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

I rise to speak to the Prime Minister’s so-called energy statement, and I should begin by saying that this is one of those speeches that was interrupted by a two-week recess. In the absence of an opportunity to check on what I was saying when I was adjourned last time, I will do my best to pick up where I left off. What is really intriguing about this energy statement is its very title. This was presented as the Prime Minister’s response to spiralling petrol prices in this country and the burden that they were placing on families, individual motorists, business and the economy as a whole. But we saw nothing in this about petrol prices, and we saw nothing in this about energy. A real energy statement is one which first of all identifies and quantifies Australia’s present and future needs, identifies and quantifies our own domestic resources and then strives to maximise our self-sufficiency.

Energy independence is becoming critical for all nation states around the globe, and we need to work a lot harder at self-sufficiency and energy independence. A real energy statement also strives to deliver affordable energy to Australia’s consumers, whether they be householders or industry; it strives to maximise efficiency; and it strives to ensure that we consume our reserves of energy, whether they be domestically produced or imported, in the most environmentally friendly way. That is not an exhaustive list, but it gives you some idea of what I see as an energy policy and what you would expect from a Prime Minister delivering an energy statement. But we saw none of that.

We did see one thing and almost one thing alone, and that was the announcement that the government would subsidise the conversion of petrol motor vehicles to LPG, an initiative I have calculated will be of assistance to just three per cent of motorists in this country. It is not going to do anything for those who do not have the opportunity to convert, and it is not even going to deliver much benefit to those who do convert. Given your background you probably know even better than me, Mr Deputy Speaker Somlyay, that, given the simple laws of supply and demand, if you push everyone onto LPG conversions and demand outstrips supply, the price of conversions goes up. And if you push more people onto LPG—

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for Northern Australia and Indigenous Affairs) Share this | Link to this | Hansard source

Are you a member of the Country Party?

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

No, I am not going to go there, Member for Lingiari. If you push more people onto LPG then, obviously, over the medium and long term the LPG price will go up as well. This is a policy wrong in isolation and wrong in aggregate. You cannot produce a response to fuel prices and focus on one fuel alone. It is a silly public policy response that will deliver no benefit and no relief to Australian motorists.

What the Prime Minister needed to do was take a holistic and long-term approach to our fuel prices crisis, our increasing dependence on imported fuels, our increasing exposure to the whims of the Middle East and global insecurity and all the problems that that brings. But he chose not to do that. He decided to put it in the too-hard basket and do none of that.

What he should have focused on, and should have been focusing on six or seven years ago, was an eventual shift to a gas based fuels economy—an economy with a wide-ranging mix of LPG, petrol, diesel, CNG, ethanol and biodiesel—and a commitment to converting our abundant reserves and natural gas into liquid diesel fuels. That is something capable of being done today using current technology and it is economically viable while ever the price of oil is $US25 per barrel. Of course, at the moment it is around $US70 and, in recent times, it has been as high as $US75.

It is capable of being done. All we need in this country is some encouragement from the major oil companies. They do not seem willing to go down this path and it is up to this government to push them in that direction by both carrot and stick. By ‘carrot’ I mean the financial incentives to do so, and by ‘stick’ I mean adjusting the regulatory regime to stop oil companies sitting on warehousing and sequencing gas projects to suit their bottom line rather than the national interest.

Another issue surrounding this LPG policy which has been of great interest to me is the extent to which the government is advertising this scheme. Today, all things being well, hopefully there will appear on the Notice Paper some questions from me on this issue. This government is spending millions of dollars advertising a subsidy scheme for which demand will dramatically outstrip supply. Given the media coverage this scheme has had, I doubt that there is a motorist in this country who was not already aware two days after the prime ministerial statement was issued that this subsidy was available, yet we see all this advertising—which costs literally millions of dollars—not just in the Australian Financial Review and the Australian and the other majors but in every regional newspaper I have seen across the breadth of this country in recent weeks. Every newspaper has contained advertisements, costing probably tens of millions of dollars, promoting a flawed scheme which will reach just three per cent of motor vehicles—in other words, which will produce a situation where demand will outstrip supply.

What is the government’s motivation in advertising this scheme so extensively? It is simple. This is a subliminal message. This is an attempt at sending a message to the Australian electorate that the government is doing something about petrol prices in this country by delivering this subsidy scheme. But, as I said, this scheme will do nothing for the 97 per cent of motorists who will not have the opportunity to convert to LPG as a result of this initiative.

It is a disgrace that so much money is being wasted on a scheme already well known and a scheme which most motorists will not have access to anyway. There is no common-sense explanation, other than the one I have given about the political perspective, as to why the government would spend that sort of money advertising a scheme only capable, given the funding that has been directed to it, of reaching three per cent of motor vehicles.

So our challenge to the government is to go back and start again. Our challenge to the Prime Minister is to come back into the parliament and have another go, this time not trying to divert attention by fancy names for the statement but to say, ‘I’m here today to deliver some short-term, medium-term and long-term relief to all those people, all those families and all those businesses, including agricultural businesses, who are suffering under the weight of higher petrol prices.’ His priorities should be, firstly, a regulatory regime that keeps the major oil companies, the wholesalers, the distributors and the retailers honest and stops excessive profiteering. We have shown the way for that process. The Prime Minister has refused to go down that path. His second priority should be a proper policy which goes across the diversity of fuel mixes. In the medium to long term, he should seriously look at our energy dependence or, more importantly, our energy independence and start to get serious about converting the enormous reserves of natural gas we have in this country into liquid diesel fuels.

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for Northern Australia and Indigenous Affairs) Share this | Link to this | Hansard source

What an erudite performance from a bloke who did not even read the speech he got interrupted from delivering in the last sitting period.

Craig Emerson (Rankin, Australian Labor Party) Share this | Link to this | Hansard source

And he wasn’t listening at the time!

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for Northern Australia and Indigenous Affairs) Share this | Link to this | Hansard source

He was not listening at the time and he cannot recall a thing he said. That can hardly be true. Mr Deputy Speaker Somlyay, I understand you do understand the laws of supply and demand well and that is why you are in the seat that you are in. You understood well enough the politics of that seat to join the party you are involved in. I am not sure you always believed in them, but nevertheless you are there. You would have been welcome with us, but you have taken another course.

Craig Emerson (Rankin, Australian Labor Party) Share this | Link to this | Hansard source

It’s not too late, Alex.

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for Northern Australia and Indigenous Affairs) Share this | Link to this | Hansard source

It is never too late to change, my friend, and you are always welcome.

Alex Somlyay (Fairfax, Liberal Party) Share this | Link to this | Hansard source

Order! That is a reflection on me, not on the chair.

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for Northern Australia and Indigenous Affairs) Share this | Link to this | Hansard source

Seriously, I note the contribution made by my colleague. As he rightly pointed out, there is nothing in the Prime Minister’s statement about petrol prices, something which I have railed against in this parliament on many occasions. Indeed, as late as the last sitting fortnight we had a debate on a separate issue from the energy policy paper on fuel and I made a number of what I think were quite salient points about that, particularly the impact of fuel prices on people living in rural and remote Australia and, most particularly, the impact of the effect of a tax on a tax, the GST, and how it disproportionately impacts on people who live in the bush and pay the highest price for fuel and therefore pay a higher proportion of their fuel price in GST. That is something that I think this parliament needs to address. I know I have spoken to my colleague about this. He does not accept this argument, by the way, and a lot of people do not. But I think there is a way to deal with this, and that is to cap the GST at the average of capital city prices so that people all over Australia pay the same GST on fuel and people in the bush are not disadvantaged because of where they live. I think it is an entirely appropriate course to follow, and I commend others involved in this debate to take it up. I also argue—and, again, my colleague probably does not agree with me but nevertheless it is something I am very concerned about—

Craig Emerson (Rankin, Australian Labor Party) Share this | Link to this | Hansard source

I’ll seek a personal explanation, Mr Deputy Speaker.

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for Northern Australia and Indigenous Affairs) Share this | Link to this | Hansard source

He may do; he is like that. It is something that I know has exercised the minds of others, and I know it has exercised his mind as we have discussed it previously—that is, the question of doing something more about tax zone rebates to ensure that people who are disadvantaged because of cost differentials and their geographic location have those issues addressed properly by the parliament. At the moment they are not. From memory, I think the last time the tax zone rebates were changed was in 1992. There has been no change since and so the value of that tax zone rebate has diminished quite substantially.

I am not going to canvass all of the arguments made by others in this debate. What I want to do in the first instance, though, is to remind the chamber that this is a complex discussion. The member for Hunter was absolutely correct in saying that there is a need for a comprehensive energy paper that addresses all aspects of energy, including alternate sources of energy, and that there is a need for more efficient energy use.

I want to give two examples of activity in my own electorate which I think provide an insight into what can be done. If I get time, I will pick up on the issue of gas to liquids because I think that, in the context of bringing down our dependence on foreign oil, the gas-to-liquids proposals have significant benefit. The Northern Territory itself and the coast off the Northern Territory could make a significant contribution to the provision—

Opposition Members:

Opposition members interjecting—

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for Northern Australia and Indigenous Affairs) Share this | Link to this | Hansard source

that is exactly right—of gas for gas-to-liquid projects, as would the offshore areas in Western Australia.

I want to talk briefly about a project which involves the Cocos Islands. I know you are aware of the Cocos Islands, Mr Deputy Speaker Somlyay, because of a previous executive function you filled within the government. I am sad that you are not still there, to be truthful, but nevertheless I do not have a vote in your caucus!

Craig Emerson (Rankin, Australian Labor Party) Share this | Link to this | Hansard source

He could have a vote now.

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for Northern Australia and Indigenous Affairs) Share this | Link to this | Hansard source

But you could have a vote now. It is very easy; you just have to jump the fence! As you would know, Mr Deputy Speaker, Home Island is part of the Cocos group, and Cocos is around 3½ thousand kilometres north-west of Perth and around the same distance, roughly—or a little further—from Darwin. Approximately 480 people live on the island.

A Darwin based company, Powercorp, was responsible for installing a new power station on the island. What is significant about this is the nature of the power station and the systems that were used. The system comprises a 1.28 megawatt diesel fuel generator and an 80 kilowatt wind farm which work together. Powercorp developed a number of technologies to enable better utilisation of wind plants in wind diesel systems. Traditionally, wind power has contributed small amounts of power to these systems, with little or no adverse effect. It is when the level of contribution increases that the power fluctuation generated by the wind plant causes unacceptable instability and, therefore, reliability. Battery systems and controls have been unsuccessful in solving the problem. It was not until Powercorp began its intense research at the Denham test site that the real nature of the problem was uncovered. Short-term power fluctuations—up to 80 per cent of rated power loss over two to three seconds and recovery to full power, for example—were recognised as the cause of instability. If you could solve this problem, you could get wind penetration rates of over 90 per cent; they are certainly possible.

Powercorp began with its Dynamic Grid Interface and inverter system designed to very rapidly sink energy into discretionary loads such as boilers for space heating. The secret here was the high-speed control which differentiates the technology from load dump systems. The progression was to develop its Low Load Diesel system from which long-term energy support could be drawn. The ultimate solution is to use PowerStore to provide grid stabilisation. The selection of which PowerStore product is best for the site is based on the configuration, size and load profile of the site. Powercorp engineers model the system and advise which system is best.

Powercorp is a company which was formed in 1988 in Darwin to automate the wide variety of diesel generator power stations in the Northern Territory and Northern Australia for the Power and Water Corporation. This program encompassed some 60 communities, and work was extended throughout Australia. Now they operate internationally.

With the success of the automation program came the need to integrate renewable energy for fuel saving. This work, and the demand-side management capability—you will recall those words again, Mr Deputy Speaker: demand, supply; in this case we are talking about the demand-side management—of the control system led to advanced wind diesel systems in Western Australia for Western Power Corporation. After winning a Renewable Energy Showcase grant from the federal government, Powercorp pioneered high-penetration wind diesel systems through the late 1990s.

The chief problem facing wind diesel systems—and, indeed, any renewable energy fuel-saving technology when connected to isolated grids—is the instability caused, as I said earlier, by power surging. Such surges and frequent losses of power can be caused by wind gusts and lulls, or cloud cover in the case of solar systems. It is not possible for conventional generators to cope with these power instability issues, and blackouts usually result. Even when the wind flow is low, the fluctuations in wind speed can cause an unacceptable generator response called ‘hunting’, which uses more fuel and can cause engine damage.

This grid instability issue is seen in many small grids and at the end of long distribution lines. In the mining sector, large electrical equipment such as winders and crushers can cause power fluctuations much the same as those seen in a renewable plant. PowerStore, the company’s flywheel inverter system, can absorb and deliver power very quickly, to dampen all instability and maintain the grid specifications to utility standards. It is important that we understand the significance of this. Powercorp has developed expertise in inverter technology, specialising in high-speed bidirectional control to solve the grid’s instability problem. With these solutions now a commercial reality—and this is very important—Powercorp stands to be the most advanced high-penetration renewable energy company in the world. This is just a small company based in Darwin. Its work has expanded to encompass mine sites and industrial complexes.

It is worth pointing out where Powercorp’s projects are. It has projects in the Cocos Islands, Hopetoun in Western Australia, Denham in Western Australia, Bremer Bay in Western Australia, Leinster in the goldfields, Mount Mueller in Western Australia, Albany in Western Australia and Windy Hill in Queensland. It has a manufacturing base in Darwin and Low Load Diesel sites at Bremer Bay, the Cocos Islands and Rottnest Island. It is responsible for 36 automated power stations in the Northern Territory and operates in Malaysia, Alaska, Antarctica and the coast of Portugal. This company is doing something that we all ought to applaud—that is, providing us with the capacity to use alternative energy sources in conjunction with more conventional energy sources. I think it is worth while pointing out that Alan Langworthy, who I think was a geologist, is the managing director of this company and his head of research and development is Juergen Zimmermann. These people are innovators and should be recognised for the work they do.

The second project I want to talk about in some minor detail is a small one called the Alice Springs Cool Living House. The reason I want to raise this is that it shows just how we can address energy issues at home. The cool living house was built in 1974 as a conventional housing commission home. It was rented to tenants until 1999 and then sold to private owners Simon Murphy and Margaret Carew. They did substantial renovations, and they used mechanisms in house design and product use to conserve energy. They were able to substantially reduce their reliance on energy to such an extent that in 2003 the energy and water bills were $1,258 less than for an average house. These are quite substantial savings, and it is important that we note that this sort of innovation can be done with technologies that are currently available. These are the sorts of things we should be promoting throughout the community.

This requires a bit of thinking outside the square but it says to us that, whilst we have on us all these pressures about the use of energy and the high costs associated with that, we should use the innovation strengths that currently exist in our community. We should use the design parameters that people have been able to establish for making houses cooler in summer and warmer in winter and we should make better use of water. You can do those things within a domestic environment and provide substantial savings in not only energy use but also, as in the case of this house in Alice Springs, water use. When the Prime Minister made his energy statement, these among others are the sorts of things he should have been talking about.

I know that the Leader of the Opposition and the shadow minister responsible for this area, the member for Batman, Martin Ferguson, have talked extensively about how we might decrease our dependence on overseas oil. I want to briefly mention the work that is being undertaken in the Northern Territory and the potential capacity for the Northern Territory to provide substantial gas and oil resources to the Australian community. In 2005 there were two record oil and gas discoveries off the Northern Territory. These are important. Phillips built a huge LNG plant, which was commissioned, in Darwin in 2006. That plant has the capacity to do a great deal more than it does currently, but we have seen the extensive exploration capacity that has been promoted in the northern waters. Ultimately, with the investment being made by the private sector, there is the capacity for the Australian community to benefit quite substantially.

I do want to mention one recent agreement—which has been signed, as I understand it—and that is an arrangement between the Power and Water Corporation of the Northern Territory and ENI, an Italian company, for the development of the Blacktip gas field. That is located in the Permian Keyling formation of sandstone in the south-eastern Bonaparte Basin. What that will do is provide substantial gas inputs into the Northern Territory grid and potentially great savings for the Northern Territory community. I say to the Prime Minister: you need to do something far broader and far better if you are to have a satisfying, real discussion on Australia’s energy needs.

Debate (on motion by Mr Cameron Thompson) adjourned.