❓ Mr. Johnston questions the Premier about Mr. Wedgwood's reservations regarding the Electricity Market Review. The Premier defends the review, blaming the previous Labor government for high electricity costs due to unused power station capacity contracts.
AnsweredQoN 716Legislative Assembly
QuestionView source ↗
ELECTRICITY MARKET REVIEW — GEOFF WEDGWOOD
716. Mr W.J. JOHNSTON to the
Premier:
I have a supplementary question.
Mr J. Norberger interjected.
The SPEAKER :
Member for Joondalup, I call you to order for the first time.
Mr W.J. JOHNSTON :
Does the Premier agree with Mr Wedgwood's comments about the
Electricity Market Review, and I quote, ''Not sure we want this to go to
cabinet even for noting''?
716. Mr W.J. JOHNSTON to the
Premier:
I have a supplementary question.
Mr J. Norberger interjected.
The SPEAKER :
Member for Joondalup, I call you to order for the first time.
Mr W.J. JOHNSTON :
Does the Premier agree with Mr Wedgwood's comments about the
Electricity Market Review, and I quote, ''Not sure we want this to go to
cabinet even for noting''?
AnswerView source ↗
The member is talking about a
discussion in an office. As it was, if the member is interested, the
electricity review did go to cabinet, and a cabinet decision was made, and that
review is underway. Why is it underway? It is underway because the cost of
producing electricity in this state is too high, and one of the major reasons
for that is the costs that were built into the system during the time of the
Labor government and none more so than paying for electricity capacity for
power stations that have never or rarely ever been turned on and probably never
will. The Labor government tried to create an illusion of competition in the
marketplace by signing all the contracts. Then people went out and bought
government trading enterprise units. There were power stations, and the
government, taxpayer and electricity consumer have been paying for capacity
that has never been used. Why did the Labor Party do that? It did it so that it
could create a pretence and say, ''Look, we have deregulated the market
and look at the private investment.'' What if someone came to me and
said, ''Put in a power station, you will never have to switch it on, and
we will pay you for it whether we use the electricity or not.'' What a
brilliant deal that was! That is what the Labor government did and it is why
the state has hundreds of megawatts of excess capacity and poor mum-and-dad
consumers are paying for power stations that have never been used, and probably
never will be used. The opposition calls that electricity reform. It was born
out of a sense jealousy —
Ms R. Saffioti :
The Premier is the one with a chip on his shoulder in this place.
Mr C.J. BARNETT : I
do not have a chip on my shoulder!
Several members interjected.
The SPEAKER :
Member for West Swan, I was hoping that you would not carry on while I am on my
feet; I call you to order for the third time. I do not want any screaming and
wailing and gnashing of teeth, if I ask somebody to leave the chamber.
Several members interjected.
The SPEAKER :
Member for Warnbro! Now, Premier just come back to the point and let us carry
on.
Mr
C.J. BARNETT : It is all about the cost of electricity. Anyone who believes
that they can make some artificial, theoretical, economic adjustment to the
market that will reduce electricity costs overnight is delusional. During the
1990s—I do recall who was Minister for Energy at the time—from
1993 until 2001, there was only one year, 1997, when the price of electricity
went up, and that was by 3.75 per cent. There were no price increases for eight
years. That did not occur by magic —
Several members interjected.
The
SPEAKER : Member for Cockburn, I call you to order for the first time.
Mr
C.J. BARNETT : For eight years of the Liberal–National government in
the 90s, there was only one year when there was an electricity increase, and it
was a small increase by any standard, particularly inflation at the time. That
was not because of some theoretical concoction of first-year economics; it was
because a number of real decisions were made about the cost of producing
electricity. One was stopping underground coalmining, which was very expensive.
Another was the disaggregation of the North West Shelf contract, so there were
direct dealings between gas consumers and customers. Another was the
redundancies of about 1 000 employees. They were practical measures to reduce
costs. That is what happened. Labor came in, thought it could adopt economics 101
and bring in a theoretical construct —
Mr M. McGowan : A
market!
Mr C.J. BARNETT :
Labor did not create a market; it created electricity utilities—private
sector investment that bought a plant, stuck it there and it has never been
used. That is not a market! A market is a large number of buyers and sellers.
The opposition's sellers never sold electricity because they never
produced any.
discussion in an office. As it was, if the member is interested, the
electricity review did go to cabinet, and a cabinet decision was made, and that
review is underway. Why is it underway? It is underway because the cost of
producing electricity in this state is too high, and one of the major reasons
for that is the costs that were built into the system during the time of the
Labor government and none more so than paying for electricity capacity for
power stations that have never or rarely ever been turned on and probably never
will. The Labor government tried to create an illusion of competition in the
marketplace by signing all the contracts. Then people went out and bought
government trading enterprise units. There were power stations, and the
government, taxpayer and electricity consumer have been paying for capacity
that has never been used. Why did the Labor Party do that? It did it so that it
could create a pretence and say, ''Look, we have deregulated the market
and look at the private investment.'' What if someone came to me and
said, ''Put in a power station, you will never have to switch it on, and
we will pay you for it whether we use the electricity or not.'' What a
brilliant deal that was! That is what the Labor government did and it is why
the state has hundreds of megawatts of excess capacity and poor mum-and-dad
consumers are paying for power stations that have never been used, and probably
never will be used. The opposition calls that electricity reform. It was born
out of a sense jealousy —
Ms R. Saffioti :
The Premier is the one with a chip on his shoulder in this place.
Mr C.J. BARNETT : I
do not have a chip on my shoulder!
Several members interjected.
The SPEAKER :
Member for West Swan, I was hoping that you would not carry on while I am on my
feet; I call you to order for the third time. I do not want any screaming and
wailing and gnashing of teeth, if I ask somebody to leave the chamber.
Several members interjected.
The SPEAKER :
Member for Warnbro! Now, Premier just come back to the point and let us carry
on.
Mr
C.J. BARNETT : It is all about the cost of electricity. Anyone who believes
that they can make some artificial, theoretical, economic adjustment to the
market that will reduce electricity costs overnight is delusional. During the
1990s—I do recall who was Minister for Energy at the time—from
1993 until 2001, there was only one year, 1997, when the price of electricity
went up, and that was by 3.75 per cent. There were no price increases for eight
years. That did not occur by magic —
Several members interjected.
The
SPEAKER : Member for Cockburn, I call you to order for the first time.
Mr
C.J. BARNETT : For eight years of the Liberal–National government in
the 90s, there was only one year when there was an electricity increase, and it
was a small increase by any standard, particularly inflation at the time. That
was not because of some theoretical concoction of first-year economics; it was
because a number of real decisions were made about the cost of producing
electricity. One was stopping underground coalmining, which was very expensive.
Another was the disaggregation of the North West Shelf contract, so there were
direct dealings between gas consumers and customers. Another was the
redundancies of about 1 000 employees. They were practical measures to reduce
costs. That is what happened. Labor came in, thought it could adopt economics 101
and bring in a theoretical construct —
Mr M. McGowan : A
market!
Mr C.J. BARNETT :
Labor did not create a market; it created electricity utilities—private
sector investment that bought a plant, stuck it there and it has never been
used. That is not a market! A market is a large number of buyers and sellers.
The opposition's sellers never sold electricity because they never
produced any.
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