Chris Hayes (Werriwa, Australian Labor Party) Share this | Hansard source

In his second reading speech on the Energy Legislation Amendment Bill 2006, the Minister for Industry, Tourism and Resources said:

A secure, reliable and affordable energy supply is a fundamental input to Australia’s economic wellbeing.

You wonder, from the lack of action on the part of this government when it comes to securing its long-term energy supplies, how much reliance can be placed on that statement. You would also wonder, considering the government’s failure to implement the recommendations of the Parer report of 2002, and indeed the recommendations of the 2004 report conducted by the Productivity Commission.

In the Parer inquiry, Parer was charged with identifying the deficiencies in all our energy markets, but hardly any of the recommendations contained in that report have been implemented. He found, for instance, energy and gas sectors in particular were burdened by excessive regulation, affecting both efficiency and certainty within the market. In 2004 the Productivity Commission specifically reviewed the gas access regime. But what did we have in the report delivered in 2004? COAG promising to respond to that report by the end of 2006, 2½ years later. So I do not get all that up-beat in looking at this government’s attention to energy security for the wellbeing of Australia, although I do welcome the measures in the bill before us today.

There is no doubt that the provisions contained in this bill are important ones. They provide a greater degree of investment security in the gas pipelines, which investment security is set to become increasingly important in delivering the energy resources required to support our manufacturing and other value-adding industries in securing our economic growth.

This bill amends part IIIA of the Trade Practices Act to remove existing barriers to investment in gas pipelines. As a result of these changes, those seeking to construct new gas pipelines will have the ability to obtain an up-front ruling on whether full price regulation in the access regime should apply to the new project. Should the pipeline not meet the full coverage criteria, it will be granted a full exemption for up to 15 years. I cannot disagree with that policy, as it is the exact same policy that the member for Hunter, the then opposition spokesman for energy, took to the last election.

I will return a little later to contrast the position adopted by the government and the opposition when it comes to energy security, but I now want to deal with the second mechanism contained in the bill. This mechanism introduces a price regulation exemption, also for a period of 15 years, for new pipelines bringing in foreign natural gas to Australian markets, subject to certain obligations. We have just heard the member for Solomon speak on the importance of PNG gas. That is critical. One thing that we should not lose sight of is that investments in pipelines are quite significant. They require decisions and assessments to be made on levels of return over projected periods. Being able to secure foreign gas for Australian markets is absolutely critical in the development of the Northern Territory’s industrial mechanisms, but in addition it will at some stage be critical in its position in relation to a national grid.

Naturally, both mechanisms involve competition and public interest assessments which will be made by the National Competition Council before final decisions are made by the minister. That in itself is an important change. These mechanisms are important and provide a greater degree of regulatory certainty for companies looking to make the significant investment required to construct gas pipelines. Greater regulatory certainty leads to greater investment certainty, and this investment is a key to exploring and developing competitive energy markets that will satisfy Australia’s ongoing energy needs.

We all have to be conscious that Australia is a gas-rich nation. Currently we have in the vicinity of 140 trillion cubic feet of known gas reserves. In layman’s terms, that is in excess of 100 years supply at our current rate of usage. Over the last 20 years we have been finding gas a lot faster than we have been able to invest in it. Some time back, in one of my former occupations, I had the opportunity to represent workers in the oil and gas fields in the North West Shelf and the Timor Sea. As a consequence, I regularly visited areas of Woodside, the Rankin A platform, West Australian Petroleum, Chevron when they operated Barrow Island, BHP Petroleum, the Challis Venture and Jabiru. They were out there trying to develop our oil reserves. By and large, in most wells that were drilled, if oil was not discovered—and no great volume has been to date—an abundance of liquid natural gas was. One of the problems for us is that 95 per cent of our natural gas reserves are found in north-west Australia but 90 per cent of our population and the vast majority of our industry based market is on the east coast. Pipelines are going to be absolutely essential if we are to capitalise on the fact that we are a gas-rich nation.

True reform of Australia’s energy sector can only come through strong leadership. Strong leadership needs to drive the energy sector forward to create and maintain the environment needed to undertake the considerable investment necessary to develop the Australian gas industry, and it can only be shown by the leadership of the national government. Leadership by our national government with the cooperation of the states and territories is a precondition to sustained investment in the Australian gas industry. To date the action and the leadership required have sadly been lacking. Considering the gas reserves of Australia, you would wonder why it has taken so long for the changes contained in this bill to be introduced—changes that will support investment in gas pipelines.

Investment in the transport networks required to transport gas from areas of resource development and production to consumers is an absolutely critical element of the long-term viability of our gas production. Naturally, the viability of companies investing in construction of gas pipelines is dictated by elements in the market for gas transport, such as the number of participants and the price that can be charged for the use of individual transport networks. Consequently, when considering investment in gas pipelines, a degree of certainty about the regulation of the transport price is an important element in the viability of a project. Investment figures to develop gas fields are staggering. In Western Australia consideration is under way to bring gas from the Gorgon field onshore in a 90-kilometre pipeline to intersect with the Goldfields gas pipeline. These billion dollar investments need to be developed to bring gas from those fields to the market; hence, a degree of regulatory certainty is necessary in order for such investments to proceed.

Of course, there is a fine line between the creation of regulatory certainty and the creation of infrastructure monopolies. For this reason, I am pleased to see that the minister has not decided to grant himself sole power to determine who is granted the exemption under the provisions of this bill. Independent assessment of the competition and public interest aspects of the exemptions will be conducted by the National Competition Council. Unlike the Minister for Employment and Workplace Relations, who has determined that he will be the final arbiter of every single contract and certified agreement made in this country, the Minister for Industry, Tourism and Resources has decided that he will not take upon himself similar powers. As I said, decisions on exemptions will be made by the National Competition Council.

It is pleasing to see the provisions of this bill introduced, as it is yet another occasion when this government—quite frankly, a government which is out of puff in this area of reform—has decided to adopt one of Labor’s election policies. It is good to see the member for Hunter in the House, Mr Deputy Speaker, because you will find his DNA all over this. He was the architect of the policy that was taken to the last federal election. It is pleasing to see that the government has adopted our policy, and hopefully the government will start to adopt some of the other policies that Labor has brought forward for securing Australia’s energy resources.

While the government is concerned with narrowing the debate to nuclear energy—a move, I have to say, that by itself is somewhat limiting—I am sure that the energy security of this country does require consideration of a wide mix of energy resources. That narrowness is in stark contrast to the position which has been put forward by the Labor Party. Recently the Leader of the Opposition outlined Labor’s view on securing Australia’s energy future in his blueprint on developing the Australian fuel industry. Labor has accepted that Australia’s national government needs to provide solid leadership when it comes to securing our energy future. Labor realises that Australia’s energy future will not be secured by hope alone. Labor knows that there will be a desperate need to invest in infrastructure to access our rich but, unfortunately, very remote gas fields. Labor knows that areas in the Pilbara, the Kimberleys and the Timor Sea are not supported by the ports, the roads, the airports, the townships, the power, the water supply, the hospitals and the schools they need to support the development of those gas fields to a productive resource into the future.

The opposition recognises the long-term implications of having no plan to secure our energy independence. It realises the implication of having no plan to reduce our reliance on a decreasing global supply of oil and transport fuels and it recognises the importance of taking efforts to insulate the Australian economy from the impacts of the significant energy price rises that we are experiencing today. This stands in stark contrast to the government’s plan, because the government just does not seem to have one. It does not have plans to increase investment in research and development in any industry, let alone investment in research and development of our energy sector.

The cooperative gas access regime has created barriers to investment in new pipeline infrastructure, and the provisions of this bill will act to remove those impediments to create an investment environment that has greater regulatory certainty and provides more efficient investment. I acknowledge the provisions contained in this bill have been agreed to by all state and territory governments through the Ministerial Council on Energy and acknowledge that the peak bodies of the industry—namely, Energy Networks Association and the Australian Pipeline Industry Association—also stand in support of these measures.

The amendments to the Trade Practices Act and other acts provided for in this bill are an important step in future developments of the Australian gas industry and they underpin investment decisions that will assist in securing Australia’s long-term energy needs. Energy in all its forms is the lifeblood of modern economies. The demand from the emerging economies of China and India certainly add to the global demand for energy resources, and it is incumbent upon this federal government to show leadership when it comes to developing the Australian energy sector. This leadership must extend beyond simply exporting gas for a few cents a tonne. It must extend to securing export revenue that reflects the true value of our energy reserves and it must also extend to securing a sufficient level of resources to support Australia’s energy needs well into the future.

Competitive supplies of energy are needed to supply the manufacturing industry and our various other value-adding industries. That is absolutely critical to developing an economy. Investment in those industries will be subject to boardroom decisions being taken on energy security within this country. Therefore, it is absolutely imperative that we address the security of our energy supplies. It is absolutely imperative that we develop our gas markets. As I said earlier, we are considered a gas rich nation and we need to take all steps to make sure that we can economically bring that gas to market to give ourselves a competitive advantage, whether it be in manufacturing or other value-adding industries. Investment in the future of our energy supplies must be undertaken. It is absolutely essential for the further prosperity of this country and it will be significant in developing jobs in the future for all Australians.

I support the bill. I support Labor’s second reading amendment. I think there has to be a wide view taken by legislators when it comes to developing our resources. In 2002 the Parer report came down, identifying the deficiencies in our industries and making recommendations for how we can improve those deficiencies. We cannot sit idly by and wait until world markets overtake us. We are in a global competition. We do need to advance the position of Australia on behalf of Australians, and I support the bill.

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