Bob Katter (Kennedy, Independent) Share this | Hansard source

People have referred to this bill, the Energy Legislation Amendment Bill 2006, as the AGL facilitation bill because, I am informed, it deals very much with the New Guinea gas pipeline. The exemptions that are proposed here are to help facilitate and enable these people to get a running start with this proposed pipeline. I wish the people well with the pipeline. When they started building a pipeline in Alaska I think it took them 16 years to fight their way past the greens. It was in Alaska first, and then they had the second battle with the greens in Canada. Then they had the third battle with the greens in the United States itself. Similarly, the indigenous peoples of Alaska, the Inuit, contested it. Then there were native title battles with the indigenous tribes in Canada—I forget the name they use—and in the United States, particularly in Alaska.

It is of great relevance to us in North Queensland, because we are in a desperate situation. We need electricity. Over the last 15 years, every time we have run out of power in North Queensland the enlightened governments of Queensland have built another line back to southern Queensland. Of course, this means 20 per cent losses in that line and we are hopelessly non-competitive in any metal processing or any other endeavour that requires energy. Let me be very specific here. The Carpentaria Mineral Province, which incorporates parts of the Northern Territory and apart from that is entirely encompassed within my own electorate in the north-west corner of Queensland, is the richest mineral province on earth. It was producing $5,000 million worth of metals before the current boom, and that is arguably not including some of the downstream processing. So we are talking about between $7,000 million and $10,000 million a year now. Almost all of those metals—silver, lead, zinc and copper—have doubled or quadrupled in price on the world market.

This is the important point: we have the Dougall River leases, and Lady Annie and Lady Loretta. People would be familiar with these if they read the business pages in the national dailies. These are important issues in a national framework. But none of these metals can be processed in North Queensland—or, I submit, in Australia. Indian companies have opened up the last three mines in North Queensland and since they could not get sufficient electricity to process those metals they put them on a boat. Sure, they can get cheap electricity if they go to Gladstone, but if they are going to put them on a boat then why not take them back to India and process them there or some other place? That is what they have done.

So, yes, Australia is quarrying. But, speaking on behalf of the richest mineral province on earth, Australia cannot process any more of these metals because we have no competitively priced power. Earlier on, the opposition’s spokesman on resources said that it is about competitiveness on the international stage. He is dead right. If you want to be competitive, then you must attempt to have each of your input items cheaper than those of anyone else in the world. And the most important input is the cost of electricity; though the cost of petrol is very important.

It is said of aluminium that it is simply congealed electricity, and that is substantially true. If my memory serves me correctly, something like 60 per cent of the cost of producing aluminium is in electricity. If we turn the clock back some 25 years, Australia then had virtually no aluminium industry. The aluminium industry came about as a result of the building of the Gladstone power station. In North Queensland we have the biggest mineral province on earth, but we cannot process the minerals because we have no power on the northern grid—no power at all. Never mind about competitive power; we have no power. They are building another pipeline but, because of the line losses that occur in bringing electricity some 1,000 or 2,000 kilometres from the power stations in southern Queensland, our power costs are non-competitive.

We have talked about the New Guinea gas pipeline. Mount Isa Mines are producing power from their gas-fired power station. It is a big power station—about 300 or 400 megawatts—and very efficiently run. They are producing power for 7c a unit. Santos has said that they want considerably more money for their gas, and it is generally considered that the cost of production of power by the gas-fired power station at Mount Isa will go up to 8c or 9c a unit. So I think that 9c is a fairly reasonable price for the cost of the power that would be generated out of the New Guinea pipeline.

If we want to be internationally competitive, a coal fired power station produces power at 3.6c a kilowatt-hour. It is proposed to build a power station at Pentland. This is what the government should be doing: building a power station at Pentland or, at least, giving them a market to enable them to proceed to build a power station. But at least half of it will have to be sold to Ergon and Energex, the two electricity retailers in Queensland. It is really up to the state government as to whether they buy the power from Pentland or not. Pentland is right in the heart of North Queensland—a third of the way between Townsville and the north-west mineral province—and Toorong power station has already stated that they can produce power for 3.6c a unit.

But this is the whole crux of the argument: whether you deliver power at 3.6c a unit or you deliver power through the gas pipeline at, I would argue, 9c a unit—I doubt anyone would argue that it would be less than 6.5c a unit. So do you want your electricity—your major cost input item—at, let us be very generous and say, 7c a unit or do you want it at 3.5c a unit?

There is bias built in here. It is said that coal fired power stations produce more CO than gas-fired power stations, and that is true. But the government could do what every other government on earth is doing and mandate ethanol into our petrol tanks. And it is very relevant to this debate to state clearly and unequivocally that it is cheaper to buy a litre of ethanol on the international market than it is to buy a litre of oil, or at least oil processed into petrol to put in our petrol tanks—gasoline, as the Americans call it. Ethanol is cheaper.

So why are we not selling any? If ethanol is a hell of a lot cheaper, why are there no ethanol plants in Australia? Well, there are two—but they are tiny little plants by world standards. Why is there no ethanol being produced if it is cheaper? It is because all the bowsers in this country are owned by the oil companies, and they do not buy oil at the spot market prices that are quoted—they own the oil wells. Their cost of production is the same now as it was 20 years ago, because most of the oil wells they produce from are 20 or 30 years old. That is the reason why we have no ethanol market.

If you moved to ethanol, then every single hectare of sugar cane planted would absorb 72 tonnes of CO out of the atmosphere. Every single hectare of sugar cane produces 9,000 litres of ethanol—and that is not counting processing of the fibrous matter. The American President said they are most certainly going to be processing lignin to cellulose to whatever you want to call it—fibrous matter. They are going to process that as well. But even without that, there are 9,000 litres of ethanol per hectare.

In this case, what goes up must come down. Each year, sure, you burn these litres of ethanol, and it goes up into the atmosphere as CO. But probably less than 10 tonnes of CO goes into the atmosphere and yet each hectare of sugar cane takes 72 tonnes out of the atmosphere. And a lot of it stays out because it is in root systems; it is in people, through the sugar we eat; and it is in animals, through their molasses intake. So the release is very delayed. Even if it were not, each year, when you burn ethanol, the CO goes up and it comes back down again. And we need not worry about building coal fired power stations, because that ethanol will absorb all of the CO that you could remotely contemplate putting into the atmosphere through your coal fired power stations.

As far as providing a free kick for the gas pipeline, whilst this will encourage the building of the gas pipeline—and I take the previous speaker’s point that we need to create a national grid in gas; I do not deny that for a moment—if this is being seriously looked at as an alternative for coal fired power, as it is being looked at in Queensland, and I am not criticising anyone in this House for this, please forget about it unless you want your country to be non-competitive in the international market. We are talking about power costs of between 7c and 9c a unit versus power at 3½c a unit. Either you are internationally competitive or you die; you will not be able to sell on the world markets.

There was talk about RFX Connor. I think history will be very kind indeed to Rex Connor, although the newspapers and other media were not at the time. I think history is already being very kind to John Button and to Bjelke-Petersen. Each of these men was able to create industries out of nothing. When I say that, John Button had a major governmental intervention in the marketplace which, among other things, promised some $750 million but gave only about $380 million. But John Button rendered our steel industry internationally competitive by that government involvement.

The better example, though, is the Bjelke-Petersen government. I spoke to Sir Leo Hielscher this week just to verify before this debate what exactly took place and to make sure that I am correct in saying that the Gladstone power station, which was arguably the biggest power station in the world at the time, was built without having any customers. It would not be contemplated today in our economic rationalist environment to build a power station for which there are no customers. It would be completely outrageous. It is unthinkable. But the Queensland government took that risk. They believed that, if they could produce the cheapest power anywhere in the world, they could secure an aluminium industry for Queensland and for Australia. They already had the bauxite industry, of course. The net result was that they built the power station and a year or two afterwards the aluminium industry came on line in Australia.

The biggest export-earning item for this country is coal. The second biggest export-earning item for this country is aluminium and alumina. If we had had an economic rationalist culture and policy operating in Australia then, there would have been a bauxite mine, with quarrying that employed 100 people up at Weipa and another 100 people over at Gove, but that would have been it. There would have been no people employed at a power station in Gladstone—there was no-one to sell the power to—and there would have been no-one at the Boyne Island smelters. There would have been none of the great growth that we have seen in Gladstone and the surrounding areas. That growth was precipitated by proactive government interventionism.

If you want to compete on the world markets, not only do you have to have the full and wholehearted cooperation of the government but as well you have to get action out of the government. So we have a situation where all the metals are in North Queensland but we cannot process them. We have bumper stickers in Queensland that say ‘Smart state’ and a lot of people write underneath ‘Smart state’: ‘Dumb government’. A government that has the richest mineral province but will not provide electricity to process those metals has to be really dumb indeed.

That in itself is bad enough, but the only proposal that has been put forward is the New Guinea pipeline. If you are going to put hundreds of millions of dollars, maybe even a thousand million dollars, into a processing plant for zinc, nickel, copper or whatever in North Queensland and you are going to rely upon New Guinea as the supplier—and far be it from me to denigrate our neighbours—I think you had better have a little sit down with BHP and ask them about Ok Tedi or maybe you should have a little sit down with CRA and ask them about Bougainville in order to find out how reliable a supplier New Guinea has proved to be.

God bless those people trying to build the pipeline. I wish them well. But, for heaven’s sake, do not say to me, as a North Queenslander—there are a million people who live in North Queensland and we are growing rapidly; we are not small but big up there—that to turn on our lights we have to hope that they have a stable situation where the gas is coming from in New Guinea. I would hate for it to be coming from Ok Tedi or from Bougainville, because I might not be able to switch on my lights. In fact, I would not be able to switch my lights on. I think Porgera is closed down at the present moment because the local tribe wanted all of the money from Porgera. Do not quote me that it is Porgera. There are two mines that have closed up there: one had the bridge blown up and the other one had the transmission lines blown up.

It is a great idea, but do not create a situation in which our lights can only be turned on if New Guinea is a reliable supplier. Do not for heaven’s sake think of that gas to produce electricity when you know absolutely that it is twice as expensive as electricity from a coal fired power station. You have one government that has the biggest mineral province on earth but cannot process the minerals because it has not been any power to process the minerals. You have had another government that said, ‘We’ll build a power station because we are confident that, if we do, we will secure an aluminium industry for Queensland and Australia.’ And they did.

In conclusion, you do not have to worry about the CO issue. Every hectare of sugarcane takes 72 tonnes of CO out of the atmosphere. It produces 9,000 litres of ethanol from that. So, when we burn up 9,000 litres from the oil industry, the CO goes up into the atmosphere and stays there, but if it is ethanol it comes back down again. You do not have to worry about coal fired power stations and having the big nuclear ones—just go to ethanol where we have a sustainable cycle with our CO. It goes up; it comes back down again. Those are the figures: every hectare of sugarcane takes out of the atmosphere 72 tonnes of CO and produces some 9,000 litres of ethanol. (Time expired)

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