Wednesday 2 April 2008

Mr FINCH ( Rosevears) - Some of my questions may have been answered in today's Examiner newspaper.  With Tasmania having to buy electricity from Victoria because of low water storages, can the Leader give an indication of what is being done to help Tasmanian consumers use less power?  Whether consideration has been given to an education campaign to show how Tasmanian consumers can help the State economy by reducing power use?  Whether it is possible to calculate the economic benefits for Tasmania if consumers reduce the demand for Basslink power from the mainland?

Mr PARKINSON - I thank the honourable member for his question which invites a detailed response.  The first point to note is that Tasmania is in fact able to buy electricity from Victoria.  This only became possible two years ago as a result of far-sighted government cooperation in the Basslink project.  In spite of the fact that Tasmania has suffered 11 years in a row of below-average rainfall and that the last five months have easily been the driest on record, Tasmania has not suffered from electricity restrictions in recent years.

There is no doubt that without Basslink Tasmanian electricity customers would be facing power restrictions now.  Furthermore the price paid to receive electricity imports over Basslink only has to be a little bit higher than the spot market price in Victoria.  Imports are competitive with on-island gas generation for meeting the final 15 per cent to 25 per cent of load demand within Tasmania.  Basslink is a cost-effective source of additional supplies, particularly when we factor in its other benefits, such as the ability to export if we have surpluses or mainland prices are very high.  Even so, it would be better and cheaper if the energy came to us from rain falling into our hydro catchments. 

There will be consequences for Hydro Tasmania's profits and dividends arising from the prolonged drought persisting.  This has been explained publicly many times and was evident in last year's financial results for Hydro Tasmania.  The first course of action in these circumstances is to see what can be done to maintain supply, and this is occurring through Basslink imports and several other initiatives.  The other course of action is through influences on demand, and this is also occurring in several ways. 

The first demand-side influence is through market forces.  The cost of electricity generation has risen throughout Australia.  Drought has been a factor in this, not only in Tasmania.  Increasing demands on the system and increased generation costs have combined to push up prices.  We have seen this reflected recently in the tariff prices approved by Tasmania's independent Energy Regulator.

At the end of the day, price signals are one of the most efficient ways to get a consumer response.  Beyond that it becomes a good indication of whether the Government should spend taxpayers' money in order to get consumers to use energy more wisely.  In fact, we do think that there is a good case for doing that.  The Tasmanian Government has been participating in the National Framework for Energy Efficiency for many years.  This has been working quietly and steadily to increase the minimum energy performance standards for appliances and new buildings, and to improve consumer information on the energy efficiency of major appliances. 

Consumer information on energy efficiency is also being provided in numerous ways in all forms of media.  Aurora Energy, for example, is just about to distribute its Warm magazine to Tasmanian consumers and this will be dedicated to energy saving information.  The message that using energy wisely is not only a good idea from the point of view of saving money but also because it reduces carbon emissions has been made over and over again.  The recent Earth Hour exercise is a case in point.  It is possible that some Tasmanians still do not appreciate that using less electricity in Tasmania now has the additional benefit of reducing greenhouse gas emissions, even though most of our electricity comes from clean renewable sources, so let it be said once again, at the margin, which is what we are talking about, energy savings in Tasmania reduce emissions.

With regard to still more education about reducing power use, the answer is yes, the Government has considered this in the past and is considering it again.  However, the evidence from overseas is that it requires a significant and sustained campaign to get a noticeable consumer response.  Consumers who care about the issue are probably already doing what they think is reasonable to reduce energy consumption without adversely impacting on quality of life, but others are less vigilant or less concerned.  That is why hard-wiring energy efficiency into appliances and housing design is so important.

The honourable member also asked whether it is possible to calculate economic benefits for Tasmania from reducing the need for imports.  The answer depends on whether he is asking about net benefits to the State or the individual.  In general terms, we can estimate the costs of imported electricity but not the costs or loss of benefits associated with reduced demand.  For example, if the energy ends up being wasted then saving it saves the individual the total price of the electricity, but electricity companies involved in this -

Mr HARRISS - Point of order, Mr President.  We had this same situation when sitting in Launceston.  I took a point of order then and I do so again today.  We encouraged the Leader last time to use initiative, exercise that initiative and precis such a long answer.  We do have a limited question time in this House and the answer has already been going about eight minutes but we are only on the second part of the question.  I would ask you to rule that he table the answer.

Mr PRESIDENT - It is up the honourable Leader.  He was good enough to do that yesterday with a very long answer.  It is entirely at the honourable Leader's discretion.  I could not uphold a point of order on that basis.

Mr PARKINSON - Thank you, Mr President; I am not far from finishing so I will continue.

Electricity companies involved in the supply chain lose their profit margin on that unit of electricity.  If the reduction in electricity usage has some sort of disbenefit then the answer is not clear-cut.  If we ignore the end results for the consumer and just focus on the effects on the profits on one part of the supply chain the answer may be somewhat easier but serves little purpose for public policy.  The simple qualitative answer is that avoiding waste or gross inefficiencies is good for the end users concerned as well as for the environment.  While we are so short of water, it also helps improve the security of Tasmania's electricity supply as well as Hydro Tasmania's profits and dividends.

As a final point, I would like to emphasise that the Government's investment in energy infrastructure, including Basslink, has supported strong growth in the Tasmanian economy.  Our population continues to grow, and the number of people employed is at the highest level ever.  Recent figures from the Australian Bureau of Statistics for the December quarter of 2007 demonstrate that the Tasmanian economy outperformed the whole of Australia in that quarter, with State final demand increasing by 5 per cent in the year.  Tasmania did better than even the resource-rich States of Queensland and Western Australia which are usually regarded as the economic giants of the nation.  Basslink has played an important role in achieving this success.  Once again I thank the honourable member for his question.