Estimates - Industry & Resources - Energy subsidies

CHAIR - Minister, I just wanted to get back, just a fairly brief question, because I know, we're getting down into the final half hour, and I just - it's in relation to industry subsidies, again. I was interested to read in the budget paper 2, chapter 4, page 63: funding's been provided to TasNetworks for the government's policy to shield existing direct transmission connected customers from the transmission cost impacts of Marinus Link, and the north west transmission thing.

Mr ELLIS - Transmission developments, yes.

CHAIR - Development, thank you. Direct-connected customers are the major industrials which fall under your portfolio. This funding commences in this budget at $1.4 million, goes to $3.7 million next year, $4.5 million the next year, and $6.5 million the following year. Can you indicate why these taxpayer funds are going to the major industrials when Marinus Link hasn't even been built yet, and what other taxpayer funded subsidies, rebates or exemptions are our major industrials receiving from the state government?

Mr ELLIS - Thank you, Chair. Obviously, it more aligns with the Energy portfolio, but we do have a lot of the relevant departmental officials here with us today. I'll just look to the Acting Secretary in terms of guidance on what we might be able to provide at the table.

Ms PINTO - Through you, minister: just for the benefit of the Committee, I am the Deputy Secretary across Renewables, Climate and Future Industries Tasmania and Resources, so I do have that information available for the benefit of the committee in your question. The Marinus Link project, which includes both the undersea cable and the North West Transmission Development Project component, as you've noted, reached a financial investment decision last year - and that decision occurred during what was then a caretaker period. Just prior to that, the government made a policy decision. As a part of that decision, consideration of consumer impacts was one of the eight criteria. For the benefit of the committee, the Financial Investment Decision Assessment Report is available online publicly and it outlines those eight criteria, and one of them was consumer impacts. This particular group of consumers, being direct connected to the transmission system consumers, were quite significantly impacted by the costs associated. Other consumer groups were not; they were within a reasonable impact level, and that is in majority due to what had been negotiated through the process. So, deeply concessional funding for both the Marinus Link and the North West Transmission Development Project brought down those loan costs as well as the negotiation of the share between Tasmania and Victoria. For all other consumers, it was fair and reasonable, but for Direct Connect customers it was very significant. I'm talking - and excuse me, this is off memory - but we're talking as a collective group, about $25-30 million a year impact.

CHAIR - Why are taxpayer funds shelled out for this?

Ms PINTO - So, the government made a policy commitment that those Direct-Connect consumers for the net real impact would receive an offset. The Department of Treasury and Finance has been working very closely with TasNetworks to understand what those cost impacts would be over the forward Estimates, and there are some cost impacts that occur in this immediate revenue period for TasNetworks as a network service provider that will impact those individuals. And the mechanism that has been determined by the Department of Treasury and Finance with TasNetworks is to have a, - I'm going to use those colleagues of mine in Treasury and Finance - I think the correct term is like a community service obligation payment will be made to TasNetworks, to ensure that those offsets are honoured.

Mr ELLIS - As you can imagine, Chair, Marinus and North West Transmission Developments deliver, you know, in excess of $400 million a year back to the Tasmanian taxpayer. And there are some impacts, but with a transfer pricing mechanism, you get the significant benefit of the uplift in revenue and then you help shield people that are affected, in this case the major industrials, to a smaller degree.

CHAIR - Well, it just seems like a pipeline of money, taxpayers' money, to Marinus. That's what I see, but we'll go to Mr Jaensch.

Mr ELLIS - It's more a pipeline of money from Marinus to the taxpayer and then, you know, we distribute a small percentage of that.