Estimates of Revenue and Expenditure
Extract from Hansard
Estimates
12th August 2025
Consideration of tabled papers
Resumed from 26 June on the following motion moved by Hon Samantha Rowe (Parliamentary Secretary):
That pursuant to standing order 69(1), the Legislative Council take note of tabled papers 316A–E (2025–26 budget papers) laid upon the table of the house on Thursday 19 June 2025.
Hon Dr Steve Thomas (1:30 pm): Here we are, honourable members, back for another budget debate and another budget speech. Obviously, we are going to bring up the regular things, but I am going to concentrate on a few new areas in this budget. I know that will be disappointing for some members opposite, many of whom have already managed to scramble out of the chamber, because it is an interesting time.
Hon Jackie Jarvis: I'm listening intently!
Hon Dr Steve Thomas: Thank you, Minister for Agriculture and Food. We will try to minimise the graphs and maximise the debate as much as we can, but I have to put in one graph. What did the 2025 budget contain? To be honest, it contained a lot more of the same. One problem with being in opposition is that when we have said the same things about a budget for a very long time, it is very hard to get people to recognise that. This government could be described as "Lucky" Phil. It is pretty easy for a "Lucky" Phil government to make it look like it knows what it is doing. I will remind members of something. I have to go back a couple of Treasurers—actually, a number—back to 2019. In February 2019, I asked the very good then Labor Treasurer, Hon Ben Wyatt, the member for Victoria Park, how his budget would alter if the price of iron ore stayed above US$90 a tonne, and his answer back in February 2019 was that we do not model that, because the assumption is highly—
Hon Dan Caddy: Tell us the new stuff!
Hon Dr Steve Thomas: We are coming to the new stuff, do not worry. There is a lot of embarrassment to go around for the government. I do not want to stint members. It will come in the fullness of time.
In 2019, the then Treasurer said that we do not model the price of iron ore staying above US$90 a tonne because that is highly unrealistic. I had look at the price today. It is nearly US$104 a tonne. It has barely fluttered below US$90 a tonne in the last six and a half years, from February 2019 to August 2025. It has been six and a half years of the biggest boom this state has ever seen. It has been six and a half years of the biggest boom of any state in the history of Western Australia, with one exception—that is a massive budget surplus in Queensland a few years ago when the price of coal went through the roof, just to compete. That is massive, massive budget luck. Well done. It is the budget and the government of "Lucky" Phil—the lucky Premiers, plural. It is very difficult, because, obviously, we say they have been lucky again. They were lucky in 2019. When we look at the budget papers back in 2019, we see that the government had exactly the same outcomes in mind as the previous government. In 2017, when the previous government said that we are going to get to a debt position of $42 billion from the $32 billion the state was in at that point, there was outrage from the then opposition, now on the government benches, but then when the McGowan government came in, its next two budgets had exactly the same outcome. We have done this before. It was not budget management that financially changed the position of the government; it was the rule of "Lucky" Phil and the iron ore boom that actually put money in the government's pockets and allowed it to spend it significantly. Again, we could spend the whole hour just talking about the luck this government has had and where its priorities lie with that money.
Hon Dan Caddy: It's a lazy line, this. It's a lazy line.
Hon Dr Steve Thomas: It is a great line! We are going to do it a bit differently this year, but I would like to seek the leave of the house to table the updated asset investment program, because members might remember that I have tabled it probably every second year for the last six years, and it shows some interesting things. This table shows the government's asset investment program, which was around $6 billion in 2014–15, 2015–16, 2016–17, 2017–18, 2018–19 and 2019–20; then, in February 2019, there was the start of the boom. In 2019–20—from 1 June 2019 into 2020—it boosted up and suddenly went over $7 billion to $8 billion, $9 billion, $9 billion, $12 billion, nearly $12 billion, and between $10.5 billion and $11 billion in the forward estimates. I seek leave to table that document.
Leave granted.
(See paper 421.)
Hon Dr Steve Thomas: I thank members for the enthusiasm. That was fantastic. Well done. I am a bit surprised Hon Dan Caddy did not jump up, just to update himself on what the budget papers actually say, but do not worry, we will get to some more interesting bits in a little bit.
Obviously, the government has a lot of money to spend, and it has chosen, as is its wont, as it has been doing now for a number of years, to pay cash for its major vanity projects like Metronet, for example. That was a $3 billion project. It is now a $13 billion to $14 billion project. It will probably finish at $15 billion. Do members know what? I am not even going to complain about it as a project. Some of that expansion has been expansions of scope, and some of it has been blowouts; it is a mixture of the two. But let us go back to the basics of economics, because I want to briefly do that before we get to the more interesting stuff.
A conservative economist would probably start with Friedman economics, which very much talked about surpluses and debts and living within one's means. At that point, we had this new kid on the block, Keynes, who had some very interesting ideas about how governments should spend more dollars when the economy is not going well, because that stimulates the economy and supports jobs, but when the economy is going well and taxation is rolling in, that is when we have to pay back that debt. People thought Keynes was very left wing. They did—they thought he was a closet communist. In fact, he is remarkably sensible. That process makes a lot of sense for someone who started out in a Friedman-like manner talking about absolutely living within one's means. But we have moved far beyond even Keynes at the moment, because this government does not follow Keynes. This government has had the biggest boom in the history of any state in Australia over time, and it has barely paid back debt. I understand why members opposite can sit there and say, "That's Liberal Party debt. As long as the current debt is a few dollars lower than the Liberal debt, we can just point the finger. That's okay; that is their problem." I understand that. It is good politics. It is bad economics, but it is good politics. Members on that side of the chamber are very good at politics; I get that. The government has not used that money to significantly pay down debt; it has used it for its major projects so that it can pay cash for Metronet. I say congratulations and good luck, and good luck is the key. Do not claim good financial management—claim good luck. The government is going to make the best political outcome out of it that it possibly can, and I understand that, too, but it does not mean that it is good economics. It is funny, is it not? We have now moved from generally what I consider Keynesian economics to the modern era. I collect economists. I go to functions, events and conferences and I collect economists, and I ask every economist the same question: Now that we have all moved beyond Keynesian economics to this thing that we will call modern monetary theory, have we all completely lost track of budget surpluses and deficits? We all now believe in modern monetary theory, which is to just spend. As much as I would like to point the finger at purely the Labor Party, with a little bit of embarrassment I say that the Liberal Party in various jurisdictions has done exactly the same thing. Just keep spending.
There is no end to this. If members want the best example of this, the United States has a fairly conservative President at the moment who is an interesting character, but the best estimate of government expenditure is that the US will not see a budget surplus in my lifetime. There might be a few younger members who might still be going in 2070 or 2080—the honourable member might get there. That is a fair way away—it is 50-odd years away—so they should stay healthy and go to the gym a bit! The Australian Treasury has done a very similar thing. The federal budget surpluses of the last couple of years have been as accidental and based on luck as the state government's surpluses have been based on the resources explosion.
Nobody is actually talking about serious economics anymore, but I do collect economists, and everywhere I go I get one of two answers. My question is: Are we all now modern monetary theorists? We used to live off the saying that governments of all ilk are too big to fail; therefore, balancing a budget does not matter anymore. I think this is really interesting because we will get one of two answers. All the left-wing economists go, "Oh, I don't want to answer that." I get that a lot. The right-wing economists, those few who are left—we are probably an endangered species—actually say, "Well, I still believe in the original economic balance and that, at some point in the future, budgets will have to be balanced." That is going to be an interesting experiment for a lot of countries, including Australia, the US and a whole pile of other ones. Some people out there still believe that that matters, particularly when I speak to the conservative group.
We find ourselves in this interesting situation in which the state government has so much money, it is going to spend a lot of it, but it cannot spend enough of it for the most part. There is only one government trading enterprise that is really making significant money, and that is the Water Corporation. The government has repeatedly taken over a billion dollars of the dividends that would normally come into the budget and hidden them away in what is called retained earnings. That bit does not go through the budget papers in the same way. Otherwise, the $6 billion surpluses that this government has been boasting about would have been $7 billion surpluses. That money has been hidden so that it does not come through the budget process. I know, for example—we can see it in the budget papers—that some of that has been set aside for the next desalination plant up in Alkimos, which is necessary. Nobody is arguing about that, but that will probably cost, at most, half of the retained earnings account, which is now at about seven billion bucks. Seven billion bucks of retained earnings are sitting in a bank account earning interest for the Water Corporation because it looks better there. It is then a bit hidden from the budget papers and not written down in the government's income. That is an example of having so much money that the government actually has to hide it away.
This is when I would talk about Scrooge McDuck and the money bin. I miss Hon Lorna Harper because that usually got her going beautifully in this Parliament, with the Scottish connection. When there is not enough room in the money bin for any more money, the government has to find somewhere else to put it, so it has taken it out of the state money bin and left it at the Water Corporation. It probably has a spare tank or two over there that it can pop mountains of cash in. The money bin is still full. The price of iron ore, which the government budgets conservatively, is at about US$104 a tonne. As we move through this financial year, the government will be billions of dollars ahead of where it expected to be. Actually, that is probably unfair; it will be billions of dollars ahead of where it told us it was going to be. I am sure that it expects to be billions of dollars ahead, but it just did not tell the wider community the truth about the financial position of the state. They are the basics of the economy. The hard bit is getting something different in there. It is a little hard when the government comes in with billions of dollars of spare money every year. At some point, that will correct. I am looking forward to the day that the government actually has a difficult budget to balance; that is going to be really interesting and a bit of fun. I think the fun part is going to be when there is a sudden $5 billion drop in iron ore royalty income and the government has to balance the budget.
There is no point in me again going through the economic details in great detail as I have done in previous budget speeches, because they are exactly the same. The government has multibillion-dollar surpluses thanks to the luck of a run on iron ore, and it is choosing its priorities and not necessarily the priorities of the people of this state. That is not new. That is not going to get a headline. Let us talk instead about one issue that I think is going to be enormously difficult. It should have been properly addressed in this budget, but it has been paid lip service. One of the great announcements of the government was about the energy transition, which the government proudly spruiked in its budget speech. It has $7 billion set aside for the energy transition and it is going to go wonderfully well, according to the government's speech, media releases and statements made in the house. The government's transition is in a mess. It is in a parlous state. This was interesting, President. I went to the Committee for Economic Development of Australia breakfast, at which the Premier, Hon Roger Cook, a man for whom I have a significant amount of respect, gave a speech on the energy transition. I do not think there were any other sitting members there. I did see a former energy minister and had a chat with him. Was Hon Sophie McNeill there?
Hon Sophie McNeill: They didn't let me in.
Hon Dr Steve Thomas: They didn't let the member in. She should stop protesting! Put the whistle down and we could have got you in there!
When the Premier was giving his speech, I was sitting amongst industry players. I spend a lot of time talking to energy industry people. The Premier said, "Look, some people say our transition plan won't work and we haven't got it in place properly and they're sceptical about it, but they're all wrong." I did not have the heart to tell him afterwards that every energy industry person whom I spoke to at that breakfast said exactly that. Energy people from one end to the other are walking into the government's offices and saying, "Your current transition plan does not work. It will not deliver what you say it's going to deliver. You will have a problem going forward, and it's coming to you at a rate of knots." I would like to explore some of the statements made by the government to demonstrate that it has a massive problem with the energy transition. There are some very nice bits in the budget papers that I will refer to going forward, because I think there is enough evidence in the budget papers alone to give members a very strong indication of this. I divide the energy system into a number of categories, and I plan to address them individually. Probably the most notable break-up of these things is into generation, transmission and storage in particular. In each case, with the possible exception of storage, although the government has issues with that as well, the government is behind where it needs to be, to the point where the stability of the grid is at risk.
We need to go back many years ago to when the previous Premier announced this transition plan and the closure of coal-fired power stations. That sort of work started in the previous Parliament. In 2020 and 2021 there were pronouncements from the government about what it was going to do, so we have known for something like five or six years that the government was on a path for a supposed transition. One would have thought that that was a huge priority. I think there are a few examples that we need to go through. Let us start with transmission. There were some interesting debates around the budget estimates last year. During the first hearing that I was in with Western Power I said, "Well, the government has announced that it requires 4,000 kilometres of additional transmission lines, so if you are putting in 130 or 500-kilovolt transmission lines, the current price for that is somewhere between $5 million and $7 million a kilometre." Let us average it out at $6 million a kilometre. Four thousand kilometres at $6 million a kilometre is $24 billion worth of transmission lines that have to be added into the system. The government does not have $24 billion worth of funding in transmission. I asked the government how it calculated 4,000 kilometres—I could not make that number work—and the geniuses advising the government said that the federal government advised that it was expecting 40,000 kilometres of additional transmission line and that Western Australia traditionally provides 10% of everything provided by the Commonwealth, so they picked the number and said 10%. They have no idea. The government announced 4,000 kilometres. It has no idea what the number means—but, by the way, it is going through the work now. This is something that we will talk about in some detail.
Five years ago, the government announced that it would transition; five years later, it is going through the work to determine how it might do so. This is unbelievable. Yes Minister could not write this stuff. How has it taken five years since the announcement for the government to still be in the "This is how we build it stage. This is the plan. This is where we're going to get to"? The plan probably should have centred around a wholeof-system plan, which the government started talking about many years ago. It was due three years ago. It was going to come out in 2022. The previous version was already out of date when it was written so the government said that it would release an updated plan in 2023. Well, guess what? We are still waiting for the 2023 plan, the whole-ofsystem plan that tells us where the energy is going to go and where the transmission lines are. Again, I will come back to that in more detail. We are still waiting for the 2022– 23 plan in 2025—well done! That has not stopped the government from making a few announcements in the budget around this, which I will refer to in a bit. The government said that it will have a transmission plan to work out where the lines are going to go but, in the meantime, it has put half a billion dollars into Clean Energy Link–North, which will not build it, of course. It will be a billion-dollar exercise by the end of the process. The government decided it is going to spend this bit, but it does not know what the overall plan looks like. It is still working on that. Fair dinkum! It is like the government is building a house and has decided to put the footings in even though the architect is still designing the house. It will work out what it looks like down the track. That is the strategic development of the government around transmission. It has said, "We don't have a plan, but we'll start building." Brilliant! I would love to know what genius thought that was a good idea. As I said, the whole-of-system plan should have been out a long period ago.
I am very pleased that today—this is updated information, hot off the presses for the enjoyment and entertainment of members—to have received an answer to a question. I have been trying to get answers out of the government on this for months. Of course, during questions without notice in here we get non-answers and, when we follow up, we get another non-answer. Ultimately, if the government has to provide some semblance of an answer, it usually goes on notice and that is what happened with this question. I received an answer to question on notice 336 today. The government has been assuring us all that the whole-of-system plan will be delivered by the end of this year. It was a promise. It was probably as reliable a promise as the promise that the West Coast Eagles would be playing in the finals, but it was a promise. I was interested to get this answer back. The question was:
I refer to the minister's refusal to provide a transparent answer to either of my questions of 18 June 2025, and specifically the non-answers in relation to my question without notice 368 on the government's whole-of-system plan.
(1) Will the whole-of-system plan be delivered by the end of 2025?
I will not read the whole question out, but that is pretty straightforward. Having passed the answers back through the representative minister in this house, it is the answer that the Minister for Energy has refused to answer repeatedly. If the government had already started construction—if it is putting down the foundations of the house—I would have thought that it would have seriously considered finishing its whole-of-system plan first so that it knows where all the power is going to go. The answer is:
A revised delivery date will be advised following publication of the SWIS Transmission Plan for the South West Interconnected System, which is due for release in coming months.
We have to bear in mind that it is the middle of August so if it is coming in "coming months"—three months away—that is the middle of November. If it is four months away, it is the middle of December and we will not get it this year, effectively. The whole-ofsystem plan will be delivered—no, that is not what it says. At that point, when the transmission plan for the South West Interconnected System comes out, the whole-ofsystem plan delivery date will be announced—not the plan. It is not dropping the plan. What we might get is the date by which the government will drop the plan, which, honourable members, will be the third date the government has come along and said, "We'll deliver a plan by this date." If that is not a sign that the government has an issue in getting the system sorted out and put together, it is hard to understand what is. That is a lovely little update, I have to say, President. Do members need any further signs that the state government's transition of energy is floundering? If they do, there are plenty of them. I will provide another example. Bear in mind, I will have to remind members that on a number of occasions the government's plan should have started when it announced the closures and the transition six years ago. However, I thought there were very interesting parts in the budget papers—and here is a trick for young players. I refer to page 781 of budget paper No 2, volume 2—this is something we will ask about in the budget estimates in the fullness of time—and the line item "Grid Transformation", which is obviously very important. The 2024–25 estimated expenditure was $53 million. The budget for the current financial year is $148 million and the budget in the forward years is $214 million, $195 million and $236 million. If members get the opportunity, on occasions it is worth looking at the previous budget to see what the government planned to spend versus what it is actually spending. Bear in mind, it is six years since the government's transition for energy announcement—six years. If members look at the 2024–25 budget—that is, last year's budget—as just as an example, they will see that the expected expenditure in 2024–25 was $202 million and the actual expenditure on the grid transformation in 2024–25 was $53 million. The government is $150 million behind the investment in grid transformation that it set out a year ago for 2024–25. In 2025–26, the grid transformation spend was supposed to be $208 million, but it is $148 million in the budget year. Let us put them together. Instead of $410 million being spent on grid transformation, $200 million is being spent on grid transformation. Grid transformation is critical. The government has to work out where it will move the energy to and from. The government is $200 million behind schedule on a program that it announced six years ago. Six years ago the government said we would have a transition. It put some money in the budget for it a few years ago but not much initially. I would have thought that the government might have started a bit quicker. This is a good example of how not to do it. Six years ago it made the announcement. It was a nice political announcement but there was no money in the budget at that point. Eventually, it became $3 billion, almost all of which is being spent on batteries. I will come to storage in the fullness of time if I get time, because there is too much to play with and I am going to run out of time. I miss the days of longer speeches, President. I am sure Hon Dan Caddy does as well.
The government made its announcement six years ago and said, "Let's get planning for it." Six years later, the government is already $200 million behind in terms of the transmission that it decided it needed to work out where it needs to go. How did you do that? How did the government get to that point where it is $200 million behind this urgent thing? It is going to close down more coal-fired power stations in 2027. In fact, there is in theory a couple of big units it is going to close. One is the Collie A power station, and it does its absolute best to put the private station Bluewaters out of business at the same time. Two 215 megawatt units plus 320 megawatts plus 430 megawatts plus 320 megawatts—that is a lot of energy coming out of the grid at the same time. The government is hundreds of millions of dollars and years behind trying to work out how it is going to make this system manage as a part of that process. I mean, surely the alarm bells should be ringing on the Labor side. Here is a bit of free advice. The parliamentary secretary is taking extensive notes. Here is my best bit of advice that I can give the government in relation to this: stop listening to Energy Policy WA and start listening to the energy industry. I wonder whether Energy Policy WA has any idea what it is doing half the time. It is difficult to believe that they have left the government, which I actually think probably would quite like to transition in a reasonable manner, in the embarrassing situation that it has.
Okay, there is not nearly enough transmission. The government proudly announced that it had $7 billion worth of infrastructure investment in the energy system in the budget— $7 billion worth. I thought that was also worthy of consideration as well. Members should probably realise that effectively all of that additional expenditure is in Western Power for transmission, which obviously needs a massive investment. There is almost no asset investment in Synergy or Horizon beyond the 2024–25 financial year that has effectively not been the big battery. If you take out the big batteries, Synergy has almost no asset investment. It has some maintenance money for its existing energy generation fleet, including the coal fleet, which it will need, but all of the money effectively goes into Western Power. It is generally divided up in the Western Power budget. If members look at the Western Power budget for works under its asset investment and works in progress, the asset investment program for Western Power starts on page 779 of budget paper No 2, volume 2. Most of the money goes into one of two places: the government's initiatives for decarbonisation and the government's initiative for grid transformation, in which there is $542 million in the 2025–26 financial year for decarbonisation and $148 million in grid transformation. When members break it down though, they have to work out what that compares to in previous budgets because there are not works that go on generally for Western Power, Horizon Power and even Synergy when it comes to investment. The grid has to be expanded all the time anyway. How much of this is new money and how much of it is duplicity by the government in trying to take money that it already had to spend and suddenly announce as something completely different? Members can look at it on page 779 of budget paper No 2, volume 2—
Government Initiatives
5. As part of the Government’s energy transition plan in achieving decarbonisation objectives, $542 million will be invested in 2025-26 to continue to progress the Clean Energy Link – North project …
Funnily enough, it is decarbonisation, but it is also grid expansion, so it is transmission as well. I think it has been interesting. That could have been shuffled, particularly in grid transformation if it is supposed to be a transformative project. There are a number of issues around this. In effect, if we look at how the government spends its dollars in energy, business as usual in connecting businesses and communities to the grid would have occupied $5 billion of the $7 billion announced by the government in the budget. When members read the budget speech, the whole $7 billion is being invested in the energy system. Do not believe for a minute that that $7 billion of new money that we have not seen before is going into a magnificent transition. It is $5 billion of status quo business as usual and $2 billion of additional activity, of which the first $500-odd million is going into Clean Energy Link–North. Bear in mind, the government still does not have a whole assistant plan, right? This whole Clean Energy Link–North project will probably be a $1 billion-plus project. That is probably half of the extra $2 billion that is in the system. But the government does not have a whole-of-system plan. I mean, it has some thoughts: the Clean Energy Link–North, the Clean Energy Link–East and the Clean Energy Link–South. Victoria, which is the basket case of energy planning and the worst state in Australia for managing its grid, at least had the sense to say, "We will work out where we need additional energy generation." In its case, Victoria put it into zones and said, "If you're going to come and build renewable energy projects, go and put it in one of these zones." At least it knew where it was going to have to build the lines. Do members know what happens in the government here? On the advice of Energy Policy WA, it says to proponents out there—when we talk proponents in clean energy generation, we are effectively talking about wind turbines—"Well, you tell us where you want to go and we'll work out the cost and we'll work out how much we charge you and whether that's going to work or not." You might have one in the deep south and one in the deep north; the government has no idea. Let us put offshore wind in a basket by itself. None of the current government and the opposition support offshore wind as a model, probably based simply on cost. I believe in the GenCost report like I believe in climate change. There you go: I am the Liberal who has spoken about climate change for the last eight years, much to problematic outcomes a lot of the time. We have had some great debates in the past in this house based on that. The Leader of the House was the Minister for the Environment, and I remember Hon Alannah MacTiernan would weigh in and my good friend Hon Robin Chapple from the Greens would make a great contribution and we would continue along. They were great debates. Put wind turbines offshore out of the picture because they are three times the price per electron as onshore. If the government cannot find room onshore in Western Australia, it has a problem. There are a couple of problems with simply relying on wind as the alternative generation model. In the first circumstance you have to workout how much you actually need. Here is one of the biggest problems with the government's transition plan. It currently has nearly 3,000 megawatts of gas capacity in this state. We are the biggest gas capacity generator of all the states in Australia. We currently have about 1,140 megawatts of coal. We all agree that Western Australia will get out of coal-fired power. The Leader of the House and I are arguing only timeframes when we get to this. We have a different time in mind as to when that occurs. That will happen as much about the economies and economics of coal as it is about anything else. We have talked about that in the past. We will get out of coal. I do not think we will get out of coal in the current government's timeframe, and I am about to explain why. Between coal and gas at the moment, we have nearly 4,150 megawatts—let us say 4,000 for a nice round number. What is our peak demand? Last year, we peaked out at 4,233 megawatts peak demand. That is with the government closing down a few major industries. This year, there was a significant increase, peaking out at 4,486 megawatts, nearly 4,500 megawatts of peak demand. Then, you have got to say that the government shuts down probably another 400 megawatts. Not only its own desalination plants but also a number of big industries get paid by the market operator to close down. Let us say that, really, we have under 5,000 megawatts of peak demand even if all that industry is kept going.
We have 3,000 megawatts of gas. The government's plan appears to be to make up the difference in wind turbines. All right, if that is the plan, that is the plan, but let us have a look at that. This is what I think is happening: the government is listening to Energy Policy WA, which is saying to the government, "Do not worry about any shortfalls in generation going forward. A plethora of private companies will come in and build massive wind farms. Consumers will just pick and choose which ones they buy from and under what circumstances. There will be a massive amount of energy." It is absolutely right that massive proposals are out there. I must have looked at 60 to 80 gigawatts—60,000 to 80,000 megawatts—of wind turbine proposals over the last couple of years, but bear in mind that the marketplace peak is five gigawatts and we are talking about the potential development of 60-plus gigawatts of wind turbines. There is no room for it in the marketplace. It does not exist. There is no market for it unless we go out there, build a set of wind turbines and export all that energy in some way, shape or form. I have a bridge or two I would like to sell to anybody who believes that green hydrogen is the solution for that.
There are optimists out there, but we must have a marketplace for it. What is the marketplace in Western Australia? If these major turbines were producing, let us say, 1,800 megawatts of wind on average, the conversion rate was somewhere between 40% and 50%—numbers vary but let us be generous—and we need 4,000 megawatts of additional wind generation, that will give an average of a couple of thousand megawatts year in, year out. What will we do with the rest? We would have four gigawatts of potential contracts to sign and 60 gigawatts that has no marketplace.
Here is the problem that I do not think Energy Policy WA understands. These projects cannot get up unless the government gives them an offtake agreement. Who else is going to buy the energy? The offtake agreement has to be with the government. The government has so many people kicking the tyres and treading the dust out there looking for it, and it is sort of hinting that it will give them all offtake agreements. Not only that, it is saying that it will give them offtake agreements in isolated places out in the middle of nowhere, rather than having a strategic model of where it will put all this additional generation. It does not work.
Someone needs to grab hold of the energy minister and say, "These projects cannot get up!" The government's solution to the energy crisis cannot work unless all these additional people have offtake agreements. I have said publicly that, until an energy plan is in place, I would not give anybody an offtake agreement. These new projects have to work out that the government would not give them that, and then the government has to work out how much it will charge them to connect.
I think that the government should be charging to connect, but the cost at which the government does so becomes critically important. I will give a good example. Down in the South West, there was a project to put in a set of solar panels and a battery about 1.5 kilometres from the Kemerton substation. Western Power's original quote for this process was about $23 million. Now bear in mind that I said before that you can probably build a 500-megawatt major transmission line for about $7 million a kilometre. The most recent budget estimate from Western Power to go underground for 1.5 kilometres is $53 million, which is $35 million a kilometre. It would want to be goldplated for that.
That is also a part of the problem, because the government does not have an integrated plan. The government is relying on a fallacy that if it says it likes wind, they will all come and build it. Then it can just pick and choose the bits that it wants on a certain day. If a bit more wind is coming from the Mid West, that is great. It will just take it from there and not worry that the company is going broke for the rest of the year. It will just take that particular bit. In other areas, it will be the eastern model, over the scarp.
The plan does not work because you have to actually contract the amount of electricity you will buy; otherwise, they cannot get financial tick-off. They have to go out in the marketplace and get funding for it. Right now, the wind turbine proposals are falling over because they cannot get funding. This is not because they are difficult or complicated to construct. There are delays because it is immensely popular at the moment, but the reality is that they have nothing unless they have an offtake agreement.
The government cannot rely on the fallacy that all these wind projects will be developed, the private sector will bear all the costs, and the government will tiptoe through the daisies and pick out the bits of electricity it wants when it needs it, at any kind of cost. It is an absolute nonsense. The government cannot fix it until it has a whole-system plan in place to work out what demand will look like and how it will move it around. It is just not going to work. That is the problem.
The other component, of course, is construction times. Bear in mind, as we said earlier, that the government is six years behind its transition plan. It announced its transition, and it is still working on the plan six years later. What has that meant to its capacity to deliver?
The second half of the argument is that companies need an offtake agreement to be able to deliver the wind turbines, which is the government's only chance of getting 60% of the way towards its transition plan. Under the current proposal, it will not get there; it is just an impossibility. That is what industry is telling government, but it is refusing to listen. It is so far behind.
What is the construction period for privately owned wind turbines? I love it—privately owned wind turbines are a sign that this is the government of privatisation by stealth. I think it is great. There might be some Friedman economists in the government. The first thing the McGowan government did in 2017 was sell off and privatise a few renewable energy projects. It was great! There is a privatisation by stealth agenda in the government, and that is good, but the problem is that they have to get a financial investment decision and do their planning, because the private sector is not going to start building before the plan is written. They will not put foundations down before the architects design the house. They have to finish the planning, get a financial decision, go into the marketplace to raise the money and start construction in a fairly competitive marketplace. Around the world, the average time for construction of significant projects like that is now somewhere between 45 and 55 months, or four and a half or possibly five years.
The government has messed around for the last six years, so it is six years behind where it should be. It is now August 2025. The last of the coal fleet is supposed to be closed down in October 2029, which is four years away. If the answer is to have the private sector plonk wind turbines everywhere it likes, it will extend it out again, because then even more transmission lines have to be built. The government has already run out of time, before it even started, because it has messed about for the last six years. It does not have a transition plan in place, and it is now leaving it so late that it is impossible to deliver what it is proposing. That is a great plan. Of course, none of that is written in the budget papers.
A plan to have a plan is as good as the government is going to get on energy. It does not work. That is why I had a pretty simple plan as we went into the 2025 election. I was then the shadow energy minister; I still am. It was pretty simple.
Hon Kate Doust: Long may that continue.
Hon Dr Steve Thomas: Thank you, honourable member. You were a shadow energy minister for some period of time.
Hon Kate Doust: I was.
Hon Dr Steve Thomas: I will not talk about the other half and whether he one-upped you or not; that is a whole different argument.
Hon Kate Doust interjected.
Hon Dr Steve Thomas: He got to be the actual minister.
Hon Kate Doust: You mean my husband.
Hon Dr Steve Thomas: Yes, your other half—not mine.
Hon Kate Doust: I don't know. You always want to spend a lot of time with him.
Hon Dr Steve Thomas: We have very interesting energy discussions. I love an energy debate. We could do that. What did I say? I said that we will keep coal until we have enough capacity to generate. I think that is the case. I think the government will concede that. I know that a lot of conservationists say, "Actually, we kind of accept that that's got to happen, too." The reason they do that—
Hon Sophie McNeill interjected.
Hon Dr Steve Thomas: Yes, it probably does, but there has to be another argument.
Hon Sophie McNeill interjected.
Hon Dr Steve Thomas: We will have time to debate that at another time. The reality is that a lot of conservationists are happy to accept the extension of coal because they are terrified of additional gas generation. That is the alternative. The policy taken to the election was to keep coal until we have enough gas generation, and gas generation will continue until whatever that renewables future looks like. That future will be some time away. I think the government will absolutely be able to close down the last coal plant, but it probably will not be until 2035 or maybe 2036. If there is no more gas generation in the system, the government will probably struggle to do that even then, because it is so far behind. The renewables component—
Hon Sophie McNeill: All the people will be dead by then.
Hon Dr Steve Thomas: The renewables component will contribute significantly more, so there will be more renewables in the system. When renewables hit 80%, we will start to have significant grid stability issues and we will have to manage that. Here is a bouquet for the government: significant investment in storage is useful. Unfortunately, it is actually more useful for smoothing the grid and grid reliability than it is for getting over electricity shortages. There are two significant issues to deal with. The first is peak demand. There will not be enough energy in the system at peak demand, particularly because the government has wasted a lot of years messing about. The second is overall energy production through the year, and the same thing will apply. The government is going to fail at peak demand and it is going to fail at overall energy production. My view is that the government will have no choice. It will eventually adopt the opposition's policy because it will have no choice; that is, it will extend coal—not for long, but whilst it has to. My wording was very careful. Where it can and where it is needed, the government will extend coal to get additional gas into the system. I think we agree on that. The Liberal Party and the Labor Party are going to end up in a very similar position, and the future of the transition will develop along—
Hon Stephen Dawson: I'm not sure we agree on anything!
Hon Dr Steve Thomas: Oh, there are lots of things we agree on, Leader of the House. I just have to get the government across the line on this one; I think it is where the government is going to end up.
One of the issues—I know the Greens will not like it—is that there is going to be more gas. Not just more gas—
Hon Sophie McNeill: It's not us; it's our grandchildren who won't like it.
Hon Dr Steve Thomas: That is a good argument to use in the community, except that it is purely emotional rather than anything else. The member is right; this will be a point of difference between us, and that is fine. We should have points of difference, otherwise it would be a pretty poor democracy. My view is that keeping the lights on is more important than having the transition by a particular year or a particular day. We are going to disagree on that. I think having enough energy in the system is actually more important than closing down coal by a certain date or refusing to have more gas. I actually think the system will ultimately deliver itself. In 25 to 50 years time, the whole system will look completely different.
Hon Sophie McNeill: The whole world will look different!
Hon Dr Steve Thomas: Yes. The whole world is going to look significantly different anyway. The problem is 1.2% to 1.3% of emissions in a world that continues to increase emissions, particularly from the four or five major emitters. I get that Western Australia is supposed to feel guilty and pick up all the pieces for the big emitters: China, India, the US and Russia. It is true that China produces more renewable energy than any other country in the world, but it is also building more coal-fired power stations than any other country in the world. The guilt concept does not work on me because I do not believe in destroying the Western Australian economy to make myself or anybody else feel better. You have to step your way through that. I am a believer in climate change.
Hon Sophie McNeill interjected.
Hon Dr Steve Thomas: I am a believer in climate change and I believe in maintaining a 2050 net carbon neutral, net zero ambition; I absolutely do. It will be very difficult to achieve, and if Western Australia achieves it in isolation from the rest of the world, it is all going to be rather token and meaningless, and I am not much for tokenism, to be honest. There you go. Even the government, though, with its more modest agenda—the Premier and I agree on lots of this stuff—knows that gas is important.
Hon Sophie McNeill interjected.
Hon Dr Steve Thomas: I get that, as well. I understand that. There are lots of things we agree on, but the government's transition plan is in tatters. It is in a dire state. From a medical perspective, it is lying on the table and there is a straight-line blip where the ECG should be showing a pulse rate. Unless the government gets the paddles out fairly soon and fairly urgently, that patient is going to be dead. That is where we sit with the transition plan that the government currently has in place; the transition plan that does not work under the circumstances in which the government has proposed it. The hard part is that industry keeps coming back to the government and saying that its transition plan is a problem. Like I said, I wish I could spend some more time on this. We will probably have some more energy debates going forward, I imagine, and hopefully have some damn good fun doing it.
The last thing I want to point out in the budget was carefully stuck in budget paper No 3. It is a lovely little line, I have to say —very clever. It is on page 104 of budget paper No 3, which is usually the most fun of all the budget papers to read, if you are ever bored and want something to read. Under the heading "Other Spending" in the middle of that page is the paragraph headed "Griffin Coal — Financial Support". It states:
To support the continued operation of Griffin Coal until 30 June 2026, $49 million of additional funds has been allocated over 2024–25 and 2025–26 …
There is $260 million basically to subsidise the losses of Griffin Coal. The management of the coalfields has been an absolute disaster, and as much as I would like to blame this government, it has taken a lot of governments over a lot of years to get us to this situation, with Collie struggling in the way it is. An additional $49 million will take the government's subsidy for a foreign-owned and insolvent company to $308 million. Here's the thing, I would not necessarily complain if the government put $308 million into subsidies in order to provide stability to the grid, but the problem is that it is $308 million just to cover the operating losses, and when Griffin stops on 1 July 2026, the government will have delivered nothing but a few extra years of operation.
Why on earth did the government not take $308 million and deliver some form of economic stability, rather than just subsidising the process? The government will have the numbers on this, but why did it not buy out the bondholders at Griffin Coal, in particular, or maybe buy out the bondholders of Bluewaters Power Station? The original company that bought it, Lanco Infratech from India, does not exist anymore; it is bankrupt. There is a bunch of banks that hold a certain amount and a bunch of bondholders have bought out that amount. Surely for $308 million, the government might have been able to buy out some of that debt and deliver a company, whether it was privately run or state run. I prefer privately run; I do not think the state runs industries particularly well. Why did the government not somehow purchase a better outcome than simply tipping it down the drain? Is it simply that the government had so much money—billions of dollars in surpluses—that tipping it down the drain was easier than finding an actual solution to the problem? I understand that coal has a relatively limited life span in Western Australia, but even when the coal-fired power stations close down, as they inevitably will, the government will get some other uses for Collie coal and there will still be a coal marketplace; it will be much smaller, but it will still exist. What the government has delivered for $308 million—nearly a third of a billion dollars— is nothing but a continuation of the same disastrous state that previously existed. I think that is a good example of the absolutely problematic position the government finds itself in.
A few years ago the government brought in 103,000 cubic metres of coal from Newcastle. We brought coal to Collie—hilarious! The government still will not tell us how much it cost, but the purchase price was $300 or $400 a tonne. Collie coal gets about $60 a tonne, nearly $70—a $300 or $400 a tonne purchase price. Then it has to be shipped to the port of Newcastle, put on the ship and taken around to Bunbury, and then they do some work in Bunbury, offload it, dump it, pick it up again, put it back in the trucks, drive it up the hill and drop it at Muja power station. Holy mackerel! That is hundreds of dollars per tonne for 100,000 tonnes. At a cost of what? They still will not tell us because apparently it is commercial-in-confidence in case the government ever wants to go back and have another run at it. I cannot imagine they would spend hundreds of millions of dollars going back to have another crack, but anyway.
That is the disaster. The disaster is in the coalfields. The disaster is in the transition. The disaster is in being unable to put forward what transmission should look like. The disaster is not having adequate generation. The disaster is basically throwing out to every wind proponent out there that they will all get on the grid. And, ultimately, the disaster will be that when the lights go out, you will have had a decade of warning.
