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Farmers to energy ministers: "Stop picking winners"

Stakeholders met with Australia's energy ministers in Brisbane last night, ahead of the COAG Energy Council meeting today. Presenting the case for farmers, the National Farmers' Federation's Jack Knowles articulated our sector's challenges and the case for change.

Speech by Jack Knowles to the COAG Energy Council Stakeholder Roundtable, Thursday 13 July 2017, Brisbane

Ministers.  Thank you for the opportunity to speak and I’d like to convey the apologies of my CEO Tony Mahar, who is unexpectedly in Canberra this evening.

Producing the best quality food and fibre in the world uses a lot of power.

Farmers use electricity to run pumps for irrigation water and their shearing sheds.  To power dairy milking machines, and fruit and vege packing facilities and cool stores.  

For many, they don’t have a choice about their time of use.  Irrigators pump at times when stream flows match their licence conditions; cows milk at the same time – usually 3 times a day - and at harvest time, packing sheds run around the clock.

Escalating prices are driving farmers to reduce their reliance on the grid – or to leave it all together. For some this means installing small scale solar & battery set ups.  But for many it means dusting off the diesel generators they put in the back of the shed when they installed 3 phase power a decade or 2 ago.  

In 2020 when new tariffs kick-in, Kim is forecasting that his annual power bill will double
Jack Knowles, National Farmers' Federation

Take the example of Kim, an irrigated grain, chick pea and cotton grower from the Darling Downs here in Queensland.  Kim’s here tonight.  Kim’s pumps run when his water licence conditions permit.  Some years this might be for 5 days, some years 15 days.  In 2020 when new tariffs kick-in, Kim is forecasting that his annual power bill will double from the $20-40,000 he currently pays, despite no planned change to his consumption.  He’s crunched the numbers – and at the moment a return to diesel generators makes the most financial sense.

Companies that supply our inputs like fertiliser and those that process and add value to our products once they leave the farm gate– milk factories, cotton gins, abattoirs, and food manufacturers are also suffering.

Affordable & reliable electricity and energy underpins not only our sector, but indeed the whole economy.

Farmers are also at the frontline of the impacts of climate change – and most accept that as a nation we must contribute our fair share to the global effort to reduce emissions.

There are all sorts of reasons for the escalating electricity prices that we’ve seen in the National Electricity Market (NEM).  The lack of a strategic and coordinated national policy, leading to under-investment in the mix of generation needed to deliver secure and reliable power, is a central part of the problem.

NFF’s view is that Government policy must not favour specific technologies, but rather enable technologies to compete on their merits
Jack Knowles, National Farmers' Federation

This has compounded the price rises that have resulted from governments acting for their own interests rather than those of consumers. Governments have inflated the asset bases of state owned businesses and reaped the resulting profits through either dividends or the spoils of privatisation.

The current suite of policies that we have on the table at a State and Commonwealth level seek to pick winners creating significant distortions in the market.  And the cost of this is being met by consumers – including farmers.

It is clear that we need significant investment in the NEM to maintain generation capacity - particularly reliable and dispatchable generation.  Failing to agree on a coordinated, national policy to encourage this is just not an option.

Some would argue that we need to narrow our focus to just the affordability and reliability legs to the trilemma.  We know however, that to do so will not be enough.  Addressing all legs of the trilemma is as much or more an economic discussion as it is about climate policy.

If we don’t act to provide some policy certainty, we will hasten the trend to more and more government intervention, continued inefficient investment in infrastructure and ultimately higher costs for taxpayers and for consumers.

It is our strong view, that if we don’t take the opportunity provided by the Finkel Review for a national policy discussion, it will be another decade before some form of national consensus might be achievable.

Many voices are seriously debating Dr Finkel’s recommendation for a clean energy target – and rightly so.  The policy choices ahead of us will underpin our economy for decades to come.

NFF’s view is that Government policy must not favour specific technologies, but rather enable technologies to compete on their merits.

The role of governments is to set the parameters to achieve the emissions and reliability outcomes we seek from the NEM.  And Governments must provide strong, transparent and fair regulatory settings, that promote competition and ensure that all the players are disciplined.  And then it is time for Governments to get out of the way and let the market do its job.

Farmers from one end of the NEM to the other have had enough.  Their businesses cannot withstand a continuation of the status quo.  The time for politics and grandstanding is well and truly over.  It is more than time to have the detailed policy discussions; to build consensus and to land the policy settings we all need.  

In the words of many commentators over the past 7 or 8 months, even the National Farmers Federation believes that it is time to act.

Jack Knowles is the Manager, Natural Resource Management for the National Farmers' Federation.

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