Mr ANOULACK CHANTHIVONG (Macquarie Fields) (13:34:58) — I make a contribution to debate on the Electricity Infrastructure Investment Bill 2020.

Given its volume, it is not feasible or necessary for me to talk on every aspect of the bill. In many respects, the lack of outcome metrics at this stage makes it difficult to measure the effectiveness of the bill in achieving the goals of cheaper, more reliable and cleaner energy.

I will focus my contribution to debate on three points: the selection and location of renewable energy zones [REZs], as detailed in part 3 of the bill; the investment in and construction of the new energy grid infrastructure and its implications on consumer pricing and welfare, as detailed in parts 2 and 4; and the economic and employment opportunities from the substantial investment that will be required to achieve the objectives of the bill.

First, our energy production, both historically and currently, is based on non‑renewable sources. It is clear that the trend is moving from non‑renewables to renewables, as evidenced by technological advances that make renewables more cost competitive; the closure of coal‑fired power plants, or closures being brought forward from their expected asset life tenure; and the financial markets increasingly moving billions of dollars towards renewable energy production and technology.

That trend, which will only increase in speed, means that communities that have traditionally been sources of energy production will bear the economic and social cost of the significant change. In New South Wales that means that proud, hardworking communities in the Hunter and the Illawarra should be at the forefront of our thoughts and decision‑making process when it comes to determining the REZs.

Part 3, division 1, proposed section 16 (1) (a) to (c) details the three REZ locations as being Central‑West Orana, New England and South West, around the Hay region. None of the locations chosen to kickstart the billion‑dollar investment are located in the Hunter or the Illawarra, which are two of the communities most impacted by the change in energy production.

However, I note that recent media reports have speculated that may change, which I welcome. I am not saying that any of the three locations in the bill are undeserving—not at all. On the contrary, I think regional investment is a good thing, but the location list should not preclude the areas that are most impacted by the rapid change in our energy production mix.

An experienced cynic would claim that the locations were chosen based on political priorities rather than community need; recent evidence about the allocation of local community grants would certainly support such a conclusion. There is nothing untoward in adding paragraphs (d) and (e) to that list, referencing the Hunter and the Illawarra respectively.

If the bill is to meet the objective of "fostering local community support", as referenced in paragraph (e) of the explanatory notes, then the absence of the Hunter and Illawarra is a glaring omission that does not attempt to foster local community support from those who are most impacted.

I note that proposed section 13 (a) requires the Minister to consider a report from the secretary about the cost and consumer effects prior to the declaration of a REZ, with paragraphs (b) to (d) outlining the other consultation required. Paragraph (e) requires that the draft declaration be made publicly available.

It is ambiguous under this section whether the secretary's report is included as part of the information to be made publicly available. I suggest that good corporate governance would insist on making the secretary's report publicly available, to ensure greater accountability and credence in ministerial decision‑making.

Similarly, transparency and good corporate governance principles in making advice, information or reports publicly available should apply to proposed section 14, which addresses ministerial discretion in REZ declaration, and proposed section 15, which addresses ministerial amendments to a REZ.

Ministerial declarations of REZs have significant social and economic consequences for impacted communities and sizeable financial benefits for prospective investors, landowners and speculators.

Recent evidence has come to light that Liberal Government decisions on land deals have made taxpayers all the poorer. The public have a right to know how ministerial decisions are made, given the substantial financial sums involved. That will enhance accountability and provide greater integrity in the decision‑making process.

The second point I will cover involves REZ selection and the consequences it has for consumer pricing and welfare. The electricity market is highly regulated through various State and Federal agencies to prevent market power abuse, such as unacceptable higher power prices for consumers.

At the same time, investors must be provided with a level of certainty in their rate of return over the capital and operational expenditure over the life of the asset, otherwise they will not invest. There needs to be a balance between capital returns over the cost base and consumer pricing to allow the billion‑dollar investment in energy production to proceed with fair market value outcomes.

The location of a REZ plays an important role in determining the capital and operational cost base in the construction of the infrastructure that is required to store, transmit and distribute the energy to other grids in the electricity network.

Comparative REZ location analysis should form part of the advice prior to a REZ being declared, to ensure that the cost base is kept to a minimum. REZ locations should produce an optimal outcome that is economically sound, to ensure that reliable clean energy also results in affordable power prices.

In short, the higher the cost base, the higher the consumer price for electricity, so keeping our construction costs down is essential.

The Liberal Government's record in building billion‑dollar infrastructure leaves a lot to be desired—the Sydney light rail and WestConnex spring to mind—but under the proposed bill any billion‑dollar blowouts will send families and businesses broke with unaffordable energy costs.

Not only are taxpayers being asked to foot the bill for any potential billion‑dollar budget blowouts, but also they will be hit a second time when paying higher power prices. To paraphrase a much‑loved conservative slogan, the Liberal Government is making electricity prices more expensive again.

My final point relates to the opportunities available within the bill to restore our resource, manufacturing and other related industries, especially in regions and communities that have been adversely affected by the change to the energy production mix.

As part of the construction activities there should be a concerted effort to utilise local materials, services and manufacturing in the procurement process. Local proportional content must be stipulated and must be contractually enforceable.

It is futile and frivolous to require local content but have no monitoring and enforcement mechanism; you might as well not have it if you cannot enforce it. Local content will stimulate economic activity and employment and generate ongoing income, especially in regional areas that have been adversely impacted by the changing energy mix.

The positive economic multiplier effect for the regions and for New South Wales is substantial. This is not a call for protectionism; such a statement implies a lack of economic competitiveness amongst local industries that could benefit from these projects.

New South Wales Labor and I are confident that local industries are able to actively compete on price and quality with the materials required, products to be manufactured and supporting services to be delivered.

When sourcing materials and building assets during the construction phase we should examine the cost over the life of the asset and its wider economic benefit to our local economies, not just the cheaper quoted purchase price; applying that method does not take into account the total cost over the life of the asset and could potentially end up costing taxpayers more in the future. We should take the opportunity to support our workers and local economies, especially those that have been hardest hit. That will have a positive multiplier effect on other industries in New South Wales and around the nation.

It is about time the biggest economic beneficiaries of those billion‑dollar projects are our people and our local businesses, both large and small.