30 March 2017

2nd Reading Speech

The Hon. ADAM SEARLE ( 12:06 ): I speak for the Labor Opposition on the Mining Amendment (Climate Protection—No New Coal Mines) Bill 2016. I do so as the Leader of the Opposition in this place and as the shadow Minister for Industry, Resources and Energy. Labor’s position on this bill is very clear: we do not support the bill before the House. We think that this is too blunt an instrument and it will be highly destructive for the industry, the economy of New South Wales and indeed all of those who depend upon the industry for economic support. But that should not be confused with being an uncritical urger or booster of mining or coalmining generally.

The Labor Party, given its history rooted in coalmining communities and other working communities over more than a century, has historically been very supportive of the development of the resources industry, including coalmining. We remain supportive of coalminers and their communities. We are very conscious of the important economic activity that comes from coalmining in this State. For example, we know that New South Wales mines produced 260 million tonnes of raw coal and 196 million tonnes of saleable coal in 2013. We know that the mining industry was worth over $21 billion, including nearly $18 billion worth of coal. We know that around 85 per cent of the coal dug out of the ground in New South Wales is exported, and the rest is used to generate electricity. Even the Government’s most recent Renewable Energy Action Plan, which was 18 months late, and I will come back to that, says that about 79 per cent of the electricity upon which we depend daily still comes from coal-fired power.

The 136 million tonnes of coal exported was worth about $15.2 billion. Coal accounted for about 31 per cent of all merchandise leaving New South Wales, making it the State’s single most valuable export commodity. The minerals industry pays about $1.6 billion to the New South Wales Government. About $1.3 billion of that is paid in royalties, the overwhelming majority of which comes from the coal industry. Nearly $135 million has been paid in payroll tax and nearly $146 million in land tax. The mining industry also pays nearly $1.5 billion to the Commonwealth Government, and that is overwhelmingly paid by the coal industry.

In 2013, the value of employment and other value-added aspects of investment in the coal industry was nearly $10 billion. It contributes $1.4 billion to the Central West economy, nearly $1 billion to the Illawarra economy, $6.3 billion to the Hunter economy, and more than $300 million to the New England and north-west economies. The mining sector, and predominantly the coalmining sector, generates about 20 per cent of the economic activity and 10 per cent of the jobs in the Central West and 7 per cent of jobs in the Hunter region. The coal industry historically has been, and it remains, very significant in this State. It pays $1.3 billion in royalties, although the New South Wales Treasury can never get the royalty figure right—it always overestimates it. That money provides more than 11,000 teachers for our schools. More than 30,000 people work in this State’s mining industry, but that figure fluctuates between 30,000 and 44,000. Of course, it has other impacts across supply chains; it impacts not only mining directly—

The Hon. Robert Brown: It has impacts across whole industries.

The Hon. ADAM SEARLE: I acknowledge that interjection. The Labor Party is extremely conscious of the economic importance of the industry. It is also conscious of the importance of employment to people; it gives them a sense of purpose and economic security, which enables them to raise their families and to go about their lives. However, the Labor Party is also aware of the reality of climate change. I disagree with the previous speaker. People on my side of politics understand that climate change is real and that it is being accelerated by human activity. We do not shy away from that. We also acknowledge that Australia’s carbon emissions are led by coal-fired power. We know that fossil fuel, primarily coal, comprises up to 80 per cent of our emissions. We also know that more needs to be done because we have only one planet on which to live. It sustains all of us, and if we destroy it we have nowhere else to go.

The Labor Party understands the scale of the challenge facing New South Wales, the nation and, indeed, the world, in grappling with these issues. We must transition to a low-emissions future and away from dependence on coal-fired power to cleaner, renewable sources of energy. We are also aware that there are consequences of that transition for those communities involved in coalmining and the industries that support it. We understand that we are facing a very complex set of issues for which there is no immediate or straightforward answer. However, we do not believe that this bill is the appropriate vehicle with which to engage in that transition.

Members should make no mistake; a transition is happening whether or not we want it to happen. I take issue with the contributions of Government members. The problem with this space is that it is becoming increasingly polarised. There are the historical uncritical urgers and boosters who say that the industry can do no wrong. They say it could be a little more efficient and cleaner, but essentially there is no problem. On the other hand, there are people—not necessarily in this Chamber—who think the industry can do no right and must be ended forthwith. Life is complicated and the truth is at neither of those extremes. The reality in New South Wales is that about 83 per cent of our coal is thermal coal, which is used to produce power, but we also use coking coal. Of course, we cannot make products like steel without using coking coal; as yet, no-one has discovered a method of doing that.

As I indicated, coal is used to generate up to 80 per cent of our electricity. We should also be aware that our coal-fired power stations all have a limited lifespan. Munmorah power station, which had the capacity to generate 1,400 megawatts of electricity, was closed in 2012. Wallerawang power station, which was bought by EnergyAustralia, formerly Macquarie Generation, was sold by Mike Baird and was closed immediately upon sale, taking 1,000 megawatts of electricity out of the New South Wales economy, thereby jeopardising our economic and energy security. That was a result of the negligence of members opposite and their former Premier and Treasurer. No guarantee was sought or obtained that the 1,000 megawatts of energy would stay in New South Wales when EnergyAustralia bought the power station. The ink was barely dry on the contract before EnergyAustralia shut it down; presumably to increase the value of its generation assets elsewhere. That extra 1,000 megawatts would have been very handy on 10 February this year.

I was distressed to learn that some of Liddell power station’s four turbines are off line at any given moment. Given the history of the power station, that is no surprise. It was built to last 30 years and it is now 46 years old. It will not last forever. Over the next two decades, almost all of the coal-fired power stations in New South Wales, which, as I said, provide 80 per cent of our electricity, will close. That will not happen because of the renewable energy target, The Greens’ schemes or government policy, but simply because of old age. It will catch up with us all. What will replace the capacity we lose? In the olden days, governments built power stations and provided power. We now live in a privatised national electricity market in which we are all dependent on private economic actors to invest in new energy supplies.

The Abbott Government did its best to destroy the renewables industry. We had a huge a pipeline of investment that would generate thousands of megawatts of new capacity across Australia and New South Wales. However, because members opposite launched an ideological war against renewable energy, much of that investment has been scared off. Of course, the second problem is that the renewable energy target that did survive—tattered, bruised and battered—has only a 2020 frame of reference. The State Government’s target for renewable energy, which is allegedly the same as the national target and which is about 23 per cent or 23.5 per cent by 2020, will take 30 years to achieve at current rates. Why? It is because renewable energy in this State went significantly backwards before making a modest recovery. Over the past three years there has been a net increase in renewable energy in this State of only 1 per cent. Some members cannot decide whether they are for or against it.

The Hon. Dr Peter Phelps: I have a very clear idea of where I stand.

The Hon. ADAM SEARLE: I acknowledge that interjection, and I know the honourable member’s position. We cannot afford to take an ideological approach to this issue because it is all about security of power for our economy and our society.

The Hon. Robert Brown: And our hospitals.

The Hon. ADAM SEARLE: Yes, also for our hospitals, schools and other activities. We must put our shoulders to the wheel to create new generation capacity. The mining industry will tell us—and the finance industry will definitely tell us—that new coal-fired power stations are not bankable and will not attract investment in this country.

The Hon. Robert Brown: Because of government interference.

The Hon. ADAM SEARLE: It is not because of government interference.

The Hon. Dr Peter Phelps: Because of threat.

The Hon. ADAM SEARLE: It is not because of any of those things, it is simply because the economics do not stack up.

The DEPUTY PRESIDENT ( The Hon. Shayne Mallard ): Order!

The Hon. Shaoquett Moselmane: Point of order: Government members are interjecting and I ask you to ask them to desist.

The DEPUTY PRESIDENT ( The Hon. Shayne Mallard ): I uphold the point of order, but I make the point that all sides were involved in that debate—or brawl might be a better term. I ask the speaker not to respond to interjections, which are disorderly. I ask members to listen to the speech in silence.

The Hon. ADAM SEARLE: The issue here is that this ideological approach has undermined our capacity to invest in new power sources. If members look at the front page of the Australian today, we see very clearly the closure of Hazelwood—not a decision of government, a decision made by a private company because the asset is at the end of its life. This is the fallout when there is no planned transition. I indicate my respect for the Construction Forestry Mining and Energy Union, the energy division and their identification of the need for a just transition; not just any transition, but a just transition, because it is not fair that working people, their families and communities should bear the brunt of people’s desire for a cleaner, low carbon future. But, it is also the case that we have a choice before us of either having a planned transition or an unplanned transition.

In their submission to a recent Senate inquiry, a distinction is drawn between the unplanned transition—the closure of coalmines and its consequences in the United States and the United Kingdom—versus the much more beneficial social and economic outcomes of more orderly planned transition in places such as the Federal Republic of Germany, but it requires private companies to collaborate. It requires government to make long-term plans and it requires the investment of significant amounts of money so that as coal-fired power stations, for example, close, and that has an ongoing consequence for the mines that support them, workers can be relocated to other economic activities where mining is ongoing or be transitioned to other parts of the economy.

But platitudes and good sentiments alone will not deliver that outcome. It requires a significant financial commitment by governments, nationally and by jurisdiction. It also requires straight talking, because in the thermal coal industry—and the Adani mine in Queensland is a good example of this—there are people who continue to hope that the downturn that we have been experiencing in the thermal coal industry over the last few years is merely cyclical. Australian history is full of booms and busts, particularly in the resources sector, and there are some people who hope and believe that the current downturn is cyclical and it will come good again. But there are other economic observers, such as Tim Buckley and others who look at the hard data, who say, no, something more profound is at work here. There is a structural decline in the demand for thermal coal.

China, for example, is reducing its imports of thermal coal each year by a magnitude greater than the whole of our mining industry. India, another objective of coal exports, is also reducing its foreign imports of thermal coal in an attempt to become more self-sufficient domestically. At the same time, both China and India are reducing their reliance on domestic supplies of thermal coal as they seek to diversify the sources of energy they derive. This is not a matter of belief or government policy, it either is happening or it is not, but the reality is that we need to make plans for a lower carbon future. We need to increase our generation of energy from other sources, because at the moment we are held hostage to the decision of private investors as to whether they will invest in new power supplies and where. We are held hostage to the private operators who decide when and where they will close existing generation assets, leaving the States and people exposed to shortages and skyrocketing prices, which will negatively impact, not just households, but businesses and all forms of economic activity.

We need to create a situation where there is greater energy independence for us all, but we cannot be ignorant of the fact that it will not occur overnight and crucial to this transition is storage technology, because we need to deal with the issue of intermittency. It is a truism that the sun does not shine at night and the wind does not always blow. There are storage technologies and they are affordable to a certain degree, but they are not affordable at the level of household or individual businesses for most people and the technology is still evolving. People in the industry expect prices to decline by 40 per cent over the next two years, but storage technology is the game changer and there can be no transition without a greater focus on and investment in that.

All of that will take time and this bill does not allow for a just, sensible, balanced or smooth transition, which is why we do not support it. We do not support this bill but we are conscious of the need to address climate change. We are conscious of the need to address emissions from the coal industry and more generally and we are conscious of the need to wean ourselves off coal-fired power because whether we like it or not, the sun will set on those power sources and we need to have alternatives in place sooner rather than later.

There is a lot more I can say, but make no mistake, we support coalminers and their communities. We will not give them false hope. We know that significant investment is needed to enable those communities to thrive when the private operators of these mines make their decisions, because capital has no conscience. If they can no longer make a buck from it, they will up stumps and move somewhere else and leave the community stranded. We will not stand idly by and allow that to happen; just as we will not stand idly by and let the negligence of those opposite leave New South Wales exposed to power shortages and skyrocketing power prices, simply because so many of them are ideologically opposed to renewable energy, because that is not the future. That is being every bit as destructive of the common good and our shared economic and social futures as they accused the authors of this bill of being, and we will have no part of it. We will provide a sensible alternative as we head towards the next State election.