Dissenting report from Government Senators
1.1
The Senate Select Committee into the Scrutiny of Government Budget
Measures inquiry into the Tasmanian energy supply challenges was a thinly
veiled attempt by the Labor and Greens political parties to politicise the
current energy supply challenges facing the Tasmanian community.
1.2
Government Senators are critical of attempts by the Green and Labor
members to use this committee as a means to engender uncertainty in the Tasmanian
community, based on a number of factual inaccuracies and misrepresentations of
the underlying circumstances that have contributed to the current challenges.
1.3
Government Senators also note that the Labor and Green members of the
committee failed to articulate how the Terms of Reference of the committee were
relevant to the nature of the inquiry.
1.4
Government Senators note that the Tasmanian Government is currently
dealing with a unique and unprecedented combination of events, namely record
low rainfall and an extended outage of the BassLink interconnector.
1.5
The combination of these events has meant that water storage levels in
the hydro catchments have been progressively declining over more than 6 months.
1.6
However, Government Senators note that the Tasmanian Government has
responded decisively and appropriately with the implementation of the Tasmanian
Energy Supply Plan to ensure that energy security can be assured for the
Tasmanian Community.
1.7
The Tasmanian Energy Supply Plan incorporates the progressive installation
of approximately 220mw of temporary diesel generation, restoring the gas
generating units at the Tamar Valley Power Station to full operating capacity
and negotiated load reductions with Tasmania’s major industrial users.
1.8
The Tasmanian Government has clearly stated that forced power rationing
or load shedding is not required under its Energy Supply Plan, but nevertheless
has encouraged Tasmanian households and businesses to be prudent with regard to
energy consumption.
1.9
Government Senators appreciate that costs associated with the Energy
Supply Plan will be considerable, but also recognise that the cost of doing
nothing and introducing alternative measures such as forced power rationing as
advocated by the Tasmanian leader of the opposition will create greater risks
and uncertainty for the Tasmanian community and economy.
1.10
Government Senators note that the costs associated with the Energy
Supply Plan will be borne by Hydro Tasmania and acknowledge the advice that
regulated prices, which cover the vast majority of households and small
businesses, will not be impacted by the actions in the Energy Supply Plan.
1.11
Government Senators are also concerned that the majority report fails to
reflect on the water management decisions made by the previous Labor/Green
Government of which it should be noted that Senator McKim was a Cabinet
Minister and at one stage had Ministerial responsibility for some elements of
the energy portfolio.
1.12
In particular Government Senators are critical of the Labor/Green
strategy to exploit the Carbon Tax between 2012 and 2014, resulting in water
storages in the Hydro catchments reducing from 60% total energy in storage to
30%.
1.13
This strategy was further exacerbated by the decision under the Energy
Minister at the time, Mr Bryan Green, to reduce the prudent water management
levels from 30% to 25%. Clearly this was a strategy designed to maximise
profits from the Carbon Tax at the expense of energy security.
1.14
Government Senators note that in providing evidence to the Committee the
opposition leader, Mr Bryan Green stated that these matter were operational
decisions by the Hydro
1.15
However, when further pressed on whether Ministerial approval was
required, it was concerning that Mr Green equivocated and told the committee it
may have been part of a document he signed.
1.16
It is also important to note that during the period of the Carbon Tax
Tasmanian households and businesses were paying almost 10 % more for power
generated from renewable sources
1.17
Government Senators also consider it is important to correct a number of
false assertions in the majority report, particularly in relation to the Tamar
Valley Power Station. The Tasmanian Government is clearly on the record that
following a request from Hydro Tasmania permission was given for Hydro Tasmania
to investigate a possible divestment of the Combined Cycle Gas Turbine, subject
to strict conditions particularly in relation to energy security.
1.18
At no stage was the Combined Cycle Gas Turbine divested and is
now making a significant contribution as part of the Tasmanian Government’s
Energy Supply Plan.
1.19
In response to Recommendation 1, Government Senators saw no
evidence to suggest the Tasmanian Government has not been fully transparent. On
the contrary, Government Senators believe the Tasmanian Government has been
keeping the Tasmanian community fully informed in regards to the implementation
of the Energy Supply Plan, including regular weekly updates.
1.20
In fact, it should be acknowledged that Minister Groom voluntarily
agreed to appear before the committee on behalf of the Tasmanian Government and
the Chair thanked the Minister for being generous with his time.
1.21
In response to Recommendation 2, Government Senators note that
the Tasmanian Government has moved to establish an independent Energy Security
Taskforce, comprising experts with considerable expertise in the energy
industry.
1.22
In addition the Public Accounts Committee of the Tasmanian Parliament
has recently established its own terms of reference to specifically look at the
circumstances underlying the current energy security challenges in Tasmania.
The Public Accounts Committee has an influential oversight function in the
Tasmanian Parliament with significant powers to call for witnesses and
evidence.
1.23
It should be noted that in relation to the second interconnector
both the Australian and Tasmanian Governments have agreed to the establishment
of a joint taskforce to specifically advance the business case for a second
interconnector. This will build on work already undertaken by the Tasmanian
Government and Hydro Tasmania.
1.24
In response to Recommendation 3, Government Senators note that
there are already frameworks in place to develop national approaches to the
development and management of electricity infrastructure including the
Australian Energy Market Commission, the COAG Energy Council, the Clean Energy
Financing Corporation and Infrastructure Australia.
1.25
In response to Recommendation 4, Government Senators note that
the Tasmanian Government has stated that one of the key activities of the
Energy Security Taskforce will be to examine the potential for further
renewable energy development.
Recommendations
Recommendation 1: That the Committee commends the
extraordinary effort of all those involved in the Tasmanian Government’s
response to the challenging energy supply situation, particularly the employees
and contractors of the State’s energy businesses.
Recommendation 2: That the Public Accounts Committee
established by the Tasmanian Parliament closely examine the impacts of the
Carbon Tax on energy security in Tasmania, in particular:
- the extent to
which the Carbon Tax encouraged the draw-down of water storages to maximise
profit, and;
-
the extent to
which the former Labor/Green Tasmanian Government used revenue from the Carbon
Tax to underpin State Government expenditure.
Senator David Bushby
Senator Dean Smith
Senator Sean Edwards
Senator James Paterson
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