❓ Shadow Treasurer Wyatt questions Treasurer Porter about cost overruns in the residential feed-in tariff scheme. Porter defends his previous statements, clarifies cost estimates, and accuses the opposition of overstating the issue.
AnsweredQoN 215Legislative Assembly
QuestionView source ↗
RESIDENTIAL FEED-IN TARIFF SCHEME — COST OVERRUNS
215. Mr B.S. WYATT to the Treasurer:
I refer to the Treasurer's answer to a parliamentary
question on the solar feed-in tariff scheme on 24 November last year in which
he stated —
the cap of 150 megawatts was
likely breached. How substantial was that breach? It was nothing like $500 million;
it was nothing of that order. It is likely to be a moderate breach,
(1) On what basis did the Treasurer make this assessment?
(2) Does the
Treasurer stand by his comments that the cost increase for the feed-in tariff
will be nothing like $500 million?
(3) What is the expected cost increase for the feed-in tariff
scheme?
(4) Can the
Treasurer confirm from his answer of the same date that the first time he
became aware of the breach was in early November 2011?
215. Mr B.S. WYATT to the Treasurer:
I refer to the Treasurer's answer to a parliamentary
question on the solar feed-in tariff scheme on 24 November last year in which
he stated —
the cap of 150 megawatts was
likely breached. How substantial was that breach? It was nothing like $500 million;
it was nothing of that order. It is likely to be a moderate breach,
(1) On what basis did the Treasurer make this assessment?
(2) Does the
Treasurer stand by his comments that the cost increase for the feed-in tariff
will be nothing like $500 million?
(3) What is the expected cost increase for the feed-in tariff
scheme?
(4) Can the
Treasurer confirm from his answer of the same date that the first time he
became aware of the breach was in early November 2011?
AnswerView source ↗
I thank the member for his question.
(1)–(4)
The first part of the question was whether I stood by my comments that the cost
overrun, or blow-out if the member wants to call it that, is nothing in the
vicinity of $500 million. Of course I stand by that answer, as does the
Premier. I will explain why that is quite correct. Over the past three days I
have heard four separate figures as to what the cost overrun, or blow-out if
you like, is. There is a blow-out; there is no question about that. Let me
describe the four figures that I have heard over the past several days. Today
the Leader of the Opposition said that the cost blow-out was $400 million. When
that question was asked of me in November last year, the Leader of the
Opposition said it was $500 million.
Mr M. McGowan : I
asked you a question.
Mr C.C. PORTER : We
have had $400 million and we have had $500 million.
Mr M. McGowan : You
are very slippery.
Mr C.C. PORTER :
The Leader of the Opposition is as slippery as a bucket of eels in oil, which
is very slippery.
Mr P. Papalia : Did
you reverse that in the budget?
Mr C.C. PORTER :
No, I just came up with that then.
Mr D.A. Templeman interjected.
The SPEAKER :
Surrender, member for Mandurah. I formally call you to order for the second
time today. I think you have all had your fun.
Mr C.C. PORTER :
The Leader of the Opposition cited a cost overrun of $400 million and $500 million.
The early edition of The West Australian referred to a huge cost blow-out of $600 million. The edition shortly after
that said it was $450 million, so we had a $150 million blow-out from The West Australian within two hours of
the first and second edition. We have seen a number of figures. The first point
that the Leader of the Opposition and the shadow Treasurer need to understand
is that the total cost of the program does not equal the overrun. The total
cost of the program was first cited in the budget papers in 2011–12 as
$303 million. The total cost of the program was $303 million over 10 years. We
are now estimating that over the total life of the program, which is 10 years,
the total cost will likely be in the vicinity of $450 million. So $450 million
minus $300 million is $150 million, which is a cost overrun of $150 million.
Divided by 10, that is about $15 million a year. That is the answer. The point
is that the cost overrun of $15 million a year has occurred because the
information that was being collated and the applications that were being
entered between Synergy and the Office of Energy were far from perfect.
Mr B.S. Wyatt : So
it is a $420 million blow-out.
Mr C.C. PORTER : Do
I need to explain it again? It is actually not that complicated. If the shadow
Treasurer ever cares to look at a budget paper, he will see that the overall
cost estimate was $303 million over 10 years. We now expect that the total cost
will be about $450 million over 10 years. So $450 million minus $300 million is
$150 million, which is $15 million a year. When we put the cap in, that was the
first time that we were able to give a proper estimate of what the overall scheme
would be over 10 years because without a cap, unlimited applications could
potentially have been processed and accepted.
Mr B.J. Grylls :
Which is what they called for.
Mr C.C. PORTER :
Exactly. The 150-megawatt cap gave us the ability to estimate the scheme would
cost $300 million over 10 years because that was the upper limit on the scheme.
Yes, that upper limit was breached to the tune of $15 million a year. When we
put in the cap, which gave us the figure of $300 million, what was the response
of the Labor Party? It was ''Feedin Tariff Armageddon on its way''.
Well, ''I'mageddon'' tired of overstatements in press
releases! That was better than the eels. When we put in the cap of 150 megawatts,
the Labor position was that we should not have done that; we should not have
attempted to cap the scheme at $300 million. Labor's position was that
it should be uncapped. The one thing I can tell members is that if it were
uncapped, the demand would have grown and grown and the applications would have
been processed and processed. The Labor Party's position was no cap. At
the time of the cap, the opposition said —
''It is truly perverse that a
Government would wind up a scheme, purely on the grounds that it has been too
successful.
The opposition wanted us to keep it
going beyond the cap of 150 megawatts, which meant that it would have cost more
than $300 million. The opposition's policy was to actually have it cost
more than $300 million! It then went on to say that if the Barnett government —
Point of Order
Mr
B.S. WYATT : I am looking back over my question; it was specific and
in four parts. At no point did I ask questions about anything other than cost
estimates from the Treasurer, and I ask you, Mr Speaker, to bring the Treasurer
back to the questions I asked.
Mr
C.C. PORTER : I am trying to answer the question globally.
Several members interjected.
Questions without Notice Resumed
Mr C.C. PORTER :
When the cap was instituted, Labor's position was this —
Several members interjected.
The SPEAKER : Member for
Bassendean, I will formally call you to order for the first time today. Member
for West Swan, you are formally called to order for the first time today as
well. Member for Warnbro, I formally call you to order for the second time
today. Treasurer, make haste.
Mr C.C. PORTER :
Indeed, Mr Speaker. The extra $15 million a year over the budget cycle —
Ms R. Saffioti interjected.
The SPEAKER :
Member for West Swan, I formally call you to order for the second time today.
Mr C.C. PORTER :
The $15 million extra a year over the budget period, as the Minister for Energy
announced yesterday, is going to be worn—paid for—by Synergy,
out of its profits. Very interestingly, the opposition's press release,
from Hon Kate Doust, was—I will finish here, Mr Speaker —
If the Barnett Government was serious about climate change
it would reinvest the massive profits it is making from increased electricity
tariffs into ensuring the electricity network can cope with more small
renewable energy generators
What good advice it was, because although the cap was
breached, which is a matter of some concern, it was breached by $15 million a
year over 10 years, and Synergy is being asked to reinvest its profits in that
$15 million to provide for renewable energy through photovoltaics.
(1)–(4)
The first part of the question was whether I stood by my comments that the cost
overrun, or blow-out if the member wants to call it that, is nothing in the
vicinity of $500 million. Of course I stand by that answer, as does the
Premier. I will explain why that is quite correct. Over the past three days I
have heard four separate figures as to what the cost overrun, or blow-out if
you like, is. There is a blow-out; there is no question about that. Let me
describe the four figures that I have heard over the past several days. Today
the Leader of the Opposition said that the cost blow-out was $400 million. When
that question was asked of me in November last year, the Leader of the
Opposition said it was $500 million.
Mr M. McGowan : I
asked you a question.
Mr C.C. PORTER : We
have had $400 million and we have had $500 million.
Mr M. McGowan : You
are very slippery.
Mr C.C. PORTER :
The Leader of the Opposition is as slippery as a bucket of eels in oil, which
is very slippery.
Mr P. Papalia : Did
you reverse that in the budget?
Mr C.C. PORTER :
No, I just came up with that then.
Mr D.A. Templeman interjected.
The SPEAKER :
Surrender, member for Mandurah. I formally call you to order for the second
time today. I think you have all had your fun.
Mr C.C. PORTER :
The Leader of the Opposition cited a cost overrun of $400 million and $500 million.
The early edition of The West Australian referred to a huge cost blow-out of $600 million. The edition shortly after
that said it was $450 million, so we had a $150 million blow-out from The West Australian within two hours of
the first and second edition. We have seen a number of figures. The first point
that the Leader of the Opposition and the shadow Treasurer need to understand
is that the total cost of the program does not equal the overrun. The total
cost of the program was first cited in the budget papers in 2011–12 as
$303 million. The total cost of the program was $303 million over 10 years. We
are now estimating that over the total life of the program, which is 10 years,
the total cost will likely be in the vicinity of $450 million. So $450 million
minus $300 million is $150 million, which is a cost overrun of $150 million.
Divided by 10, that is about $15 million a year. That is the answer. The point
is that the cost overrun of $15 million a year has occurred because the
information that was being collated and the applications that were being
entered between Synergy and the Office of Energy were far from perfect.
Mr B.S. Wyatt : So
it is a $420 million blow-out.
Mr C.C. PORTER : Do
I need to explain it again? It is actually not that complicated. If the shadow
Treasurer ever cares to look at a budget paper, he will see that the overall
cost estimate was $303 million over 10 years. We now expect that the total cost
will be about $450 million over 10 years. So $450 million minus $300 million is
$150 million, which is $15 million a year. When we put the cap in, that was the
first time that we were able to give a proper estimate of what the overall scheme
would be over 10 years because without a cap, unlimited applications could
potentially have been processed and accepted.
Mr B.J. Grylls :
Which is what they called for.
Mr C.C. PORTER :
Exactly. The 150-megawatt cap gave us the ability to estimate the scheme would
cost $300 million over 10 years because that was the upper limit on the scheme.
Yes, that upper limit was breached to the tune of $15 million a year. When we
put in the cap, which gave us the figure of $300 million, what was the response
of the Labor Party? It was ''Feedin Tariff Armageddon on its way''.
Well, ''I'mageddon'' tired of overstatements in press
releases! That was better than the eels. When we put in the cap of 150 megawatts,
the Labor position was that we should not have done that; we should not have
attempted to cap the scheme at $300 million. Labor's position was that
it should be uncapped. The one thing I can tell members is that if it were
uncapped, the demand would have grown and grown and the applications would have
been processed and processed. The Labor Party's position was no cap. At
the time of the cap, the opposition said —
''It is truly perverse that a
Government would wind up a scheme, purely on the grounds that it has been too
successful.
The opposition wanted us to keep it
going beyond the cap of 150 megawatts, which meant that it would have cost more
than $300 million. The opposition's policy was to actually have it cost
more than $300 million! It then went on to say that if the Barnett government —
Point of Order
Mr
B.S. WYATT : I am looking back over my question; it was specific and
in four parts. At no point did I ask questions about anything other than cost
estimates from the Treasurer, and I ask you, Mr Speaker, to bring the Treasurer
back to the questions I asked.
Mr
C.C. PORTER : I am trying to answer the question globally.
Several members interjected.
Questions without Notice Resumed
Mr C.C. PORTER :
When the cap was instituted, Labor's position was this —
Several members interjected.
The SPEAKER : Member for
Bassendean, I will formally call you to order for the first time today. Member
for West Swan, you are formally called to order for the first time today as
well. Member for Warnbro, I formally call you to order for the second time
today. Treasurer, make haste.
Mr C.C. PORTER :
Indeed, Mr Speaker. The extra $15 million a year over the budget cycle —
Ms R. Saffioti interjected.
The SPEAKER :
Member for West Swan, I formally call you to order for the second time today.
Mr C.C. PORTER :
The $15 million extra a year over the budget period, as the Minister for Energy
announced yesterday, is going to be worn—paid for—by Synergy,
out of its profits. Very interestingly, the opposition's press release,
from Hon Kate Doust, was—I will finish here, Mr Speaker —
If the Barnett Government was serious about climate change
it would reinvest the massive profits it is making from increased electricity
tariffs into ensuring the electricity network can cope with more small
renewable energy generators
What good advice it was, because although the cap was
breached, which is a matter of some concern, it was breached by $15 million a
year over 10 years, and Synergy is being asked to reinvest its profits in that
$15 million to provide for renewable energy through photovoltaics.
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