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One Nation vs Labor: Putting Money Back in Your Pocket

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The Labor government introduced legislation to increase the petrol and diesel excise by 16 cents a litre. When combined with GST (a tax on a tax) and retailer margins, everyday Australians will face an extra 32 cents per litre at the pump. This is money going straight into Treasury to fund Labor’s wasteful spending.

This tax hike hits those who can least afford it. While large corporations can pass these costs on to consumers, small and medium businesses lack market power and must absorb the hit directly from their profits. For everyday families, commuting, running errands and simple drives will all become more expensive.

Contrary to claims, reducing the fuel excise is not inflationary. It directly lowers fuel prices, which immediately reduces CPI inflation.

Furthermore, because fuel is a core input across the whole economy (farmers, tradespeople and freight operators), lowering fuel costs relieves inflationary pressure across all goods and services.

When One Nation proposed cutting the fuel excise by 50% and freezing indexation, it was dismissed. Yet, when the government temporarily adopted our measure, it proved to be a resounding success for living costs and inflation. That is why One Nation is calling on the government to freeze the fuel excise and cancel all indexation increases until June 2028.

While Labor is raising taxes to fund its reckless spending, a One Nation government would put a line through these wasteful projects.

We would:

➡️ Terminate all Net Zero spending, including associated departments, grants, and subsidies.

➡️ End funding to the “Aboriginal industry”, replacing it with direct grants to local councils for housing, infrastructure, and community support.

➡️ Scrap Snowy Hydro 2.0, saving taxpayers from a financial sinkhole that could reach $100 billion.

➡️ Cancel the $3.8 billion federal allocation for Victoria’s Suburban Rail Loop, an insane project projected to cost $216 billion that serves to line the pockets of union bosses.

The Albanese government must stop overtaxing Australians to funnel money to renewables, union mates, and left-wing causes.

One Nation will put money back in your pocket, starting with a freeze on the fuel excise until 2028.

Transcript

Senator Roberts: This week the government is introducing legislation to make a 16c a litre increase to the excise levied on petrol and diesel. When including the GST, which is levied on top of the fuel tax—it’s a tax on a tax—and then adding retailer margins, this will cause petrol to go up around 20c a litre before the weekend. Every litre, 20c—kerching into the Treasury for Labor to waste. This is occurring just when small business and everyday Australians are recovering from the high petrol prices caused as a direct result of the war in the Strait of Hormuz. 

Make no mistake, this is a tax on those who cannot afford it. Large corporations can simply pass this rise on to their customers—meaning you’ll be paying more. Small and medium businesses can’t do that. They have no market power. They are price takers. This tax rise will come straight out of what is left of their profit. Everyday Australians will find their drive to work will be more expensive, as will running around after the children. Even a simple day out, just getting in the car and going out for a drive, will be more expensive. 

I know when One Nation promised a 50 per cent reduction in the fuel excise at the last election, the commentariat called that ‘inflationary’. Then the government copied our policy and suddenly it’s no longer inflationary! Which is correct? It’s not inflationary. Reducing the fuel excise reduces the petrol price, which is directly trapped in the CPI—the consumer price index—calculation. Lower fuel prices means lower inflation. 

There is a second-round effect as well. Fuel is an input cost right through the economy, from the farmer running a cool room or ploughing a field, to the local tradesman, to the truckie who delivers everything we buy. When fuel goes up, everything goes up. When fuel goes down, inflationary pressure is taken out of the economy. Reducing the fuel excise will reduce inflation. It’s that simple. It’s proven. This is why One Nation promised, at the last election, to reduce the fuel excise by 50 per cent and suspend indexation for 12 months, with a review after that. 

Well, the government borrowing our policy for a few months has provided the review we needed to know that the policy is a winner. Everyday Australians have enjoyed the lower cost of living. Inflationary pressures were taken out of the economy for a short time. This is why One Nation are calling on the government to not increase the fuel excise until June 2028, including cancelling all indexation increases, and then review it after the next election, which any incoming government would do anyway. Give hardworking Australians and small businesses two more years of respite from the Albanese government’s high—stubbornly high—inflation. 

Why do the government need to put this tax up? Because they’re wasting our money again, that’s why! This budget included measures that One Nation would have put the red line through. I’ve already spoken about our policy promising to remove all net zero spending, including the department itself, loans, grants and associated boondoggles. We’ve already announced all spending on the Aboriginal industry will be terminated. Instead, One Nation will give grants directly to local government to build the homes and roads and provide maintenance and support to Aboriginal communities. 

We’ve already announced that Snowy Hydro 2.0 will be terminated and taxpayers saved from a financial disaster which may reach $1 trillion for capital costs, interest, maintenance and subsidies for the tiny amount of electricity the project will generate in the period the construction loans are being paid back. The budget set aside $3.8 billion for Victoria’s Suburban Rail Loop. The Victorian Parliamentary Budget Office has put the cost of this project at $216 billion over a 50-year finance cycle. This is an insane project. Even Victorians don’t want it. It’s there to put money into the pockets of corrupt union bosses and assorted underworld figures, as 60 Minutes clearly showed last night. One Nation would terminate that project. 

We will have more policy announcements in the months ahead. For today’s debate, let me say this: the Albanese government needs to stop overtaxing everyday Australians so it can funnel money to its mates in the unions, to the renewable solar and wind industry, academia and other costly lefty nonsense causes—spending that does not benefit everyday Australians and certainly benefits the Labor Party’s election campaign funds. Labor is making life harder during a severe cost-of-living crisis. One Nation will put more money back in people’s pockets, starting with a freeze on fuel excises until 2028. 

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Clean Coal vs. Snowy Hydro: Which One Makes Sense?

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During Question Time, I asked Finance Minister Katy Gallagher for the real bottom line on Snowy Hydro 2.0.

Not just the construction cost. I asked for the true total to taxpayers: interest on the debt, transmission lines, endless maintenance, and the required wind and solar replacements.

The response? Labor admits they don’t even know how much it will cost or when it will be finished. A recent ANAO audit confirmed there is no reliable system to track future costs, no completion baseline, and no quality data.

Originally pitched as a $2 billion project, it’s already blown out to $42 billion — and that’s just a fraction of the final bill. When you factor in the full life cycle costs and the massive grid overhauls needed, taxpayers are staring down at $100 billion plus in costs for a project that will lose money every year, and provide a tiny amount of electricity at a totally unaffordable price.

Yet, Labor refuses to cancel it.

Reliable, low-cost clean coal power stations could secure our energy grid today without bankrupting the nation, however Labor remain fixated on Net Zero at all costs and hardworking Australians are paying the price.

It’s time to stop the waste and put cheap, reliable power first.

Transcript

Senator ROBERTS: My question is to the Minister for Finance, Senator Gallagher, regarding the cost to taxpayers of the Snowy Hydro 2.0 scheme. Minister, can you inform the Senate how much Snowy Hydro 2.0 will cost to complete, including cost of construction; capital costs through to the end of the financing cycle, meaning interest on the debt; maintenance through the same period; the cost of transmission lines dedicated to this project, including maintenance; and, finally, the industrial wind and solar installations, including cyclical replacement, needed to generate the power? In short, if it’s built and it’s paid off, how much all up is this thing going to cost? 

Senator Gallagher: I’m happy to update the chamber with the information that I have available to me on Snowy 2.0. I think you’ll remember that, when we came to government, we inherited a project that was having significant difficulties. If you remember, I think former prime minister Turnbull announced this project and said it would cost $2 billion. It had not had a business case done. There had been no scoping done. There had been no surveys done of the geological environment that the project was going to be built in, and so there was a significant reset probably in the first couple of years of our government, and that increased the project total cost to in the order of $12 billion. Currently, the Snowy board is undertaking a cost reassessment for the total project cost. We have not received that work yet. It is due to the government towards the end of July. I would say that Snowy 2.0 is more than half built. It is an important project for the nation in terms of the security and stability of our energy grid. It is an important project, but, as to any further reassessment of the costs, the information that I have are the ones where we took that initial reset to properly scope the project, get it back on track and work with the organisation to deliver the project when it was raised to $12 billion. 

The PRESIDENT: Senator Roberts, first supplementary? 

Senator ROBERTS: The Australian National Audit Office audit released this month found significant shortcomings, including no reliable system to track future costs, no base line for project completion and no quality data with which to work these things out. In short, we don’t know how long it’s going to take and how much it’s going to cost. Just like the uniparty’s net zero, there’s no plan. Minister, will you cancel this project? 

Senator Gallagher: No, the government will not do that. As I said, it is an important project. I think I saw a figure that said it was 72 per cent complete, but I will correct that if I am wrong. I can’t find that number in front of me, but I was reading some documents about Snowy Hydro on the weekend. In relation to the ANAO report—I should say this because you didn’t—it did say that the management of the project has been partially effective and there were, I think, five or so recommendations which outlined deficiencies in some project governance arrangements. Snowy 2.0 has accepted, I think, the vast majority of those recommendations. It is an important project for the stability and security of our energy system. It’s an important project to get done, but it has been a troubled project from the beginning, including when it was so poorly implemented initially by those opposite. 

The PRESIDENT: Senator Roberts, second supplementary? 

Senator ROBERTS: Labor appears to be upset about Senator Whitten signing a contract to sell his shares in September 2023, almost two years before his Senate nomination. Minister, at what point do you accept that a clean coal power station provides cheaper power, much more of it, than this fantasy project costing taxpayers hundreds of billions of dollars, perhaps a trillion, before it’s paid off? When will you give up this fantasy? 

Senator Gallagher: Again, Senator Roberts, this project is important for the security and stability of the energy grid. In relation to coal-fired power stations, there have been none built in this country for decades, and, indeed, under the former government, I think there was $3 million allocated to Collinsville to explore that. I don’t know what happened to that and where that project ended, but we heard nothing from it. The market is not building new coal-fired power stations. They’re not. If they were able to deliver the energy that you say they would be able to do in a way that you want them to do, the market would be investing in them. They’re not. The market is investing in renewables because it delivers cheaper and more reliable energy. We’ve seen that, indeed, in some announcements that Minister Bowen has made in recent times about the wholesale price of electricity coming down because of the amount of renewables in the system. 

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Time to Pull the Plug on Snowy 2.0

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I asked Minister Gallagher a simple question about the true cost of Snowy Hydro 2.0. Unsurprisingly, I got a response, just not an answer.

Economic analysts like Robert Gottliebsen projects that this project could cost taxpayers over $1 trillion by the time it’s finished. While One Nation believes this figure is far too high, the lack of proper planning, financial analysis, cost control and transparency makes an accurate analysis impossible.

How much will electricity have to cost for taxpayers to get their money back? They don’t know. They are making this up as they go along!

One Nation will:

❌ Close down Snowy 2.0 before it sends the country broke.

❌ Remediate the environmental damage.

❌ Build clean, reliable coal-fired power to slash the cost of living.

A One Nation government will stop this madness, balance the budget and put Australians first.

Transcript

Senator Roberts: Thank You. I take note of Minister Gallagher’s response—it wasn’t an answer—to my question regarding the urgent need to close down Snowy Hydro 2.0 before it sends us broke. Robert Gottliebsen, not a man to be taken lightly, has projected the cost of this project at over $1 trillion after allowing for capital costs, maintenance, transmission line construction and maintenance costs, industrial solar and wind installations necessary to provide the power, and regular renewal of these renewables—because they only last 15 years—from now until the project is finished and paid for, likely in 2060. Then add in the annual subsidies, because Snowy 2.0 will always run at a loss and you’ll be paying for it. How much will the power have to be priced at to get our money back? They don’t know. They’re making this up as they go along. What a metaphor for the whole so-called net zero transition, a transition to poverty! One Nation will close this project down, remediate the environmental damage and replace the generation of power with beautiful, clean coal-fired power, lowering the cost of living for all Australians and helping us balance the budget.

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Snowy 2.0: A Masterclass in Government Failure

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During this Estimates hearing back in February I questioned Dennis Barnes, the CEO of the infamous Snowy Hydro 2.0 that’s estimated to cost taxpayers $12 billion … for now.

This project began without a transparent business case and is currently locked into an anti-competitive contractor structure whilst relying on a cost-plus model that leaves taxpayers carrying the blowouts.

Add years of delays, poor early planning, and constant political blame-shifting, and the project looks less like nation-building and more like a multibillion dollar waste of taxpayer money.

Despite the project’s spiralling costs and repeated failures, the government continues to shift blame rather than accept responsibility.

Barnaby Joyce has openly acknowledged his mistake, yet those overseeing Snowy Hydro 2.0 refuse to show the same accountability.

And it’s you. The Australian taxpayers, that are expected to foot the bill.

One Nation says: it’s time to cut our losses on this white elephant and get back to what works – cheap base-load energy.

Transcript

CHAIR: Thank you. I’ll give the call to Senator Roberts.  

Senator ROBERTS: Thank you for appearing again tonight. Good evening, Mr Barnes.  

Mr Barnes: Good evening.  

Senator ROBERTS: Your principal contractor is FGJV, Future Generation Joint Venture, which is three companies: Webuild, Clough and Lane Construction. Webuild as an Italian company who has across the construction arc of Snowy Hydro bought out Clough and Lane Constructions, so the joint venture is Webuild, Webuild and Webuild. Is that correct?  

Mr Barnes: Yes.  

Senator ROBERTS: It’s significant because one arm of Webuild is unlikely to find fault or offer a cheaper option than another arm of Webuild. They really have this project in their grip, don’t they?  

Mr Barnes: We have a principal contractor called Future Generation Joint Venture. That joint venture was chosen through a competitive process before my time. Circumstances meant that Clough, who went into receivership, I believe, in 2022, was acquired by Webuild at that time. The contractual counterparty for Snowy Hydro has not changed.  

Senator ROBERTS: So who’s the contractual partner?  

Mr Barnes: Future Generation Joint Venture.  

Senator ROBERTS: Which is Webuild, Webuild, Webuild.  

Mr Barnes: There are three Webuild subsidiaries.  

Senator ROBERTS: That’s right. So the current contract with Webuild uses an incentivised target cost model, also called a cost-plus margin. Is that correct?  

Mr Barnes: The important part is the incentivised bit. There are elements of the project which are more complex and challenging, which are on a cost-recovery basis, but is a large proportion of the contract where the contractor Future Generation Joint Venture is incentivised to do a better job on time, on cost, and, if they don’t, then they suffer some penalties.  

Senator ROBERTS: But, essentially, it’s cost-plus margin.  

Mr Barnes: Elements of it are cost-plus margin; elements of it are incentivised target costs, where the contractor is incentivised to deliver the lowest cost and fastest outcome, and, if they don’t, then they incur penalties.  

Senator ROBERTS: Being cost-plus, the higher the cost, the more money the contractor makes through the plus margin part.  

Mr Barnes: There is a series of triggers and caps within the contract which mean that the contractor doesn’t continue to earn as the cost of the project increases. In fact, the recovery from the contractor means their return goes down. 

 Senator ROBERTS: Do you use external auditors to ensure every cost is legit?  

Mr Barnes: We have a monthly process conducted by Ernst & Young, who go through every line item and every subcontractor payment and assure those to us.  

Senator ROBERTS: So they’re external auditors?  

Mr Barnes: Yes.  

Senator ROBERTS: This question might actually be good news. How many apprentices and trainees are working on Snowy Hydro? I understand you have a school based apprenticeships and traineeships program.  

Mr Barnes: I think the round number—and we can provide the detail on Snowy Hydro as opposed to Snowy 2—is more than 40 people in what we call development programs. That include apprentices, vacation students and graduates—across that spectrum. We can provide the detail. We do produce a report each year with that input. We’re happy to provide that. 

Senator ROBERTS: One Nation believes very much in apprenticeships. They used to be a fantastic system, and they’ve been peeled off.  

Mr Barnes: I’m a product of an apprenticeship myself, Senator.  

Senator ROBERTS: This is my last question. Minister, without reflecting on the performance of Mr Barnes, who is making good progress, you understand that the taxpayers are annoyed that the cost just keeps going up and up under the current model. It started without an open business case or cost-benefit analysis. Costs will continue to go up through 2028. Is that correct?  

Senator Ayres: Yes. I think this was a project that commenced under the—  

Senator ROBERTS: Turnbull government.  

Senator Ayres: Turnbull government, when Mr Joyce was the deputy prime minister. Mr Joyce and that government announced the program. It’s a little bit like some of the dam projects that Mr Joyce constantly talks about. I think he said he was going to deliver 100 dams during the life of the Abbott-Morrison-Turnbull catastrophe—and delivered one.  

Senator ROBERTS: Which one was that?  

Senator Ayres: I don’t know, but one out of 100—one per cent. A lot of talk, not much water.  

Senator ROBERTS: He found it very frustrating, didn’t he?  

Senator Ayres: Well, he wasn’t much good. The assessment that was made on Snowy 2.0 was that the cost escalation was partly due to what was described as design immaturity at final investment decision and site conditions and geology, which should have been known at the time. Unlike Mr Joyce and Mr Turnbull and Mr Morrison and Mr Taylor—all these characters—we haven’t covered up—  

Senator ROBERTS: You haven’t mentioned Sussan Ley.  

Senator Ayres: I’m only pointing at the people who are responsible. I don’t know about—maybe, maybe; certainly Mr Joyce is at the heart of this free-wheeling catastrophe. We haven’t covered up the costs, and we haven’t covered up the delays. What we, as a government, have done is work with Mr Barnes and the team to make sure that this nation-building project gets back on track. It is an important project for our future energy security. Despite the damage of a ham-fisted start, with a focus on announcements and the sort of approach that was taken by Mr Joyce and his colleagues, we are working hard. The project is now 70 per cent complete. It’s still got some quite substantial work to go. You are right to point to work that has been done by Snowy and contractors in terms of apprenticeships. That’s a good contribution. We’re very focused on this project proceeding as quickly as possible in as low cost a way as possible but transparently. We don’t think good public policy is supported by deliberately concealing facts about important national projects like this.  

Senator ROBERTS: It did bother me that Prime Minister Turnbull at the time heavily redacted the business case. That certainly did bother me because I wasn’t in favour of it at the start. But its cost has gone from roughly $2 billion, I think, to about $20 billion.  

Senator Ayres: I might go to Mr Barnes on the cost questions because I think we should be precise. The cost has escalated significantly, but let’s have some precision.  

Senator ROBERTS: We’ve had a lot of imprecisions in the past. Is it worth continuing?  

Mr Barnes: The cost approval that was budgeted was $5.9 billion, and the project reset that we concluded in 2023 was $12 billion.  

Senator Ayres: I thought the figure was closer to $12 billion than $20 billion.  

Senator ROBERTS: With all the extra transmission lines and all the ancillaries?  

Senator Ayres: Yes, well these are nation-building projects that are required to deliver an electricity system. I agree with Mr Joyce 1.0, not 2.0 or whatever version he is now. In 2020, he said: The Federal Government has delivered millions of dollars of investment already for renewable energy generation right here on our doorstep in places like Inverell and Glen Innes. He then went on to say: We’ve made massive investments in the New England into renewable energy— I’m passionate about this because it’s where I come from. We’ve made massive investments in the New England into renewable energy, in fact we’re one of the biggest renewable energy hubs in Australia. Just like the Inland Rail, others talked about it for years and I made sure it happened. 

Senator ROBERTS: And he now has the courage to admit his folly.  

Senator Ayres: In 2021, he then went on to say, ‘In the long term, we understand that there may be a transition to other fuel sources, and we’ve got to make sure that we’re also part of that transition,’ something his constituents agree with. In 2017, he said: With other projects like the Sapphire Wind Farm going ahead— and here he is backing in a wind farm that he was cutting the ribbon at, extolling the virtues of this very important development—  

Senator ROBERTS: And he’s had the courage to recognise he was wrong.  

Senator Ayres: He said: With other projects like the Sapphire Wind Farm going ahead, it also shows that the New England is leading the way in renewable energy production and I will continue to advocate for the region as a growing power supplier for Australia. Before his decline to where he’s got to now, he said some quite commonsense things, this bloke.  

Senator ROBERTS: Well, at least he’s got the strength of character to admit he was wrong.  

Senator Ayres: He’s a long way away from common sense now.  

Senator ROBERTS: That’s something that you haven’t done, despite the rising cost of electricity.  

Senator Ayres: He’s a long way away from common sense now.  

CHAIR: Senators, thank you for that exchange. Senator Roberts, I will have to wind you up.  

Senator ROBERTS: I’ve finished my questions. 

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A Masterclass in Buck-Passing

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This is my Senate Estimate session in December with the CEO of Snowy 2.0 and Minister Watt, where we witnessed a masterclass in buck-passing and dodging, when asked about the future of the Tomago aluminium smelter.

Tomago employs thousands of people both directly and indirectly. It relies on cheap coal power from the Eraring Power Station to reduce its production costs to compete with cheap Chinese aluminium.

With Eraring scheduled to close in 2028, Tomago has advised that the renewable power currently available for order is substantially more expensive, making the plant not economically viable.

The Albanese Government has held several press conferences in the Hunter region in the last few months, assuring locals that the government “has their backs” and that the power will come from firmed renewables from Snowy Hydro. Specifically, this extra power is intended to come from Snowy 2.0 upon its completion and from the new gas plant in Kurri Kurri. However, this solution will not work.

Tomago uses 8,400 GWh of power annually. Snowy Hydro will contribute 375 GWh, and the new Kurri Kurri gas plant 2,500 GWh, bringing Snowy Hydro’s total generation to 5,800 GWh. Even if all existing customers sourced their power elsewhere and Snowy sold Tomago every watt of power they had, it would still fall short of the required amount needed. Given that Eraring generates 14,000 GWh, the solution is obvious: Eraring must remain open.

When questioned on this, Snowy Hydro CEO Mr. Barnes did his best not to upset Minister Watt by deferring to the Department. The Department advised that these discussions “sensitive” and declined to provide further information.

Most alarming was the admission that Snowy 2.0 isn’t an energy provider, it’s more of an “insurance company,” designed to run only 10% of the time, with their power being used to backup the grid in case of an emergency.

If Snowy Hydro sold its entire power to keep Tomago operational, the grid will not have that emergency source of power, inevitably resulting in blackouts. This highlights the lie that Snowy Hydro can “save” Tomago.

The government claims to care about jobs in the Hunter Valley, yet when asked what the plan was to replace the baseload power being lost, they had nothing to say other than they were at the “sensitive stage of discussions.”

The net-zero transition is a disaster that is wrecking breadwinner jobs. One Nation will extend the life of Eraring until new baseload coal power can be built at Bayswater, followed by a refit of Eraring to ensure further operation.

— Senate Estimates | December 2025

Transcript

CHAIR: Senator Roberts.

Senator ROBERTS: Thank you for appearing again. I’ve got simple questions about Snowy. First, with reference to media reports on 24 November this year regarding a role for Snowy Hydro in saving the Tomago
aluminium smelter, the report states that Snowy Hydro will provide Tomago with electricity subsidised by the taxpayer from 2028. Are those plans advancing? How much power will be supplied, and how much will the subsidy cost taxpayers?

Mr Barnes: It’s always flattering to have the role of Snowy recognised, but that’s a question for the department. We’re not acting on that right now.

Senator ROBERTS: You can’t tell me about Tomago’s advancing?

Mr Barnes: No.

Senator ROBERTS: What about your role in that?

Mr Barnes: We’ve provided some limited advice to the department.

Mr Duggan: I answered this question earlier. The stage of discussions at the moment is sensitive from the point of view of commercial negotiations, so, in the interests of that, we’re not providing any more information at this stage around the process.

Senator ROBERTS: Okay. The next question is about reviewing Snowy Hydro’s generation capacity. I would have thought you were selling all the power you generate. How much spare capacity does Snowy Hydro have currently?

Mr Barnes: We currently have 5,500 megawatts of generation capacity.

Senator ROBERTS: That is 5.5 gigawatts.

Mr Barnes: Yes. We’re obviously building 2.86 gigawatts with Kurri Kurri and Snowy 2.0. We sell to multiple channels, whether it’s residential customers from our retail brands, large industrial customers or the
wholesale market more generally—our competitors and anyone who participates in that market. The contract duration varies, so we don’t necessarily have a 10-year home for all of our capacity, so our spare capacity does vary, but we are, of course, currently in the process of building 2.86 gigawatts, which we haven’t sold.

Senator ROBERTS: Thank you. In fiscal year 2024, Snowy Hydro generated 3,937 gigawatt-hours in total. Even if your gas plant, the Hunter power project, is fully online by 2028, that’s only another 2,900 gigawatt-hours. Snowy Hydro 2.0 is only another 375 gigawatt hours. They won’t be available in 2028; you just said that’s going to be finished at the end of 2028. Can you give me an honest assessment of how much power you will have available for Tomago in 2028?

Mr Barnes: I won’t reference it to Tomago, but—

Senator ROBERTS: How much is available?

Mr Barnes: To describe how Snowy Hydro works: we’re a provider of what you might call last-resort capacity. Our average capacity factor, or the amount of time our plant runs relative to its capacity, is only 10 per
cent of the time. We expect, for example, Kurri Kurri to run for less than 10 per cent of the time. So we’re not really an energy provider; the energy provision is from the solar and wind that we enable. We have now contracted more solar and wind than we will produce from the Snowy 1 hydro scheme.

Senator ROBERTS: You mean receive it?

Mr Barnes: That is to receive it and be able to sell to customers packaged as a firm supply. We’re not really an energy provider; we are the provider who’s there when, currently, a coal plant fails, the wind is not blowing or the sun’s not shining. Energy provision isn’t really our game. Being there when another plant isn’t available is really our game. We enable energy to come to market.

Senator ROBERTS: Thank you for being honest with me. Very few people will actually admit would you just admitted—that Snowy 2.0 is not an energy provider.

Mr Barnes: No, we act more like an insurance company.

Senator ROBERTS: Or a battery.

Mr Barnes: We back that insurance with physical assets.

Senator ROBERTS: Thank you. You have the generation capacity in the Snowy scheme, but you’re limited by water, and of course we need to balance water with real environmentalism—environmental needs for water as well. Minister, as coal comes out of the grid, will the government be forced to change the rules to allow more water for hydro and less for the environment?

Senator Watt: I don’t really think that’s a question in this outcome. I’ve only just arrived here, but I presume all those sorts of issues were canvassed with the department earlier in the day. If you’ve got questions for Snowy Hydro, now is probably the time to ask those, but those are much broader policy issues that the relevant officials aren’t here for.

Senator ROBERTS: Mr Barnes, your water need is one of the vulnerabilities of Snowy 2.0. The catchment area for the upper reservoir is very small. I know you’re going to recycle water, but nonetheless that surely must be a concern. I think someone identified it in the past as a concern that you will need to take water from other places, which means either farming or the environment.

Mr Barnes: Snowy Hydro is obviously subject to water regulation. We don’t make those rules, so we comply with those rules. The purpose of the Snowy scheme is to capture, store and release water to provide reliable
irrigation flows and support the electricity market. As you know, Snowy 2.0 is a recycling plan, so it doesn’t actually rely on those inflows. As I say, there are a couple of current reviews underway on the balance of environmental flows versus flows for irrigation and the electricity market, but we don’t make those. We are subject to water license compliance, which is the instrument that governs us 100 per cent each year.

Senator ROBERTS: I accept that you don’t govern the water requirements and that you’re governed by regulation, but you foresee any need for increases?

Mr Barnes: Again, it is not really a question for Snowy Hydro. We will be subject to whatever regulation is put in place.

Senator ROBERTS: That would tend to indicate that maybe Snowy 2.0 is not terribly secure.

Mr Barnes: Like I say, Snowy 2.0 is a recycling plant, so it doesn’t really rely on any changes to inflows or outflows from the scheme.

Senator ROBERTS: Minister, is the proposal to use Snowy Hydro to keep Tomago open complete nonsense?

Senator Watt: As you may be aware, I’ve been a little bit focused on some other matters over the last few days, involving EPBC reforms!

Senator DEAN SMITH: I thought that was last week!

Senator Watt: It was. I was on the job again on that today in Tasmania, as you may have seen. So I will ask Mr Barnes to say what he can about that matter. You might get better information out of him than you might out of me, but I’m not sure what he’s at liberty to discuss.

Mr Barnes: What is the question?

Senator ROBERTS: Is the proposal to use Snowy Hydro to keep Tomago open complete nonsense?

Mr Barnes: Again, it is not one for me to comment on. I think it’s a process for the department and the
government.

Senator ROBERTS: So Snowy Hydro can’t comment and the minister can’t comment?

Mr Duggan: I will repeat what I said earlier, which is that in earlier evidence we indicated that discussions with Tomago are ongoing. They’re through the industry department, not through this portfolio. We’re supporting them, but they are at a sensitive stage of discussions and therefore I wouldn’t feel at liberty to provide further information on the process, as that may upset those commercial discussions.

Senator ROBERTS: I will reiterate that Snowy Hydro 2.0 is only 375 gigawatt-hours and Snowy Hydro’s gas is almost half of Snowy Hydro’s generated power, so there seems to be not much room for error there.

Mr Duggan: This is, again, probably a question more for the industry department about those discussions with Tomago.

Senator Watt: We would love to have a chat with you about that later in the week.

Senator ROBERTS: Okay. The Eraring Power Station produced 14,000 gigawatt-hours in fiscal year 2023. Minister, will you take over Eraring, extend the life of Eraring and keep Tomago smelter open to save the thousands of jobs it supports at the smelter and in the Hunter?

Senator Watt: I’m not aware of any of those discussions, but, again, we’re here to answer questions about Snowy Hydro in this part of the program. I’m sure Minister Bowen will have more to say about that in coming—

Senator ROBERTS: I’m very concerned about the jobs in the Hunter though.

Senator Watt: As are we. You will be aware of the work that this Labor government has done to protect those jobs, as has the New South Wales Labor government.

Senator ROBERTS: And threatening coal.

Senator Watt: Well, it is a coal-fired power station that is coming to the end of its life whether we like it or
not.

Senator ROBERTS: It was brought forward, and now it’s been shoved back again. On the night of the election win in New South Wales state election in 2023, the incoming energy minister dropped a very big hint that they wanted to prolong the life of Eraring, and now they aren’t doing that.

Senator Watt: You’re talking about decisions of the New South Wales government. I couldn’t comment on that.

Senator ROBERTS: Your Labor government. Thank you.

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Snowy Hydro: A Wasteful Project

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According to information from the crew working on Snowy Hydro, the reason the Florence tunnel boring machine became jammed while drilling a bend is because it was used for too long between scheduled maintenance. This practice reduces production costs and increases boring rates, however as the cutting wheels wear down, the tunnel is cut to a narrower width. In this case, the machine jammed on a bend where the full width was needed for clearance.

I asked about this at the last Estimates and received a partial admission that the jam was due to worn cutting wheels, but that it was a one-time occurrence. I have requested the maintenance logs for Florence to determine if this was indeed an isolated incident or part of a wider problem.

One Nation believes the Snowy Hydro project is a fool’s errand. While the sunk cost (money spent so far) is around $4 billion, completing the project will cost an additional $20 billion. This does not include the drilling region, which is full of asbestos – a can of worms yet to be addressed.

Another problem is that the electricity from Snowy 2.0 is being sent to Victoria and South Australia via Hume Link, which began construction this week. Hume Link involves putting two high-voltage power lines (two towers) across 360 km of bushland, which will require clearing, as well as farmland and forcibly reclaimed private property. This will cost another $5 billion.

All this expense just to provide firming of unreliable wind and solar power, when a zero emission coal plant could do the same thing for a few billion.

Transcript

Senator ROBERTS: I don’t know if this was asked before, but is Florence moving?

Mr Barnes: Yes.

Senator ROBERTS: How long has she been moving?

Mr Barnes: She has been moving in a more predictable fashion since July and a total length of 1.6 metres and we are now achieving—kilometres. That was true a year ago. We’re now achieving the rates we need to achieve the target date of December ’28.

Senator ROBERTS: How far has it drilled since July?

Mr Barnes: I would have to come back to you on that specific.

Senator ROBERTS: Okay. Can I ask about maintenance on the tunnel boring machines. I understand a cutting head inspection must be performed every mere six to eight metres, stopping every two metres for concrete
behind. Is that a fair statement of the normal operation of a TBM?

Mr Barnes: The way the TBM advances is that it excavates a two-metre length, and the concrete segments that form the tunnel lining are then placed into the—the circumference of the tunnel. And that takes about 40
minutes, typically. So in that 40-minute period someone will inspect the cutter head to make sure that they can then do the next two metres. Periodically, we stop it for longer and do maintenance and replace some parts.

Senator ROBERTS: As I understand it, weekends are normally used for the inspections on the cutter head.

Mr Barnes: Snowy 2.0 is a 24/7 operation, so it happens as it occurs. So if it was a Wednesday evening when we have to do some maintenance, that’s when we would do it.

Senator ROBERTS: How long has it been 24 hours?

Mr Barnes: Since the start of the construction.

Senator ROBERTS: Since the start. Okay. Thank you. Is it true that the cutting wheels were not replaced at the correct time sometime in the last few months and that the tunnel is, as a result, being built to 11.4 metre
width?

Mr Barnes: The tunnel—

Senator ROBERTS: I think the specification is 11.5.

Mr Barnes: I can’t remember the exact figures, but the tunnel boring machine does construct a circumference which is over 11 metres and then there is ground and a concrete segment that brings the interior of the tunnel to just under 10 metres.

Senator ROBERTS: What are the specifications on the drill before you put the lining? Is it 11.5 or 11.4?

Mr Barnes: It’s just over 11, I think is the number.

Senator ROBERTS: Just over 11?

Mr Barnes: We can come back on notice but it is over 11 and then the internal circumference is under 10 because—

Senator ROBERTS: I would have thought they would be very important specs.

Mr Barnes: Well, they are very important specs but I don’t keep every number in my head.

Senator ROBERTS: No, I understand that, but that would be fundamental to the project, wouldn’t it?

Mr Barnes: Yes, they are fundamental and we have an international design joint venture of Tractebel and Lombardi who have signed off on these as specifications that will last 150 years.

Senator ROBERTS: Is there anyone in the room who knows what the designed cutting diameter is? 11.5, 11.4?

Mr Barnes: No.

Senator ROBERTS: No one?

Mr Barnes: No, but we can provide you that information on notice.

Senator ROBERTS: So, as I understand it, the cutting width spec is 11.5 and that because the cutting wheels were not replaced at the correct time, the tunnel as a result is 11.4, which caused Florence to get wedged on a
bend. Is that correct?

Mr Barnes: That’s not because of the design characteristics. There was a period in May when we hit very hard rock as we were going around a bend, and that hard rock wore down the edge cutters quite dramatically. I think that happened—I will get these dates wrong, but it happened on a Thursday. We were public on the Friday with that information, and on the Monday we had a specialist crew on site who used high-spec water blasting to relieve that pressure. Florence has now moved forward and is on the straight so doesn’t have any corners to deal with.

Senator ROBERTS: So for clarity, you are saying that Florence never cut a width of less than 11.5. I just said that the spec was 11.5 and the reason it became stuck on a bend was not because the tunnel was being cut to a lesser width, 11.5, as a result of overextending the life of the cutting wheels to speed up excavation?

Mr Barnes: No.

Senator ROBERTS: Okay. Could you please provide the maintenance log on notice of inspections and replacement of the cutting wheels on Florence for the last two years?

Mr Barnes: Probably. I’m not sure what that would help the minister with—

Senator Ayres: We will take that on notice, if we can, and see whether that is something that we can sensibly provide.

Senator ROBERTS: Swinging quickly to Kurri. What is the completion date of the Kurri gas pipeline? I understand the power station will have to burn diesel until the gas pipeline is connected. Is that correct?

Mr Barnes: The current schedule is for the gas infrastructure to be completed by 10 March.

Senator ROBERTS: 10 March next year. Where is the gas coming from and how secure is your supply over the timeframes of 10 years and 25 years?

Mr Barnes: So we rely on a gas portfolio drawing on the national gas grid. We have a range of contracts. Sometimes we access the wholesale market on the day. We announced earlier this year that we had entered into a gas storage arrangement in western Victoria. So I think the simple answer is that it’s a portfolio approach.

Senator ROBERTS: Who owns the storage facility in Victoria?

Mr Barnes: It is owned by a company called Lochard Energy.

Senator ROBERTS: Above ground energy?

Mr Barnes: It’s underground storage. The Iona Gas Storage Facility, I think is the name of the facility.

Senator ROBERTS: So it’s rock. It is not lined?

Mr Barnes: No, it’s an old geological storage cavern.

Senator ROBERTS: The Newcastle Herald reported on the Albanese government commitment of $7 million on top of the current $950 million construction cost to allow the plant to run on a blend of hydrogen and gas. How far advanced is the hydrogen component at Kurri?

Mr Barnes: We have now had confirmation of Mitsubishi Heavy Industries that with some notification, we can run at 30 per cent hydrogen.

Senator ROBERTS: How far advanced is the hydrogen component of the Kurri plant?

Mr Barnes: We have proven technically with our equipment provider and with some modification, which we have not yet committed to, that would enable us to run 30 per cent hydrogen.

Senator ROBERTS: Any idea of the completion date?

Mr Barnes: We are not currently executing that project.

Senator ROBERTS: So where is the—you are not executing the project on hydrogen?

Mr Barnes: No. We know it is technically capable.

Senator ROBERTS: That’s the end of it for now.

Mr Barnes: For now, yes.

Senator ROBERTS: Where would the gas come from? Mitsubishi?

Mr Barnes: Mitsubishi are the turbine manufacturer. The question of hydrogen supply we haven’t assessed.

Senator ROBERTS: Any idea at all? Because hydrogen is very expensive to produce, as I understand it.

Mr Barnes: Yes. We haven’t assessed that.

Senator ROBERTS: You haven’t assessed the cost?

Mr Barnes: No.

Senator ROBERTS: Okay. Thank you so much, Chair.

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Snowy Hydro is an Endless Money Pit!

The Snowy Hydro is a $12 billion pumped hydro project that connects two existing dams in the Snowy with a tunnel, to allow excess power generated by industrial wind and solar sources during the day to be used for pumping water up the hill into the top dam, where it can be released to provide hydro power for the evening and morning peak periods. This sounds like a reasonable idea except, the cost started at $2 billion when announced by Liberal PM Malcolm Turnbull in 2018.  It’s now $12 billion and that’s not including the cost of the transmission lines to take the power into the national grid, which is $14 billion at the least. I expect the final cost will more likely be $20 billion.

Additionally, the project itself and the transmission lines are being built through undisturbed National Park, which will be permanently scarred.

This project will generate 350,000 MW/h of power per annum, providing revenue of $30 million a year at current rates, which suggests they expect electricity to become much more expensive. This means the project will not recover it’s capital cost and is likely to run at a loss every day it operates. The same machinery that is used to pump water up hill and the same “headrace” tunnel used for that purpose, is the same tunnel that brings the water down and generates electricity. This means the facility can’t pump water up and generate electricity at the same time.

So, while it’s true that the generator has a capacity of 2,200 MW, it doesn’t maintain this output all day. As Snowy Hydro admitted during my questioning, they aren’t actually generating new power; they’re simply time shifting existing power. This project has encountered delays due to drilling mistakes and now faces serious obstacles to completion.

Why are we throwing good money after bad on this boondoggle? The reason is that without pumped hydro acting as a “big battery” to transfer expensive, unreliable wind and solar power from the day (when the sun is shining and the wind is blowing) to the night and early morning when it isn’t, the grid will never survive. Evening and morning peak hours will be in darkness – every day. In renewable energy terms, pumped hydro “firms” wind and solar. They have to build Snowy, regardless of the cost.

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Water is Crucial for Snowy 2.0

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Hydropower comes from flowing water and for that you need the key ingredient — water. While Snowy 2 will pump water up and then generate electricity by letting it flow down, its’ water needs are much more than just re-using the same water.

Snowy 2’s profitability depends on keeping water in storage to provide immediate baseload power when the unreliables in the grid go down from inclement weather. What we do know is there’s definitely no water in the high mountains as an insurance policy essential for underwriting the unreliable solar and wind power generation.

All the water in Tantangarra is needed for environmental flows into the upper Murrumbidgee. Water taken from the lower dam, Talbingo, is water owned by other users.

I would have thought a $12 billion scheme that uses water for electricity generation would have already sorted out where that water is coming from, but apparently not! I put questions to the department around water availability, water licences, and agreements. I also asked whether Snowy Hydro has sufficient water allocated to meet its agreed insurance policy against the shortfalls of wind and solar.

The responses suggest the disaster movie that is Snowy 2.0 is still playing Act 1.0.

Transcript

Senator ROBERTS: I want to reference the Snowy Montane Rivers Increased Flows: Safety Management Plan 2022-2027. The plan calls for increased flows into the upper Murrumbidgee in a series of high-flow releases from Tantangara Dam. Page 37 is headed ‘Key issues/considerations’. The very first one refers to an increase of 40,755 megalitres to be released into Snowy montane rivers from Tantangara reservoir. This is an increase of 35,800 megalitres from the 2022-23 water year. Is that correct?

Ms Connell: I don’t have that document in front of me. We can take it on notice to look at that. Given conditions over the last couple of years, I wouldn’t be surprised if there had been an increase from 2021-22 to 2022-23. I would need to take it on notice.

Senator ROBERTS: It seems to be to repair or restore the Murrumbidgee. I am not arguing that case.

Senator McAllister: Senator Roberts, I think you’ve heard the official say that she doesn’t have the document in front of her.

Senator ROBERTS: I will get it on notice.

Senator McAllister: If you did want to ask further questions about that, presumably we can find it. Providing the reference would assist us to do so.

Senator ROBERTS: It is by the New South Wales government. You can have this, if you like.

CHAIR: Maybe table it, Senator Roberts.

Senator ROBERTS: Tantangara storage holds 250 gigalitres. However, Tantangara reservoir has never been more than 70 per cent full in the 23 years to December 2020. This means there has never been water available to generate 350 gigawatt hours of electrical energy. In addition, the long-term average weekly volume of the Tantangara reservoir in the same 23 years is 18.15 per cent, which allows only 32 gigalitres to be used for generation. The long-term average storage available in Talbingo is found to be approximately 33 gigalitres. These new high-surge flows, plus the existing daily water inflow into the upper Murrumbidgee, will account for 100 per cent of the water storage in Tantangara, based on the last 23 years of inflows. There’s no water in Tantangara for Snowy 2.0. Is this correct?

Mr Fredericks: Senator, in fairness to you, the questions that you are asking are really about the business of Snowy Hydro Ltd. I suspect they will be able to give you a high-quality answer to your question. If it is okay, I will take that on notice for them to come back on notice and respond to it.

Senator ROBERTS: I would like you to answer it.

Mr Fredericks: I can’t answer it. I will take it on notice.

CHAIR: Senator Roberts, the officials from the department will answer what they can. In directing your questions, if the questions are about the operation of Snowy, they need to go to Snowy.

Senator ROBERTS: I understand that.

CHAIR: The department can help you, via the interface they have there.

Senator ROBERTS: I understand that, Chair, very clearly.

Senator DAVEY: To be fair, I was at the Snowy hearing. Senator Roberts did ask these questions of Snowy, and Snowy were a bit ambivalent and suggested that he ask the department.

CHAIR: Put them on notice to both sets and then, through the committee, we’ll deal with whether the response covers your questions.

Senator ROBERTS: I want to know because Snowy Hydro 2.0 said, ‘There’s plenty of water in Tantangara.’ Clearly, there is not.

Mr Fredericks: I will take that on notice for Snowy Hydro.

Senator ROBERTS: Thank you. I would like you to answer the question about the availability of water. This is crucial.

Mr Fredericks: That is fair enough. I will take it on notice.

Senator ROBERTS: The water in Tantangara cannot be used for hydro via the existing connection to Lake Eucumbene, which flows into the Murray, or the new Snowy 2.0 connection, which flows into the Tumut and then the lower Murrumbidgee. This means that all the water for Snowy 2.0 will have to be pumped up from Talbingo before coming down. That’s not a problem. We understand that, because with pumped hydro you either start with the water at the bottom or you start with the water at the top and you end up in the same place. My critical question is about the availability of water. Here is the second question. Snowy 2.0 is making one-third of its revenue from selling insurance policies to underwrite the lack of continuity of supply of unreliable wind and solar as generators. The basic idea is that if an unreliable renewable project, like solar and wind, can’t supply its contracted power then Snowy will let the water flow down the hill and generate power for them. One-third of the revenue of Snowy 2.0 comes from insurance, we were told.

That suggests the water must be available in Tantangara year round to provide for immediate electricity dispatch. We’re talking about critical peak hour generation. The water in Tantangara is fully allocated, so water will have to be pumped up the hill and stored against future needs, under these insurance contracts. Some of that will be lost in seepage and evaporation—quite a lot. How has that been dealt with in Snowy Hydro’s water licence? Does Snowy Hydro have a water licence?

Mr Fredericks: I’ll need to take that on notice. In deference to you, I’ll take it on notice for Snowy and for the department as well.

Senator ROBERTS: I would like an answer from your department in particular. We can get it from Snowy. Do they have water agreements?

Mr Fredericks: On notice.

Senator ROBERTS: If they do have any water agreements, are they sufficient to match the insurance policy that Snowy Hydro is going to be getting one-third of its revenue from?

Mr Fredericks: On notice for both—Snowy Hydro and us.

Senator ROBERTS: This deals with water in the high mountains. Thank you very much.

Mr Fredericks: You’re welcome.

CHAIR: Thank you, Senator Roberts. Senator Davey.

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Snowy 2.0 Will Never Dig Itself Out of a Hole

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In Senate Estimates, Snowy Hydro Chief, Dennis Barnes, revealed that the tunnel boring machine, Florence, has finally started boring again after being bogged for most of the last year. Florence became bogged because the planning for Snowy 2.0 was rushed and designed to meet a political timetable under Prime Minister Turnbull. A critical review of the Turnbull thought bubble would have never authorised work to start. The scheme has now run into problem after problem that should have been foreseen.

The bogging of Florence is just one of many problems that has seen the costs rise from $2 billion when announced, to a staggering $12 billion today. This does not include $5 – $10 billion in poles and wires to get the power out. Those lines will carve a scar through the Kosciuszko National Park, which for some reason is okay with “greenies”.

Hydro needs water. If the scheme has to rely only on water being pumped up to the top dam, the scheme will never generate enough power to pay for itself and will become a white elephant. The Snowy Hydro Authority are relying on a 2002 water agreement that gives them access to water, however there are many agreements, notably the Murray Darling Basin Plan, that now lay claim to that same water. It is criminal that the Authority has not sorted out its water supply at this late stage.

In the second video I asked about local information received that the tunnel drilling machine will encounter natural seams of asbestos, which will result in more cost and delays. I was surprised to have this confirmed, as asbestos has not been mentioned so far. I can only wonder what else they are hiding. This project is 100% funded by the taxpayers who I think are about to lose a very large sum of money. It will be cheaper to stop the project now than throw good money after bad.

Transcript

Senator ROBERTS: Thank you for appearing here today. I said in 2018 that this is a dog: no cost-benefit analysis, no transparent business case and no basis. From your January 2024 project update, it seems that Florence has started moving again, drilling the headrace tunnel at Tantangara. How much distance has been made since the machine became bogged?

Mr Barnes: As of this morning, 241 metres.

Senator ROBERTS: How many weeks is that?

Mr Barnes: That’s about eight weeks.

Senator ROBERTS: Let’s move on to the water. Once completed, how much water will the project require to operate, and what will the losses be to evaporation and seepage?

Mr Barnes: The Tantangara Dam reservoir will contain 350,000 gigawatt hours of water equivalent, which is around 700 gigalitres.

Senator ROBERTS: How many gigalitres?

Mr Barnes: Sorry, 240 gigalitres, two-thirds of that. The losses on moving the water uphill and bringing it downhill is in the order of 20 per cent.

Senator ROBERTS: And evaporation and seepage?

Mr Barnes: There’s no additional evaporation caused by the operation of Snowy 2.0.

Senator ROBERTS: I appreciate you can access Talbingo water, but I’m looking at issues around Tantangara, the top dam. Tantangara Dam has a poor catchment design, as I understand it, holds a nominal 250 gigalitres—you said 240—and is currently at 19 per cent capacity, so roughly 47 gigalitres. You must be watching the water closely, since water is essential to your project. Can you tell me the latest capacity and how much of that is that is dead storage?

Mr Barnes: Tantangara reservoir allows us to store 240 gigalitres. Obviously, before we were to operate Snowy 2.0, we would ensure that it was more full than 19 per cent, but there’s no lost storage in effect.

Senator ROBERTS: What is the effective storage that you’re counting on?

Mr Barnes: It’s 240 gigalitres, which turns into 350 gigawatt hours.

Senator ROBERTS: The long-term weather forecasts say it’ll be fairly wet until it starts becoming dry around 2032, when Snowy 2.0 starts. Tantangara, as I understand it, is used to store and release all of the environmental water going into the Murrumbidgee River. What happens if the 40 gigalitres available after dead water—unless there’s another figure in there; dead water being the amount of water that’s basically inaccessible because it’s below the outlet—are required for environmental flow? Who owns the water that you pump from Talbingo to Tantangara? Can you show me the water use agreement between your project, the federal government and the NSW government, please?

Mr Barnes: We don’t own the water; we operate under the terms of our water licence, which is a public document. Perhaps Mr Whitby can—

Mr Whitby: Senator, I think you’re not taking into account the natural inflows that occur into the upper Murrumbidgee, which, from memory and off the top of my head, is about a similar amount to that 240 gigalitres of storage.

Senator ROBERTS: It’s a fairly small catchment, though, as I understand it.

Mr Whitby: There’s still quite a bit of water that comes in there.

Senator ROBERTS: Quite a bit—how much?

Mr Whitby: I just said, off the top of my head, that it’s around 240 gigalitres of natural inflows.

Senator ROBERTS: So that’s in addition—

Mr Whitby: And, additionally, when Snowy 2.0 is operating, depending on the balance between pumping and generation, you can take water out of Talbingo, the lower storage, which is the whole point of the arrangement.

Senator ROBERTS: My understanding is that the Commonwealth Environmental Water Holder owns and controls every drop in that dam.

Mr Whitby: No.

Senator ROBERTS: The Snowy Water Inquiry Outcomes Implementation Deed, SWIOID—which was some years ago—is currently under review based on the upper Murrumbidgee River running dry recently. Will any outcome from that review lead to your water entitlement being reduced or affected in any way?

Mr Barnes: I think it’s too early to say that; it has some time to go.

Senator ROBERTS: That would be a significant risk to the whole project. Surely you’ve done some assessments of it.

Mr Barnes: I think the review will take into account and balance the needs of our stakeholders, including the national electricity market. There are times, of course, where—if we go back to the 2019 drought and bushfires—the flows through the upper Murrumbidgee were higher than naturally would have occurred, as a result of our operations. So it can have a positive effect.

Senator ROBERTS: According to an ABC article, Snowy Hydro has previously stated that the regulation governing water allocations for the scheme is independent of it and that the government owns the water; is that correct?

Mr Whitby: Yes.

Senator ROBERTS: So there’s no agreement at risk here—or anything subject to an agreement?

Mr Barnes: We operate under our water licence. The implementation deed you referred to from 2002 is the instrument that’s under review.

Senator ROBERTS: From 2002—that’s SWIOID.

Mr Barnes: Yes.

Senator ROBERTS: Three weeks ago, the New South Wales government announced temporary water restrictions on Murrumbidgee water licences, specifically water sources I and II, high-flow river licences. Are you confident you’ll always get your water? Everyone seems to be claiming the water—the farms, the towns, the environment—but who actually gets it in the water brawl?

Mr Barnes: I might leave that one to Mr Whitby, but we don’t consume any water.

Mr Whitby: I’m not sure I really understand the question, Senator. Are you asking if we’re confident that we will get future inflows?

Senator ROBERTS: Yes.

Mr Whitby: That’s a matter for the gods; I’ll leave it there.

Senator ROBERTS: So we’re leaving it to the gods.

Transcript

Senator ROBERTS: Of the now $12 billion projected cost, how much of that is private money?

Mr Barnes: I’m not sure I understand the question, but—

Senator ROBERTS: Is it all taxpayer money?

Mr Barnes: Snowy will finance its debt position, because of course we have debt for the purposes of our operating cash flows, from the bank market or the bond market, and I think we’ve been public that the $6 million increase will require some equity support from the Commonwealth. That level hasn’t been determined yet.

Senator ROBERTS: So its component is privately funded; the debt will be privately funded and then paid back through the revenue?

Mr Barnes: Well, we pay a dividend, obviously, to the Commonwealth and over the last 10 years we’ve paid $2 billion in dividends and $1 billion in taxes, so it is an investment that the Commonwealth get a return on.

Senator ROBERTS: I understand that in answer to Senator Cadel earlier on, you said the net present value is now $3 billion.

Mr Barnes: That’s correct.

Senator ROBERTS: Is that with a $5 billion cost or $12 billion cost?

Mr Barnes: A $12 billion.

Senator ROBERTS: Could you provide on notice the price of the power you sell that you envisage? Your selling price? We’d like to get a feel for the cost.

Mr Barnes: The Snowy 2.0 concept is that its revenue comes from two sources: the provision of insurance to all the participants in the market—so that doesn’t have a power price; it has a fee—and then the difference in the cost of pumping the water up, which will likely occur when there is excess renewables, and the revenue from generating electricity as the water comes down. So there isn’t what you would call a translatable energy price that results.

Senator ROBERTS: On what basis is the project calculated to give a net present value of $3 billion? If we could have the basis for that.

Mr Barnes: We’ve done market modelling on those two revenue streams. Bear in mind that that is an activity we undertake today for our current 5,500 megawatts. We have seen increasingly, with the increase in variable and renewable electricity, that the market value of those two services has gone up.

Senator ROBERTS: Can we get access to your costs, please, so that we can understand how the $3 billion net present value is calculated?

Mr Barnes: We haven’t released the detailed business case on the present value of the project.

Senator ROBERTS: So we can’t get it?

Mr Barnes: I think we have taken on notice in the past that we would consider what business case could be provided. But the business case essence is no different to when it originally went to FID.

Senator ROBERTS: A lot of the key assumptions back then were redacted.

Mr Barnes: A business case was released a number of years ago, and all of the same dynamics apply, except that the market for the services we provide has increased.

Senator ROBERTS: Can we get a feel for the revenue from the guarantee—the insurance if you like—as well as the profit on the price difference?

Mr Barnes: I think I’ve said publicly before that—and one can calculate this—the revenue from Snowy 2.0 is in the order of a billion dollars a year. One-third is from capacity sales, and one-third is from a shift in electricity from low-price times to higher price times.

Senator ROBERTS: Minister, it seems to me the taxpayer is taking a big risk here so far with what we’ve seen of the performance of Snowy 2.0. Why can’t the taxpayers see what they’re paying for and the risk they’re being exposed to?

Senator McAllister: I think the history of this project is well understood. We’ve asked Snowy management to take a more active role in assessing and responding to project risk, and we’ve talked already about the reset. I think, as part of the reset, Snowy management—Mr Barnes and his team—released quite an amount of information and the results of their analysis of their position, and they’ve made clear their assessment about the value that sits within the project. If there’s any further information we can provide, we’re happy to consider it.

Senator ROBERTS: Could you take that on notice, please. What are your annual maintenance costs in your net present value calculations?

Mr Barnes: I don’t have the number off the top of my head, but it’s relatively small.

Senator ROBERTS: Could you take that on notice.

Mr Barnes: Yes.

Senator ROBERTS: This is my final question. We’ve heard reports from someone who’s local, so we’re not saying it’s definite—I haven’t got a publication; it’s just reports from a local. Have you encountered natural asbestos as part of land clearing, drilling or construction of Snowy 2.0?

Mr Barnes: I’m not sure we have to date, but we do expect to—

Mr Whitby: I would phrase it as there is a risk that we may encounter naturally occurring asbestos.

Senator ROBERTS: What sort of risk is that? Is it from geology projecting forward? What’s the basis of it?

Mr Whitby: From projection, geological models based on the geological surveying that we’ve done.

Senator ROBERTS: And drilling as a part of that?

Mr Whitby: Correct.

Senator ROBERTS: Where is it, what are the costs, and what delays will this cause?

Mr Barnes: We don’t know exactly where it may occur, but the design of Florence is such that, were it to be encountered, Florence would convert into its closed or slurry mode and be able to handle the excavation. It’s a risk that’s already been planned for.

Senator ROBERTS: So it’s incorporated in the cost?

Mr Barnes: Yes.

Senator ROBERTS: Thank you, Chair, and thank you.

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Time to Cancel Snowy Hydro

,

The $100-$200 million tunnel-boring machine known as Florence has been bogged in muddy water on soft ground for a year.

I followed up on previous estimate questions, where I was categorically lied to by bureaucrats who were trying to cover up this expensive and embarrassing disaster.

Why is the government allowing executives from the Snowy Hydro Authority to deliberately mislead the committee about the main tunnel being blocked by a boring machine that has not moved in a year? Why did Snowy 2 executives and the government cover up the toxic gas in the tunnel that is coming from the chemicals used to unsuccessfully free Florence?

The cost has now blown out to $12 billion, with another $5 billion needed to carve a 50 metre wide easement through the Snowy Mountains National Park. This is to build transmission lines to take the power into the grid and to upgrade, to carry 2200 MW of power for 20 minutes in the morning and evening peak, which is all Snowy 2.0 will generate.

I look forward to receiving the answers to my Questions on Notice for the Minister.

Transcript

Senator ROBERTS: Thank you for being here again today. Mr Whitby, in the November 2022 estimates, I asked you:I note that the tunnelling machine Florence was bogged up near Tantangara Reservoir. Can you confirm how long it was bogged and confirm that it’s now back in operation? The answer you gave was: The tunnel-boring machine hasn’t been bogged. It encountered soft ground, which we expected. We have been progressing the tunnel-boring machine through that zone with care and diligence. In February 2023, I was reassured Florence was not bogged, and, in May 2023, was advised it would progress shortly. Minister: today, the ABC published photos of Florence clearly in mud and water in a story that says it was flooded in and unable to function from the moment it hit the soft ground a year ago. It moved a matter of metres. Further, the article goes on to say Snowy Hydro authority knew it was bogged even as they testified in senate estimates that it was not. The authority was covering up the machinery to progress Florence. A slurry machine that lays down a base for the machine to travel over was not ordered when the waterlogging was discovered. It was only ordered when Florence became bogged. Why is the government allowing the authority to deliberately mislead the committee?

Senator McAllister: Thank you for the question, Senator Roberts. I don’t quite recall the evidence being provided in the terms that you suggest in your question. But I confess I don’t exactly remember all of the
testimony that was provided at all of the estimates. I will invite Mr Barnes to respond.

Senator ROBERTS: Minister, before you do, were they lying to you? When did you know about the machine being bogged?

Senator McAllister: I will take that on notice. You will understand that I don’t have all of the communications between the authority and shareholder ministers, so I will see what I can provide.

Senator ROBERTS: I would like to know when you found out the machine was bogged, if you made inquiries beforehand, were they lying to you, and whether or not you were misled.

Senator McAllister: I will take those questions on notice.

Mr Barnes: Obviously, there are many engineering terms, but bogged, paused or stuck, all have subjective definitions. There has been no point since Florence encountered this incredibly soft and wet ground in November 2022 that the machine has not been able in some way to move forward. In fact, as part of its stabilisation and commissioning of the slurry treatment plant since December 2022, it has in fact moved 10 metres as part of that activity, so it is not bogged; it is able to move. In May I apologised for my perhaps optimism regarding the ability to get Florence moving at pace again. The full story on the slurry treatment plant is that Florence is going to hit what we know to be naturally occurring asbestos about seven kilometres into its journey.

Senator ROBERTS: Naturally occurring what?

Mr Barnes: Asbestos.

Senator ROBERTS: Do you mean naturally in the strata?

Mr Barnes: Yes, and the slurry treatment plant is designed to handle those conditions. The incredibly soft ground it hit early in its journey was not predicted at that stage, so the slurry treatment plant, which was always
envisaged—just not envisaged that quickly—was ordered and started to be designed as early as December 2022. It is now complete, commissioned. Once we receive an approval from the New South Wales Department of Planning and Environment, we will be able to move forward.

Senator DAVEY: I agree with your recollection, Senator Roberts. Mr Barnes, you spoke in May about the fact that the slurry treatment plant was coming. I took it from that evidence that it would be activated sooner
rather than later, but are you saying it still hasn’t been turned on?

Mr Barnes: To jog your memory, I think I said weeks, not months. I should have said months, not weeks. It wasn’t a mistake, it was my optimism at the time. The physical works to get the slurry plant complete and
Florence able to move. We’ve all progressed. What I underestimated was the process with which to go through the approval process, given the sinkhole that formed in December is just outside our construction boundary.

Senator ROBERTS: Mr Barnes, could you give me on notice the movement of the machine, in metres, between November 2022 and February 2023, between February 2023 and May 2023, and from May 2023 to now?

Mr Barnes: Yes.

Senator ROBERTS: Thank you. Minister, it seems on the face of it that this is government misinformation covering up a massive failure. I’m not blaming you entirely for that, because this whole thing was started under
Malcolm Turnbull as prime minister and Scott Morrison as prime minister. There was no fully disclosed business case. It was heavily redacted. There was no cost-benefit analysis done. The whole thing is based on a false premise. This is what happens when the top is rotten. I’m not referring to you as being rotten, Minister; I’m referring to the project when it was first given the go-ahead. But you’re now carrying the can.

CHAIR: Is there a question?

Senator ROBERTS: Yes. Minister, what questions are you asking about the rest of the project, because this is serious stuff?

Senator McAllister: You are right in this regard: the project as first announced by the Turnbull government does not reflect the dimensions and characteristics of the project as we now understand it. Some of those changes and issues were known to the previous government and not revealed. Minister Bowen has made it very clear how disappointed he was when he came to government and discovered that aspects of the project, including significant delays in cost increases, had not been communicated. As I indicated earlier in my evidence, when Mr Barnes was appointed, the expectation from the shareholder ministers was communicated very clearly to the board and, I understand, through the department to Mr Barnes that we wanted to see this project back on track. We wanted the new management to examine it and provide advice about how to get it back on track. It took some time. It wasn’t possible to do that in weeks; it has taken Mr Barnes some time. When that advice was provided, it was to the Minister, who then sought to communicate it directly to the Australian public. These are complex projects. We accept that. We have noted a constructive tone and a more open approach to communication from the engagements we are presently having with Snowy Hydro, and we hope to see this project—which, as I indicated, is an important project for the energy system and the Australian people—back on track.

Senator ROBERTS: Let’s move to something else that the government has lied about. This might not be ministerial staff or the ministers themselves, but we know that the agency has lied about the toxic gas in the shaft
coming from isocyanate, used to strengthen the ground in the absence of proper machinery—the slurry machine. That was more government misinformation, wasn’t it, Minister?

Mr Barnes: I’m happy to talk to this. You are referring to an incident that occurred in early July. When polyurethane foam, which is sometimes used in front of the tunnel boring machine, comes into contact with water
it can create isocyanate gas. It did so. The incident was reported quickly, access to the site was restricted, additional personal protective equipment was provided and monitoring was put in place.

Senator ROBERTS: What was that personal protective equipment?

Mr Barnes: You can do positive-pressure face masks which stop any gases entering.

Senator ROBERTS: Does that involve carrying air or oxygen?

Mr Barnes: No. I don’t how the reverser flow works, but you picture the large face masks with a positive flow meter. They have a filter. I don’t know the details of how those machines work, but they do protect the individual. We have actually stopped using the polyurethane foam and reverted to grout on that.

Senator ROBERTS: So lives are at stake?

Mr Barnes: Absolutely. This is a complex project with many hazards.

Senator ROBERTS: And the economy is at stake if this project doesn’t live up to nameplate design. How much is Florence worth, and who pays if you can’t get it out or if it comes out as scrap?

Mr Barnes: Florence is not identified as a single item in the project line, but between $100 million and $200 million would be an estimate of a tunnel boring machine. But Florence is able to progress its journey once we
receive the necessary approvals.

CHAIR: We’ll need to rotate the call, Senator Roberts. Do you have a final question? We can come back to you.

Senator ROBERTS: In May I asked about the updated cost, and Mr Barnes replied, ‘We haven’t got an updated cost here and will provide that in months.’ Your updated cost is now $12 billion? Is that it?

Mr Barnes: That’s correct.

Senator ROBERTS: Does that include two major expenses: transmission lines to get the power in and out and the ongoing cost of Florence still being bogged?

Mr Barnes: It is the cost to complete the project to the transmission lines at the power station, including all action necessary to complete the head race tunnel, which is where Florence is.

Senator ROBERTS: So any additional transmission lines needed to take the power out are not part of that project cost?

Mr Barnes: We have one transmission connection from the power station up to the grid, which Snowy Hydro pays for on an ongoing tariff.

Senator ROBERTS: My understanding is that the current transmission lines will not be adequate after Snowy 2 comes in.

Mr Barnes: For snowy 2 to get its full potential, there is an extension to the transmission grid required.

Senator ROBERTS: Thank you. So the total cost of this project—

CHAIR: We need to move on, Senator Roberts. We need to rotate the call.

Senator ROBERTS: Okay.

Senator McAllister: Senator Grogan, I took on notice a series of questions from Senator Roberts. I had previously indicated that these were questions for shareholder ministers and I would take them on notice on their
behalf. I just want to clarify that that’s also what you were seeking in the other questions that you put to me later on?

Senator ROBERTS: I’m happy to get an answer from the government ministers. It doesn’t have to be you; just the person in charge would be perfect.

Senator McAllister: Thanks, Senator Roberts.

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