Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Hansard source

The member for Kingsford Smith agrees with me on that point. We have to do a lot more in the area of consuming our finite reserves of energy more efficiently.

The fourth point I put down was, of course, affordability. An energy policy has to be about delivering both affordable and reliable power to Australian households and, just as importantly, to Australian industry. This is the challenge in the context of the climate change debate—finding ways of producing cleaner power without imposing too great a cost not only on Australian households but also on Australian industry. Access to cheap power is one of the things that give us comparative advantage in international markets. Indeed, it is one of the things that give us advantage in manufacturing because obviously, if domestic manufacturing can access power more cheaply, it can better compete globally. The best examples of that are the big energy-consuming industries like the aluminium and paper industries that, in themselves, pose a great challenge to us in terms of global warming.

That is an energy plan. It is not exhaustive, but that gives you a picture of what an energy policy is. It is such a shame that we simply do not have one in this country. This is emerging as the biggest policy issue facing Australia, and here we are, 10 years into the Howard government, without an energy policy. We have had plenty of committees, plenty of studies, a power review and COAG consideration, but it is time to show some leadership, bite the bullet and put a plan in place.

The Energy Legislation Amendment Bill 2006 is very much about energy policy. It is about ensuring that we bring forward investment in gas pipelines, which is so critical, and goes back to what I was saying before—that, if we are going to use more of our natural gases domestically, we need to have the pipeline infrastructure to deliver that gas to Australian industry and to Australian households. In transmission, the more pipelines we have the better, because that will produce competition and further drive down the price, both for industry and for households.

This bill effectively does two things—although there are a range of more minor issues in the bill. I was happy to hear the member for Batman and the member for Werriwa acknowledge the fact that it embraces the policy that Labor took to the last federal election. That was a policy that acknowledged and recognised that investment in gas pipelines in this country was being held back by a heavy-handed regulatory approach, which might have been appropriate in some circumstances but not in the current circumstances facing Australia’s gas markets. We have to remember—and I think the member for O’Connor made the point—that about 95 per cent of our natural gas reserves are in remote locations, most of it off the west coast of Northern Australia, and of course 90 per cent of our population live on the eastern seaboard. So gas pipelines bringing gas to market is a critical goal for the Australian economy and for the Australian people.

We still fondly remember Rex Connor. Even though his method might have had a touch of madness about it, Rex Connor had a dream all those years ago to bring natural gas to the east coast, and we are still talking about it. It has always amazed me that we can ship competitively priced gas all the way to Asia and beyond but we cannot get our gas from the west coast to the east coast of Australia, and there has to be something wrong with the economics in that scenario. So this bill does two things effectively. It provides up-front binding rulings on whether a gas pipeline will face regulation under the gas code, which is underpinned by the Trade Practices Act. In other words, let us say you are going to build a pipeline and you are worried about whether regulation is going to truncate your returns and you need a period of grace while the pipeline is in its infancy and you develop new customers for the pipeline. This would allow someone to go to the NCC, have the issue assessed on competition grounds and get a guarantee that the pipeline will not be covered, will not be price regulated, for the first 15 years of its operation. The other big change in the bill extends that same consideration to gas pipelines that will be sourcing gas from other nation states. I suspect that is largely designed to take into consideration the Papua New Guinea arrangement and our hope—still—that we will get another significant supply of gas from a source other than Moomba, for example, on which we are very heavily dependent at the moment. Other suppliers of gas bring a competitive nature to the market and benefit consumers, whether they be householders or industry.

Given that it is our policy, Labor supports the bill. I make the point that prior to 2001 in this country we did not have legislative underpinning for access to essential facilities until the Keating government—Paul Keating, in particular—moved to ensure that we were keeping pace with other nation states, particularly the United States and the United Kingdom. It is bizarre to reflect back that we moved so recently to put in place an effective legislative regime. That began under Paul Keating. It is still not a perfect regime and today we are dealing with some issues that highlight that imperfection. One of the great imperfections of that regime is part IIIA of the Trade Practices Act and the continuing existence of division 6, which was a compromise. When Paul Keating did the negotiations with the states, which were then all Liberal—although there was a popular national Labor government, all states were occupied by Liberal governments—it was a difficult negotiating period and division 6 was one of the compromises. Division 6 allowed the states to submit a certified arrangement for their state owned facilities. In other words, they submitted it and it was accepted under part IIIA of the Trade Practices Act. But the reality is that the states own the facilities and they certify arrangements that are beneficial to their own economic interests. None of us would be surprised or would even criticise that, but it is time we rethought division 6 and asked ourselves whether state owned monopoly infrastructure should not be further exposed to the provisions of part IIIA of the Trade Practices Act.

It is very important to remember that it is not proposed that part IIIA replace commercial agreements. If you have a piece of monopoly infrastructure and someone wants access to it to service that same retail market, commercial arrangements are the best outcome. An agreement between the two parties on that access is the best outcome and should be our default setting but, if an agreement cannot be reached, part IIIA provides opportunities for people to have that declared so that they can allow the competition regulator to secure that access for them. The other option is to deliver an undertaking for the infrastructure owner to say to the ACCC, ‘This is the basis on which I will allow people to secure access,’ and these industry codes, including the national electricity code and the gas code, which is the subject of this bill, fall under that undertaking process.

Part IIIA was a futuristic initiative. It really looked forward to what the country needed in competition policy. Unfortunately, part IIIA is starting to fall apart for a number of reasons. The first reason I have already mentioned, and that is the failure of this government to continue with the reform. I made the point that, unfortunately, in the end part IIIA was very much a compromise between the Commonwealth and the states in the early 1990s, but the vision was always to rid ourselves of those compromises and get on with a more effective part IIIA which covered all the issues, and that just has not been done. In fact, to the contrary, this government has begun to unravel part IIIA. Some might even use today’s amendment as an example. It is taking one piece of infrastructure and effectively exempting it from part IIIA, in many senses. Again, we support that, because we think a special case has been made out.

But my concern is that it is the thin end of the wedge, and this is the beginning of the unravelling or unwinding of part IIIA. And who benefits from the unravelling of part IIIA? It benefits the owners of big natural monopolies, who are typically and understandably people who often happen to be close to this government. Again, when it comes to the interests of the consumers of small business—small business who are relying upon being able to secure competitively priced energy, for example—if it comes to a choice between the interests of consumers and small business and the big end of the town, you know where the government will go every time. This should be of real concern to every member of this House.

So we have had no reform, and now the government is starting to unravel the very good work that Paul Keating did in the early nineties. Now we seem to have a new front opening up, and this is the surprise approach by the now Treasurer of not considering NCC recommendations. That recent example was Fortescue’s application to gain access to BHP’s rail line network in the Pilbara. In this case I actually agree that physical access to that rail line was not the best economic outcome. There were very many reasons why BHP would not want someone’s rogue rail rolling stock running on its railway line; it is high-tech and computerised. But you do not have to have physical access to secure economic access. I think that is an often misconceived concept within part IIIA. Of course Fortescue can get access by allowing BHP to take its product at a reasonable cost—a cost either negotiated between the parties or determined by the competition regulator. You do not have to have that physical access.

But the NCC in its wisdom—and I agree with the decision—decided that in this case the rail line should not be covered. It was up to the Treasurer to determine whether that was the right call or not, and we all waited with bated breath to see what the Treasurer’s view on this subject was. In the same way, we waited with bated breath for the Treasurer to make a decision on the Shell takeover of Woodside many years ago. But, alas, we got no decision from the Treasurer. He invoked the part of the legislation that says if he does not make a decision in so many days—I think it is 60 days—then it will be deemed a refusal. So now you have got Fortescue wondering where to go with this thing. Obviously court action is an option, but there is no view from the Commonwealth Treasurer on which to base its case. What sort of leadership is that? The act gives you the final say, but you just refuse or give up the opportunity to act on it. It is extraordinary stuff and another way in which this Treasurer is undermining the effectiveness of part IIIA. In a sense, he is denying the people of Fortescue procedural justice. Even though I agree with the decision, he is denying them the opportunity to take the Treasurer’s view to the courts when making their case.

We welcome the change, but I am very concerned that part IIIA of the Trade Practices Act is slowly but surely going out the window. That is going to be bad for competition in this country, it is going to be bad for prices, and ultimately it is going to be bad for industry, private consumers and our economy. (Time expired)

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