Electricity Industry Amendment (Premium Solar Feed-In Tariff) Bill

 Mr BARBER (Northern Metropolitan) -- It is a pleasure to speak on this subject. I would be surprised if most members had not had a chance to start thinking about the content of this bill and asking questions about it. Clearly that is being done by the usual shadow spokespeople for each party, but I would be very surprised if most members had not been approached by their communities at some stage on the issue because it is a very, very important measure in the toolkit of reducing emissions, and that is well recognised across the community.

Within every one of our upper house districts there is an enormous amount of activity in support of these sorts of measures. That has been reflected in a considerable amount of media coverage over a very long time. But this narrow analysis that we are now getting into about simple measures of price and cost of one scheme verses another is a little bit self-defeating if that becomes the only discussion that we are having here. If that is the only discussion, then one could probably argue about it forever and one would probably not get to the main reason why a feed-in tariff is so important.

When I was briefed on this bill the minister looked me in the eye and without a hint of irony said, 'We are for lowest cost abatement'. His government, in other words, wants to seek out those measures that lead to the biggest amount of reduction in emissions for the lowest price. I understand what he was trying to say, but when you look across the spread of efforts this government is making, it is quite laughable.

In fact if you look at the release yesterday of a so-called greenhouse green paper that might have laid out the action plan, you see that not only is it lacking a centrepiece but it is lacking a genuine considered analysis of all the options that are out there to cut emissions and an honest appraisal of what they are worth.

If this government was for lowest cost abatement, it would bring a piece of paper into this place that abolished VicForests and ended the logging of native forests in Victoria. That would be the single largest and single cheapest piece of abatement it could do -- at the stroke of a pen!

We then move through all the other policy levers that state governments themselves hold.

They have much more capacity to take action, and take it fast, than the federal government; yet for some reason the federal government appears to be the centre of the action and the centrepiece of the state governments' response is living in the margins around the federal government's decidedly shaky plan for a CPRS (carbon pollution reduction scheme) or an ETS -- an emission trading scheme.

We would be expanding the capacity of the public transport network, and we would be requiring minimum standards for rental housing in terms of insulation and basic energy efficiency. All the really cheap stuff -- the insulation, the doorstopping -- we would quite simply regulate, possibly in conjunction with other states, for minimum standards of appliances so that every DVD and other gadget we have in our homes did not have one of those silly little red lights that sits there burning for 24 hours a day saying, 'I am on, I am ready for action', and in the process pulling 4 or 5 watts.

One might not think it is a lot of power, but when multiplied by 24 and then by 365 it turns out to be a significant chunk of our energy use. It provides minimal societal benefit and provides one opportunity to make a very rapid reduction of a few per cent in everybody's household energy bill.

We would set minimum standards for vehicle fuel efficiency rather than just tracking along with the standards of our markets for export vehicles. We are tracking somewhere between Europe and California, both of which are on a rapid downward trajectory, and that is because we sell cars to them.

We would move into issues of local government planning and land use planning, the government itself would make rapid strides in its own in-house emissions, and so on. There would be great slices off the salami in this effort to get our emissions turned around and moving downwards.

But for some reason the state government -- and I will not even begin to speculate on why it is -- is either completely hands-off or just cannot see that these levers are in its hands. Despite that we get lip-service paid to climate change in almost every document, agency and speech that a politician gives.

There is no question that awareness -- and the lip-service that goes with it -- is absolutely across the board now. It is completely politically correct to mention climate change in whatever it is you are doing but at the same time never deliver up a practical, simple, well-understood and low-cost method of doing it. The problem with that is that by ignoring all of those low-cost measures and giving free kicks to the polluters across the board, you push the task of cutting emissions onto a narrower and narrower segment of society or economy and make that segment work harder.

In other words, when Alcoa pays less every other business and household in Victoria pays more, until you have given away so many free kicks and you have cut off so many different avenues for action that you are trying to push it all into a very narrow segment of the community, which of course is going to rebel. That is where the government finds itself on this question of lowest cost abatement. It simply should not say that.

If we look at this particular measure in isolation, even then we find that the benefits it offers are much greater than the narrow analysis of cost per tonne that the government is putting forward as its key rationale for sandbagging its own scheme.

We should recall that at the last state election this was one of the major asks that the environment movement across the board was ready to jointly sign on to -- a genuine and effective feed-in tariff scheme. If the government is not going to deliver that scheme through this particular legislative process, then it can well understand why those same environment groups will be back at the next election asking it to do the thing that it promised to do. It should not think for a minute that a mere technical compliance with its promise is going to let it off the hook politically, which makes one wonder what exactly is the aim of the exercise for the government. It seems to be the worst of all possible worlds. The real dilemma the government is facing is that the non-government parties -- the Greens, the Democratic Labor Party and The Nationals -- could actually combine to green up the government's own legislation; and that would be the worst of all worlds for the government.

Business interrupted pursuant to sessional orders.

Debate resumed.

 Mr BARBER (Northern Metropolitan) -- I return to the subject of the broader benefits offered to the operation of the electricity grid by a feed-in tariff and, for that matter, by increased solar contribution to that grid. The simplistic analysis the government is putting forward of the price, cost and returns to a particular group that is receiving a benefit within the terms of this bill is much too narrow. In fact that is the whole problem -- if you look at it that way you miss the understanding of the broader benefits to a whole range of participants in the grid.

The first benefit of having more solar -- particularly more small solar PV (photovoltaic) -- energy in your mix is not just that it is an emission-free power source; it is a fuel-free power source. Once these panels are up there, they do not need any more fuel than that fantastic big nuclear power plant the Greens support that is known as the sun. In contrast, other sources of energy such as coal or hydro-electricity, are subject to all sorts of fluctuations depending on other conditions such as drought. Both coal-fired power plants and hydropower plants need a lot of water to run, and when that water is not available the price of their power can increase.

Solar power is also not subject to the scarcity, congestion or fluctuating input prices that sources such as natural gas are. Last year a so-called network congestion charge was added to my gas bill; I knew nothing about it at the time, but apparently we were having network congestion. The pipes are not big enough for all the gas we needed at a given time; again this is not a feature you would expect with solar panels, which suffer only from the natural but fairly well understood variation associated with what the sun is doing.

The cost of generating energy through this method, then, is mainly a function of the capital and installation costs. We expect both of those to fall as the volume of solar panels installed increases. That is the real point here.

We are not legislating for a solar feed-in tariff simply because of a particular dollar rate of return we are expecting right now; we are doing this to kick-start a new industry whose capital and installation costs, once the industry is moving forward and scaling up in terms of volume, will fall sharply. We know that because we have we have already seen it. We know it because it is what is happening in other countries. We know it because that is the history we have learnt from all sorts of forms of industrial production, going right back to the manufacturing of bombers during World War II, where the first one was expensive and took a long time, but as hundreds and thousands were subsequently made the price, time and so-called experience curve fell off dramatically.

Right now we are obviously on the cusp of that worldwide. In fact we are seeing a glut of manufactured solar panels in inventories worldwide. I understand that as much as 1 gigawatt's worth is sitting around in warehouses or on ships moving from place to place in the world.

All of this will lead to a dramatic reduction in the capital and installation cost for solar photovoltaic panels.

Once we tap into that form of value we can expect the rate of return for solar panels to go up or alternatively, if you like, the required rate of return -- the amount of reward people need in order to invest in solar panels -- to go down. Then we will not need a solar feed-in tariff, but right now we do. It is chicken and egg. We need to build up this industry so that all these economies of scale can begin to kick in. No-one has suggested we need a solar feed-in tariff that lasts forever or that applies to an unlimited amount of solar generation. This scheme is capped at 100 megawatts.

If you think about it, what we need to do here is build ourselves a new power system, one that is radically different to the old one but does the same job. Our current power system was built through government intervention. It was built literally by the government. Not only did the government build the power stations, the poles and wires and install the meters into your house, but it even built the houses that the workers lived in when they were building the power stations. That is how we got the electricity system we have now. I do not know who would suggest it might have just magically appeared without that level of government intervention. Clearly if we are going to get a new way of using electricity, which we have to, then governments are going to build it through intervention.

The difference here is that by using this particular method, the feed-in tariff, we are harnessing individuals' capital and letting them make their own decisions. They decide whether they think there is an acceptable rate of return for that investment. In the process, no doubt, they learn a lot more about their household energy use and can start to adapt their energy use to the new reality that they are both a user of power and a localised power station.

That will make a real difference to the way we think about electricity. It could be that some people are fearful of the idea of individuals running the electricity grid. That is one explanation at least of why everything this government promotes seems to go back towards the big, dumb, centralised, expensive and risky form of power generation, and why it is terrified of this one.

You can see that in the way the minister made the comment that the government did not want anybody to make a profit out of solar panels. It would be the only bit of the electricity grid that someone was not making a profit out of. How the minister thinks the rest of the grid is allowed to function without someone making a profit, I do not know. But profit in any case is a quite imprecise term for what we are talking about. What we are really saying is that we want people who have solar panels to make a return on their investment. We are not specifying that that has to be a fancy return.

Many people have done it for a very low return -- for a 25 or 30-year payback, which barely matches the useful life of the equipment. All we are trying to do here is make that return a little bit more acceptable so as to harness people's private capital.

It turns on its head this idea that if you want to be green you should sign up for GreenPower and pay a little bit extra. What happens here is you will be generating green power and everybody else who could not be bothered will pay a little bit extra. I do not know why anybody would not think that is a fairer way of doing things.

Some time back the minister critiqued the model put forward by environmental groups. He claimed that their model would put $100 onto everybody's electricity bill. In classic propaganda style he did not enter into any debates and he did not acknowledge that there might be any variability around that number. He simply pumped that out as hard and as fast as he could to get the number into a few people's heads and scare them. Belatedly he informed us that his new estimate is around about $40. He did not put out the disclaimer that his original estimate was based on a 250-megawatt scheme. We are not legislating here for a 250-megawatt scheme; we are legislating for a 100-megawatt scheme. You can understand why it has immediately fallen from $100 down to $40.

But to answer this question definitively one way or another there are a few things you need to know, and we do not know the answers to all these.

The first is: what is the uptake rate? How quickly do these people install these 100 megawatts of eligible solar panels? Because it will not just be there on day one. We assume it will come in over time. We assume it will ramp up. Various assumptions can be made about that. The other is the capacity factor: how much power do you get from your solar panels? It is not 100 per cent capacity because the sun is not shining 100 per cent of the time. The minister used the assumption of 19 per cent, but as I will talk about in a minute, that is an overestimate.

You would have to put into this some sort of carbon cost. You would have to assume that between now and when this scheme comes to a close regular retail electricity will have a carbon price in it. I think that is correct, but you have to say what that number is. It varies all over the place. There is in fact no definitive way of pricing that in because it is a function of whatever scheme we end up designing.

I have to say the carbon pricing scheme put forward by the government seems determined to make that as low a number as possible, so we cannot benefit there.

If you are comparing this with a net scheme, as opposed to the gross scheme that the Greens would support, there is the question of what is the net production. Some people have said to me that their household use is very efficient and that they are generally not there at the times when their system would be generating at maximum capacity and therefore for them net might be very similar to gross, notwithstanding all the other tricks and nasties the minister has put in this bill to make sure that they do not get all that. Nevertheless there would be a great variability across households as to what the net production would equate to. Therefore the minister's estimates have to be brought into doubt.

The last thing that contributes to the cost of this scheme and is a variable, even though the minister does not really look at it, is this interesting giveaway of electrons that is provided for in the bill, which very few people seem to have picked up on. How this legislation will work is the distribution businesses pay 60 cents for every kilowatt of solar electricity, which they collect by smearing it across all of their customer bases. They pay that to the retailers. The retailers pay 60 cents to the person with the solar panels, but what happens to the electrons? They are sitting in the hand of the retailer. I have been paid my 60 cents, but I have also given my electrons over to the retailer, and the retailer can then go and sell those back into the grid at something between the wholesale and the retail price, and the retail price is around 17 cents at the moment. When I asked the minister about this he just smiled, which I took to mean that he well understood that it is an implication of the bill.

If there is any justification for that measure, it could be that it is compensation for the retailers who have to go through some small inconvenience in changing their billing systems to reflect that they will be paying dollars or credits to those with solar panels.

That is a hell of a lot of compensation. Whatever their costs are for those issues, I imagine it could only be the equivalent of a few cents worth of the electricity that will be generated and will move through this scheme. Nevertheless, that puts a real extra cost onto the scheme. A benefit is being created there, and it is being captured by the retailers.

In one of those fantastic perfectly competitive markets, of course, I would be able to negotiate with different retailers as to what part of that booty they are willing to share with me. A member of the chamber is now conferring with the advisers to see if this is correct. She will be assured that it is.

In a perfectly competitive market that would happen -- this is not one of those. In fact it is a windfall to the electricity retailers. If I found $50 in a gutter, I would not give it away -- I would not go out and pay $50 for a Mars Bar; I would keep paying the same price for a Mars Bar -- and I do not expect the retailers are going to be greatly willing to give this away.

You do not have to take my word on all these issues. You can go to the original and primary piece of research that the minister's own department commissioned from McLennan Magasanik Associates and read the final report it prepared. The coalition parties obtained this report through a motion of this Parliament, and I commend them for that. The Greens did not need any more convincing on this, but if the coalition parties did, it is good they took the step of obtaining a copy of this report. The report was solely devoted to the issue of potential for a feed-in tariff. It notes how Germany and Spain have introduced them to support a whole range of renewable generation options, including large ones and small ones. The common feature is that legislation specifies the price to be paid to generators for energy exported to the grid from eligible options, and it applies over an extended period of time so that the person can understand the rate of return they would expect. Those payments are higher than wholesale prices and in many cases even higher than retail tariffs, which is exactly what we are looking at here. They also choose different prices for different types of generation technology, with the rates based on the minimum revenue required to cover the costs with a particular technology.

If you were an economic rationalist, you would shudder a bit. You would ask, 'Why are we fixing prices?'. The one thing economic rationalists do not generally want to do is fix prices, because if you fix prices all the other aspects, the other variables, then come to bear. In any case we are talking about a whole series of interlocking markets here -- the market for electricity, the market for water and so forth -- where everything is fixed at some point. It is fixed around providing each section of the vertical value chain with a necessary but not too fancy and not prohibitively low rate of return. That is the whole game. There is nothing different to the existing settings.

It is interesting that the Magasanik report then goes on to have a chapter headed 'Potential market failures'. In fact they are not market failures -- that is the one part of the report I disagree with -- they are actually regulatory failures.

They are aspects of the current electricity market as set up over a period of time that prevent these things from happening at the expense of the overall efficiency and greatest number of benefits to all the various players in the grid. In other words, the current model of regulation benefits some players for some behaviours and punishes or prevents other players for some things that are quite beneficial to society as a whole.

The Magasanik report goes through each one. First of all it points out:

     Peak solar output of PV systems may correspond closely with times of peak demand, typically during summer afternoons with high air-conditioner use. On the other hand during off-peak hours, usually at night, solar PV output is zero. It points out that at peak times, and even on individual days of the year, that price can rocket by a factor of thousands. To check this out I went to the NEMMCO (National Electricity Market Management Company) website and printed myself a little chart of the wholesale price for the relevant benchmark. What I see there is a line that is mostly just crawling along the floor at about 3 cents. On a couple of days last January in the middle of that incredible heatwave the price during particular 15-minute calculation periods rocketed up to $10.

Here we are passing a bill where I will get an average of 60 cents for my solar output, but there would be times of the year when, if I could sell my electricity into a spot market, I could actually get $10. Maybe I am even getting ripped off.

The point is that this bill, whilst being a small step, is still not maximising what should be the right incentives, which is for me to introduce peak generation into a market at a time that it most needs it and smooth out some of these prices. Who would be against that? In the current situation generators would be against it, because the retail prices are fixed through tariffs that are approved. They all relate to smeared or averaged cents-per-kilowatt-hour prices. When the wholesale price suddenly surges, it is the retailers who get hammered. The retailers have been getting murdered with this stuff over a series of summers. Conversely the generators have been raking it in -- that is, until the drought got so bad that they could not even buy enough water to run their plants. Then the peaking gas generators started to move in, and they did all right because they do not need much water.

There is great inefficiency in the regulatory settings that is stopping a good thing from happening, and the Magasanik report notes that. It reports that owners of solar PV (photovoltaic) panels are unable to capture the benefit. The report goes on to tell us that there are other benefits for the network which the tariffs that you can get now do not reflect. They include network charges faced by small customers which are also a highly average price. The cost of ramming more electrons down particular networks at particular times is also high, never mind just the actual peak demand for electricity. And yet that is not reflected in the price I am charged as an electricity user, let alone the money that I could make or save by generating or saving electricity or by switching off some appliances so that my solar panels will export more electricity. It is just not available. That is another massive built-in bias to the wider implementation of these PV panels and the broader societal benefits that we get.

The report notes that embedded generators can make a case to have some of the benefits of deferred network upgrades passed on; that is, the need generated for more network capacity which would be a real cost to those who run the network. It notes that the Somerton plant in Victoria received some payments for the benefit of those deferred system upgrades -- I am talking about bigger transformers or bigger poles and wires. There is nothing in the rules that prevents them from negotiating with that; it is just that they do not have the market power to be able to do so.

Then there is the reduction in network losses themselves. If you have to move electrons from over here to a long way over there it is basic year 10 physics that there will be electrical resistance associated with moving along the wires. Creating electricity in a place very close to where you are going to use it can only make savings. Another aspect of the laws of physics is that the more electricity you are trying to pump down a given wire the greater is the increase in the rate of electrical resistance. It is back to the peak flow issue again.

When you have network owners who are also the same thing as, or very close to, the planning authority, the incentive they have is to increase the size of their asset base because then they get the regulatory based allowable increase in their profit margins, which is based on what assets they own. There is the opposite to incentive for them to reduce the size of their asset base. Of course, this is all made more difficult by the fact that those of us who are not running the network cannot get very good information about the network, and there are no explicitly written rules which say that those who are responsible for running the network would be forced to consider these alternatives as opposed to just making their whole show bigger.

To be fair, there is quite a bit of contention on what proportion of these different network costs would be avoided by a wide application of solar panels, or conversely what savings and benefits are out there and able to be captured. However, the Magasanik report commissioned by this minister had a stab at it, and I will quote what is said on page 8 of the report. It states:

     A summary of the avoided costs due to small-scale distributed generation is contained in table 2-1.

I recommend that all members get a copy of it and look at it. It continues:

    Note that the estimates are the high and low range for an average avoided cost across all regions within Victoria. The estimates indicate a value for the energy produced by a PV system of between $100/MWh to $150/MWh or 10c/kWh to 15c/kWh.

What this is saying is that right up-front we could save ourselves 15 cents a kilowatt hour just in those network effects.

The report breaks it down as well through aspects such as the wholesale spot price, the carbon price impacts, the NEMMCO (National Electricity Market Management Company) fees, the contract premium, network losses, the retail margin and the avoided network fees.

There is another variable here, and as I said at the beginning, that is the generation capacity of a given solar panel which varies quite a bit according to the climate it is in. As I said, the minister's critique of environment group proposals early is the figure of 19 per cent production. In fact the data is in the report for what is considered to be a widely accepted PV system capacity factor. When I say widely accepted, it is accepted for the purpose of creating renewable energy targets and schemes. It is available at www.netscreen.net. It varies quite a bit across the countryside. At Altona it is about 16.9 per cent, Ballarat 17.3 per cent, and Bendigo 18.4 per cent. For most parts of metropolitan Melbourne it is closer to 16 per cent or 17 per cent.

The highest is considered to be Kerang at 19.2 per cent. Shepparton is 18.4 per cent. It is no wonder then that at least The Nationals members of Parliament from north of the Divide have been quite enthusiastic about the scheme, because whatever the rate of return is for the average, it will be better than average in sunnier climates. But I think the minister's argument that we have assumed for costing purposes that 19 per cent would be typical rather than an extreme is wrong. That would assume that almost all the panels were located up in Kerang or Mildura. While there might be some bias to those areas, generally it is going to follow the pattern of population and of course the availability of people who are keen to invest in solar panels. I would not suggest that is only people who vote for the Greens and live in the inner city. I am sure there are plenty of green-minded farmers up there. In fact I know some in the Shepparton area.

There is another red herring that has been thrown into the mix by the minister sponsoring this bill, and that is the issue of constitutionality.

I will not paraphrase the minister's argument because there will be some member of the Mission: Impossible force over there on the government benches who would like to argue this. Suffice to say the minister has taken it off to his fellow state ministers who have already introduced a whole range of different solar feed-in tariffs and has argued it with them, and they certainly have not gone scuttling off in a terrified huddle to wonder if their schemes are unconstitutional. A pretty basic perusal of the relevant case law tells you why this is wrong. But they can continue to try it on if they want.

In my office I have a third-year law student. I do not want to downplay that, but he has had a look at the scheme and has cracked it off pretty much in an afternoon. Interestingly, he came up with a very similar opinion to that put together by the Clean Energy Council with the help of a no doubt much more highfalutin group of lawyers, Rigby Cooke. The government is claiming that the premium feed-in tariff scheme could run the risk of invalidity under section 90 of the federal constitution if it obliges retailers to award cash payments.

There are two threats to this argument that make it quite easy to refute the government's position. The first is whether the scheme is a tax or excise, and the second relates to this hypothetical proposition that even if the scheme were deemed to be an excise, making credit payments as opposed to cash payments would not save it. Either way, the credit scheme is legally superfluous vis-a-vis cash payments. I understand this advice was provided by the Government Solicitor's Office. It has not been provided to me.

That is an admirably nonpartisan and independent provider of legal advice. I also understand the government would want to mitigate any possibility that the legislation was declared invalid by the High Court, because we have been there before in relation to electricity and charges. But the actuality of the case being mounted against the scheme that would be strong enough to strike it out is excessively overstated in the way the government has used this legal advice. It has just been thrown out there as another way of pulling the wool over the eyes of some of the other non-government parties, as a way of suspending a really important debate.

Is the scheme a tax? Most of the debate in the lower house focused on whether it was even considered a good, because any tax on the production of a good would become an invalid state law. That is yet to be determined by the High Court, so it makes sense to err on the side of caution and assume that electrons are a good.

Electricity was deemed to be a good in Victoria's sales tax legislation in the case State Electricity Commissioner of Victoria v. Federal Commissioner of Taxation (1999) and also in the Victorian Supreme Court case AGL Victoria v. David Neil Lockwood (2002) case. If electrons are not a good, I do not know what other legal taxonomy it would fall into, except perhaps as part of a service -- the service of lights coming on.

But debating whether electricity is a good or not is a red herring. The crux of the issue is whether the scheme contained within this bill could be classified as a tax. If it is not a tax, it cannot be an excise. The essential character of a tax is to raise revenue, but this bill does not contemplate any net benefit to the state. However, in Australian Tape Manufacturers v. Commonwealth, the High Court said it is not necessary for the compulsory exaction of money to go to consolidated revenue in order to be classified as a tax. While this decision has since been questioned by the court in Luton v.

Lessels, this ruling still ostensibly remains, so any analysis we would do would proceed on that basis.

The test for determining whether a legislative scheme is a fee for service or a tax was laid down by Chief Justice Gleeson and Justice Kirby in Airservices Australia v. Canadian Airlines International, where they said:

Not all taxation has as its primary purpose the raising of revenue; and some forms of taxation are notoriously inefficient means to that end.

They always like to have a few funnies. They went on:

An objective of raising revenue is not, therefore, a universal determinant. Even so, the presence or absence of such an objective will often be significant.

In this case the charges were not imposed to raise revenue. The charges were undoubtedly charges for the provision of services and facilities. The charges were imposed to recover the cost of providing such services and facilities across the entire range of users. The charges for categories of services were reasonably related to the expenses incurred in relation to the matters to which the charges related. The services and facilities were, of their nature, part of an activity which must be highly integrated in order to be effective. There was a rational basis for such discrimination between users as existed. That was the airline industry; this is the power industry.

There is no warrant for concluding that the charges amounted to taxation on the grounds that they exceeded the value to particular users of particular services. Frankly, there are a lot of things buried in an electricity bill that can vary, and making your power just that little bit greener is not likely to be seen as way out there.

Is it an excise? The case of Ngo Ngo Ha v. New South Wales was the definitive case on excise which endorsed a broad view of excise to include a tax on goods at any point before consumption. The court made it clear that a genuine fee was to be distinguished from an excise duty if it is imposed as part of a regulatory scheme, as distinct from a revenue raising device. This scheme cannot by any stretch of the imagination be seen as an underhanded way to raise revenue. Even if the distributors and retailers were still publicly owned, they would neither gain nor lose income under this scheme -- although one is gaining.

This scheme has the quality of an excise in that the compulsory payment for energy production at a premium is a statutory condition of the retailer's licence. That is how it has been written into the bill, and it will ultimately be borne by final consumers. Where the essential qualities of excise are absent is that the financial beneficiaries of the compulsory levy are the households who produce their own solar power, not only public agencies.

Would credits, in any case, prevent invalidity? In the Ngo Ngo Ha case, the majority made it very clear that the court will examine substantive effects of a fee in order to determine if it is an excise. Given that the courts are so willing to peer behind the scheme's form to prevent a legislative prescription that acts like a tax, I find it difficult to believe the government can allay its fears of a constitutional defeat solely on having a 12-month credit system instead of cash payments.

Even the World Trade Organisation's appellate body deems a financial contribution, in its words, to be made out whether in the form of credit or a direct contribution, and there is no reason to assume any alternative interpretation would be made by the High Court. So much for that.

The Greens are proposing some amendments that would in some ways address the problems with this bill. First of all, there is the restriction that only a person living at the principal place of residence and no other electricity consumer would be eligible to participate. What can we say about that? It seems that ALP members of Parliament get an inordinate thrill at the moment out of handing out solar panels to schools. Every time I turn around there is another smiling picture of Kevin Rudd or Peter Garrett, with some local MP, handing over solar panels to schools.

What this means is that those schools will not earn anything better than 17 cents off those solar panels; they certainly will not be able to access the 60 cents, which means that basically they will have to go and run another cake stall for the couple of hundred bucks they might have made. If the government insists on pushing this through, I guess in the next couple of elections we will just get a list of all the schools that have been handed out solar panels; then we will go and hand out a leaflet telling them exactly that.

Had I the time I would have rung all of the school councils and said, 'You are about to miss out on something here that households are going to get'. If the minister's objection is to people making a profit, how can his objection be to a not-for-profit entity like a school or local government simply making a bit of extra cash?

In terms of the restricted size of the eligible panels, there is the limit of 3.2 kilowatts in size. That is big for a household set of panels. The government has provided me with data that suggests it would cover the majority of the panels that are out there now, but if you are accepting my argument on the principal place of residence and you are thinking and maybe even hoping that schools and local councils -- and, who knows, maybe even a few small businesses, farmers with their dairies -- will start investing in this scheme, you would want to allow for investment in a larger system. This is, firstly, because they are the only people who can do it; and, secondly, because it is a way of them increasing, all other things being equal, their net return.

Then there is the issue of gross versus net, which, as I have said all through this discussion, is just silly to oppose, because all you are doing is reducing the amount of benefits that go across all of us collectively who have an interest in the efficient running of an electricity grid -- dare I say not just an 'efficient' grid but a 'smart' grid. While we can argue about who gets what benefit, how and when -- and that could be part of the compromise -- I do not see why you would want to actually limit the amount of eligible electricity, especially when the scheme is time limited and total megawatt limited as well.

I am not sure where we are at with this bill at the moment, but the Greens have a number of amendments along those lines that we are ready to move when we get to that stage of the bill. I am keen to hear from government members if there are any particular refutations they are prepared to put up to any of the matters I have just raised or if they are even willing to put their thinking caps on about another way to achieve the sort of benefits I have described.

 Ms HUPPERT (Southern Metropolitan) -- I am delighted to rise to speak in favour of the Electricity Industry Amendment (Premium Solar Feed-in Tariff) Bill, and I seek leave to incorporate into Hansard three tables which I will refer to later in my contribution. These are tables 5, 6 and 7 and have been distributed.

 Mr Barber -- We are happy to grant leave for these tables to be incorporated into Hansard because they help us prove our case rather than the government's.

 The ACTING PRESIDENT (Mrs Peulich) -- Order! Has Ms Huppert consulted the President and Hansard?

 Ms HUPPERT -- Yes.

Leave granted

Table as incorporated and full debate available on Hansard - click here