Nola Marino (Forrest, Liberal Party) Share this | Link to this | Hansard source

I rise to inform the House of the crisis in my electorate of Forrest as a result of the gas explosion at Varanus Island three weeks ago. The explosion stripped 30 per cent from Western Australia’s gas supply. Over 40 per cent of Western Australia’s gas supply is used in my electorate by a diverse range of small, medium and large industries and business enterprises. These industries are being forced to secure alternative energy supplies—at a premium price that can be three to five times the normal price—to cut back their production schedules or, in extreme cases, to close their doors for the interim and stand down staff and contractors. Larger businesses have the financial capacity to pay premium prices for alternative energy supplies; however, small to medium companies are being hit hard and forced to stand down or lay off staff until supplies are restored.

A survey by the Chamber of Minerals and Energy of Western Australia indicates that the impact of the gas shortage on the resources sector in WA is severe, and critically so in Forrest. The survey identified that 25 per cent of companies do not have the capacity to substitute diesel for gas, and that 40 per cent of the companies are planning to alter staffing arrangements as a consequence of the gas shortage. The federal Minister for Resources and Energy has confirmed that the cost could run into hundreds of millions of dollars a day. Much of that loss and cost will be borne by the south-west of Western Australia, a major economic powerhouse providing significant wealth to the state and nation. Industries affected include the mining and resources sector, some in the process of expansion; support services, transport and contractors to the mining industry and manufacturing and processing companies; drycleaners; abattoirs; hotels; wineries; the Port of Bunbury and a multitude of small businesses. In fact, there will be very few businesses not affected by this crisis and some small businesses will be at risk. This economic downturn will also impact on towns, sporting clubs and service clubs. A regional impact and cost analysis for the south-west is a necessity.

Many industries have already scaled back their operations to a minimum, operating on a restricted gas supply. Businesses have cut back to a maximum of eight-hour days for permanent staff and have stood down contractors and casual staff. In practical terms, a multimillion dollar business receives notification of the next 24 hours gas supply allocation one day at a time, and this may enable the business to operate at only 10 per cent capacity. I know of businesses that have an end-to-end process that cannot operate unless the whole plant is working. They have no alternative but to shut down. In spite of the best will and intention, the process of rationing supply is adding to production costs and inefficiencies. There is also a clear need for transparency in the gas supply process. There are major processing plants that do not respond well to being shut down and restarted. One company has a kiln which takes five days to prepare for use. With only 24 hours of supply guaranteed at a time, this is not a viable commercial option.

Small businesses in the south-west are preparing for the worst, with about 700 to 800 companies attempting to retain their workforce as well as manage their commercial crisis. Employees are being asked to take annual leave, and maintenance schedules are being brought forward. And they are only short-term measures. There is no doubt that the situation will worsen over the next few weeks for both industry and workers. The effect on workers and their families, the human cost for those who are carrying debts to which they are highly committed and the stress of potentially losing jobs cannot be underestimated. The predicted two-month time frame for gas supplies to start is very optimistic and plans need to be implemented now to assist businesses, workers and the regional economy. Given the skills shortage, industry cannot afford to lose its workforce, but it is aware that workers will have to seek alternative employment. The impact on productivity will be significant if key staff are lost due to this crisis, given that it takes six months to train some new operators.

I am equally concerned about the capacity to source and transport the volumes of diesel required over an extended period. There is a further need to facilitate cooperation from gas-fired electricity providers here on the east coast to assist in fast tracking the recommissioning of the Muja power stations and Kwinana plant currently under maintenance. An industry and regional support program is urgently needed to assist businesses and affected workers through this crisis over the coming weeks. Security and continuity of gas supplies have been exposed by this incident. In this year’s federal budget there were no new measures for offshore petroleum and gas safety. This crisis reinforces the need for comprehensive risk analysis and management strategies. There is a genuine need to address the human cost pressures on individuals and families, ensuring the appropriate levels of support are provided. I call on the federal and state governments to prioritise and progress this support.