Chris Bowen (Prospect, Australian Labor Party, Shadow Assistant Treasurer) Share this | Hansard source

We recently saw the high-profile Fortescue and BHP case. I am not convinced the system got this one right. The Treasurer failed to exercise his right to override the decision to grant Fortescue access to the railway line, which was a pity. His failure to act had the same consequence as if he were to have acted—deemed refusal—but it would have been better if the Treasurer had come out and explicitly outlined his reasons. That is why the government should, in my view, accept the recommendations of the Export Infrastructure Task Force. The task force recommended an efficiency override for applications for the declaration of export related facilities under the national access regime. The task force said that this test would ‘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’.

My personal view is that there is a strong case for some legislative prescription which would codify what is and is not part of the production process and therefore provide more certainty for investors. I stress that we should not lose sight of the fact that the national access regime is a very important part of national competition policy. It is a positive development that has opened up access to infrastructure in this country, but we cannot for one second let it become a disincentive to investment. We need to get the balance right both in this bill and in national competition policy generally. It is a positive development that there will be a coherent national approach to the access regime for gas pipelines. It will be a light-handed regulatory approach, which is appropriate. We do not want to discourage investment in pipelines. Some 95 per cent of Australia’s gas production is located in the north-west of Australia, but 90 per cent of the population lives in the south-east, so we need pipelines to get the gas from the north-west to the south-east.

Establishment of secure national gas market infrastructure is vital to meeting Australia’s growing national energy demands. The speedy passage and implementation of this legislation is in the nation’s interest, and it is critical to ensuring our energy market and its export potential. There are over 140 trillion cubic feet of known natural gas reserves. The private sector now owns the majority of this resource. Transmission pipelines and substantial private sector investment will be required going forward.

These reforms are being implemented against the background of unprecedented demand for energy resources. The Australian Bureau of Agriculture and Resource Economics estimates that, by 2030, electricity generation will need to grow by 73 per cent to meet demand and that gas demand will increase by 50 per cent. The bill we have today will pave the way for the $30 billion in investment that the energy industry estimates will be required over the next 15 years for energy infrastructure projects. This bill will be an important first step in reaching that investment.

While Labor supports the bill and the implementation of the national gas law and the national gas regime, the federal government must push ahead with a second wave of gas reform, which is scheduled to come on line before 1 January 2008. There is much more to be achieved with competitive gas reforms.

The example of the benefits of these reforms is best seen by our experience in the electricity market. Average world prices have fallen by 19 per cent since the early nineties, delivering real benefits to businesses and to households. I noted again in today’s Financial Review, as opposed to yesterday’s, a report by Adrian Rollins and Duncan Hughes, which reports on a Productivity Commission finding that the potential benefit from further competition reform would result in an increase in gross domestic product by almost two per cent, adding about $17 billion to the national economy. Of course, gas is a very important part of that energy reform which is necessary.

The Productivity Commission’s 2005 Review of national competition policy reforms has put this in the context of the importance of pushing forward with the ministerial council’s energy market reform agenda. It says:

Given the long lead time involved in bringing new generating capacity on line, it is also important to get the timing, location and nature of investment decisions right.

By getting the national access regime, the NGL and the next wave of reforms in place in a timely fashion, the energy industry will have more confidence in the long-term investment decisions that they need to make.

In December 2003, the Ministerial Council on Energy announced its reform program. It included a reform program that was supposed to take three years to be fully implemented. Of course, that was four years ago. In August last year, the Ministerial Council on Energy announced that some of the proposed energy reforms would be pushed back from 1 January this year to 1 July this year. It was the Ministerial Council on Energy that in 2003 set in trail what was supposed to be a three-year time frame for establishing a national regulatory regime for electricity and gas. Here we are early in 2007, we have already fallen behind the MCE’s timetable, and the commencement of the national gas law has been pushed back to 1 July this year.

I am not seeking to make a political point here; I do not hold the Commonwealth government entirely responsible for that. This is a matter of some negotiation between the different levels of government. This is not a matter for the blame game and certainly on this side of the House we are not going to play the blame game. But all governments need to do better.

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