Page 2006 - Week 06 - Wednesday, 25 June 2008
Next page . . . . Previous page . . . . Speeches . . . . Contents . . . . Debates(HTML) . . . . PDF . . . .
abandoned the no-regrets approach, and I know Dr Foskey was never keen on it, the fact is that in 1996 onwards I was able to introduce the most successful greenhouse program for any industry sector in the nation, including the mining industry, which should have been at the forefront. Their Liberal Party colleagues at a federal level heartily endorsed that as a sensible way to go.
We are not doing any favours to our environment if we are not scrupulous to ensure that any money spent in pursuit of environmental objectives is optimised. If money spent on subsidising environmental projects is not value for money or has dire and unintended economic consequences, that will lead to greater problems and we will then be betraying any genuine desire for environmental sustainability in order to feel warm and fuzzy about ourselves.
One can always throw money at a problem, and governments have a stubborn tendency to use costly subsidies to get what they want without regard to the hidden costs. It is these hidden costs and unintended consequences that I would like to discuss. I say they are unintended consequences, but perhaps that is being kind. In truth, the kinds of principles which I will be talking about are little more than elementary teachings of economics. They are things which have been said over and over again about a host of government subsidy schemes over the years.
The bill creates a forced sale mechanism that compels electricity distributors and suppliers to purchase electricity from certain renewable sources at a price far exceeding its market value. The price set for this forced sale is set initially at a premium rate of 3.88 times the transition franchise tariff retail price payable for electricity under the price direction of the Independent Competition and Regulatory Commission applying at the time of commencement. For supplies over 10 kilowatt hours of power, the price reduces to 80 per cent of this premium rate, and for supplies over 30 kilowatt hours of power, the price reduces to 75 per cent of this premium rate. These percentages can be changed by the minister.
This premium rate lacks any objectivity and is entirely arbitrary. No doubt Mr Gentleman can regale us with some wonderful stories about how exactly the figure of 3.88 was determined and how the percentages were determined, but, from an economic point of view, this figure is entirely arbitrary. I had an email from a constituent in May, who I believe also wrote to other members, to question the wisdom of this figure and to ask what the subsidy costs would be for each kilowatt of electricity produced from renewable sources under the scheme. Whilst my constituent had done some calculations of his own and had determined the scheme to be grossly inefficient, I have not been able to verify these figures. Suffice to say, it is far from clear that this subsidy scheme will deliver value for money.
Even if it were good policy to implement a subsidy scheme—and I am far from convinced on this issue—the Assembly must consider the efficiency of this scheme against alternative subsidy schemes. I know Mr Gentleman has put in a lot of work on this, and I am not being personally critical, but this comes down somewhat to philosophy.
Over the weekend I was lobbied by a member of my family who works for an accounting firm, and he advocated that I support this. He tells me that the model here
Next page . . . . Previous page . . . . Speeches . . . . Contents . . . . Debates(HTML) . . . . PDF . . . .