Senator McALLISTER (New South Wales—Deputy Opposition Whip in the Senate) (17:09): It's apt, isn't it, to be talking about policy leadership on the day that the High Court has ruled that we have to continue with this shambles of a postal survey cooked up by the government? On energy, much like on marriage equality, the government has had to repair its makeshift solutions so many times that there's really not much left but masking tape and bits of chewing gum. In this case, it's not just a case of the government making a bad decision; it's actually refused to make any decision at all. Its policy paralysis on energy has had serious effects for business, consumers and our environment. Let's be really clear about this: we are in the middle of an unprecedented investment strike which has been brought about by the government. Earlier this year, the head of the Energy Council, which represents the coal-fired generators and the gas generators, wrote: We are already experiencing the consequences of energy policy paralysis … The "grid" as we know it is degrading in front of our eyes. But you don't hear much about that from the coalition, a group ordinarily enthusiastic about championing the views of business, because they are not listening. They are stuck in an ideological dilemma entirely of their own making. I want to take a moment to consider how we got into this mess in the first place. This is not a technical problem. We know how to reduce electricity prices and we know how to reduce emissions, and we know that those two things are entirely compatible. This is a political problem. It's a political problem because the solution requires the coalition to make a break from the universality of coal-fired generation, a mineral that has long ceased to be an energy source and instead has become a symbol of the culture wars in the coalition party room. The Liberal Party brawl about energy has been going on for so long that it is hard to remember where it all started, but late last year we were promised a circuit breaker. The Finkel review was supposed to be a way for the Liberal party room to put off having to make a decision about energy policy. They were going to defer it for a while and have an expert come up with what was hopefully a workable compromise. Within days, however, the Minister for the Environment and Energy had already been forced into an embarrassing backdown. On Monday on ABC Radio an EIS was in. The minister said: We know that there's been a large number of bodies that have recommended an emissions intensity scheme, which is effectively a baseline and credit scheme, we'll look at that … That is what he was saying on the Monday—'We'll look at it.' On talkback radio on Tuesday it was ruled out. What did he say on the Tuesday, just 24 hours later? He said: 'The Turnbull government is not contemplating such a scheme. We are not advocating for such a scheme. What we are focused on is driving down electricity prices and increasing energy security.' How utterly embarrassing and completely depressing for Australian consumers and Australian energy businesses. This depressing trend continues. Every time anyone from the government dares question the orthodoxy propagated by the hard Right of the Liberal Party, the hard Right flex their muscles and bring them right back into line. It was inevitable that the same thing would happen to Dr Finkel's proposal. Within hours of the Liberal Party's special meeting on the Finkel report in June, one anonymous but very, very talkative MP had briefed The Australian: Finkel in its current form is dead. What we have had ever since is a government in search of an escape and absolutely desperate to avoid making a decision. It has been months since Chief Scientist Alan Finkel delivered his report recommending a clean energy target. The Finkel panel indicated that there was an urgent need for a clear and early decision on a clean energy target. At this stage, I think we'd just settle for a decision. This isn't a problem caused by partisanship. At the start of this year, industry, consumer and not-for-profit groups put out a rare joint statement on energy. I'm going to read it because all of these groups, not normally allies, said: The status quo of policy uncertainty, lack of coordination and unreformed markets is increasing costs, undermining investment and worsening reliability risks. This impacts all Australians, including vulnerable low-income households, workers, regional communities and trade-exposed industries. The finger pointing will not solve our energy challenges. More than a decade of this has made most energy investments impossibly risky. This has pushed prices higher while hindering transformational change of our energy system. The result is enduring dysfunction in the electricity sector. We need mature, considered debate. Well, that was in February, and now—in September—nothing has changed. Labor have been willing all along to compromise in order to find a solution, to work with whoever we can on the other side of the aisle who might be in a position to meaningfully or coherently negotiate. But this is something the Liberal Party has proven to be unwilling and unable to do, time and time again. The problem is that the Liberal Party doesn't need to compromise with us; it needs to reach a compromise with itself. What does the solution look like? It's not coal. You have to wonder how far from the pack you have strayed if you are being slapped down by electricity companies as being too bullish on coal, as the Prime Minister was yesterday. The simple reason AGL, like all the other generation companies, is getting out of coal is that it doesn't make economic sense for them. Senator Ian Macdonald: They worked for the Labor Party! Senator McALLISTER: I want to take a moment to talk about this, because Senator Macdonald is having a minor fit over there about the fact that someone at AGL once worked for GetUp! and maybe supported renewables. Senator Ian Macdonald interjecting— Senator McALLISTER: Well, there are all sorts of conspiracy theories, and Senator Macdonald is voicing them now, about how environmentalists are trying to capture Australian business with leftist policies. The fact that people have missed is this: it is not that the Australian energy sector has been dragged to the left; it is that renewables are now a sensible, mainstream, entirely unobjectionable policy proposition everywhere except in the coalition party room. And it's not just business but households as well. It's worth reading the material AEMO produces, rather than just name-dropping AEMO, which is the government's current approach. AEMO says that net residential demand—the households, the mums and dads the coalition love to talk about—is 'projected to decline as growth in population and appliance usage is offset by increased generation from rooftop solar and by energy efficiency initiatives'. That is what AEMO projects. That's its vision of a future electricity network, and it actually doesn't look like a great big new coal-fired power station. The electricity system is changing. It is radically altering, and the coalition are simply not keeping up with the market reality, with the technological reality, with the engineering reality. Despite all the carry-on about how they are going to be guided by economics and guided by engineering, none of that is evident in their approach, because they're so selective in the material they are willing to draw on when they are considering the AEMO information. Think about transition. On average, network charges accounted for 43 per cent of residential electricity prices in 2015. If you are generating locally, that entire charge no longer need apply to you. There are enormous savings. If you want to go chasing savings, there are enormous savings available with a more decentralised energy system. Let's talk about storage technology. We've already seen two huge technology driven changes in electricity demand. The peak in the electricity system used to be in winter, associated with heating homes. Now it's in summer, associated with the ubiquitous presence of air conditioning in so many Australian homes. The growth in rooftop storage has seen further changes. There's a dip in energy use in the afternoon as people generate their own power and then a surge in use in the early evening. And storage technology is going to drive further changes. The system is changing. The demands of the system are changing, and solutions that were appropriate back in 1970, when most of the people on the other side formed their view about energy policy, are not solutions that will work in the future. Battery technologies are expected to fall in cost by another 40 to 60 per cent by 2020. We are seeing the introduction of entirely new technologies that will radically change the way that households and businesses consume electricity, providing opportunities for people to manage their electricity demand behind the meter at home. Energy Networks Australia predicts that 30 to 50 per cent of Australia's energy needs will be supplied by millions of customer-owned generation and storage devices. The Prime Minister can complain—and he often does, slightly disingenuously, because I'm not sure that he actually believes it—about wind and solar having different generation profiles from traditional coal. Sorry, Mr Turnbull, that is just the future. That is where technology is going. People are going to have rooftop solar; they are going to have batteries—they already do. Tens of thousands of Australian households already do, and they are looking to the government for leadership as to how all these new technologies will be integrated into a new system. But all they get is a nostalgic hankering for coal, which presents no solution to the energy challenge that we face now. We should be able to make our energy system more flexible, better able to accommodate diverse sources of supply, and better able to manage our demand and sequence our demand so that overall the system is in balance. That is what all of this communication technology will allow, if only the market can be adapted to allow these things to take place, and nothing has happened on this front. The coalition has been asleep at the wheel while report after report has been produced by the AEMC, the AER and the AEMO begging the government to undertake meaningful market reform to allow these technologies to work. I come back to the original proposition. We need to create a certain investment environment. This is something the coalition has comprehensively failed to do, and the repeal of the carbon price was the first step in a long march towards trashing the energy market. Everybody who knows anything about the electricity system is demanding policy certainty. Dr Finkel presented options months ago that still wait to be enacted. All that it would take is for the coalition to get its act together, sort out its own differences, put aside the dinosaurs and the hard Right of the Liberal Party and the National party, and come to a decision, based, as they say they will, on the engineering, on the science, on the economics and on Dr Finkel's report.