Page 2207 - Week 06 - Wednesday, 22 June 2011
Next page . . . . Previous page . . . . Speeches . . . . Contents . . . . Debates(HTML) . . . . PDF . . . . Video
We also noted at that time that businesses were concerned about the cap on the micro scheme, unanimously expressing a preference for a gradual winding back of the tariff rate over a cap and that a wind-back of the tariff would give more time for the industry to adjust and transition. We believed and argued that the mechanism to wind back the tariff already existed in the legislation and that we would be able to see the cap approaching, unlike New South Wales. We therefore argued that we would be able to meet the policy objective of containing the scheme, keeping costs on consumers within the amount that had already been passed through by the Australian Energy Regulator, thereby having a system that was more considered. Funnily enough—and unfortunately—those arguments turned out to be true, truer perhaps than even I would have wished for.
I want to be clear here: we did not just make up the stuff about caps being bad for industry. Experience of feed-in tariffs around the world has already shown that when you cap a scheme the industry goes into a slump. It is just a ridiculous way to manage an industry incentive. It is why modern feed-in tariff schemes are built around digression rates that gradually phase out support for industry over a longer period of time so that they can stand on their own two feet and compete effectively in the marketplace.
The government back then failed to support my amendment, and I am going to review the reasons given by the minister for energy for dismissing my concerns about what would happen when the industry hit the cap. Firstly, the minister said that the ACT would not emulate the New South Wales boom and bust cycle. After all, he said that it was the dramatic change in the premium price in New South Wales that drove the boom-bust cycle there. Well, going from 45.7c to a one-to-one scheme seems fairly dramatic to me, which is what we here in the ACT have managed to pull off.
The minister also argued that our annual review of the tariff rate, with advice from the ICRC, would mean that the boom-bust cycle would be prevented. He talked about the scaling back of the price as affordability of small-scale solar PV improved. Indeed, he hinted that the premium rate would drop. The minister said:
We have seen already a scaling back of the price as the affordability and the efficiency of small scale PV has improved. That, combined with the strength of the Australian dollar, I think will compel the ICRC to have further regard to the premium price in its advice to me later this year.
I can only imagine the minister must have forgotten everything he said in this speech when in April he announced that the premium tariff for micro generators for 2011-12 would stay exactly the same as it had been the year before—45.7c per kilowatt hour. That was in spite of the good advice he received from the ICRC that, indeed, took into account those factors and recommended that the premium be reduced to 39c a kilowatt hour. While this did not affect what happened in the last three months, it would be fair to say, it will affect the nature of the bill I am tabling today, and I will return to that point a little later.
The second point the minister made was that he had the capacity to allocate elements of different categories within the overall scheme cap, for example, to move a level of
Next page . . . . Previous page . . . . Speeches . . . . Contents . . . . Debates(HTML) . . . . PDF . . . . Video