Martin Ferguson (Batman, Australian Labor Party, Shadow Minister for Primary Industries, Resources, Forestry and Tourism) Share this | Link to this | Hansard source

I rise to address the House on the Energy Legislation Amendment Bill 2006. In doing so I move:

That all words after “That” be omitted with a view to substituting the following words: “whilst not declining to give the bill a second reading, the House condemns the Government for:

(1)

its failure to implement energy market reform in a timely manner, including its lack of action in implementing the recommendations of the Parer Report of 2002 and the  Productivity Commission report of 2004; and

(2)

its lack of commitment to microeconomic reform and to strengthening Part IIIAA of the Trade Practices Act 1974”.

The opposition, as will be made clear by my remarks, welcomes this bill, but I simply say it is only part of the job that needs to be done with respect to energy reform in Australia. The bill, after all, does implement the policy that the opposition took to the last election, developed by my colleague the former shadow minister for resources and energy, the member for Hunter. It states:

In natural gas, industry remains engaged in battle with the ACCC over a range of regulatory issues. Australia still lacks all the necessary ingredients for the development of a mature and fully competitive gas market and, yet again, Parer’s recommendations have been ignored.

The opposition policy statement went on to say:

No initiatives have been taken to tackle the various barriers to enhancing upstream competition and nothing has been done to address regulatory risk, whether it be real or perceived.

…            …            …

Labor will retain a strong Gas Code, but, consistent with the COAG Review, will pursue two significant changes to provide greater certainty for new investors. We will provide for: Binding and up-front coverage rulings; and up-front agreements locking in key regulatory parameters for extended, but agreed periods of time.

That is what this bill is about. Unfortunately, it has been a long time coming. Let us be very clear about this: it still does not go far enough in implementing the many energy market reform measures that are still outstanding. I think it is about time that the Prime Minister actually fronted up to the issues that need to be attended to today. The issue of nuclear power is a futuristic debate. There are regulatory decisions and base load energy decisions to be made in Australia in the foreseeable future, not at some distant point in time. That is what this debate is about—it is about our requirement as a nation to put a system in place which provides for a national grid and for sufficient energy capacity to meet Australia’s demands in the foreseeable future.

Whilst these charges are welcome, as a community we have to get our heads around the real, tough energy decisions that have to be made, especially on the east coast of Australia. That means making immediate decisions going to base load capacity. It is also about ensuring that we have an environment in place which fosters and encourages ongoing exploration for oil and gas in Australia. I simply do not think the government is doing enough on that front. That was rammed home last night at the minerals industry council dinner, where the Chair of the Minerals Council of Australia correctly reminded the government that, despite a number of endeavours, it has failed to put in place a flow-through share scheme. That scheme is important because it is about encouraging necessary investment, especially for small and middle sized explorers in Australia. It is about doing something for those hardworking medium and small sized exploration companies that do not just represent the top end of town.

I think we have to take this criticism on board because we have still failed to front up to some of the real, tough issues going to taxation reform in Australia. The opposition have already said in the last 12 months that that is an issue we will seriously consider in the lead-up to the next election because it has been identified as a priority by the energy market companies.

This aside, the bill will amend part IIIA of the Trade Practices Act to provide new incentives for investment in gas pipelines or, more accurately, to remove the existing barriers to investment—and that is important. There are two mechanisms provided for in the bill. The first is an ability to obtain an up-front ruling on whether fuel price regulation in the gas access regime should apply to a new pipeline. If a pipeline does not meet the coverage criteria, it will be granted a full exemption for 15 years, which is called a ‘binding no coverage ruling’. The second mechanism is a price regulation exemption, also for 15 years, for new pipelines bringing foreign natural gas to Australian markets, subject to certain obligations.

Both mechanisms involve a prior competition and public interest assessment by the National Competition Council before a final ministerial decision can be made. We believe that is a sound accountability mechanism. It is about having proper regard for due process before the minister is required to tick an appropriate recommendation. The mechanisms are not just welcome to encourage investment in gas supply and gas transmission infrastructure but necessary to guarantee Australia’s future. They are very much needed for the purpose of locking in Australia’s future economically.

We all appreciate that Australia is a gas rich nation. There are over 140 trillion cubic feet of known reserves. For the last 20 years we have been finding gas faster than we have been producing it; but, unfortunately, most of it is remote from markets, and that represents an additional challenge to the Australian community. Of Australia’s natural gas resources, 95 per cent is in the remote north-west, but 90 per cent of Australia’s population lives on the eastern seaboard and most of the country’s energy-intensive, job-creating industries are in the south-west and the east. I do not think we can put it more starkly: it is not just a question of finding gas but also how we access it as a nation for the purpose of running industry in Australia and for domestic requirements in our households. That is why we need to be thinking about strategic national energy market infrastructure, not tomorrow, but today and, in doing so, promoting investment in things like natural gas transmission.

Natural gas is the best transition fuel for a lower carbon economy, with proven reserves more than capable of meeting the nation’s energy growth needs over the next few decades. This raises a number of important issues: firstly, enhancing the competitiveness of gas in the domestic market; secondly, achieving greater interconnection of major supply and demand hubs; and, thirdly, expanding domestic gas markets in electricity generation, process energy, gas to liquids and chemicals—some of which the government just does not want to debate. This is despite reports recommending that we rigorously pursue and consider some of these recommendations, such as gas to liquids.

It is a debate now, not a debate for the future. But when do we hear the Prime Minister or the Minister for Industry, Tourism and Resources fronting up to these debates? They would sooner have a debate about nuclear power, which is a futuristic debate, rather than a debate about the base load energy requirements of Australia at this point in time.

In opening up new markets for natural gas, it is critical to underpin the development of remote gas production, processing and pipeline infrastructure for natural gas supply security. This is an important issue of security for Australia. It is about security of supply; it is about security of access. Just consider the dangers in the Middle East. Surely that says to the Australian community that we have to be a bit cautious. We have to invest to make sure that, if something goes wrong beyond Australia’s shores in accessing oil, for example, we have alternatives in place. That is why this debate is so important to Australia.

I therefore suggest to the House that, without investment in that infrastructure today, Australia’s gas resources could be too expensive to get to market in the future and, unfortunately, be locked away forever or be destined only for export markets as LNG. That is not to deny that those export markets are not important to Australia; they are exceptionally important to Australia for our economic development. But let us also start thinking about home and what we need as a community, not just the export dollars that can be gained from selling LNG to China. If the Prime Minister thinks it is commercial sense to get gas to Shanghai, it is about time he started to think about getting gas to Darwin, Sydney or Melbourne. That is about looking after the Australian community. I would have thought that a Prime Minister would be thinking about the immediate future of Australia’s access to energy. Yes, it is good to sell LNG to Shanghai but it is also important to have a serious debate about how we get gas to Darwin and Sydney and suiting our own domestic needs.

I say that because I do not think we can assume that gas exports will necessarily create additional domestic industries or energy infrastructure. It is not doing that at the moment. We are just processing it and exporting it. Yes, we are earning good export dollars, but let us also think about creating additional downstream industries, employment and training opportunities and energy infrastructure opportunities for Australia as a nation. Do not just export base products; do more in Australia.

I therefore say to the House that the government has to do more to develop value-adding gas chemicals and gas to liquids industries and to expand domestic gas infrastructure to complement the LNG industries. This is the debate the Prime Minister does not want to have. Next month he is going to China. He is very proud of our achievements in the export of LNG to China. But, if the Prime Minister wants a debate about energy, we want to hear at home what the Prime Minister thinks we should do to develop value-adding opportunities in Australia. That is about jobs and training in Australia; that is about sufficiency and security of supply. Why shouldn’t we be seriously thinking about a gas to liquids industry in Australia, expanding our own gas infrastructure and securing our own future?

So I simply say to the House today: let us have the debate about energy and about security of supply. They are the debates that determine our future economically. We as a nation, like every other nation, depend on energy to maintain a high standard of living, to attract investment and, in doing so, to secure our future for employment and training opportunities and our capacity to look after people in retirement, to educate the young and to ensure that we have decent health care systems in place—just to name a few requirements and expectations of government.

We should also think about why other countries can do it but not Australia. What I am talking about in terms of gas to liquids and value-adding gas chemicals has been done beyond Australian shores. We have always been a nation that has prided ourselves on our intellectual and scientific capacity to be ahead of the game, but now we are sitting back and leaving it to other nations to pursue these value-adding opportunities and basically undermining our own security for the future.

We have to understand that it is a tough global market. We must have security of supply of energy, and we have to be competitive. Although I do not accept that we cannot do it, Australia’s competitors in the global gas market, including Qatar, are way ahead of us already. Rather than sitting back, we must grasp the opportunity. Our resources are there, and they are abundant. Let us do something seriously about taking that next step. We should pursue some downstream opportunities and lock in security of supply, given the uncertainty in the international market on a range of issues such as the problems of the Middle East and of oil.

These are serious issues, and Australia as a nation has to get serious about exploring these opportunities. How do we address this challenge? I think it is fair to say that this bill goes part of the way. Without a doubt—as reflected in the opposition’s policy at the last election—it goes some of the way towards removing the impediments to increased investment in interconnection and barriers to gas on gas competition. The private sector now owns the majority of Australia’s gas transmission pipelines and substantial private sector investment will be required over the next decade and beyond. It is therefore in our national interest to encourage, not deter, this investment. That is why the provisions of this bill are welcome and are supported by the opposition.

Whilst pipeline infrastructure developed since the late 1990s—Eastern Gas and SEA Gas pipelines—has ensured continuity of supply following the Moomba incident, it is clear that more could and should be done to facilitate linkage of uncommitted gas pipelines to markets, to improve security and reliability of supply as well as to encourage gas on gas competition. That goes to the question of a price signal. The absence of a carbon price signal is also undermining the competitiveness of gas, thereby holding back demand and investment and forcing regulatory intervention. Consequently, in this looming crisis, the opposition accepts the need to provide greater certainty for investors as gas plays catch-up in the market. And that is what we are talking about at the moment—we have abundant gas but, as a nation, we are playing catch-up. Regulatory burdens are growing, not shrinking, and competition regulators are under increasing pressure to provide long-term income guarantees for infrastructure investors. The existing cooperative gas access regime has created barriers to efficient investment in new pipeline infrastructure, and this bill will hopefully encourage more efficient investment and provide investors with regulatory certainty.

The bill also recognises appropriately the additional complexity of international gas infrastructure projects such as the Papua New Guinea gas pipeline and provides investors with regulatory certainty. Both mechanisms will have a positive impact on securing investment in gas pipeline infrastructure for Australia’s long-term energy security needs. But, unfortunately, energy market reform is happening too slowly.

Let us take by way of example just where COAG has got to this year. Whilst the commitment to progressive national roll-out of smart meters from 2007 is to be commended, it is heavily qualified and only time will tell whether the initiative is truly national. Beyond that, we are promised a recommitment to earlier COAG reform proposals and a new high-level, expert energy reform implementation group. I must say we have heard it all before. It is not the first time we have heard talk of this type of activity, but nothing seems to come to fruition.

I note that this new committee is due to report back to COAG before the end of 2006 on a range of energy market issues, including options for a national grid, structural weaknesses in the electricity market and financial market measures to support energy markets. These are pretty fundamental issues, but again I say to the House: when do we hear the Prime Minister talk about these issues? Decisions on this front underpin economic activity in Australia. It goes to whether or not we can continue to remain competitive and attract investment to Australia. We have to compete on the basis of being very competitive on the price of energy in Australia and security of access and supply, so I think there is some urgency for the Minister for Industry, Tourism and Resources to pursue this energy reform. All too often it has been put back.

There has been the Parer report, meetings of ministers and COAG discussions. It just seems to stumble from one meeting to another meeting without an end gain. It should be pointed out to the House that what the communique does not say is that this new committee is the Prime Minister’s latest attempt to address his inertia and that of his energy minister, the Ministerial Council on Energy and the National Electricity Market Ministers Forum on real energy policy issues. I also accept there is some criticism to be levelled at state ministers. Some of them do not want to make progress on this, because it is all too hard. So it is the combined responsibility of state and federal ministers to get on with the job. The truth is that very little has been done over the last five years. The fact is that we are no further advanced on national energy market reform than we were when the Parer review was announced. Guess when that was? It was June 2001, along with the establishment of the Ministerial Council on Energy and the national energy market. So reports were done but no action has been taken.

The Parer review was released in December 2002. Interestingly, an audit shows that only a handful of its recommendations were ever implemented. It was August 2004 when the Productivity Commission review of the gas access regime was released. COAG now promises us a response by the end of 2006—a full 2½ years later. After Parer in 2002, it took until July 2004, with legislation introduced in mid-June 2004—at the eleventh hour—to set up the Australian Energy Regulator and the Australian Energy Market Commission. It then took another year to agree on who would head it, where it would be located and how it would interface with the ACCC. Operations did not actually commence until July 2005. I would hate to see it if they were in a hurry. Just think about the lack of activity and commitment from government to progress the implementation of the recommendations and outcomes of the Parer review. The government’s answer to the problem is to go back to June 2002 and to make the same mistakes again—a new national body, a review of the same issues and still no action or leadership. I suppose someone will do well out of it in a consultancy, but we as a community go backwards while government sits idle on fundamental energy reform.

I believe what is really needed is action and national leadership—people being pushed and prodded to actually do something. Well over a year ago, I stated—and I have said it many times since:

Internationally competitive supplies of energy are critical to Australia’s global competitiveness in a range of manufacturing and value adding industries, and while the success of the reforms of the 1990s cannot be denied, nor can the fact that much more needs to be done.

That is the challenge out of this debate. There has been some progress, but much more needs to be done. COAG, to be fair, recognised this by commissioning the Parer report, but we all appreciate that little action has been taken by government since that report.

The Parer report correctly and appropriately identified all the deficiencies in our energy markets, but barely any of its recommendations have been implemented. That is where our problem is; that is where the logjam is. It actually goes to a failure to implement the recommendations of a report that was very seriously considered not just by the private sector involved in the energy market but by the Australian community at large and, most importantly, by industry at large. They want action. It is no good just having reports if you do not proceed to implement the recommendations of those reports. This speaks for itself.

The facts show that our electricity and gas sectors remain burdened by excessive regulation, overlaps in regulatory roles, slow and cumbersome code change processes, anti-competitive marketing practices, poor market design and poor, if any, planning mechanisms. Just think of the complexity of those issues. One would have thought there was some urgency at government level to make serious progress in trying to find solutions to some of those problems. The opposition reminds the government today that it is time for the government to get moving, once and for all, on both the Parer recommendations and the Productivity Commission recommendations. I recall that my colleague and former shadow minister for resources, the member for Hunter, also said this many times during the last parliament when he had responsibility for energy, so this is not new. We have been continually standing in support of the need to do something about the recommendations embodied in the Parer report which was welcomed as a report of substance by the Australian community.

One of the biggest issues for the natural gas industry is the expansion of its markets. This is a big issue for Australia because natural gas is part of the answer to its concerns about petrol prices and supply security. You need only go out to the shopping centres today to understand the importance of this issue. People are worried about the Middle East and security of supply and they are worried about the price of oil and its impact on their household budgets. I contend that the government is out of touch with the triple whammy facing Australians around the kitchen table these days—higher interest rates and mortgage payments, industrial relations changes undermining their wages and capacity to look after their families and, we all appreciate, record high petrol prices. Action is required to see what we can do as a nation domestically with respect to this challenge.

This government, I think it is fair to say, treats tax cuts as go-away payments for motorists worried about petrol prices. It hopes with a few tax cuts that the concerns of the community about petrol prices will disappear. Everyone in the House knows that the concerns of the community about petrol prices are simply not disappearing. There is nothing in this budget to bolster Australia’s fuel supply security or to look to the long term. This is a short-term budget. I am talking about the big issues that secure our future. Where do you see any discussion of those issues either in question time or in the budget documentation and appropriation bills currently being debated in the Main Committee? There is nothing being done by the government.

The fact is that, without developing alternative fuel industries in  Australia, we will—let us be honest and clear; let us be stark about this—increasingly be hostage to supplies from the Middle East, West Africa and Russia. That is a worry to all of us. We cannot remain hostage to the Middle East, West Africa and Russia. We have to do something ourselves. Just think about the problems in Europe this year with access to Russian gas. It was actually turned off. We are sitting back thinking that we are relaxed and comfortable. I am not relaxed and comfortable about the energy debate because I do not think the government is doing enough.

I do not need to spell out the implications of that for energy security for Australia and for our economic future as a nation. Australians want to know that their government and the companies with stewardship of their resources have a plan to secure their energy supplies for the future and they want the prices to be affordable. But there is no plan and they are far from relaxed and comfortable about that.

The Howard government has failed Australians by letting the opportunity pass to create the right fiscal and regulatory environment to make gas to liquids a new industry option and a new fuel supply source for Australia. The answers are there for the Prime Minister and the Treasurer in the opposition leader’s fuels blueprint, just as they were on gas pipeline investment in Labor’s 2004 election policy. That blueprint is about a real debate on energy in Australia. It is about real, tough policy decisions and people have to start debating these decisions going to energy in Australia. If the government were serious about the gas industry and gas market reform, they would have seriously reviewed the PRRT regime, and considered special treatment of capital investment in gas to liquids fuel projects and associated gas production infrastructure. A bill about these issues will be before the House and debated in the foreseeable future. These issues are not attended to by government in that proposal.

The Commonwealth could also have faced up to some responsibility for resource related infrastructure instead of passing the buck to the states. Above all, they could have sent a clear signal to Australians that they are interested in their future fuel supply security and to the industry that this should be part of Australia’s national gas strategy. Australia’s competitors in the gas industry are way ahead of us, particularly in the Middle East where countries such as Qatar, already a formidable competitor for the Australian LNG industry, are now developing what we should be doing—gas to liquids projects to make clean transport fuels for the global market.

It is now almost five years since the government’s own gas to liquids task force highlighted the potential significance of such an industry to Australia’s economy, interestingly saying it could underwrite offshore gas supply infrastructure to bring forward the possibility of major new domestic gas pipelines to connect the national market, increase domestic gas competition and energise gas exploration. The potential benefits go beyond unlocking new resource wealth and creating new industry, more jobs and more exports; they appropriately include the opportunity for Australia to address this most pressing of problems—our transport fuel security. But, five years later, no action has been taken by the government.

There is a long list of issues that have to be attended to in the energy debate: regulation reform, the development of new opportunities and gas to liquids. I think we have to have this debate now. It has to be on the agenda and no-one can run away from it, because we have to make these decisions to guarantee security of supply and also to guarantee that we have energy at a competitive price to maintain our competitive opportunities internationally. It is for that very reason that I have moved my second reading amendment, which states:

“whilst not declining to give the bill a second reading, the House condemns the Government for:

(1)

its failure to implement energy market reform in a timely manner, including its lack of action in implementing the recommendations of the Parer Report of 2002 and the  Productivity Commission report of 2004; and

(2)

its lack of commitment to microeconomic reform and to strengthening Part IIIAA of the Trade Practices Act 1974”.

I think the second part of that second reading amendment says it all. When do you ever hear this government talking about micro-economic reform and productivity? They were the issues of the 1980s and the early 1990s; they are no longer on the agenda. As a nation, we are simply content to ride on the back of the resources boom, digging resources up and selling them overseas without taking the opportunity to secure a product innovation on research and development which guarantees Australia’s future for many decades to come. There is not always an uncertain question mark about when the resources bubble will burst. That is what we are all worried about. Yes, there is a resources boom and we are all benefiting as a nation, as reflected in the tax cuts, but where are the hard decisions about locking in productivity reform on ongoing innovation in this nation, which guarantees further training and job opportunities and a larger economic cake? I commend the second reading amendment to the House.

Mrs Bronwyn Bishop (Mackellar, Liberal Party) Share this | Link to this | Hansard source

Is the amendment seconded?

Laurie Ferguson (Reid, Australian Labor Party, Shadow Minister for Consumer Affairs) Share this | Link to this | Hansard source

I second the amendment.

Dave Tollner (Solomon, Country Liberal Party) Share this | Link to this | Hansard source

As many people in this place know, I am a very proud, loyal and outspoken Northern Territorian. People may wonder what I am doing on my feet talking about the Energy Legislation Amendment Bill 2006, an energy market reform bill, when the Northern Territory is an island with regard to energy—our electricity transmission system is stranded, we are not connected to the national grid in any particular manner and our gas is not connected to a national pipeline system. But the Northern Territory has some wonderful energy resources and assets. Many people in this place will be aware of the abundance of natural gas in the Timor Sea and the Bonaparte Gulf. Those resources are currently being exploited through the hard work and good management of this government, which has ensured a regime which allows investors to confidently invest in those areas, which brings this energy ashore and which supplies it to world markets.

The Northern Territory is blessed not just with gas. Where I come from, Darwin, we are blessed with some wonderful tides which are between eight and 10 metres. I think there are huge opportunities for the community to harness some of the energy in those tides. I note that the work that has been occurring up in Broome—which has been so fabulously championed by the member for Kalgoorlie—is of great interest to us in the Northern Territory, where we have similar large tides. There are also the great opportunities of wind and solar energy. I know of a small company in the Northern Territory that supplies wind turbines to remote areas, some as far away as Mawson in Antarctica, and India and China. They are small wind powered generators that produce electricity for small communities at costs far more competitive than for a similar amount of energy produced by electricity after carting diesel over long distances.

It is also obvious to most people here that the Northern Territory is blessed with a wonderful abundance of uranium. Currently, all of Australia’s uranium comes either up our railway line or from the Ranger mine in Jabiru over the port of Darwin. So 100 per cent of Australia’s uranium goes over the port of Darwin. I think this also presents a wonderful opportunity for the Northern Territory to take a leading role in the upcoming nuclear debate that the Prime Minister has trumpeted. I am very keen to be involved in that debate and to put the Territory’s position very clearly on the public record.

As I say, the Northern Territory is an energy island. Our transmission system is stranded and we are not part of the national grid. Consequently, we pay much more for electricity than do people in other parts of the country. It is my view that the Northern Territory should be working towards trying to connect to the national grid both with gas and with electricity. I am aware of an exciting project that has been promoted by Powercor, a large national company that has transmission systems in Victoria and South Australia. It also has Citipower and CityLink, which has some tunnels in Sydney and Melbourne. Powercor is very interested in running a high-voltage DC powerline from Central Queensland through Mount Isa and Borroloola—the McArthur River mine site—and on to Darwin. The high-voltage DC power utilises what many in the industry call ‘superconductors’. It allows large amounts of high-voltage power to be transmitted over long distances at relatively low costs. I know that there is a business case being undertaken at the moment by Powercor and they are working towards establishing a business case and starting a full-scale feasibility study at some point this year. I think this presents great opportunities for the Northern Territory government to secure energy prices at a rate that is competitive with the rest of Australia.

Additionally, the PNG gas project, which is coming in through North Queensland and has a spur line out to the west connecting with Nhulunbuy in the Northern Territory, also offers wonderful opportunities for the Northern  Territory. It allows the Northern Territory to connect to the national gas grid and at the same time it allows Alcan at Nhulunbuy to access very cheap gas. I would like to hear talk of this pipeline being extended to Darwin so as to create a competitive market system in the Darwin area that, in conjunction with the high-voltage DC power line, would create an environment of competition in the Northern Territory. That would assist in driving down energy prices.

I was interested to see the amendment that the honourable member for Batman, the shadow resources spokesman, has moved. It was probably the best that he could manage. He says that the Prime Minister has not spoken loudly enough about this. He acknowledges that some of the hold-up in this legislation is due to the sabotage conducted by state energy ministers. If this is the best objection that Labor can come up with, I think it is pretty poor. It just shows that its ideas are moribund.

The Howard government continues to ensure that Australians enjoy the benefits of a strong economy. A secure, reliable and affordable energy supply is fundamental to Australia’s economic wellbeing. It is, therefore, of serious importance that the energy framework governing our energy sector is sound. Natural gas has an important role to play in our nation’s energy mix, helping to build the security and diversity of our energy supply while also providing important advantages in reducing greenhouse gas emissions. This government recognises that greenfield pipelines are needed to meet Australia’s increased demands for natural gas. However, market participants must be given incentives to invest in greenfield pipelines.

Two specific incentives have been designed to encourage investment in the area. The first incentive allows the provider of a proposed pipeline to seek an exemption from regulation under the gas access regime for the pipeline’s first 15 years of operation. This incentive removes the threat of the regulator intervening to impose third party access provisions, including price regulations, on a new pipeline. The second incentive allows the provider to seek an exemption from price regulation for a proposed international transmission pipeline which will deliver foreign gas to Australia. The key driver for this second incentive is the importance of securing Australia’s long-term energy security needs. The greenfield incentives will cut the regulatory burden for new gas pipelines, making Australia’s energy market a more attractive place in which to invest. This will stimulate investment and make sure Australia’s gas infrastructure can grow to meet our rising energy demand. The member for Groom, and Minister for Industry, Tourism and Resources, said last week in an article in the Australian Financial Review:

These ‘greenfields incentives’ are about cutting the regulatory burden, to make Australia’s energy market a more attractive place in which to invest.

It is absolutely critical that investors can get regulatory certainty, in a clear but light-handed fashion, and these changes will go a long way towards helping projects such as the PNG gas pipeline proposal get off the ground.

The minister is right. Being from the Northern Territory, where electricity is the most expensive in the country and demand for greater supply is growing rapidly, I certainly see it as important that such projects as the PNG gas pipeline get up and running in earnest very quickly. The government’s proposed incentives will work. Even the shadow resources spokesman, the member for Batman, from the Labor Party, agrees that this bill is a step in the right direction.  He said a little while ago, ‘This is welcomed and supported by the opposition’. Good on him!

The Managing Director of AGL, Mr Paul Anthony, said in a press release on 9 May that these measures provided a ‘significant step in the development of the proposed PNG to Australia pipeline’. I congratulate our industry minister on introducing this bill. This is precisely the reaction from investors that the government is looking for to the incentives that this bill provides. Mr Anthony said:

The policy leadership of the Federal Industry and Resources Minister as well as all State Energy Ministers in reaching this important decision will create long term national benefits for both Australia and PNG.

The announcement facilitates the setting of tariffs on the Australian component of the pipeline through commercial forces for the first 15 years of the pipeline’s operations rather than by a regulatory process.

All buyers of PNG gas will benefit from the arrangements requiring the pipeline to provide open access and non-discriminatory pricing. This underpins the ability of PNG gas to provide an alternative source of competitively priced energy to growth markets in Queensland and the Northern Territory as well as the established markets of NSW, Victoria and South Australia.

The PNG gas pipeline project includes a proposal to deliver gas to Alcan’s alumina refinery at Nhulunbuy in the Northern Territory. The refinery is currently undergoing an expansion which will almost double its capacity and PNG gas will replace the close to one million tonnes of fuel oil the expanded refinery will consume annually. This pipeline is an important piece of infrastructure for the Northern Territory, representing a first step towards connecting the Northern Territory to the broader energy network. As I said before, I think we should look at continuing this pipeline through to Darwin. The Northern Territory government should be talking to the proponents of the PNG gas to see how that can happen.

Another positive reaction to the legislation came from the Chief Executive of the Australian Pipeline Industry Association, Cheryl Cartwright. She also says that this amendment will encourage long-term investment in infrastructure. Again, this shows that this bill is a step in the right direction to meeting the demands of increased energy consumption in this country.

Further, this government intends to provide a framework of support for the supply of gas to Australia, especially as gas demands increase considerably. I would, therefore, like to re-emphasise the following three points. Firstly, if the PNG gas project goes ahead it will see large volumes of gas at a competitive price into the national markets for expansion of our economy, obviously keeping pressure on lower energy prices, which will lower inflation and the CPI; therefore, there will be less pressure on interest rates and, as a result, a better economy. Secondly, a greenfield policy allows certainty for large complex gas projects to have regulation certainty for the life of the project. Companies need certainty to ensure that projects are economic and that they will not be changed in the future. Thirdly, a greenfield policy allows the Australian Energy Regulator to regulate non-priced assets of the project.

The Howard government continues to build a framework for a stronger economy. This government acknowledges the increased demand on energy in Australia and is taking measures to ensure that these demands are met. I have been advised that, without this bill, projects like the PNG gas pipeline would probably not go ahead. We have the support of proponents of pipelines, such as AGL. We even have the support of our Labor resources spokesman, who spoke just a moment ago. Obviously, this is a step in the right direction. It is also a step in the right direction towards the Northern Territory one day being part of the national grid. With people who live in my electorate and the wider Northern Territory community currently paying the highest price for electricity in this country, I am fighting hard for more competitive energy prices. I fully support this bill, and I see it as yet another step towards this government securing a stronger economy and a brighter future for the people of Australia.

Chris Hayes (Werriwa, Australian Labor Party) Share this | Link to 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.

Wilson Tuckey (O'Connor, Liberal Party) Share this | Link to this | Hansard source

The Energy Legislation Amendment Bill 2006 is important legislation that sets out to remedy a situation that has developed where investors have spent their money and been caught out by the return available to them. The classic case is the pipeline from Karratha to Bunbury in Western Australia. A man called Sir Charles Court, whom I admire above all other politicians, took a risk with Western Australian taxpayers’ money to build a pipeline from the North West Shelf to Perth and south from there and entered into a take or pay contract for the gas which ensured that the export of that wonderful and now huge Australian resource could commence. He took that risk and many a noted economist criticised him for doing so because the economics at the time did not add up. But Sir Charles Court was never a man to think only of today. Unlike many people we meet in the market and the political field today, Sir Charles always had forward vision. I was most fortunate to deal with him in respect of my local government responsibility. If you had a need for housing blocks in your small town and the state lands department said they would have a problem in doing the work, he would ask, ‘Could you and your council do it, Wilson?’ and if you said yes he would say, ‘Okay, there’s the land. Fix it.’ That is exactly what occurred in our town. Sir Charles was an amazing politician and this massive resource project, built around his initiatives, was ready and able to supply when the world discovered liquefied natural gas and, more particularly, its benefits from an environmental perspective.

It is interesting that years later his son sold that pipeline. The minister that had the job of doing it gave, in my view, a too optimistic prediction to investors as to the prices that they might be able to charge in the future. The government changed, a regulator was installed, the regulator went in the reverse direction and as a result the company concerned went broke. The pipeline is now in the possession of a different company and at this stage they are doing some upgrades to meet the demands of industries in the Perth metropolitan area. The previous speaker mentioned the pipeline that was also built from that resource project directly to Kalgoorlie and the benefits that has brought in a competitive sense to the mining industry of that region.

This legislation, put in the simplest of terms, is saying that you can apply, prior to investing your money, for a 15-year exemption from the regulator coming in and telling you what you can charge for gas. In other words, you can plan to make profits on your investments. These investments are often painted as being the property of extremely rich people. However, the investors that typically take on these very large infrastructure projects are called fund managers. Fund managers are the people who invest the money, provided each week in millions of workers’ pay packets or pay slips, from the nine per cent compulsory superannuation scheme. That money is accumulating at a huge rate. In fact, Australia is battling to find investment opportunities within our landscape for that money. So those people want to know, when they invest all those workers’ superannuation funds, that they can deliver to them an economic return on their moneys. The legislation also points out that, when people are seeking that exemption, the National Competition Council will look at the circumstances of ‘market power’: what alternatives people using this gas have in respect of energy and, consequently, if they can be held to ransom—and I do not think we want that to happen. Fundamentally, it is a decision of the Ministerial Council on Energy, which brings the states and their particular regulatory powers into this issue and of course the legislation picks up the recommendations made by the Productivity Commission in its Review of the gas access regime.

I note the fact that people can seek exemption from regulation for 15 years of operation. The first incentive in this legislation removes the threat of the regulator intervening to impose third-party access provisions, including price regulation on new pipelines. The second incentive allows a proponent to seek an exemption from price regulation for a proposed international transmission pipeline which will deliver foreign gas to Australia. The special area of note here is the Papuan pipeline coming down through Cape York. The key driver of this second incentive is the importance of securing Australia’s long-term energy security needs whilst recognising the additional complexity of international infrastructure projects. In other words, this is a piece of machinery legislation that will encourage investment in the delivery of natural gas around Australia and make it more attractive for industry and electricity generators to use it while it delivers environmental benefits. Whilst natural gas is a hydrocarbon and its use emits carbon dioxide, with the accompanying greenhouse problems, it is of course a more efficient gas to use and the carbon emissions are not as great as they are with coal use.

However, every time we deliver more gas to a consumer, or an overseas customer, we deplete those resources. I am not one to say that we should not do that, but I am one to say that, in that process, we are ignoring the potential for renewable energy resources, which could give us a perpetual source of energy. These resources are well known; nevertheless, they can be subject to considerable criticism if their application is incorrect. The classic example of that is wind power generation. We have a hang-up with wind generators, but their capacity to reliably supply energy into a grid, where you have to be able to adjust production to demand when people want it, is limited. Typically, the wind blows strongest when all the lights are out. That is not a good choice for grid power consumption.

There was a case quoted in the Australian some time ago of two wind farms in New Zealand, of I think some 150-megawatt capacity, that were experiencing 100-megawatt fluctuations in their generation output over periods of five minutes. The people who have to transmit this power were more worried when it went up than when it came down. They now have a serious problem managing that resource. There is not a wind farm in Australia that can stand alone and deliver electricity into a market—not one—for the simple reason that you would be blowing up people’s computers one minute and the lights would go out the next. That is not to say that there is not potential for how wind power generation might be utilised. I will come back to that.

The same applies to solar—photovoltaics. If you try to supply an electricity demand, other than with a very large battery bank, it does not work; and, just when you want to turn the lights on, they stop generating. I might add that, in a total sense, both of those resources are mickey mouse; they do not have the capacity to meet the huge demand for energy that exists in Australia, or for that matter any other part of the world.

In the Kimberley region of Western Australia we have a tidal resource that is totally predictable. Unlike wind, you know exactly when it is capable of generating the electricity you need. Consequently, it can be managed so that you can even out its fluctuations. There is well-known technology—some of it used, by the way, in the Snowy, where they pump water back to a higher reservoir and use it again to supply peak power demand. You can do that with the tides. The tides of the Kimberley region of Western Australia have a mean level of 11 metres, twice a day. With modern technology you harvest the tide on the way in and on the way out. You only really have to worry about neap tides. They can be adjusted in the high peak of production and stored water can fill that gap.

But each and every one of these renewable resources, which are there forever—and the tides, by the way, have the capacity to replace all the energy, of every variety, consumed in Australia; that is how big a resource it is—can be used to make hydrogen. Here we are today watching fuel prices going through the roof. I think I have informed the parliament previously that only 12 per cent of the world’s population owns a motorcar today. That is predicted, reliably, to grow to 16 per cent by 2020. But in that same period the world’s population will grow from six billion to eight billion. So we are not talking about 16 per cent of today’s population; it will be 16 per cent of a population that is 25 per cent larger than it is today. There will still be enough liquid hydrocarbons around to meet that market, but it will be so expensive to harvest, to extract from the ground or the distant oceans. You will be able to name any price you like for that fuel—if, for instance, Australia stays dedicated to that marketplace.

We have all sorts of people telling us about biofuels—you know, ‘Grow a crop.’ That will be good in the end. If we do enough of that we will be able to drive our cars wherever we like, but there will be no food in the supermarket when we get there. As for the argument that you can convert our rather sparse agricultural capacity: in the wheat debate, I keep reminding people that the United Kingdom grows more wheat than Australia. If we are going to keep converting that resource then we naturally reduce our capacity to feed ourselves or other segments of the world. If you compare the value of grain on the food consumption market, it is possible that that would also force the price of automotive fuels up substantially.

Visualise the farmer who is being told today, ‘Grow some canola.’ In parts of my electorate it would take a third of your acreage to have enough fuel to put in next year’s crop. In fact, on an acre of land a farmer could put up a major photovoltaic panel and be making hydrogen from groundwater that is causing other problems in his farming practice, and he could pump store it. The new tractor would be a very simple piece of machinery. The farmer could virtually make one himself. He would buy four hub motors, as used in a Hall pack today, to drive the wheels of the tractor, then buy separately an electrical generator pack that takes hydrogen. There are three 300-kilowatt buses running around Perth as I speak with exactly this sort of pack. The technology and the reliability of equipment are improving every day. I might add that the fuel cell that converts hydrogen back to electricity and water was first invented in 1839. That farmer could then in fact have the pack as a separate implement, which he either attaches to or puts into his tractor when he is using it, and his harvester when he uses that at a later time, and he could make all his own electricity.

For householders, CSIRO has already announced that it has developed a box about the size of a microwave oven which you can hang up in your garage and connect to either the mains or a solar panel on the roof and produce enough hydrogen daily to run a fuel cell car 150 kilometres. But what are we doing about that? It’s like three-tenths of what’s-her-name!

This parliament is talking about making it easy to get gas from one side of the country to the other—and still liquefying it by burning natural gas—when, within close proximity to most of the gas resources in Australia, there is a huge tidal resource which could be generating the electricity to liquefy the gas we sell overseas and consequently extend the resource of our gas deposits and reduce the emissions associated with that process. It does not even get a mention. Nobody wants to know about it.

I have argued in this place before, and I will argue again, that we need to use hydrogen as the fuel for our mobility here and in other parts of the world. Of course, half the energy consumed in Australia is used to turn wheels. With regard to the nuclear debate, I think our best opportunity is to use hydrogen as the fuel for mobility and keep using coal to generate base-load energy. Notwithstanding the continuing level of emissions, the problem would be diluted to the extent that you would get a 100 per cent saving using hydrogen in motor vehicles and for transport simply because it is reconverted into water. If you follow one of those buses around Perth, you will see steam coming out of the exhaust pipe. This is where Australia should be going.

Industry is getting on with this—I have visited General Motors in Detroit and I have been briefed on their progress—but what they all need is some targets. The governments of the world should be saying, ‘If you want to drive a taxi in Sydney or London, it must run on hydrogen.’ By the way, BMW has the capacity to sell you tomorrow a reciprocating motor that runs on hydrogen. All of a sudden you will have a massive clean-up and, if the fuel is created here in Australia from renewable energy, you can virtually fix the price. The only fuel of tidal power is money—and we have it running out our ears. We are buying tollways all around the world. Yet we are not investing—and there are union super funds in this category—in works of this nature. It is up to governments to say, as the Californians did years ago, that car emissions will be limited to X by a certain date, to Y by another date and so on. And it happened. Industry said in the beginning, ‘That’s impossible,’ but they met the targets. President Kennedy told the Americans they would send a man to the moon, and industry geared up and did that—and, by the way, they used hydrogen as the fuel to get there.

There is no rocket science—if I can use the pun—in any of this. School kids—and our Prime Minister, I might add—have been making hydrogen in school laboratories by electrolysis for probably 100 years. And that is the process. They call hydrogen the energy transfer agent. You put electricity into water and you create hydrogen. You deliver it to, say, Sydney, you put it into the tank of a taxi and it is reconverted into electricity and water—the hydrogen created by putting energy into water in the Kimberleys is converted into electricity and water. And it is there forever. It does not matter. The tides will be there for as long as the moon circumnavigates the earth—if the sun stops shining for my farmers to produce hydrogen on their properties, we will have other problems. These are the challenges for us in energy. I welcome this legislation. It is going to make it easier to deliver a non-renewable resource around the country, but we must seriously consider these other options now. (Time expired)

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

On past occasions, I have expressed my delight at the opportunity of following the member for O’Connor. I usually say that mischievously—because we have been known to have a stoush or two in this place—but this time I say it quite genuinely because I know that the member has a deep-seated interest in energy policy. We do not see eye to eye on every point. Sometimes he is a bit parochial in his contributions—there is nothing wrong with that; we are here to represent our constituencies—but I broadly agree with what he has said. More than anything else, he is saying Australia needs to be broad-thinking in its approach to energy policy—or, more succinctly, that Australia needs an energy policy.

Wilson Tuckey (O'Connor, Liberal Party) Share this | Link to this | Hansard source

That’s right.

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

I thank the member for O’Connor for acknowledging that point. Unfortunately, we do not have an energy policy in this country. We have an energy white paper—which I suppose the government could argue presents a guide to future directions in energy policy—but we do not have an energy policy per se. I will be interested to hear what the member for Kennedy has to say on this issue when he follows me. The member for Kennedy and I often do not agree on these issues, but at least he understands that Australia needs direction in energy policy. I am delighted that we are debating energy issues more and more in this parliament—unfortunately, it is because of necessity. When I was the Labor spokesperson in the last parliament, energy was emerging as a big issue, particularly as it relates to climate change and the challenges that poses for us. As we deal with the enormous demand from China in particular and as the world gets even more focused on climate change and alternative energy, we are talking about energy policy in this place more and more—and I could not be more pleased about that.

I thought I would make a sketch of what an energy policy is, so I jotted down four points. It is not exhaustive, of course, but I have had people ask me: ‘What is an energy policy after all?’ It is not rocket science, to pick up on the pun used by the member for O’Connor. The first point is that an energy policy plans for our future needs, including recognition that most of our energy today comes from finite resources. Our coal and our gas are not infinite sources of fuel. Of course oil is another example. That is another story, but it is certainly not an infinite source. We need to look towards alternative fuels. The member for O’Connor talked about hydrogen, and I agree absolutely that that is ultimately our goal. I do not believe the technology and the economics are there yet, but we do need to be striving towards a hydrogen based economy.

The second point in a national energy policy is that it must maximise our energy independence. This is not something we do well in this country, and we have seen the results. We see today, through higher fuel prices, what large exposure to the Middle East in particular but also to the global market can do for the independence of our economic settings here in this country. We must strive towards greater energy independence. We are now fast approaching something like 60 per cent on the importation of our oil, and would you believe we are now importing about 22 per cent of our refined petroleum. No-one would have dreamed only a decade ago that that would be the case.

Unfortunately, in this country our major oil companies are focusing not on our energy independence but on value for their shareholders. There is nothing wrong with focusing on value for their shareholders—they have a fiduciary duty to do so—but we need the government to take some control in this country, to steer the oil companies in the right direction and make them see that there is something beyond digging it up and shipping it out, whether it be coal, iron ore or, indeed, our natural gas reserves.

A theme is developing in this country. That theme, developed by the major oil companies, is that they will make Australia the LNG hub of the world by exploiting our natural reserves of gas and shipping them offshore at bargain basement prices and that they will make Qatar in the Middle East the GTL hub of the world. In other words, all the value adding will happen in the Middle East because that suits the major oil companies. That suits their corporate architecture. That suits their goals in producing value for their shareholders. We cannot allow it to keep going in that direction.

When we signed the 25-year contract with China back in about 2002—it seems an eternity ago—I was pilloried for criticising that deal. People said: ‘What are you talking about? This is the biggest trade deal Australia has ever secured.’ I criticised it because we gave it away. It was only a month or so ago that I felt vindicated—and I was not delighted; I was upset—when I read on the front page of the Australian Financial Review that someone had finally woken up to this and worked out that we had been dudded to the tune of about $7 billion over the term of that contract. The fact is that we went into a competitive market with the Indonesians, the Chinese were happy to have us in competition for that market and in the end the Chinese took both sources of gas at bargain basement prices. We are stuck with that price contract for 25 years, and that will have add-on effects for the future renewal of other contracts with other trading partners such as Japan. Japan is going to turn around and say: ‘The Chinese are getting the gas much cheaper than we are. We want a new deal as well.’

I am all for exporting LNG—don’t get me wrong—but we have to have a plan for our own use of natural gas. We have to be value adding in this country. We have to be producing diesel liquid fuels to drive our motor vehicles, for example, from our natural gas. We have to be fuelling value added industries in the more remote regions of our country. But we are doing nothing about that. We do not have a plan.

The third point I wrote down was: clean and efficient. We have to have an energy policy that allows us to consume our fossil fuels more cleanly and more efficiently. The government would claim that, through processes like the white paper and, of course, their involvement in AP6, the Asia-Pacific partnership, they are striving towards cleaner fuels. I support that as part of the mix of things we need to do to drive down our contribution to global warming, but I do not see them doing a lot on the efficiency side. I do not think they are doing anything on the efficiency side.

Peter Garrett (Kingsford Smith, Australian Labor Party, Shadow Parliamentary Secretary for Reconciliation and the Arts) Share this | Link to this | Hansard source

Yes.

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

Bob Katter (Kennedy, Independent) Share this | Link to 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)

Bob Baldwin (Paterson, Liberal Party, Parliamentary Secretary to the Minister for Industry, Tourism and Resources) Share this | Link to this | Hansard source

I would like to thank the honourable members on both sides of the House for their contributions to the debate on the Energy Legislation Amendment Bill 2006. Before I begin to sum up, I just want to say that in all the years I have been in this parliament I thought I had heard it all. But to hear the member for Kennedy state in the middle of a speech, which is recorded in Hansard, ‘Don’t quote me as saying’ defies all logic. It is recorded now, and it will perhaps be referred to and quoted at some time by someone.

We note that the member for Batman has moved an amendment. On the amendment, I make the following points. Significant progress has been made by the Ministerial Council—

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

Mr Deputy Speaker, I rise on a point of order. I claim to have been misrepresented.

Kim Wilkie (Swan, Australian Labor Party) Share this | Link to this | Hansard source

I think the member for Kennedy should raise that at the end of the parliamentary secretary’s address and not at this point in time.

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

I do not wish to waste the time of the House, but I will comment that when I say ‘not to be quoted’ it means everything else can be quoted quite safely—

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Kennedy does not have the call.

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

but if I am using a figure—

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Kennedy will resume his seat.

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

Mr Katter interjecting

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Kennedy is defying the chair. The parliamentary secretary has the call.

Bob Baldwin (Paterson, Liberal Party, Parliamentary Secretary to the Minister for Industry, Tourism and Resources) Share this | Link to this | Hansard source

As I said, significant progress has been made by the Ministerial Council on Energy in reforming Australia’s energy markets and, in particular, the establishment of the new national governance arrangements, which will get rid of a raft of inefficient state based legislation. Secondly, the Ministerial Council on Energy has already released its response to the Productivity Commission review. That response contains key policy decisions, which will be incorporated in the new national gas law and national gas rules. The Ministerial Council on Energy has announced that it intends to release an exposure draft of that legislation at the end of July. Following public consultation, the bills will be introduced into the South Australian parliament in late October or early November. I inform the House that the government looks forward to bilateral support for these important reforms.

This government demonstrated its ongoing commitment to micro-economic reform through its support for a new national reform agenda announced by COAG in February this year. As the member for Batman is well aware, these reforms are a cooperative effort with the states. If the member is so concerned with the rate of their progress, he would do well to raise these concerns with his state colleagues, considering they hold power in all states of Australia. For these reasons, the government opposes the amendment moved by the member for Batman.

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

Mr Fitzgibbon interjecting

Bob Baldwin (Paterson, Liberal Party, Parliamentary Secretary to the Minister for Industry, Tourism and Resources) Share this | Link to this | Hansard source

The member for Hunter has just interjected. I listened to his speech with great interest. He said, quite correctly, that energy is an increasing issue, particularly due to global warming. Many scientific experts agree with the prospect of global warming; others discount it. I am not a scientist, but I listen to all aspects of the argument. He also said, and I agree, that most energy comes from finite resources. It is important that governments of all persuasions obtain maximum benefit from any resource available—that it is not wasted. The member for Hunter also said that we need energy independence from other countries. That is true, and for the first time what he is admitting in essence is that fuel prices are influenced by other nations, including the cost of oil. The basis of that argument is supply and demand. But, as I said, in principle we reject the opposition amendment.

As the Minister for Industry, Tourism and Resources said when introducing this bill, a secure, reliable and affordable energy supply is of fundamental importance to Australia. For this reason, it is vital that the regulatory regime governing the nation’s energy sector is sound. The Productivity Commission’s review of the gas access regime has been a key input into the work of the Ministerial Council on Energy on natural gas and a major motivation behind the two new greenfield incentives for gas pipelines agreed to by the council.

The first incentive allows the proponent of a proposed pipeline to seek a full exemption from regulation under the gas access regime for the pipeline’s first 15 years of operation. The second incentive allows proponents to seek an exemption from price regulation for a proposed international transmission pipeline, which will deliver foreign gas to Australia. The key driver for this incentive is the importance of securing Australia’s long-term energy security needs, while recognising the additional complexity of international infrastructure projects.

These measures are another example of how this government’s collaborative approach to energy policy with the states and territories is making substantial progress towards our goal of a truly national and efficient energy market. The incentive mechanisms were included in a bill to amend the South Australian ‘lead legislation’ for the gas access regime which passed the South Australian lower house on 30 May.

The Energy Legislation Amendment Bill 2006 implements key changes to Commonwealth legislation to ensure the two greenfield gas pipeline incentives can function properly. First, they remove the possible application of regulation under part IIIA of the Trade Practices Act to a pipeline granted one of the incentives. Secondly, they ensure that the gas access regime can remain a certified effective access regime, notwithstanding the availability of these incentives. This bill is a positive signal to market participants aimed at cutting regulatory burden and encouraging investment in greenfield pipelines to help meet our rising energy demand. As I have said, I do not accept the amendment put forward by the member for Batman, but I commend the bill to the House.

Kim Wilkie (Swan, Australian Labor Party) Share this | Link to this | Hansard source

The original question was that this bill be now read a second time. To this the honourable member for Batman has moved as an amendment that all words after ‘That’ be omitted with a view to substituting other words. The question now is that the words proposed to be omitted stand part of the question.

Question agreed to.

Original question agreed to.

Bill read a second time.