Martin Ferguson (Batman, Australian Labor Party, Shadow Minister for Transport, Roads and Tourism) Share this | Hansard source

I rise this morning to speak on the 2006-07 budget appropriation bills. In doing so, I note that Australia is lucky to be riding a wave of the longest run of global growth, in excess of four per cent per annum, for 40 years. I also note, however, that Australia’s own growth, at below three per cent for six of the eight quarters to the end of September last year, is relatively modest and that we cannot afford to take our eye off the ball, which is the challenge to the government with the forthcoming budget.

This growth has been driven by developing countries, which have contributed more than 60 per cent of global growth over the last five years. China has been front and centre of that growth; it alone accounts for more than a quarter of the global growth in that period—a contribution far in excess of its 15 per cent share of world GDP. Australia has benefited in two ways: the disinflationary effect of imports that has come from the growth in China’s exports, and the high commodity prices and strong demand that has come from China’s insatiable appetite for our resources. Resources are in demand in many other markets as well, especially in the growing Indian market.

The value of Australia’s minerals and energy exports is forecast to be around $110.7 billion in 2006-07. The value of energy exports is up by five per cent and minerals are up by an enormous 31 per cent. As was the case last year, Australia remains relatively reliant on the resources sector and on very many service industries that support it, such as engineering, tourism—which employs over half a million people—construction, transport, power, banking and finance, and information technology, to name a few.

The sector I am now responsible for as shadow minister includes tourism and transport. It is a key part of the resources export supply chain and is growing in importance. Export infrastructure is a major challenge facing Australia’s resource sector. It is a responsibility both of the state and territory governments and of the Commonwealth. This has been a controversial issue over the last two years, and the Hunter Valley coal chain, the Dalrymple Bay coal terminal and the Pilbara iron ore chain are all cases in point.

I note that the ABS, in its commodities report in June last year, said:

Much of the port, rail and related infrastructure supporting Australia’s exports has elements of natural monopoly.

In many cases it is impractical, or makes no economic sense, to have multiple systems.

In cases where there are strong elements of natural monopoly, infrastructure owners could provide too little capacity and too low a quality of service in the process of extracting monopoly rents if left unregulated.

The challenge for Australia, however, is to get the balance right between managing issues surrounding extraction of monopoly rent by infrastructure owners and maintaining the incentive for investment in infrastructure, particularly to prevent underinvestment. As I have said on many occasions, if Australia cannot keep up with the investment required to support the important expansion of our export industries, investors will flood elsewhere because there are plenty of opportunities in other parts of the world to meet the growing international demand and Australia will be left behind.

I raise these issues today because, unfortunately, this is yet another issue where the government is bereft of leadership, out of touch with industry and squandering Australia’s future. There is no better example than the Treasurer’s non-decision of 22 May last when at midnight the National Competition Council’s recommendation to declare BHP Billiton’s Newman railway under the Trade Practices Act was deemed rejected. This was the right outcome, but it came about only because Peter Costello was too irresponsible to make a decision as Treasurer and now, after appeal, it is set to be overturned by the Australian Competition Tribunal’s adherence to doctrinaire competition policy.

In December the Australian Energy Regulator decided to cap investment in Queensland’s transmission grid by Powerlink at an average of about $406 million a year for the next five years. This was despite advice that it is totally inadequate to provide the power for the billions of dollars of mine, rail and port expansion now underway and required for the future of Australia based on the resources opportunities out of Queensland. I say that because coal is our biggest export from Australia—more than $24 billion a year. But the competition purists, with the Treasurer in full complicity, would rather set hypothetical limits on export infrastructure investments in natural monopoly markets than properly secure the future of our major export industries.

These are just two examples of competition policy gone mad, which is threatening the expansion of Australia’s export industries and creating disincentives for investment. No-one would argue against an effective and efficient access regime for rail haulage for all Pilbara iron ore producers. But, in effect, competition rules favour access seekers over the operations of existing owners, who have borne the huge risk of investment, who maintain the infrastructure and who operate a sophisticated logistics chain to supply their export markets to the benefit of Australia, and especially of Western Australia.

I therefore suggest to the House this morning that it is time for the Prime Minister and the Treasurer to implement the recommendations of their own Export Infrastructure Task Force, established by and reported on in this parliament. According to the task force—and I agree with it—the answer to the problem is to introduce an ‘efficiency override’ for applications for the declaration of export related facilities under part IIIA or its associated regimes. The task force goes on to say—and this is important—that the purpose of such a mechanism would be ‘to minimise the risk that access regimes would disrupt the very areas of the economy that have performed best in the management of export related infrastructure’. I could not agree more.

I would like to know whether the Treasurer agrees and when he is going to do something about this important challenge. Infrastructure investment in electricity, water and our export supply chains is far from the only threat to the future of our key resource industries and the jobs of tens of thousands of Australians, especially in our regional communities. Let me turn to the climate change debate and the proposition recently put forward by the Greens and their fellow travellers that we should close down the Australian coal industry within the next three years. What a disgrace! Destroying the livelihoods of Australian forest workers and timber communities is not enough any longer for the Green movement. Now it wants to destroy the lives of 30,000 coalminers in coal communities from Mackay to Moe, from the Bowen Basin to the Hunter and Latrobe Valleys, all areas historically well represented by the trade union movement and the Labor Party.

Climate change fever has captured the world, and the Green warriors believe they are now on the cusp of bringing down capitalism. Victory, so far as they are concerned, is just 30,000 jobs away in Australia. Let me, therefore, remind the House that the coal industry brings to this country more than $2 billion every month and that it directly employs about 30,000 people, not to mention the huge impact it has on indirect and associated employment. Coal also supplies 85 per cent of Australia’s electricity—safely, reliably and cheaply to our nation’s benefit. I simply remind the Greens and their fellow travellers that, without coal, Australia would be a Third World economy.

Coal underpins the current boom and is the key to its continuance. It is about time its beneficiaries stood up and were counted with respect to the need to defend this important industry. ABARE predicts that energy demand will grow by 70 per cent in Australia by 2030. A lot of that investment will include gas and renewables, and so it should. It is not about one form of energy to the detriment of others. The key to low-cost emissions abatement is an energy mix that includes the widest possible range of technologies deployed in places and for uses for which they are best suited and where they are most cost-effective.

However, in 2030, almost 70 per cent of Australia’s energy will still come from burning coal. Last year, the International Energy Agency forecast that total world coal demand will grow by almost 60 per cent by 2030. It is therefore worth remembering that, while Australia is the world’s biggest exporter of coal, it supplies just six per cent of the world’s total coal consumption. The Greens would have us close down the Australian coal industry—a responsible producer of coal to the benefit of Australia and the international community. Australian coal is regarded internationally as some of the cleanest coal in the world.

So I say to the House today that shutting down the Australian coal industry would do virtually nothing to curtail coal use or reduce emissions globally. There are ample other suppliers that do not have the same record as Australia does on a variety of fronts. I also say that emissions trading will work best if we have international technology cooperation, with everyone in the cart. Part of our responsibility is to make AP6 work. This is the lesson of the Tobin tax—some people have short memories—and we must pursue this same principle in developing an international emissions trading system. I say that because, even if the big emitter countries were in, it would take only half a dozen of them to refuse and then the whole system would be brought down.

Our responsibility is to work to ensure that we take everyone with us in solving this international problem whilst also acting locally, pulling our weight back home, on our emissions. Unless we pursue this aggressively, energy intensive industries will flock to those countries that choose to ignore such a development. We want to take them with us rather than have them stand outside the circle. Accordingly, the truth is that those who oppose the opening of new coalmines and mineral processing plants in Australia should be doing the exact opposite and insisting that this is done in Australia to the highest environmental standards, with the best available technology and in the safest possible way.

The coal industry—and I should also stress this—has never had a free run in Australia. The truth is that the coal industry, like every other mineral industry in Australia, has to comply with stringent environmental requirements, Indigenous consultation and planning approval processes at a local, state and federal level that are amongst the best and most rigorous in the world. Australian miners are at the leading edge of mining technology and the environmental technologies that go hand in glove with it. By and large, the coal industry is an accepted and welcome part of the Australian community in which it operates—and so it should be. It is important to the national economy, exceptionally important to some states and territories and exceptionally important to regional economies.

What Australians must do is take our industry expertise out into the world. That is the best thing that we can do as a nation in the global warming challenge that confronts us all. We must not only sell our coal to China; we must engage with China on cleaning up the technology it uses to generate electricity and on improving the safety and environmental management of its coalmines. Thousands of workers die in Chinese coalmines each year. In this country we consider it a tragedy—and rightly so—if just one life is lost in the industry in a year. Poor water management in Chinese coalmines pollutes local rivers and streams of vital importance to village communities. These are real issues that must not be forgotten in the clamour to address climate change. That is where Australia’s efforts must go when it comes to seriously dealing with global climate change policy and that is where we as a nation can make a real difference through strong national and international leadership.

We must be very careful not to mislead middle Australia about the real economic and lifestyle ramifications of a feel-good response to climate change. ABARE says cutting emissions by 50 per cent will double the price of petrol and push up electricity and gas prices by 600 per cent. That would be a disaster. But there are alternative opportunities to cushion such an impact, which I want on the table today.

Yes, we must set targets and act now on a no-regrets basis to reduce our energy use and lower our greenhouse emissions. But when it comes to emissions trading, let us crawl before we walk and put in place a national emissions trading system first. That would be a huge step forward for energy market reform and for climate change. It would be about what is possible at a given time. It would be a key instrument in developing a proper, practical and pragmatic climate change policy. National emissions trading is also what the electricity industry is crying out for today. I remind the House it is what the Prime Minister’s own energy market review, the Parer review, called for five years ago. Why hasn’t the Howard government acted on that simple recommendation in what was a well-prepared, well-researched and well-received report?

I also remind the House that, according to Parer, if we were to remove the distortions of the myriad of state and federal based systems in existence today and replace them with a national emissions trading scheme, electricity prices would actually be lower in the national market. Why aren’t we doing that simple reform, part of microeconomic reform in Australia, which would be to the benefit of industry and ordinary consumers?

Of course the price of carbon will increase electricity prices in the long term, but that reform today would be a productivity gain and help lower prices as part of that process. We might also then get private sector generation and transmission investment when and where it is needed and get rid of midsummer brownouts. That would be a giant leap forward for a truly national electricity and gas market.

There is also a link between climate change and energy security policies and there are major no-regrets steps forward that we can take in this area as well. The only two energy security issues Australia has are underinvestment in electricity generation and over-reliance on foreign oil.

If the Prime Minister is really serious about climate change and energy security, there are four things that should be taken on board immediately. Firstly, ratify Kyoto. It would cost Australia nothing and restore its standing in the global community as a leader on environmental policy. Secondly, focus on a national emissions trading system, not just an international scheme. We can actually do both—pull our own weight domestically and work to take the world with us internationally. Thirdly, focus on the conversion of our vast gas and coal reserves into clean diesel for the nation and reduce our reliance on foreign oil. Fourthly, focus on a domestic gas policy, not just LNG, to solve energy security problems of other countries such as China and India.

Never has a federal government had it so good in terms of the resources available to build a foundation for Australia’s future in the 21st century, but it actually comes back to political will and leadership. Never has a federal government had a better opportunity to invest in these issues and to lay down a foundation for the future. There are issues like intergenerational equity, the struggle of today’s old-age pensioners who did not grow up with the same superannuation opportunities that we enjoy, and the forgotten people, black and white, barely surviving on welfare in dysfunctional communities, sometimes unfortunately for second and third generations. There are issues like the decline in our skills base and the need to pave the way for the next generation of innovation and productivity improvements and for our economic security.

In conclusion, there are many challenges in the lead-up to the next election: issues like our reliance on the resources sector and the implications of that for manufacturing and other sectors; and the danger of creating a two-tiered economy, with the resource-rich regions and states versus the rest—workers in resources on boom-time salaries and bonuses versus teachers, nurses, police officers, firefighters and childcare workers, to name a few. All of those, like other hardworking Australians, are being left behind on fixed incomes. There is so much potential for reform, yet the Treasurer’s last budget was a wasted opportunity. In the lead-up to the May budget there are some key decisions to be made, but I have also laid out today the importance of the resource sector. Those who condemn the coal industry ought to start fronting up to the fact that they are the beneficiaries of the export opportunities that the coal industry gives to Australia. We are all living off the back of the resources sector today, just as in the past we lived off the back of wheat and sheep. I commend the issues I have raised in this House today for consideration. (Time expired)

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