Dave Tollner (Solomon, Country Liberal Party) Share this | Hansard source

As many people in this place know, I am a very proud, loyal and outspoken Northern Territorian. People may wonder what I am doing on my feet talking about the Energy Legislation Amendment Bill 2006, an energy market reform bill, when the Northern Territory is an island with regard to energy—our electricity transmission system is stranded, we are not connected to the national grid in any particular manner and our gas is not connected to a national pipeline system. But the Northern Territory has some wonderful energy resources and assets. Many people in this place will be aware of the abundance of natural gas in the Timor Sea and the Bonaparte Gulf. Those resources are currently being exploited through the hard work and good management of this government, which has ensured a regime which allows investors to confidently invest in those areas, which brings this energy ashore and which supplies it to world markets.

The Northern Territory is blessed not just with gas. Where I come from, Darwin, we are blessed with some wonderful tides which are between eight and 10 metres. I think there are huge opportunities for the community to harness some of the energy in those tides. I note that the work that has been occurring up in Broome—which has been so fabulously championed by the member for Kalgoorlie—is of great interest to us in the Northern Territory, where we have similar large tides. There are also the great opportunities of wind and solar energy. I know of a small company in the Northern Territory that supplies wind turbines to remote areas, some as far away as Mawson in Antarctica, and India and China. They are small wind powered generators that produce electricity for small communities at costs far more competitive than for a similar amount of energy produced by electricity after carting diesel over long distances.

It is also obvious to most people here that the Northern Territory is blessed with a wonderful abundance of uranium. Currently, all of Australia’s uranium comes either up our railway line or from the Ranger mine in Jabiru over the port of Darwin. So 100 per cent of Australia’s uranium goes over the port of Darwin. I think this also presents a wonderful opportunity for the Northern Territory to take a leading role in the upcoming nuclear debate that the Prime Minister has trumpeted. I am very keen to be involved in that debate and to put the Territory’s position very clearly on the public record.

As I say, the Northern Territory is an energy island. Our transmission system is stranded and we are not part of the national grid. Consequently, we pay much more for electricity than do people in other parts of the country. It is my view that the Northern Territory should be working towards trying to connect to the national grid both with gas and with electricity. I am aware of an exciting project that has been promoted by Powercor, a large national company that has transmission systems in Victoria and South Australia. It also has Citipower and CityLink, which has some tunnels in Sydney and Melbourne. Powercor is very interested in running a high-voltage DC powerline from Central Queensland through Mount Isa and Borroloola—the McArthur River mine site—and on to Darwin. The high-voltage DC power utilises what many in the industry call ‘superconductors’. It allows large amounts of high-voltage power to be transmitted over long distances at relatively low costs. I know that there is a business case being undertaken at the moment by Powercor and they are working towards establishing a business case and starting a full-scale feasibility study at some point this year. I think this presents great opportunities for the Northern Territory government to secure energy prices at a rate that is competitive with the rest of Australia.

Additionally, the PNG gas project, which is coming in through North Queensland and has a spur line out to the west connecting with Nhulunbuy in the Northern Territory, also offers wonderful opportunities for the Northern  Territory. It allows the Northern Territory to connect to the national gas grid and at the same time it allows Alcan at Nhulunbuy to access very cheap gas. I would like to hear talk of this pipeline being extended to Darwin so as to create a competitive market system in the Darwin area that, in conjunction with the high-voltage DC power line, would create an environment of competition in the Northern Territory. That would assist in driving down energy prices.

I was interested to see the amendment that the honourable member for Batman, the shadow resources spokesman, has moved. It was probably the best that he could manage. He says that the Prime Minister has not spoken loudly enough about this. He acknowledges that some of the hold-up in this legislation is due to the sabotage conducted by state energy ministers. If this is the best objection that Labor can come up with, I think it is pretty poor. It just shows that its ideas are moribund.

The Howard government continues to ensure that Australians enjoy the benefits of a strong economy. A secure, reliable and affordable energy supply is fundamental to Australia’s economic wellbeing. It is, therefore, of serious importance that the energy framework governing our energy sector is sound. Natural gas has an important role to play in our nation’s energy mix, helping to build the security and diversity of our energy supply while also providing important advantages in reducing greenhouse gas emissions. This government recognises that greenfield pipelines are needed to meet Australia’s increased demands for natural gas. However, market participants must be given incentives to invest in greenfield pipelines.

Two specific incentives have been designed to encourage investment in the area. The first incentive allows the provider of a proposed pipeline to seek an exemption from regulation under the gas access regime for the pipeline’s first 15 years of operation. This incentive removes the threat of the regulator intervening to impose third party access provisions, including price regulations, on a new pipeline. The second incentive allows the provider to seek an exemption from price regulation for a proposed international transmission pipeline which will deliver foreign gas to Australia. The key driver for this second incentive is the importance of securing Australia’s long-term energy security needs. The greenfield incentives will cut the regulatory burden for new gas pipelines, making Australia’s energy market a more attractive place in which to invest. This will stimulate investment and make sure Australia’s gas infrastructure can grow to meet our rising energy demand. The member for Groom, and Minister for Industry, Tourism and Resources, said last week in an article in the Australian Financial Review:

These ‘greenfields incentives’ are about cutting the regulatory burden, to make Australia’s energy market a more attractive place in which to invest.

It is absolutely critical that investors can get regulatory certainty, in a clear but light-handed fashion, and these changes will go a long way towards helping projects such as the PNG gas pipeline proposal get off the ground.

The minister is right. Being from the Northern Territory, where electricity is the most expensive in the country and demand for greater supply is growing rapidly, I certainly see it as important that such projects as the PNG gas pipeline get up and running in earnest very quickly. The government’s proposed incentives will work. Even the shadow resources spokesman, the member for Batman, from the Labor Party, agrees that this bill is a step in the right direction.  He said a little while ago, ‘This is welcomed and supported by the opposition’. Good on him!

The Managing Director of AGL, Mr Paul Anthony, said in a press release on 9 May that these measures provided a ‘significant step in the development of the proposed PNG to Australia pipeline’. I congratulate our industry minister on introducing this bill. This is precisely the reaction from investors that the government is looking for to the incentives that this bill provides. Mr Anthony said:

The policy leadership of the Federal Industry and Resources Minister as well as all State Energy Ministers in reaching this important decision will create long term national benefits for both Australia and PNG.

The announcement facilitates the setting of tariffs on the Australian component of the pipeline through commercial forces for the first 15 years of the pipeline’s operations rather than by a regulatory process.

All buyers of PNG gas will benefit from the arrangements requiring the pipeline to provide open access and non-discriminatory pricing. This underpins the ability of PNG gas to provide an alternative source of competitively priced energy to growth markets in Queensland and the Northern Territory as well as the established markets of NSW, Victoria and South Australia.

The PNG gas pipeline project includes a proposal to deliver gas to Alcan’s alumina refinery at Nhulunbuy in the Northern Territory. The refinery is currently undergoing an expansion which will almost double its capacity and PNG gas will replace the close to one million tonnes of fuel oil the expanded refinery will consume annually. This pipeline is an important piece of infrastructure for the Northern Territory, representing a first step towards connecting the Northern Territory to the broader energy network. As I said before, I think we should look at continuing this pipeline through to Darwin. The Northern Territory government should be talking to the proponents of the PNG gas to see how that can happen.

Another positive reaction to the legislation came from the Chief Executive of the Australian Pipeline Industry Association, Cheryl Cartwright. She also says that this amendment will encourage long-term investment in infrastructure. Again, this shows that this bill is a step in the right direction to meeting the demands of increased energy consumption in this country.

Further, this government intends to provide a framework of support for the supply of gas to Australia, especially as gas demands increase considerably. I would, therefore, like to re-emphasise the following three points. Firstly, if the PNG gas project goes ahead it will see large volumes of gas at a competitive price into the national markets for expansion of our economy, obviously keeping pressure on lower energy prices, which will lower inflation and the CPI; therefore, there will be less pressure on interest rates and, as a result, a better economy. Secondly, a greenfield policy allows certainty for large complex gas projects to have regulation certainty for the life of the project. Companies need certainty to ensure that projects are economic and that they will not be changed in the future. Thirdly, a greenfield policy allows the Australian Energy Regulator to regulate non-priced assets of the project.

The Howard government continues to build a framework for a stronger economy. This government acknowledges the increased demand on energy in Australia and is taking measures to ensure that these demands are met. I have been advised that, without this bill, projects like the PNG gas pipeline would probably not go ahead. We have the support of proponents of pipelines, such as AGL. We even have the support of our Labor resources spokesman, who spoke just a moment ago. Obviously, this is a step in the right direction. It is also a step in the right direction towards the Northern Territory one day being part of the national grid. With people who live in my electorate and the wider Northern Territory community currently paying the highest price for electricity in this country, I am fighting hard for more competitive energy prices. I fully support this bill, and I see it as yet another step towards this government securing a stronger economy and a brighter future for the people of Australia.

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