New Year Resolution Part 2

By Brian Tessmann, QDO President

Australia has throughout its history been a significant producer of food and fibre because of the ingenuity of its farmers and their ability to make the most out of a sometimes unforgiving climate. The return from this endeavour though has been increasingly put at risk by costs from other sectors of our economy and society including from government.

As I alluded to last week in this column these unnecessary cost burdens Australian Farmers are forced to carry, especially when compared to farmers in most other developed countries, are major issues state and federal governments must address with urgency. Top of this list is the cost of energy particularly electricity and where the sustainable production cost path of this input goes in future.

As we all have seen there have been significant movements in recent months including the Copenhagen Summit to pick up momentum in tackling and reducing carbon emissions around the world. Whatever some might individually believe regarding climate change it is clear that the Australian economy needs to change to meet international expectations and in fact safe guard local industry. While mining and exporting high quality coal to overseas countries for uses such as steel production will continue for some time the use of coal in our domestic power generation industry will obviously need to be considerably reduced with some haste.

Clearly all ongoing and future investment in power generation whether new plants or refurbishment of current plants needs to be in more carbon friendly technology. From a power users point of view this in itself should not cause any great concern at all as overseas industries in places such as the west coast of North America have replaced most of their coal fired generation with large efficient renewable energy plants that are more than competitive with coal. These power stations are mostly solar with significant wind and hydro generating systems plugged into the grid as well.

The real issue is that this power is in fact delivered to the power consumer in places like California through their power grid at a small fraction of the cost impost that electricity is for homes and industry in Queensland. In Queensland the power cost problem chiefly descends from the various Government policies and decisions relating to the actual power grid that delivers the electricity to consumers including the incentives for off grid production that increases the per unit cost of distributing electricity through the grid.

Obviously the more people who follow previous government incentives and go off grid the more the ‘per unit’ cost will be left for those still on the grid to pay. Now while QDO, like QFF and some other industry organisations have been assisting their members reduce cost including finding and accessing alternative sources of power, what we all still appreciate is that if more people drop off the grid supply then those remaining on the grid will pay more for their power thus increasing their incentive to go off grid. A situation some now call the solar panel death spiral.

While the current work going into advising government on tariff structures and also helping farmers select the right tariffs for them is important and necessary it is a little like rearranging the deck chairs while the Titanic was sinking. What we really need to see the government show resolve to rethink and revamp the whole electricity production and supply system so that Queensland can have world class cost competitive low carbon renewable power delivered through the existing grid to Queensland consumers within five years.