❓ Debate regarding water and electricity tariff increases, cost reflectivity, and the previous government's policies. The Treasurer avoids providing specific figures, citing complexity and ongoing analysis.
AnsweredQoN 35Legislative Assembly
QuestionView source ↗
WATER AND ELECTRICITY TARIFFS — COST REFLECTIVITY
I note that today’s report from the Centre for Independent Studies reveals that, thanks to the previous Labor government’s tax reduction reforms, Western Australia continues to have the most business-friendly taxation regime in the country. (1) Why does the Treasurer not provide to households the same tax relief that it allows business to continue to receive? (2) Does the Treasurer know what further increases to household water and electricity tariffs are required to reach full cost reflectivity; and, if so, what are those costs? (3) Does the Treasurer know when cost reflectivity for household water and electricity will be reached; and, if so, will he advise the house accordingly? Mr C.C. PORTER
I note that today’s report from the Centre for Independent Studies reveals that, thanks to the previous Labor government’s tax reduction reforms, Western Australia continues to have the most business-friendly taxation regime in the country. (1) Why does the Treasurer not provide to households the same tax relief that it allows business to continue to receive? (2) Does the Treasurer know what further increases to household water and electricity tariffs are required to reach full cost reflectivity; and, if so, what are those costs? (3) Does the Treasurer know when cost reflectivity for household water and electricity will be reached; and, if so, will he advise the house accordingly? Mr C.C. PORTER
AnswerView source ↗
(1)–(3) First of all, I am absolutely delighted that the shadow Treasurer is asking questions based on CIS reports; I never thought I would see the day. It is a fantastic organisation. In fact, I subscribe to it, and it has many good things to say. It had a lot of good things to say about Western Australia, and not merely about the Labor Party’s time in government, because the time frame it was looking at also encompassed our time in government. The CIS report provided an excellent representation of the economic state of Western Australia, so I thank the shadow Treasurer for bringing it to the attention of the house. In respect of the issue of tariffs, the shadow Treasurer has asked whether I will spell out, prior to the budget, precisely what the tariff increases in water and electricity will be. She must know that I will not do that, but I will answer each of her questions in turn. That is the first question I have answered; I am not going to do that, and the shadow Treasurer knew that I would not. As to what price increases would be required to reach cost reflectivity, that is a very complicated question. It is complicated for the reason that one of the assumptions that is worked on in respect of the modelling that occurs both within and outside the Department of Treasury and Finance is that costs are ceteris paribus and based on the analysis of the Economic Regulation Authority and the 2009 costs—an analysis that excluded Synergy. Working out precisely what the costs are is very difficult and requires ongoing work in this budget. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : What’s your answer? Mr C.C. PORTER : Let me say this — Mrs M.H. Roberts : Does that mean you don’t know? Mr C.C. PORTER : What you will find is that the electricity market in Western Australia is very complicated, and if the member listens, I will give her some indication of why that is the case. Mr E.S. Ripper : What’s the bottom line? Mr C.C. PORTER : The bottom line with regard to costs changes is that one of the things that the previous government promised was that the price of electricity was going to decrease. Of course, that now appears to be very, very unlikely. Costs have been contributed to by a variety of factors, but I ask the shadow Treasurer: had we maintained the Labor glide path—with costs increasing as they were, through a variety of mechanisms, not least of which is renewable energy certificates, which places a very large ongoing impost on Synergy—when would we have likely reached cost reflectivity? The answer, based on the best assessment that I have through the Department of Treasury and Finance, is never. That is why this government took the very, very difficult decision that it took last year. Mrs M.H. Roberts : When will you reach it? Can you tell us? Mr C.C. PORTER : We are still doing that analysis. We have got as far as working out that the previous government would never have reached cost reflectivity. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : You do know what the total goal is? Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
(1) Why does the Treasurer not provide to households the same tax relief that it allows business to continue to receive? (2) Does the Treasurer know what further increases to household water and electricity tariffs are required to reach full cost reflectivity; and, if so, what are those costs? (3) Does the Treasurer know when cost reflectivity for household water and electricity will be reached; and, if so, will he advise the house accordingly? Mr C.C. PORTER replied: (1)–(3) First of all, I am absolutely delighted that the shadow Treasurer is asking questions based on CIS reports; I never thought I would see the day. It is a fantastic organisation. In fact, I subscribe to it, and it has many good things to say. It had a lot of good things to say about Western Australia, and not merely about the Labor Party’s time in government, because the time frame it was looking at also encompassed our time in government. The CIS report provided an excellent representation of the economic state of Western Australia, so I thank the shadow Treasurer for bringing it to the attention of the house. In respect of the issue of tariffs, the shadow Treasurer has asked whether I will spell out, prior to the budget, precisely what the tariff increases in water and electricity will be. She must know that I will not do that, but I will answer each of her questions in turn. That is the first question I have answered; I am not going to do that, and the shadow Treasurer knew that I would not. As to what price increases would be required to reach cost reflectivity, that is a very complicated question. It is complicated for the reason that one of the assumptions that is worked on in respect of the modelling that occurs both within and outside the Department of Treasury and Finance is that costs are ceteris paribus and based on the analysis of the Economic Regulation Authority and the 2009 costs—an analysis that excluded Synergy. Working out precisely what the costs are is very difficult and requires ongoing work in this budget. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : What’s your answer? Mr C.C. PORTER : Let me say this — Mrs M.H. Roberts : Does that mean you don’t know? Mr C.C. PORTER : What you will find is that the electricity market in Western Australia is very complicated, and if the member listens, I will give her some indication of why that is the case. Mr E.S. Ripper : What’s the bottom line? Mr C.C. PORTER : The bottom line with regard to costs changes is that one of the things that the previous government promised was that the price of electricity was going to decrease. Of course, that now appears to be very, very unlikely. Costs have been contributed to by a variety of factors, but I ask the shadow Treasurer: had we maintained the Labor glide path—with costs increasing as they were, through a variety of mechanisms, not least of which is renewable energy certificates, which places a very large ongoing impost on Synergy—when would we have likely reached cost reflectivity? The answer, based on the best assessment that I have through the Department of Treasury and Finance, is never. That is why this government took the very, very difficult decision that it took last year. Mrs M.H. Roberts : When will you reach it? Can you tell us? Mr C.C. PORTER : We are still doing that analysis. We have got as far as working out that the previous government would never have reached cost reflectivity. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : You do know what the total goal is? Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
(2) Does the Treasurer know what further increases to household water and electricity tariffs are required to reach full cost reflectivity; and, if so, what are those costs? (3) Does the Treasurer know when cost reflectivity for household water and electricity will be reached; and, if so, will he advise the house accordingly? Mr C.C. PORTER replied: (1)–(3) First of all, I am absolutely delighted that the shadow Treasurer is asking questions based on CIS reports; I never thought I would see the day. It is a fantastic organisation. In fact, I subscribe to it, and it has many good things to say. It had a lot of good things to say about Western Australia, and not merely about the Labor Party’s time in government, because the time frame it was looking at also encompassed our time in government. The CIS report provided an excellent representation of the economic state of Western Australia, so I thank the shadow Treasurer for bringing it to the attention of the house. In respect of the issue of tariffs, the shadow Treasurer has asked whether I will spell out, prior to the budget, precisely what the tariff increases in water and electricity will be. She must know that I will not do that, but I will answer each of her questions in turn. That is the first question I have answered; I am not going to do that, and the shadow Treasurer knew that I would not. As to what price increases would be required to reach cost reflectivity, that is a very complicated question. It is complicated for the reason that one of the assumptions that is worked on in respect of the modelling that occurs both within and outside the Department of Treasury and Finance is that costs are ceteris paribus and based on the analysis of the Economic Regulation Authority and the 2009 costs—an analysis that excluded Synergy. Working out precisely what the costs are is very difficult and requires ongoing work in this budget. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : What’s your answer? Mr C.C. PORTER : Let me say this — Mrs M.H. Roberts : Does that mean you don’t know? Mr C.C. PORTER : What you will find is that the electricity market in Western Australia is very complicated, and if the member listens, I will give her some indication of why that is the case. Mr E.S. Ripper : What’s the bottom line? Mr C.C. PORTER : The bottom line with regard to costs changes is that one of the things that the previous government promised was that the price of electricity was going to decrease. Of course, that now appears to be very, very unlikely. Costs have been contributed to by a variety of factors, but I ask the shadow Treasurer: had we maintained the Labor glide path—with costs increasing as they were, through a variety of mechanisms, not least of which is renewable energy certificates, which places a very large ongoing impost on Synergy—when would we have likely reached cost reflectivity? The answer, based on the best assessment that I have through the Department of Treasury and Finance, is never. That is why this government took the very, very difficult decision that it took last year. Mrs M.H. Roberts : When will you reach it? Can you tell us? Mr C.C. PORTER : We are still doing that analysis. We have got as far as working out that the previous government would never have reached cost reflectivity. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : You do know what the total goal is? Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
(3) Does the Treasurer know when cost reflectivity for household water and electricity will be reached; and, if so, will he advise the house accordingly? Mr C.C. PORTER replied: (1)–(3) First of all, I am absolutely delighted that the shadow Treasurer is asking questions based on CIS reports; I never thought I would see the day. It is a fantastic organisation. In fact, I subscribe to it, and it has many good things to say. It had a lot of good things to say about Western Australia, and not merely about the Labor Party’s time in government, because the time frame it was looking at also encompassed our time in government. The CIS report provided an excellent representation of the economic state of Western Australia, so I thank the shadow Treasurer for bringing it to the attention of the house. In respect of the issue of tariffs, the shadow Treasurer has asked whether I will spell out, prior to the budget, precisely what the tariff increases in water and electricity will be. She must know that I will not do that, but I will answer each of her questions in turn. That is the first question I have answered; I am not going to do that, and the shadow Treasurer knew that I would not. As to what price increases would be required to reach cost reflectivity, that is a very complicated question. It is complicated for the reason that one of the assumptions that is worked on in respect of the modelling that occurs both within and outside the Department of Treasury and Finance is that costs are ceteris paribus and based on the analysis of the Economic Regulation Authority and the 2009 costs—an analysis that excluded Synergy. Working out precisely what the costs are is very difficult and requires ongoing work in this budget. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : What’s your answer? Mr C.C. PORTER : Let me say this — Mrs M.H. Roberts : Does that mean you don’t know? Mr C.C. PORTER : What you will find is that the electricity market in Western Australia is very complicated, and if the member listens, I will give her some indication of why that is the case. Mr E.S. Ripper : What’s the bottom line? Mr C.C. PORTER : The bottom line with regard to costs changes is that one of the things that the previous government promised was that the price of electricity was going to decrease. Of course, that now appears to be very, very unlikely. Costs have been contributed to by a variety of factors, but I ask the shadow Treasurer: had we maintained the Labor glide path—with costs increasing as they were, through a variety of mechanisms, not least of which is renewable energy certificates, which places a very large ongoing impost on Synergy—when would we have likely reached cost reflectivity? The answer, based on the best assessment that I have through the Department of Treasury and Finance, is never. That is why this government took the very, very difficult decision that it took last year. Mrs M.H. Roberts : When will you reach it? Can you tell us? Mr C.C. PORTER : We are still doing that analysis. We have got as far as working out that the previous government would never have reached cost reflectivity. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : You do know what the total goal is? Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mr C.C. PORTER replied: (1)–(3) First of all, I am absolutely delighted that the shadow Treasurer is asking questions based on CIS reports; I never thought I would see the day. It is a fantastic organisation. In fact, I subscribe to it, and it has many good things to say. It had a lot of good things to say about Western Australia, and not merely about the Labor Party’s time in government, because the time frame it was looking at also encompassed our time in government. The CIS report provided an excellent representation of the economic state of Western Australia, so I thank the shadow Treasurer for bringing it to the attention of the house. In respect of the issue of tariffs, the shadow Treasurer has asked whether I will spell out, prior to the budget, precisely what the tariff increases in water and electricity will be. She must know that I will not do that, but I will answer each of her questions in turn. That is the first question I have answered; I am not going to do that, and the shadow Treasurer knew that I would not. As to what price increases would be required to reach cost reflectivity, that is a very complicated question. It is complicated for the reason that one of the assumptions that is worked on in respect of the modelling that occurs both within and outside the Department of Treasury and Finance is that costs are ceteris paribus and based on the analysis of the Economic Regulation Authority and the 2009 costs—an analysis that excluded Synergy. Working out precisely what the costs are is very difficult and requires ongoing work in this budget. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : What’s your answer? Mr C.C. PORTER : Let me say this — Mrs M.H. Roberts : Does that mean you don’t know? Mr C.C. PORTER : What you will find is that the electricity market in Western Australia is very complicated, and if the member listens, I will give her some indication of why that is the case. Mr E.S. Ripper : What’s the bottom line? Mr C.C. PORTER : The bottom line with regard to costs changes is that one of the things that the previous government promised was that the price of electricity was going to decrease. Of course, that now appears to be very, very unlikely. Costs have been contributed to by a variety of factors, but I ask the shadow Treasurer: had we maintained the Labor glide path—with costs increasing as they were, through a variety of mechanisms, not least of which is renewable energy certificates, which places a very large ongoing impost on Synergy—when would we have likely reached cost reflectivity? The answer, based on the best assessment that I have through the Department of Treasury and Finance, is never. That is why this government took the very, very difficult decision that it took last year. Mrs M.H. Roberts : When will you reach it? Can you tell us? Mr C.C. PORTER : We are still doing that analysis. We have got as far as working out that the previous government would never have reached cost reflectivity. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : You do know what the total goal is? Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
(1)–(3) First of all, I am absolutely delighted that the shadow Treasurer is asking questions based on CIS reports; I never thought I would see the day. It is a fantastic organisation. In fact, I subscribe to it, and it has many good things to say. It had a lot of good things to say about Western Australia, and not merely about the Labor Party’s time in government, because the time frame it was looking at also encompassed our time in government. The CIS report provided an excellent representation of the economic state of Western Australia, so I thank the shadow Treasurer for bringing it to the attention of the house. In respect of the issue of tariffs, the shadow Treasurer has asked whether I will spell out, prior to the budget, precisely what the tariff increases in water and electricity will be. She must know that I will not do that, but I will answer each of her questions in turn. That is the first question I have answered; I am not going to do that, and the shadow Treasurer knew that I would not. As to what price increases would be required to reach cost reflectivity, that is a very complicated question. It is complicated for the reason that one of the assumptions that is worked on in respect of the modelling that occurs both within and outside the Department of Treasury and Finance is that costs are ceteris paribus and based on the analysis of the Economic Regulation Authority and the 2009 costs—an analysis that excluded Synergy. Working out precisely what the costs are is very difficult and requires ongoing work in this budget. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : What’s your answer? Mr C.C. PORTER : Let me say this — Mrs M.H. Roberts : Does that mean you don’t know? Mr C.C. PORTER : What you will find is that the electricity market in Western Australia is very complicated, and if the member listens, I will give her some indication of why that is the case. Mr E.S. Ripper : What’s the bottom line? Mr C.C. PORTER : The bottom line with regard to costs changes is that one of the things that the previous government promised was that the price of electricity was going to decrease. Of course, that now appears to be very, very unlikely. Costs have been contributed to by a variety of factors, but I ask the shadow Treasurer: had we maintained the Labor glide path—with costs increasing as they were, through a variety of mechanisms, not least of which is renewable energy certificates, which places a very large ongoing impost on Synergy—when would we have likely reached cost reflectivity? The answer, based on the best assessment that I have through the Department of Treasury and Finance, is never. That is why this government took the very, very difficult decision that it took last year. Mrs M.H. Roberts : When will you reach it? Can you tell us? Mr C.C. PORTER : We are still doing that analysis. We have got as far as working out that the previous government would never have reached cost reflectivity. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : You do know what the total goal is? Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mr E.S. Ripper : What’s your answer? Mr C.C. PORTER : Let me say this — Mrs M.H. Roberts : Does that mean you don’t know? Mr C.C. PORTER : What you will find is that the electricity market in Western Australia is very complicated, and if the member listens, I will give her some indication of why that is the case. Mr E.S. Ripper : What’s the bottom line? Mr C.C. PORTER : The bottom line with regard to costs changes is that one of the things that the previous government promised was that the price of electricity was going to decrease. Of course, that now appears to be very, very unlikely. Costs have been contributed to by a variety of factors, but I ask the shadow Treasurer: had we maintained the Labor glide path—with costs increasing as they were, through a variety of mechanisms, not least of which is renewable energy certificates, which places a very large ongoing impost on Synergy—when would we have likely reached cost reflectivity? The answer, based on the best assessment that I have through the Department of Treasury and Finance, is never. That is why this government took the very, very difficult decision that it took last year. Mrs M.H. Roberts : When will you reach it? Can you tell us? Mr C.C. PORTER : We are still doing that analysis. We have got as far as working out that the previous government would never have reached cost reflectivity. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : You do know what the total goal is? Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mr C.C. PORTER : Let me say this — Mrs M.H. Roberts : Does that mean you don’t know? Mr C.C. PORTER : What you will find is that the electricity market in Western Australia is very complicated, and if the member listens, I will give her some indication of why that is the case. Mr E.S. Ripper : What’s the bottom line? Mr C.C. PORTER : The bottom line with regard to costs changes is that one of the things that the previous government promised was that the price of electricity was going to decrease. Of course, that now appears to be very, very unlikely. Costs have been contributed to by a variety of factors, but I ask the shadow Treasurer: had we maintained the Labor glide path—with costs increasing as they were, through a variety of mechanisms, not least of which is renewable energy certificates, which places a very large ongoing impost on Synergy—when would we have likely reached cost reflectivity? The answer, based on the best assessment that I have through the Department of Treasury and Finance, is never. That is why this government took the very, very difficult decision that it took last year. Mrs M.H. Roberts : When will you reach it? Can you tell us? Mr C.C. PORTER : We are still doing that analysis. We have got as far as working out that the previous government would never have reached cost reflectivity. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : You do know what the total goal is? Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mrs M.H. Roberts : Does that mean you don’t know? Mr C.C. PORTER : What you will find is that the electricity market in Western Australia is very complicated, and if the member listens, I will give her some indication of why that is the case. Mr E.S. Ripper : What’s the bottom line? Mr C.C. PORTER : The bottom line with regard to costs changes is that one of the things that the previous government promised was that the price of electricity was going to decrease. Of course, that now appears to be very, very unlikely. Costs have been contributed to by a variety of factors, but I ask the shadow Treasurer: had we maintained the Labor glide path—with costs increasing as they were, through a variety of mechanisms, not least of which is renewable energy certificates, which places a very large ongoing impost on Synergy—when would we have likely reached cost reflectivity? The answer, based on the best assessment that I have through the Department of Treasury and Finance, is never. That is why this government took the very, very difficult decision that it took last year. Mrs M.H. Roberts : When will you reach it? Can you tell us? Mr C.C. PORTER : We are still doing that analysis. We have got as far as working out that the previous government would never have reached cost reflectivity. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : You do know what the total goal is? Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mr C.C. PORTER : What you will find is that the electricity market in Western Australia is very complicated, and if the member listens, I will give her some indication of why that is the case. Mr E.S. Ripper : What’s the bottom line? Mr C.C. PORTER : The bottom line with regard to costs changes is that one of the things that the previous government promised was that the price of electricity was going to decrease. Of course, that now appears to be very, very unlikely. Costs have been contributed to by a variety of factors, but I ask the shadow Treasurer: had we maintained the Labor glide path—with costs increasing as they were, through a variety of mechanisms, not least of which is renewable energy certificates, which places a very large ongoing impost on Synergy—when would we have likely reached cost reflectivity? The answer, based on the best assessment that I have through the Department of Treasury and Finance, is never. That is why this government took the very, very difficult decision that it took last year. Mrs M.H. Roberts : When will you reach it? Can you tell us? Mr C.C. PORTER : We are still doing that analysis. We have got as far as working out that the previous government would never have reached cost reflectivity. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : You do know what the total goal is? Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mr E.S. Ripper : What’s the bottom line? Mr C.C. PORTER : The bottom line with regard to costs changes is that one of the things that the previous government promised was that the price of electricity was going to decrease. Of course, that now appears to be very, very unlikely. Costs have been contributed to by a variety of factors, but I ask the shadow Treasurer: had we maintained the Labor glide path—with costs increasing as they were, through a variety of mechanisms, not least of which is renewable energy certificates, which places a very large ongoing impost on Synergy—when would we have likely reached cost reflectivity? The answer, based on the best assessment that I have through the Department of Treasury and Finance, is never. That is why this government took the very, very difficult decision that it took last year. Mrs M.H. Roberts : When will you reach it? Can you tell us? Mr C.C. PORTER : We are still doing that analysis. We have got as far as working out that the previous government would never have reached cost reflectivity. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : You do know what the total goal is? Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mr C.C. PORTER : The bottom line with regard to costs changes is that one of the things that the previous government promised was that the price of electricity was going to decrease. Of course, that now appears to be very, very unlikely. Costs have been contributed to by a variety of factors, but I ask the shadow Treasurer: had we maintained the Labor glide path—with costs increasing as they were, through a variety of mechanisms, not least of which is renewable energy certificates, which places a very large ongoing impost on Synergy—when would we have likely reached cost reflectivity? The answer, based on the best assessment that I have through the Department of Treasury and Finance, is never. That is why this government took the very, very difficult decision that it took last year. Mrs M.H. Roberts : When will you reach it? Can you tell us? Mr C.C. PORTER : We are still doing that analysis. We have got as far as working out that the previous government would never have reached cost reflectivity. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : You do know what the total goal is? Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mrs M.H. Roberts : When will you reach it? Can you tell us? Mr C.C. PORTER : We are still doing that analysis. We have got as far as working out that the previous government would never have reached cost reflectivity. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : You do know what the total goal is? Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mr C.C. PORTER : We are still doing that analysis. We have got as far as working out that the previous government would never have reached cost reflectivity. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : You do know what the total goal is? Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : You do know what the total goal is? Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mr E.S. Ripper : You do know what the total goal is? Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
(1) Why does the Treasurer not provide to households the same tax relief that it allows business to continue to receive? (2) Does the Treasurer know what further increases to household water and electricity tariffs are required to reach full cost reflectivity; and, if so, what are those costs? (3) Does the Treasurer know when cost reflectivity for household water and electricity will be reached; and, if so, will he advise the house accordingly? Mr C.C. PORTER replied: (1)–(3) First of all, I am absolutely delighted that the shadow Treasurer is asking questions based on CIS reports; I never thought I would see the day. It is a fantastic organisation. In fact, I subscribe to it, and it has many good things to say. It had a lot of good things to say about Western Australia, and not merely about the Labor Party’s time in government, because the time frame it was looking at also encompassed our time in government. The CIS report provided an excellent representation of the economic state of Western Australia, so I thank the shadow Treasurer for bringing it to the attention of the house. In respect of the issue of tariffs, the shadow Treasurer has asked whether I will spell out, prior to the budget, precisely what the tariff increases in water and electricity will be. She must know that I will not do that, but I will answer each of her questions in turn. That is the first question I have answered; I am not going to do that, and the shadow Treasurer knew that I would not. As to what price increases would be required to reach cost reflectivity, that is a very complicated question. It is complicated for the reason that one of the assumptions that is worked on in respect of the modelling that occurs both within and outside the Department of Treasury and Finance is that costs are ceteris paribus and based on the analysis of the Economic Regulation Authority and the 2009 costs—an analysis that excluded Synergy. Working out precisely what the costs are is very difficult and requires ongoing work in this budget. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : What’s your answer? Mr C.C. PORTER : Let me say this — Mrs M.H. Roberts : Does that mean you don’t know? Mr C.C. PORTER : What you will find is that the electricity market in Western Australia is very complicated, and if the member listens, I will give her some indication of why that is the case. Mr E.S. Ripper : What’s the bottom line? Mr C.C. PORTER : The bottom line with regard to costs changes is that one of the things that the previous government promised was that the price of electricity was going to decrease. Of course, that now appears to be very, very unlikely. Costs have been contributed to by a variety of factors, but I ask the shadow Treasurer: had we maintained the Labor glide path—with costs increasing as they were, through a variety of mechanisms, not least of which is renewable energy certificates, which places a very large ongoing impost on Synergy—when would we have likely reached cost reflectivity? The answer, based on the best assessment that I have through the Department of Treasury and Finance, is never. That is why this government took the very, very difficult decision that it took last year. Mrs M.H. Roberts : When will you reach it? Can you tell us? Mr C.C. PORTER : We are still doing that analysis. We have got as far as working out that the previous government would never have reached cost reflectivity. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : You do know what the total goal is? Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
(2) Does the Treasurer know what further increases to household water and electricity tariffs are required to reach full cost reflectivity; and, if so, what are those costs? (3) Does the Treasurer know when cost reflectivity for household water and electricity will be reached; and, if so, will he advise the house accordingly? Mr C.C. PORTER replied: (1)–(3) First of all, I am absolutely delighted that the shadow Treasurer is asking questions based on CIS reports; I never thought I would see the day. It is a fantastic organisation. In fact, I subscribe to it, and it has many good things to say. It had a lot of good things to say about Western Australia, and not merely about the Labor Party’s time in government, because the time frame it was looking at also encompassed our time in government. The CIS report provided an excellent representation of the economic state of Western Australia, so I thank the shadow Treasurer for bringing it to the attention of the house. In respect of the issue of tariffs, the shadow Treasurer has asked whether I will spell out, prior to the budget, precisely what the tariff increases in water and electricity will be. She must know that I will not do that, but I will answer each of her questions in turn. That is the first question I have answered; I am not going to do that, and the shadow Treasurer knew that I would not. As to what price increases would be required to reach cost reflectivity, that is a very complicated question. It is complicated for the reason that one of the assumptions that is worked on in respect of the modelling that occurs both within and outside the Department of Treasury and Finance is that costs are ceteris paribus and based on the analysis of the Economic Regulation Authority and the 2009 costs—an analysis that excluded Synergy. Working out precisely what the costs are is very difficult and requires ongoing work in this budget. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : What’s your answer? Mr C.C. PORTER : Let me say this — Mrs M.H. Roberts : Does that mean you don’t know? Mr C.C. PORTER : What you will find is that the electricity market in Western Australia is very complicated, and if the member listens, I will give her some indication of why that is the case. Mr E.S. Ripper : What’s the bottom line? Mr C.C. PORTER : The bottom line with regard to costs changes is that one of the things that the previous government promised was that the price of electricity was going to decrease. Of course, that now appears to be very, very unlikely. Costs have been contributed to by a variety of factors, but I ask the shadow Treasurer: had we maintained the Labor glide path—with costs increasing as they were, through a variety of mechanisms, not least of which is renewable energy certificates, which places a very large ongoing impost on Synergy—when would we have likely reached cost reflectivity? The answer, based on the best assessment that I have through the Department of Treasury and Finance, is never. That is why this government took the very, very difficult decision that it took last year. Mrs M.H. Roberts : When will you reach it? Can you tell us? Mr C.C. PORTER : We are still doing that analysis. We have got as far as working out that the previous government would never have reached cost reflectivity. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : You do know what the total goal is? Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
(3) Does the Treasurer know when cost reflectivity for household water and electricity will be reached; and, if so, will he advise the house accordingly? Mr C.C. PORTER replied: (1)–(3) First of all, I am absolutely delighted that the shadow Treasurer is asking questions based on CIS reports; I never thought I would see the day. It is a fantastic organisation. In fact, I subscribe to it, and it has many good things to say. It had a lot of good things to say about Western Australia, and not merely about the Labor Party’s time in government, because the time frame it was looking at also encompassed our time in government. The CIS report provided an excellent representation of the economic state of Western Australia, so I thank the shadow Treasurer for bringing it to the attention of the house. In respect of the issue of tariffs, the shadow Treasurer has asked whether I will spell out, prior to the budget, precisely what the tariff increases in water and electricity will be. She must know that I will not do that, but I will answer each of her questions in turn. That is the first question I have answered; I am not going to do that, and the shadow Treasurer knew that I would not. As to what price increases would be required to reach cost reflectivity, that is a very complicated question. It is complicated for the reason that one of the assumptions that is worked on in respect of the modelling that occurs both within and outside the Department of Treasury and Finance is that costs are ceteris paribus and based on the analysis of the Economic Regulation Authority and the 2009 costs—an analysis that excluded Synergy. Working out precisely what the costs are is very difficult and requires ongoing work in this budget. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : What’s your answer? Mr C.C. PORTER : Let me say this — Mrs M.H. Roberts : Does that mean you don’t know? Mr C.C. PORTER : What you will find is that the electricity market in Western Australia is very complicated, and if the member listens, I will give her some indication of why that is the case. Mr E.S. Ripper : What’s the bottom line? Mr C.C. PORTER : The bottom line with regard to costs changes is that one of the things that the previous government promised was that the price of electricity was going to decrease. Of course, that now appears to be very, very unlikely. Costs have been contributed to by a variety of factors, but I ask the shadow Treasurer: had we maintained the Labor glide path—with costs increasing as they were, through a variety of mechanisms, not least of which is renewable energy certificates, which places a very large ongoing impost on Synergy—when would we have likely reached cost reflectivity? The answer, based on the best assessment that I have through the Department of Treasury and Finance, is never. That is why this government took the very, very difficult decision that it took last year. Mrs M.H. Roberts : When will you reach it? Can you tell us? Mr C.C. PORTER : We are still doing that analysis. We have got as far as working out that the previous government would never have reached cost reflectivity. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : You do know what the total goal is? Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mr C.C. PORTER replied: (1)–(3) First of all, I am absolutely delighted that the shadow Treasurer is asking questions based on CIS reports; I never thought I would see the day. It is a fantastic organisation. In fact, I subscribe to it, and it has many good things to say. It had a lot of good things to say about Western Australia, and not merely about the Labor Party’s time in government, because the time frame it was looking at also encompassed our time in government. The CIS report provided an excellent representation of the economic state of Western Australia, so I thank the shadow Treasurer for bringing it to the attention of the house. In respect of the issue of tariffs, the shadow Treasurer has asked whether I will spell out, prior to the budget, precisely what the tariff increases in water and electricity will be. She must know that I will not do that, but I will answer each of her questions in turn. That is the first question I have answered; I am not going to do that, and the shadow Treasurer knew that I would not. As to what price increases would be required to reach cost reflectivity, that is a very complicated question. It is complicated for the reason that one of the assumptions that is worked on in respect of the modelling that occurs both within and outside the Department of Treasury and Finance is that costs are ceteris paribus and based on the analysis of the Economic Regulation Authority and the 2009 costs—an analysis that excluded Synergy. Working out precisely what the costs are is very difficult and requires ongoing work in this budget. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : What’s your answer? Mr C.C. PORTER : Let me say this — Mrs M.H. Roberts : Does that mean you don’t know? Mr C.C. PORTER : What you will find is that the electricity market in Western Australia is very complicated, and if the member listens, I will give her some indication of why that is the case. Mr E.S. Ripper : What’s the bottom line? Mr C.C. PORTER : The bottom line with regard to costs changes is that one of the things that the previous government promised was that the price of electricity was going to decrease. Of course, that now appears to be very, very unlikely. Costs have been contributed to by a variety of factors, but I ask the shadow Treasurer: had we maintained the Labor glide path—with costs increasing as they were, through a variety of mechanisms, not least of which is renewable energy certificates, which places a very large ongoing impost on Synergy—when would we have likely reached cost reflectivity? The answer, based on the best assessment that I have through the Department of Treasury and Finance, is never. That is why this government took the very, very difficult decision that it took last year. Mrs M.H. Roberts : When will you reach it? Can you tell us? Mr C.C. PORTER : We are still doing that analysis. We have got as far as working out that the previous government would never have reached cost reflectivity. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : You do know what the total goal is? Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
(1)–(3) First of all, I am absolutely delighted that the shadow Treasurer is asking questions based on CIS reports; I never thought I would see the day. It is a fantastic organisation. In fact, I subscribe to it, and it has many good things to say. It had a lot of good things to say about Western Australia, and not merely about the Labor Party’s time in government, because the time frame it was looking at also encompassed our time in government. The CIS report provided an excellent representation of the economic state of Western Australia, so I thank the shadow Treasurer for bringing it to the attention of the house. In respect of the issue of tariffs, the shadow Treasurer has asked whether I will spell out, prior to the budget, precisely what the tariff increases in water and electricity will be. She must know that I will not do that, but I will answer each of her questions in turn. That is the first question I have answered; I am not going to do that, and the shadow Treasurer knew that I would not. As to what price increases would be required to reach cost reflectivity, that is a very complicated question. It is complicated for the reason that one of the assumptions that is worked on in respect of the modelling that occurs both within and outside the Department of Treasury and Finance is that costs are ceteris paribus and based on the analysis of the Economic Regulation Authority and the 2009 costs—an analysis that excluded Synergy. Working out precisely what the costs are is very difficult and requires ongoing work in this budget. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : What’s your answer? Mr C.C. PORTER : Let me say this — Mrs M.H. Roberts : Does that mean you don’t know? Mr C.C. PORTER : What you will find is that the electricity market in Western Australia is very complicated, and if the member listens, I will give her some indication of why that is the case. Mr E.S. Ripper : What’s the bottom line? Mr C.C. PORTER : The bottom line with regard to costs changes is that one of the things that the previous government promised was that the price of electricity was going to decrease. Of course, that now appears to be very, very unlikely. Costs have been contributed to by a variety of factors, but I ask the shadow Treasurer: had we maintained the Labor glide path—with costs increasing as they were, through a variety of mechanisms, not least of which is renewable energy certificates, which places a very large ongoing impost on Synergy—when would we have likely reached cost reflectivity? The answer, based on the best assessment that I have through the Department of Treasury and Finance, is never. That is why this government took the very, very difficult decision that it took last year. Mrs M.H. Roberts : When will you reach it? Can you tell us? Mr C.C. PORTER : We are still doing that analysis. We have got as far as working out that the previous government would never have reached cost reflectivity. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : You do know what the total goal is? Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mr E.S. Ripper : What’s your answer? Mr C.C. PORTER : Let me say this — Mrs M.H. Roberts : Does that mean you don’t know? Mr C.C. PORTER : What you will find is that the electricity market in Western Australia is very complicated, and if the member listens, I will give her some indication of why that is the case. Mr E.S. Ripper : What’s the bottom line? Mr C.C. PORTER : The bottom line with regard to costs changes is that one of the things that the previous government promised was that the price of electricity was going to decrease. Of course, that now appears to be very, very unlikely. Costs have been contributed to by a variety of factors, but I ask the shadow Treasurer: had we maintained the Labor glide path—with costs increasing as they were, through a variety of mechanisms, not least of which is renewable energy certificates, which places a very large ongoing impost on Synergy—when would we have likely reached cost reflectivity? The answer, based on the best assessment that I have through the Department of Treasury and Finance, is never. That is why this government took the very, very difficult decision that it took last year. Mrs M.H. Roberts : When will you reach it? Can you tell us? Mr C.C. PORTER : We are still doing that analysis. We have got as far as working out that the previous government would never have reached cost reflectivity. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : You do know what the total goal is? Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mr C.C. PORTER : Let me say this — Mrs M.H. Roberts : Does that mean you don’t know? Mr C.C. PORTER : What you will find is that the electricity market in Western Australia is very complicated, and if the member listens, I will give her some indication of why that is the case. Mr E.S. Ripper : What’s the bottom line? Mr C.C. PORTER : The bottom line with regard to costs changes is that one of the things that the previous government promised was that the price of electricity was going to decrease. Of course, that now appears to be very, very unlikely. Costs have been contributed to by a variety of factors, but I ask the shadow Treasurer: had we maintained the Labor glide path—with costs increasing as they were, through a variety of mechanisms, not least of which is renewable energy certificates, which places a very large ongoing impost on Synergy—when would we have likely reached cost reflectivity? The answer, based on the best assessment that I have through the Department of Treasury and Finance, is never. That is why this government took the very, very difficult decision that it took last year. Mrs M.H. Roberts : When will you reach it? Can you tell us? Mr C.C. PORTER : We are still doing that analysis. We have got as far as working out that the previous government would never have reached cost reflectivity. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : You do know what the total goal is? Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mrs M.H. Roberts : Does that mean you don’t know? Mr C.C. PORTER : What you will find is that the electricity market in Western Australia is very complicated, and if the member listens, I will give her some indication of why that is the case. Mr E.S. Ripper : What’s the bottom line? Mr C.C. PORTER : The bottom line with regard to costs changes is that one of the things that the previous government promised was that the price of electricity was going to decrease. Of course, that now appears to be very, very unlikely. Costs have been contributed to by a variety of factors, but I ask the shadow Treasurer: had we maintained the Labor glide path—with costs increasing as they were, through a variety of mechanisms, not least of which is renewable energy certificates, which places a very large ongoing impost on Synergy—when would we have likely reached cost reflectivity? The answer, based on the best assessment that I have through the Department of Treasury and Finance, is never. That is why this government took the very, very difficult decision that it took last year. Mrs M.H. Roberts : When will you reach it? Can you tell us? Mr C.C. PORTER : We are still doing that analysis. We have got as far as working out that the previous government would never have reached cost reflectivity. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : You do know what the total goal is? Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mr C.C. PORTER : What you will find is that the electricity market in Western Australia is very complicated, and if the member listens, I will give her some indication of why that is the case. Mr E.S. Ripper : What’s the bottom line? Mr C.C. PORTER : The bottom line with regard to costs changes is that one of the things that the previous government promised was that the price of electricity was going to decrease. Of course, that now appears to be very, very unlikely. Costs have been contributed to by a variety of factors, but I ask the shadow Treasurer: had we maintained the Labor glide path—with costs increasing as they were, through a variety of mechanisms, not least of which is renewable energy certificates, which places a very large ongoing impost on Synergy—when would we have likely reached cost reflectivity? The answer, based on the best assessment that I have through the Department of Treasury and Finance, is never. That is why this government took the very, very difficult decision that it took last year. Mrs M.H. Roberts : When will you reach it? Can you tell us? Mr C.C. PORTER : We are still doing that analysis. We have got as far as working out that the previous government would never have reached cost reflectivity. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : You do know what the total goal is? Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mr E.S. Ripper : What’s the bottom line? Mr C.C. PORTER : The bottom line with regard to costs changes is that one of the things that the previous government promised was that the price of electricity was going to decrease. Of course, that now appears to be very, very unlikely. Costs have been contributed to by a variety of factors, but I ask the shadow Treasurer: had we maintained the Labor glide path—with costs increasing as they were, through a variety of mechanisms, not least of which is renewable energy certificates, which places a very large ongoing impost on Synergy—when would we have likely reached cost reflectivity? The answer, based on the best assessment that I have through the Department of Treasury and Finance, is never. That is why this government took the very, very difficult decision that it took last year. Mrs M.H. Roberts : When will you reach it? Can you tell us? Mr C.C. PORTER : We are still doing that analysis. We have got as far as working out that the previous government would never have reached cost reflectivity. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : You do know what the total goal is? Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mr C.C. PORTER : The bottom line with regard to costs changes is that one of the things that the previous government promised was that the price of electricity was going to decrease. Of course, that now appears to be very, very unlikely. Costs have been contributed to by a variety of factors, but I ask the shadow Treasurer: had we maintained the Labor glide path—with costs increasing as they were, through a variety of mechanisms, not least of which is renewable energy certificates, which places a very large ongoing impost on Synergy—when would we have likely reached cost reflectivity? The answer, based on the best assessment that I have through the Department of Treasury and Finance, is never. That is why this government took the very, very difficult decision that it took last year. Mrs M.H. Roberts : When will you reach it? Can you tell us? Mr C.C. PORTER : We are still doing that analysis. We have got as far as working out that the previous government would never have reached cost reflectivity. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : You do know what the total goal is? Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mrs M.H. Roberts : When will you reach it? Can you tell us? Mr C.C. PORTER : We are still doing that analysis. We have got as far as working out that the previous government would never have reached cost reflectivity. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : You do know what the total goal is? Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mr C.C. PORTER : We are still doing that analysis. We have got as far as working out that the previous government would never have reached cost reflectivity. Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : You do know what the total goal is? Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mrs M.H. Roberts : So you don’t know. Mr E.S. Ripper : You do know what the total goal is? Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mr E.S. Ripper : You do know what the total goal is? Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mr C.C. PORTER : What is interesting about this debate is that there seems to be some level of bipartisan agreement that cost reflectivity in the electricity market is a desirable goal. I listened with great interest to the member for Balcatta last night when he spoke in response to the Premier’s Statement. Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mrs M.H. Roberts : We actually think that the costs of water and electricity should be frozen. Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mr C.C. PORTER : He made some very interesting points, but one point that needs to be acknowledged — Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mr E.S. Ripper : Enough is enough. You’ve gone too far, too fast. Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
Mr C.C. PORTER : Those very difficult decisions were undertaken last year precisely to achieve what I understand to be the point of the shadow Treasurer’s question: the desirable goal of getting something near cost reflectivity. In respect of the comments made by the member for Balcatta last night, I point out that in the debate in this place, and to an extent amongst the general public, there is a sense that if prices are dampened and do not reach the budget assessments—which, as the member pointed out, are 22 per cent for next year—that money will have to materialise from somewhere other than the taxpayer. One of the pieces of modelling that we have done is that if tariffs for electricity were to increase at five per cent over the next four out years after this year—we are not saying that this is the extent of tariff increases—the taxpayer subsidy, as a direct operating subsidy to the electricity utilities, in each year would be $299 million, $320 million, $370 million and $387 million. If it were the case that five per cent was to be the only increase that occurred and was estimated to occur, the taxpayer would subsidise electricity utilities to the tune of $1.38 billion. What I hope for, going forward—I am sure the opposition will be part of it, given that it has put down the nasty pills from yesterday—is some form of bipartisan debate on what we can do about that problem. It is an ongoing problem. The point of the shadow Treasurer’s question about cost reflectivity is that that figure of $1.38 billion is based on the assumption that costs are fixed over the four-year period, and they will not be. The amount of money that Synergy is required to expend over the four out years of the budget, simply to purchase small-scale renewable energy credits, is astronomical and increasing, because there is no cap on that federal system. Unfortunately, I have to put it to the house that costs are increasing and that prices will increase to some degree, and they will be determined in the budget. If we had increased prices by only 10 per cent, which is what the previous government said it would do, we would never reach cost reflectivity, and that is not good for the consumer of electricity in this market over the long term.
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