Wake up Clive: it’s time to really help the poor.
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STT hears that Tony Abbott is hard at work on his mission to kill off the mandatory RET – with the aim of bringing an end to the most expensive and pointless policy of all time. One of the cross-bench Senators the PM needs to help demolish it during this parliament is David Leyonhjelm – the Liberal Democrats Senator for NSW – and he gets it.
David has come out with a cracking piece published by The Australian – which is pitched squarely at Clive Palmer and his PUPs. The Palmer United Party’s 3 Senators – Glenn Lazarus (QLD), Dio Wang (WA) and Jacqui Lambie (Tasmania) – are the only obstacle that stands in the way of scrapping the mandatory RET during the life of this parliament. Big Clive and his Senators should consider David’s article a timely “wake up” call.
Ditch RET to set economy free
The Australian
David Leyonhjelm
27 August 2014
If Labor and Clive Palmer care about the poor they will stop subsidies for windmills.
ELECTRICITY bills are a huge worry for many Australians. In coming months a lot of people will receive the biggest household utility bills they have seen.
The latest figures from the Australian Bureau of Statistics show that in the five years to June 2012, Australia’s retail electricity prices rose by 72 per cent with even higher increases in Melbourne and Sydney.
The Queensland Competition Authority’s annual report revealed recently that 344 households were disconnected every week in the Sunshine State because of non-payment of electricity bills.
Senators and MPs, however, don’t need to worry about whether staying warm in chilly Canberra may send them broke. Perhaps if they had to pay for their own heating and airconditioning in Parliament House, it would concentrate their minds on the important discussion we need to have on the future of the renewable energy target.
The repeal of the carbon tax will help, but studies show that the RET has an even greater impact on the bottom line, reducing our living standards and the competitiveness of our entire economy.
The dramatic surge in power bills has been a major factor in the decline of our manufacturing sector and the loss of thousands of jobs. In a little more than 10 years the RET has rocketed Australia from almost the cheapest to almost the most expensive electricity in the world: Australian states occupy four of the top six spots beaten only by Denmark and Germany. These countries also are sapped pointlessly with punishing renewable energy policies producing small amounts of extremely expensive, intermittent power that has to be backed up by fossil fuel power anyway.
Contrary to claims by industry lobby groups and consultants representing Big Wind producers and merchant bankers, it is no coincidence that power prices went up so steeply when mandatory renewable energy targets were introduced. A report from the accounting firm Deloitte shows the RET will stifle the economy, cost jobs and drive up prices, and is a very inefficient means of reducing greenhouse gas emissions. It concludes that abolishing the RET would increase real GDP by $29 billion in net present terms relative to the RET continuation.
The chief beneficiary of the RET is the wind industry, which receives Renewable Energy Certificates worth about $30 for every megawatt of electricity it produces, on top of the price paid to it for electricity generated by wind turbines. The certificates are funded by electricity customers as a hidden charge on their bills. The net effect of this subsidy is to hand an additional $17bn of our money to these companies over 15 years for no measurable environmental benefit.
It is undisputed that despite being a mature technology the wind generation industry is not viable anywhere in the world without government or customer subsidies. It is just government mandated corporate welfare.
Grant King, chief executive of Origin Energy, one of Australia’s largest electricity retailers with extensive interests in gas and wind energy generation, has said that the RET would be the main driver of electricity price rises by 2020 and that renewable energy costs now accounted for 14 per cent of electricity bills, up from 2 per cent five years ago; for larger users it is 30 per cent of their bills.
If Labor, the Greens and Clive Palmer really care for social justice they will not allow working families, pensioners and the disadvantaged to be ripped off by wealthy wind generators and will back the abolition of the RET.
David Leyonhjelm is the Liberal Democrats senator for NSW.
The Australian
David Leyonhjelm: gives common sense a name.
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When David talks about handing wind power outfits “$17bn of our money … over 15 years for no measurable environmental benefit”, he bases that figure on a REC price of $30.
While RECs are currently trading at $30, from 2017 – when the annual figure for the RET starts to increase dramatically – RECs will be worth at least as much as the mandated shortfall charge of $65 per MWh.
The total renewable energy target between 2014 and 2031 is 603,100 GWh, which converts to 603.1 million MWh (1 GW = 1,000 MW). In order for the target to be met, 603.1 million RECs have be purchased and surrendered over the next 17 years: 1 REC is issued for every MWh of renewable energy dispatched to the grid. The REC is a Federal Tax on all Australian electricity consumers.
The cost of subsiding the wind industry through the REC Tax is born entirely by Australian power consumers. As Origin Energy chief executive Grant King correctly put it earlier this week:
“[T]he subsidy is the REC, and the REC certificate is acquitted at the retail level and is included in the retail price of electricity”.
It’s power consumers that get lumped with the “retail price of electricity” and, therefore, the cost of the REC subsidy to wind power outfits.
Even at the current REC price of $30, the amount to be added to power consumers’ bills will hit $18 billion (David gets pretty close with his figure of $17 billion). However, beyond 2017 (when the target ratchets up from 27.2 million MWh to 41 million MWh and the $65 per MWh shortfall charge starts to bite) the REC price will almost certainly reach $65 and, due to the tax benefit attached to RECs, is likely to exceed $90.
Between 2014 and 2031, with a REC price of $65, the cost of the REC Tax to power consumers (and the value of the subsidy to wind power outfits) will approach $40 billion – with RECs at $90, the cost of the REC Tax/Subsidy balloons to over $54 billion (see our post here).
This massive stream of subsidies for wind power stands as the greatest wealth transfer in the history of the Commonwealth.
That transfer comes at the expense of the poorest and most vulnerable; struggling businesses; and cash-strapped families.
If Clive Palmer is serious when he says he is out to represent the poorest in society, he has a golden opportunity to put his money where his mouth is.
With thousands of Australian households living without power – having been chopped from the grid simply because they can no longer afford what used to be a basic necessity of life – and thousands more suffering “energy poverty” as they find themselves forced to choose between heating (or cooling) and eating – Australia risks the creation of an entrenched energy underclass, dividing Australian society into energy “haves” and “have-nots”.
For a taste of the scale (so far) of a – perfectly avoidable – social welfare disaster, here are articles from Queensland (click here); Victoria (click here); South Australia (click here); and New South Wales (click here).
Slapping a further $50 billion on top of already spiralling Australian power bills over the next 17 years can only add to household misery. So Clive, if you really do care about the poor? – then it’s time to muscle up and help kill the mandatory RET now.
Beyond the RET’s perverse impact on the poorest and most vulnerable is its wealth and job destroying impact on the economy as a whole.
The Australian Chamber of Commerce and Industry (ACCI) – the top body representing Australian business – came out with this press release in full support of the position taken by David Leyonhjelm – calling for the mandatory RET to be scrapped outright.
Australian Chamber of Commerce and Industry
MEDIA RELEASE
WEDNESDAY, August 27, 2014
BUSINESS WELCOMES LEADERSHIP ON RENEWABLE ENERGY TARGET
The Australian Chamber of Commerce and Industry (ACCI), Australia’s largest and most representative business organisation, welcomes the leadership of Independent Senator David Leyonhjelm in calling for the abolition of the Renewable Energy Target (RET).
The RET is a major policy failure that drives up electricity prices and is a highly inefficient means of emissions abatement. Economic modelling by Deloitte Access Economics commissioned by ACCI makes a powerful policy case for the abolition of the RET. The modelling shows that persisting with the policy in its current form will cost the economy $29bn in lost economic output and more than 5,000 jobs.
“It is a matter of deep regret that a policy with such appalling economic foundations has remained uncontested for so long”, remarked Chief Economist Burchell Wilson.
“This insidious tax needs to be taken off energy users, as an important step toward restoring the competitiveness of Australian industry.”
“The business community remains hopeful that the Palmer United Party after examining the findings of the Deloitte Access Economics modelling will reconsider their support for a policy that is driving up electricity prices, sending businesses to the wall and destroying jobs”.
While options for appropriate compensation for sunk investment under the scheme will need to be considered, it is clear that abolition of the RET is the best outcome for energy users and the economy.
At the very least the target should be wound back to a level consistent with 20 per cent of demand in the wake of the collapse in actual and projected electricity consumption over the past five years.
A robust Parliamentary debate in which all the facts are on the table is the first step in achieving that objective.
Australian Chamber of Commerce and Industry
27 August 2014
ACCI’s Kate Carnell: time to scrap the RET.
About stopthesethings
STOP THESE THINGS 
For once it looks like Australia is heading to lead the way for the rest of the world. Let’s hope our Politicians are ready for the challenge – they have for long enough told us we are world leaders it’s time they proved it.
It’s time they put the people first before their personal ideologies.
The industry is running scared. They are fully aware that one day their money making mechanism will fail.
Why not stop it now before it destroys this country’s ability to ensure health, and wellbeing for its citizens?
Why wait until the people are living lives of poverty because they can’t afford the cost of food which has risen because of the cost of energy to produce it, or they are unable to keep themselves warm/cool because they can’t afford the price of energy?
It’s always too late when you wait too long when knowing the right thing to do is make the right decision.
Banner headline on the “Senior” newspaper [Vic] this week,–LIVING IN ‘ENERGY POVERTY’. Wake up Clive and stop just thinking about yourself.
A great speech David.
Millions of Australians are suffering because of poor government in Australia.
After 5 years of trying to get a resolution with Acciona, the planning department, the local council, all we get are lies, lies and more lies. Ongoing illness of my family meant that the last of our farm was sold three months ago. It went to auction and was passed in on a vendor bid and was sold for $40,000 above unimproved value after selling costs were taken out. The improvements had a replacement value of $400,000. The difference was covered with borrowings.
I ask what is being done for the people who can not afford to lose their asset value and are too ill to know what is the best thing to do for their family members?
Noel Dean
Congratulations to Senator Leyonhjelm for his well thought out article in the Australian, and his speech in the Senate, on the RET and what to do about it. If only you could take the politics out of it and focus on the mathematics, logic and common sense, which the Senator has done. PUP must know and understand this and ultimately the community will hold its representatives in the Senate responsible if they don’t support the Government and the sensible cross-benchers in bringing an end to the economically punitive RET.
Good comment Grant.
The momentum of common sense builds.
The parasites realize this and are squealing.
The absurdity of the parasites, with the compliance of an ignorant or knowingly complicit government, writing legislation to suit their own nefarious activities, will be seen retrospectively as one of the greatest cons of recent history.
May it pass quickly and may the karma bus be coming soon, to those that have no conscience.