Bill - National Electricity (Victoria) Amendment (VicGrid) Bill 2024

BILL

‘NATIONAL ELECTRICITY (VICTORIA) AMENDMENT (VICGRID) BILL 2024.’

Thursday, 21 March 2024.

James NEWBURY (Brighton) (10:20):

I rise to speak on the National Electricity (Victoria) Amendment (VicGrid) Bill 2024.

Before I mention what this Bill does do, it would be remiss of me not to say what this Government has not done and what this Bill does not do.

What this Government has not done is anything effective with VicGrid since it was formed. We are here today with a Bill before us which starts to provide VicGrid with powers for works in relation to energy and transmission. But for years the community, business and the Coalition have been calling for action on transmission and on VicGrid, and the Government has done nothing. We are here to talk about a Bill and powers that are contained within that Bill, but it is important to note that and to put that on the record before the substance of the debate commences.

I note in March 2019 in one of the first speeches I gave in this place I spoke about the NSW Transmission Infrastructure Strategy, which was released in November 2018, which in many ways does some of the things that this Bill now does. So, some five years ago there were calls for action in terms of strategy and planning on transmission in Victoria. We have, after almost half a decade, started to look at doing some of the things that have been done around this country years and years and years ago. It should be noted, though, that what the Government is proposing to do in this bill in terms of planning and strategy for transmission is not equivalent to what has happened around the country. I do note that some of the elements of this Bill have picked up the New South Wales approach, if I can put it that way, and the Government through their briefings prior to this Bill being debated confirmed that the New South Wales model had been looked to and had been incorporated.

The one difference that exists with this Bill and these powers as opposed to the New South Wales model is how strongly involved industry was in the development of this Bill and future planning and strategy of transmission. It is a big difference, because in New South Wales the Government worked with industry on planning how renewables primarily and transmission upgrades to the grid would take place, and that makes sense. Of course it does, because it is a partnership in terms of leading that work and then working with the community with their social licence to deliver it. That is a big difference between the way this Government operates and the way the New South Wales Government has operated in these matters.

What this bill does in short is provide new infrastructure energy planning powers in Victoria how that infrastructure work will be brought about in terms of working with communities. That is the overarching purpose. So, the Government is empowering VicGrid to undertake planning and consultation on energy projects and to consult with the community to some degree on those works.

It will further implement a new Victorian transmission infrastructure framework, set a timeline for that planning and also allow payments for landholders who hold energy infrastructure. In short, that is what this Bill does.

If I can set the scene on where we are as a State, not just in terms of policy and infrastructure, which I will speak to in detail shortly, but in terms of how the delays in the Government’s approach to dealing with these issues have had an effect on every single household, because that is what matters. What matters to Victorians is that they have reliable, secure and affordable power. That is what matters to Victorians. They deserve reliable, affordable and secure power, and the government has not delivered that.

We know of the recent St Vincent de Paul report finding that Victorians are paying 22 per cent more for gas and 28 per cent more for electricity. The most recent ABS statistics show a 25 per cent increase in the last year on energy costs. So, the year-on-year costs are significant. We know it because we hear it from our communities. We know it because it is a key issue raised in our communities. And though I am not a huge fan of polling, polling shows that two out of three rate the issue as one of their most significant concerns. That only underlines what people actually tell us in the street, what people speak to us in the street about. We know the cost for people is up year on year on year – 25 per cent as per the ABS in the last year.

But we also know that it is not just in relation to affordability. On the reliability and security, we have as a coalition deep, deep concerns about the Government’s failure to ensure that our energy is reliably provided to Victorian households. Of course, we saw most recently the worst blackout in our state’s history, where 530,000 people were left without power. But it is important to note that though that was the worst blackout in our State’s history and the Government will say, ‘It’s not our fault; it’s the weather,’ over the last six years 1.9 million Victorian businesses and households have suffered a blackout. So set aside this most recent event because the Government will blame the weather, but almost 2 million Victorian businesses and households have suffered blackouts over the last six years. So, security and reliability of energy is obviously a significant issue in our state. The Australian Energy Market Commission found that 95 per cent of blackouts in Victoria between 2009 and 2018 were caused by transmission and distribution failures, not the weather – 95 per cent. These are real issues. These are real challenges.

I am not suggesting that every single issue was caused by the Minister for Energy and Resources herself. What I am saying is it is the Minister’s job to make sure they do all they can to fix it. Today we are considering a bill that does not go far enough in terms of fixing these issues after spending years and years and years doing nothing in relation to transmission.

Many of us will have read recent reports around the transmission infrastructure in Victoria and how alarmed we should all be in relation to the grid and the Australian Energy Market Operator warning of imminent and urgent issues in relation to our energy transition. These are serious concerns, and I quote from AEMO:

The projected electrification of traditional gas loads, particularly heating loads in Victoria, increases forecast consumption and maximum demands in winter. For Victoria in particular, winter peak demands may exceed summer peak demands by the end of the ESOO horizon.

So, we are having the peak body warn of the system and warn of the lack of capacity of our system to meet the needs of Victorians, and that is the Government’s job – to ensure that supply is provided. If I can refer back to AEMO again:

To ensure Australian customers continue to have access to reliable electricity, it’s critical that planned investments in transmission, generation and storage projects are urgently delivered.

How many warnings do we need? We are being warned by people who know more, who are experts in this field, over and over again. I refer to the warning of supply earlier. The warnings have been clear from the most peak minds, the most peak experts, that our transmission system is not good enough, that our supply is at risk, yet we are dealing with a bill that does not do anywhere near enough and is the best part of a decade behind what the other states have been doing.

After the recent blackout where 530,000 people were left without power we saw a report of an AusNet Services assessment that one in seven of Victoria’s 13,000 electricity transmission towers were damaged by patchy or extensive rust. About 8000 of them – more than half – are now a decade or less from their designed service life. This is a deep, deep concern. So, we are now having industry say, ‘We’re concerned about the infrastructure.’ It is not just the peak experts; we are now having industry say we have issues. The report further says that:

All failed structures were built to historical design standards with inadequate strength to withstand convective downdraft winds occurring during extreme storm events.

I mean, you cannot get a clearer warning for the weather, can you? I think that even the minister can understand that one. The report says further that, of the 13,000 towers, 12 per cent were deemed to be in average condition with patchy rust and 1.5 per cent in poor condition with extensive surface rust and that 60 of the towers were a present health and safety risk because they were next to roads. How deeply concerning. It shows clearly how urgent it is to ensure our transmission is of the standard that we will need moving forward. Without being alarmist, it is a concern that we have had so many blackouts and that a weather event caused the damage that it did.

So, we need to get cracking, and what this Bill does not do is get cracking fast enough on ensuring that we have the grid for the future.

I do think it is important to note that the Coalition spoke very, very strongly on these issues in the last term and also in the last election. We announced policy to ensure that we as a Government would have worked very closely with industry to work on upgrading our infrastructure. It was a core part of our energy and climate policy. That was announced, from memory, in July 2022. It is almost two years later, and we are dealing with a Bill that starts to do some of that work. The Government has been so slow on these issues it is a serious concern – and should be for all Victorians.

I note the warnings the Government has been receiving do not just relate to infrastructure and do not just relate to security and reliability of energy, they also, specifically on energy today, relate to gas. We have seen AEMO again warn about serious issues in terms of gas supply at a time when the Labor Government are persisting with their mad ideological ban on gas. The CEO of AEMO said:

From 2028, supply gaps will increase in size as Bass Strait production falls significantly …

What that means is that Victoria’s total available gas supply is forecast to reduce by 48 per cent, from 297 petajoules in 2024 to 154 petajoules in 2028. At the same time, and I am quoting reports, demand is expected to hit 187 petajoules in 2024 and 176 in 2028. What does that mean? This:

… increases the probability of outages.

Further:

It is clear that more gas supply is required because the forecast decline in production is faster than the forecast decline in gas consumption …

We have seen the Government sit on its hands for the best part of a decade as other States were doing work, and warnings come in and collect dust on the Minister’s desk in relation to infrastructure, in relation to supply and today in relation to gas. How many warnings does this Government need?

We know that over the last six years almost 2 million Victorian businesses and households have suffered blackouts, so starting work frankly is not good enough and committing to creating a plan will not get us what we need as soon as we are going to need it. Planning is not good enough. Delivering is what matters, and we have seen from business very, very clearly how concerned they are about what is going on in Victoria. In fact, we have seen extremely clearly from people like Paul Guerra from the Victorian Chamber of Commerce and Industry how concerned they are, because as he said:

We cannot let energy security be the casualty of the transition to net zero.

And:

… call out the ideology. This isn’t a game. This is our future. Reliable energy at affordable prices must be aligned.

When you have people like him speak to these issues with such fervour, you know that he is speaking on behalf of industry more broadly.

The Chamber recently released a survey of 500 members, and on the release said if the Government ‘cannot guarantee that the lights remain on in this State’, then they guarantee that many businesses will find places other than Victoria to set up. That survey found that energy policy was a top concern for Victorian businesses, with 65 per cent rating it as their biggest worry – two out of three businesses rating it as their biggest worry, with him underlining that businesses will find other places to invest. That survey also found that 86 per cent believe that a move to renewables will impact their output – the businesses that is. These are deeply worrying concerns.

I do want to note one of the issues in relation to this Bill and the capacity under this Bill to declare renewable energy zones in terms of the Bill – but at the same time that this Bill was laying on the table, the Premier and the Minister for Planning were announcing a new renewable energy power. You can see how these two issues are aligned in terms of the Government’s thinking and how this power will play into how this Bill will operate in terms of renewable planning. What the Government did last week was they announced they would extend the development facilitation program, which is in short a power that the Minister for Planning has under the act to take projects out of the system, as it were – to exempt them from the planning system and deal with them individually and personally, as the Minister or through the Minister’s delegate. Last week the Minister for Planning announced that renewable energy projects would now be exempt from the planning system, at the same time as this Bill is proposing to allow the Minister to declare renewable energy zones. So yes, the Bill has a renewable energy zone power, which does include consultation, but at the same time the Government has confirmed that there will be a new power on top of that for the Minister to bring in renewable energy projects and deal with them personally or through her delegate, though when I looked, just mid-week, the details of that power had not been added onto the Government’s website in relation to this particular program.

If I can give some context, the way this power works is when a project is put forward the Department considers it, and if it meets certain criteria, the Minister can make a determination completely outside the planning law. No consultation, no meaningful consultation allowed – and that is a key theme for how this Government is operating in relation to planning more generally but in relation to this power and renewable energy projects.

Just for some context, although the details have not been released, in other priority sector criteria the average cut-in for being eligible for a project regionally is about $10 million. So, I think it would be reasonable to expect that there may be a cut-in around that amount. Potentially there could be a cut-in of zero. We do not know, because the Government, other than by putting out a press release with very little detail and a lot of quotes, has not put the detail on their own website. So, it could be zero. It could be every project – every single project. But as I say, in other sectors the cut-in for regional projects has been around $10 million.

What this does is undermine social licence. We see it with planning and we are seeing it with renewables more broadly; not only have the government forgotten industry, but they have also forgotten the community. You can see with that particular power I spoke to earlier there are a number of other areas in which the government has circumvented the planning system, and the community is rightly concerned. I have a number of my National Party colleagues with me at the table, and they would be aware of a report that was on the Department’s website until it was removed which stated that up to 70 per cent of Victorian agricultural land could be required for renewable projects.

I have gone to the Government, to be fair, and said this is a concern, and they have said that that report did go to ‘the impossible scenario’, in their words, of providing up to 60 gigawatts of capacity, whereas to meet the targets the Minister believes that we will be aiming for 25 gigawatts, so just under half. Well, if you are on agricultural land and you see a report which is then removed from the government website that says 70 per cent and then the minister says, ‘That is the impossible scenario, so it’s just under half’ – so what is it, 30 to 35 per cent of agricultural land? That is the obvious math. That would concern everybody who lives in regional Victoria, and I think that it is only fair and reasonable for a fuller explanation to be given by the Government in relation to those calculations, because it is a genuine concern that has not been properly answered by the Government. At a time when social licence is ebbing away in relation to renewable projects many Members in this place would know of communities right across the state that are concerned about being cut out of consultation in relation to renewables. That is not how you do business; that is not how you operate as a Government. You do not cut the community out where you are going to build it, and that is exactly what is being proposed. Then, on top of that, members are seeing reports that say 70 per cent of agricultural land will have to be covered. Well, even if it is 30 to 35 per cent, how will that look?

I do want to note that the Coalition in the Upper House will be moving a number of Amendments, and they will be moved by the Shadow in the Upper House. They go to two things primarily: firstly, to ensure that proper community consultation occurs. That would be through, in our view, a community advisory panel that would include the interests of Victorian farmers, the interests of the Victorian manufacturing industry, the interests of Victorian rural councils, the interests of Victorian small business owners, the interests of the Victorian seafood industry and the interests of Victorian consumers in Victoria. The Shadow in that place will move an Amendment that relates to that community advisory committee and all of those people and interests involved in that. Finally, the Shadow will move Amendments that relate to easement land tax, which is of course passed on to consumers in the form of higher electricity bills. So those Amendments will be introduced in that place, in relation to both the land tax easement issue and also community consultation.

There is more that this Bill does not do than what it does do. This Bill does not fix the problems that we have. This Bill does not address the warnings that the Government is receiving. So, the Coalition has deep concerns about it and cannot support it in its current form, because we cannot be ripping away the rights of the community.

We cannot be not ensuring that we have reliable, secure and affordable power. We must do those things, and this Government has not done that. The Government have not addressed the warnings they are receiving, and so until they can provide reliable, secure and affordable energy, they stand condemned.