Independent senator David Pocock says compo for coal ‘perverse’

The senator whose vote was key to Labor’s energy plan ‘was not told’ $450m of taxpayer funds would go to Gladstone’s coal-fired plant.

Independent senator David Pocock. Picture: NCA NewsWire / Martin Ollman

The independent senator whose vote was crucial to Anthony Albanese’s energy plan has labelled secretive compensation deals for mining giants “perverse” and says he was not told about the nearly $450m of taxpayer funds going to Gladstone’s coal-fired power station.

ACT senator David Pocock says Labor told him compensation for Gladstone Power Station – which is partially owned by Rio Tinto – and up to four other power generators in NSW would be much smaller than the more than $1bn they could now receive in total.

The Australian revealed on Wednesday that negotiations are almost finalised to reimburse owners of Gladstone Power Station for anticipated losses incurred by the government’s year-long price cap on domestic coal.

Senator Pocock’s vote – along with the Greens – allowed the gas component of the deal to become federal law earlier this month, and he said on Wednesday that coal-fired power plants could now stand to get more than consumers under the Prime Minister’s energy plan.

“The briefings and information I received suggested that any compensation under this plan to bring much-needed energy price relief for households and small businesses would be minimal and confined to a small number of generators,” he told The Australian.

“If these reports are correct, the payment for just one generator could be worth almost a third of the total support provided to consumers. This raises serious concerns about the total amount of compensation to be paid.

“It is perverse that we should be paying compensation to sell our own resources back to us at a reasonable price.”

The compensation deals, which the Greens have also vowed to fight back on, could damage the government’s relationship with the crossbench, which it relies on to pass legislation in the Senate.

Greens leader Adam Bandt said the party would push for compensation money to be redirected to people struggling with rising power costs, when parliament resumes next year.

“We’ve been clear throughout negotiations that we won’t support a single dollar going to coal and gas corporations, and the legislation we supported did not include compensation,” he said.

“Labor should be making coal and gas corporations pay more tax, not giving them handouts.

“This money could be used to stop people’s power bills rising at all, and then recouped by a windfall tax on coal and gas corporations.”

Mr Bandt said the government must “come clean” about how much public money would be given to coal and gas companies.

A federal government source said the rebate for Gladstone Power Station, of which Rio owns the largest share, was not expected to be higher than $450m.

Queensland sources say recent negotiations had put the compensation bill at up to $750m.

Three or four power stations in NSW are also expected to be reimbursed for expected losses, with sources saying the total bill could tip over $1bn.

Before the laws passed, Mr Albanese indicated the government would compensate coal plants, which are being ordered to sell power into the national wholesale market as though coal was bought for $125-a-tonne, even if it cost more.

“If there is a cost of production that is higher than $125 per tonne, then it is reasonable that there be payments made for that to make sure that there isn’t a disincentive to continue to supply,” Mr Albanese told the ABC this month.

The legislation did not include compensation provisions, as they are being enforced by the states.

Nationals MP and former resources minister Keith Pitt said the federal government needed to reveal “what other secret deals have been done with the states”.

“With reports of as much as half a billion in compensation to be paid to just one coal company it’s clear that Labor’s energy cure is going to cost taxpayers more than the disease,” he said.

“Both the Greens and Senator Pocock said compensation to coal companies would be a deal breaker. There are two possibilities: they were misled or they knew. ­Either way, it’s the taxpayer getting the raw end of this deal.”

Compensation deals are tied to commercial coal contracts, so their total cost is likely to remain secret.

Grattan Institute energy program director Tony Wood believes the government struck the right balance with its energy plan and would have raised sovereign risk if generators were not compensated.

“I think it does make sense to provide compensation while there’s price caps in place,” he said. “When governments directly intervene in contractual arrangements, that’s what people get very nervous about.

“The overall objective wasn’t to intervene in those contracts; the overall objective was to reduce the windfall profits that companies were making on the domestic market, and give that benefit to the consumers – and that is what they’ve done.”

Peter Dutton said the compensation bill was “the latest instalment in economic idiocy from the Albanese government”.