And that’s what this legislation delivers –

Support, certainty, security –

For families and pensioners. For small businesses and for large manufacturers.

In the national interest – for all Australians.

I commend this Bill to the House.