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Power Off Power on Rebooting the National Energy Market Power Off Power On Rebooting the national energy market December 2017 Power Off Power On: Rebooting the national energy market 1 The Shepherd Review Power Off Power On: Rebooting the national energy market An options paper commissioned by the Menzies Research Centre Nick Cater, MRC Executive Director Spiro Premetis, MRC Director of Policy and Research Published by The Menzies Research Centre Limited R G Menzies House Cnr Blackall and Macquarie Streets BARTON ACT 2600 PO Box 6091 KINGSTON ACT 2604 Phone: 02 6273 5608 Email: [email protected] Portal: www.menziesrc.org The Menzies Research Centre is a company limited by guarantee. The Menzies Research Centre is supported by a grant from the Commonwealth Department of Finance. ACN 067 379 684 © THE MENZIES RESEARCH CENTRE From the the desk desk of Tony of Shepherd Tony AO Shepherd From the desk of Tony Shepherd AO For generations the great promise celebrated in our national anthem – wealth in exchange InForfor March toilgenerations – 2017 has the given Shepherd the us great an Review enviable promise published lifestyle. celebrated its Statement in our of national National Challengesanthem – settingwealth out in exchangethe priorities for fornational toil –reform. has given us an enviable lifestyle. Yet Australians are beginning to doubt that promise. They are prepared to work as hard as Since then we have conducted a series of community forums talking to people in every state to discover what they thinkYetever Australians toneeds secure fixing. a are better beginning life for tothemselves doubt that and promise. their families, They are yet prepared many feel to itwork has asbecome hard as harder everto get to ahead. secure They a better have life become for themselves distrustful and of theirgovernment families, and yet nervousmany feel about it has the become future. harder The spiralling cost of energy was the most frequently made complaint in every state except Western Australia. to get ahead. They have become distrustful of government and nervous about the future. ThisConcerns review about of the the reliability nation’s were economic a close second. challenges One woman shows in Whyalla,that Australians South Australia, are right told usto she be used anxious. to ThisTheshop steadyforreview groceries improvementof the once nation’s a month. in economic Now living she standards shops challenges twice Australians a week shows because that have she Australians come cannot to rely expect are on herright iselectric far to frombe freezer. anxious. Theguaranteed;Energy steady prices improvementwas rapid the changes number inone in living complainttechnology standards by small and Australians business highly mobileowners. have Weinvestment come learned to thatexpect capital fast foodis are far franchises disruptingfrom are guaranteed;establishedparticularly affected. business rapid Ifchanges you’re models; serving in wagestechnology burgers remain on demand,and static highly you and cannotmobile basics, turn investment like off energythe grill. capital and housing, are disrupting are no Inestablishedlonger Port Augusta, cheap. business we found models; a pub running wages on remain newly installed static anddiesel basics, generators like within energy sight and of thehousing, decommissioned are no longerNorthern cheap. Power Station. ConsumersThe burden and of business national owners debt have makes a right us to increasingly feel angry. As vulnerable our report shows, to external they have shocks. been largely Yet the kept in the darkThemounting aboutburden the cost of extent nationalof the and services effect debt of makes subsidieswe expect us to increasingly support from ourthe introduction governmentsvulnerable of to renewable –external welfare, energy. shocks. health andYet theeducation – makes the task of repaying that debt harder every year. Itmounting was never costmade of clear the that services the cost we of thoseexpect subsidies from wouldour governments be added to their – welfare, bill. health and education – makes the task of repaying that debt harder every year. IfThey we were fail tonot meet warned the about not the inconsiderable technical challenge challenges that comes we from now trying face, to the integrate outlook large for amounts Australians Ifisof wegloomy.non-synchronous fail to Job meet opportunities energythe not generation inconsiderable will shrink,into the wagesgrid.challenges won’t we rise now and face, each the next outlook generation for Australians will have isfewerNor gloomy. were chances they Job told inopportunities about life than the high the costwill previous ofshrink, sourcing one. wages reliable won’t energy rise when and wind each and next solar generation generators are will idle. have Itfewer is clear chances from our in report life thanthat the the energy previous crisis one. afflicting Australia is a problem entirely of government making. ItBusiness is arguably and the individuals most costly failurewill be of asked government to pay in ourhigher lifetimes. taxes and higher energy bills which will drive up the price of almost everything we consume. FixingBusiness this andmess individualswill not be easy. will It be requires asked a focussedto pay higher response taxes from andCommonwealth, higher energy state andbills territory which will governmentsdrive up the focussed price of on almost the national everything interest. we consume. Fortunately there is an alternative. We can rise above these challenges by creating an FortunatelyenvironmentMost of all, it requires there in which isthat an businessesthe alternative. market should thrive We be can and left rise towe balance above can insist supply these that and challenges demandgovernment and by to creating passstops on wasting the an benefits of Australia’s abundant sources of energy. environmentour money, by in providing which businesses services thriveefficiently and we and can effectively. insist that government stops wasting ourThe costmoney, of inefficiency by providing in the servicesenergy market efficiently flows through and toeffectively. every sector of the economy. It affects our Theprosperity, rewards health will and follow: employment jobs, higher opportunities. real wages, An inefficient affordable energy energymarket putsand, a handbrakeabove all, onthe the economy and limits the life chances of future generations. It is in every Australian’s interest, therefore, to ensure that the marketTheopportunity rewards operates forwill smoothly. Australians follow: jobs, to higher pursue real their wages, dreams. affordable energy and, above all, the opportunity for Australians to pursue their dreams. AustraliaReliable and remains affordable in energy control are of non-negotiable. its destiny, but Without we cannot them, Australians postpone and the the hard businesses decisions they run will struggle to get ahead. Australiaindefinitely. remains The choicesin control we of makeits destiny, today butwill shapewe cannot our future. postpone the hard decisions indefinitely. The choices we make today will shape our future. Tony Shepherd AO Tony Shepherd AO Chairman,Tony Shepherd The ShepherdAO Review Chairman, The Shepherd Review MarchChairman, 2017 The Shepherd Review December 2017 March 2017 The Shepherd Review Power Off Power On: Rebooting the National Energy Market is an Options Paper by The Shepherd Review commissioned by the Menzies Research Centre. Its brief is to identify the obstacles in the path of national progress and to recommend policy solutions that will drive prosperity. The first stage of the Shepherd Review concluded with the publication of Statement of National Challenges in March 2017 which set out the reform priorities. Australia has benefited from an extended period of strong economic growthThe and wealth Review generation. Panel This has contributed to the country’s high levels of prosperity, relative equality and standard of living. If Australia is to retain control of its destiny, it must capitalise on new wealth generating opportunities and avoid complacency. Failure to do so will reduce Australia’s performance over the medium to long term and restrict opportunities for its citizens. The Review Panel is led by MRC Director Tony Shepherd AO and supported by Secretariat Head, Spiro Premetis. It is working with small, medium and large businesses, specialists and the wider community The Review Panel to produce principled, empirically-based findings. Tony Shepherd AO Hon Warwick Smith AM The ReviewThe Panel Review Panel TheThe PanelThe Review Review Panel Panel Tony Shepherd AO Hon Warwick Smith AM Ben Heap Josephine Sukkar Tony Shepherd AO Tony Shepherd AO Hon Warwick Smith AM Hon Warwick Smith AM Tony ShepherdTonyTony Shepherd Shepherd AO AO AO (Chair) HonHon Warwick WarwickHon Warwick Smith AM SmithAM AM Ben Heap Josephine Sukkar Dr Peta Seaton Peter Strong Ben Heap BenBen Heap Heap JosephineJosephine Sukkar Sukkar AMJosephine SukkarDr Peta Seaton AM Ben HeapBen Heap JosephineJosephine Sukkar Sukkar Dr Peta Seaton Peter StrongPeter Strong Spiro Premetis (Head of Secretariat) Geoffrey Winters Andrew Bragg Dr Peta Seaton Dr Peta Seaton Peter Strong Peter Strong Head of Secretariat Dr PetaDr Seaton Peta Seaton Peter StrongPeter Strong Geoffrey Winters Andrew Bragg Head of Secretariat i The Shepherd Review: Statement of National Challenges Geoffrey Winters Geoffrey Winters Andrew Bragg Andrew Bragg Head of Secretariat Head of Secretariat GeoffreyGeoffrey Winters Winters AndrewAndrew Bragg Bragg Head ofHead Secretariat of Secretariat i The Shepherd
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