Ian Macfarlane (Groom, Liberal Party, Shadow Minister for Trade) Share this | Link to this | Hansard source

I am pleased to rise today to speak on the Australian Energy Market Amendment (Minor Amendments) Bill 2008, as it is a bill that was prepared by me in the previous government. Energy market reform is a key area in terms of not only future investment but also ensuring that the market provides confidence for those investments that will need to be made. This bill will make minor amendments to the existing Commonwealth legislation that underpins the national regime for the regulation of gas pipeline infrastructure. Specifically, the bill will amend the Australian Energy Market Act 2004, the Australian Energy Market Amendment (Gas Legislation) Act 2007, the Administrative Decisions (Judicial Review) Act 1977—the AD(JR) Act—and the Trade Practices Act 1974, or TPA, to correct the year of enactment of South Australian and Western Australian legislation from 2007 to 2008. Can I just say in regard to that that, whilst the delay in the enactment of that state legislation is disappointing, it should not be seen in any way as a lack of commitment by those states to this important reform and to energy market reform as a whole.

The new legislative regime will apply to the National Gas Law and the National Gas Rules in all participating jurisdictions to create a harmonised national gas access regime. The Commonwealth and all states and territories, with the exception of Western Australia, have agreed to introduce legislation known as the applications act to apply to the National Gas Law as law in their own jurisdictions. Western Australia will pass complementary legislation to give effect to the NGL. The Commonwealth applications act is the Australian Energy Market Act 2004, the AEM Act. It was amended in 2007 to apply, among other things, the National Gas Law in the Commonwealth’s offshore jurisdiction through reference to the anticipated South Australian and Western Australian legislation. The South Australian lead legislation implementing the NGL, and the WA complementary legislation, will be passed in 2008 rather than 2007.

The Ministerial Council on Energy has, in the main, worked cooperatively and effectively since it was established by the coalition government in 2001. There are always a number of issues to be thrashed out when bringing together ministers from different states and, on occasions, of different political persuasions. I am referring here not just to the Liberal-Labor divide or the parochialism of states and territories but, rather, to the personalities involved. Over the time that I chaired the MCE—some six years, with each meeting an interesting experience, to say the least—it is fair to say that there was an eclectic mix of personalities round the table. The first few meetings probably took the cake. One would wonder how, from those first meetings, we ever succeeded to take this issue so far so successfully. We saw a commitment from the ministers involved—perhaps with one exception; I do not think Kim Yeadon ever saw it as anything other than an opportunity to score points, firstly, off the Commonwealth and then off his Labor colleagues. I would probably suggest that without his confrontationist attitude energy market reform may have got off to a better start. Kim aside, I think every minister who came to that table came, yes, with state interests in mind but certainly with a view that energy market reform is something that needs to be pursued, and that, as we see from this legislation, is continuing to make progress.

I must take this opportunity to lament the highly politicised nature of energy market reform in New South Wales. I guess it comes from that state not making some hard decisions earlier on. But I do hope that the reform in that state continues, because if it does not the sort of investment we need to see in the energy industry—not only in New South Wales but in Queensland, Victoria and of course right around Australia—will simply not happen. There is no role for government in the ownership and operation of energy assets. That is a thing of the last century. That is a way of operation when there is market failure. Energy market reform is a critical factor in ensuring that Australia provides a sound economic environment for companies and corporations to make investments in energy that will not only enable them to make a return but also, of course, see the investments made in such a way that we will have the energy security that we need in the future.

There is probably no better time to talk about energy security than now, when we see the disaster that has beset Western Australia. In the main, it was due to an accident, but I am not going to delve into the wheres and whys of that. But it does highlight a couple of issues. It highlights, firstly, that Western Australia has allowed, through this current Carpenter government, a situation to arise where it has no alternative supplies of domestic gas. The way you encourage supplies of domestic gas is the same way you encourage alternative sources of electricity or power stations—that is, you allow the market to work. You allow the price to reflect demand and, in the case of gas, you allow the price to reflect the world price. Interference in that market by the Carpenter government has certainly caused a lack of investment in domestic gas supply in Western Australia in the last three years, and there are lessons to be learned from that by the federal government.

This current proposal of the Minister for the Environment to interfere in the normal commercial development of gas fields insisting that there be only one gas hub in the northern Western Australian Kimberley region again puts in danger the commercial and normal development of energy resources in Australia. I urge the government to take stock of that position and realise that, wherever government has interfered in the energy market, whether it was in the 20th century or now in the 21st century, disaster has inevitably followed. There are bad investment decisions and there is the requirement for taxpayers to pick up the tab. This is certainly an area which, if left to its own means, can make the right decisions to ensure that Australia has the right energy solutions. Energy market reform is very much a part of that.

The ministerial council, as I said, was focused, over the six years that I chaired it—and I understand under the current Minister for Resources and Energy it has continued along that path—on developing a framework for an efficient and effective national energy market in Australia. I say in conclusion that the opposition will be cooperating with the government to assist in strengthening the energy market program under the ministerial council and delivering the economic gains that are available from such reforms. Without those reforms, the energy market in Australia and the infrastructure and investment we need to sustain it will simply not happen.

Kelvin Thomson (Wills, Australian Labor Party) Share this | Link to this | Hansard source

The Australian Energy Market Amendment (Minor Amendments) Bill 2008 before the committee is one element of the National Gas Law. The National Gas Law is a significant piece of cooperative economic reform that will bring the economic regulation of gas transmission and distribution pipelines under the national energy market governance arrangements. It also implements reforms contained in the Ministerial Council on Energy’s response to a 2004 Productivity Commission review of the gas access regime. The National Gas Law will reduce the regulatory burden on industry, improve service provider certainty and protect the long-term interests of consumers by introducing a new light-handed form of regulation that regulators may apply by empowering the Australian Energy Regulator, as the national regulator for gas access, to improve the consistency of regulatory decision making by allowing for merits review by the Australian Competition Tribunal of key regulatory decisions, by introducing strict requirements for timely regulatory decisions and by increasing information transparency. It will also maintain greenfields incentives for new pipelines, incentives which were established by the Ministerial Council on Energy in June 2006.

The Ministerial Council on Energy is seeking to achieve a truly national gas access regime by enacting the National Gas Law by 1 July this year. So that the National Gas Law can correctly commence at that time, it is necessary for this bill to be passed in the winter sitting. I note that at the last Ministerial Council on Energy meeting the Minister for Resources and Energy strongly emphasised the need for the reform program to proceed expeditiously. Since that meeting we can see that the government has made significant progress on energy market reform. The National Gas Law is before the South Australian parliament—I think passage is expected in coming days—and this will see gas pipelines brought under national regulatory arrangements, improving the climate for investment in the sector.

The government is also well into the process of establishing the Australian Energy Market Operator with responsibility for electricity and gas. This Labor government recognises that energy security is paramount to the continued wellbeing of all Australians. The government is putting in place arrangements that will guide the strategic decisions we need to make and prepare us for threats to our energy security. It is also clear that adequate, reliable and affordable provision of energy requires vigilance against threats. While appropriately focused investment will improve energy system resilience, we also need to manage the implications of accidental, environmental or intentional disruptions.

At the start of this week I had the opportunity, along with the minister and others, to receive a briefing from the Shell company concerning energy futures. The material that they put forward was very challenging. I will just point out to the House a couple of extracts from their publication Shell energy scenarios to 2050. In the foreword it states:

Never before has humanity faced such a challenging outlook for energy and the planet. This can be summed up in five words: “more energy, less carbon dioxide”.

And, in the introduction:

How can I prepare for, or even shape, the dramatic developments in the global energy system that will emerge in the coming years?

This question should be on the mind of every responsible leader in government, business and civil society. It should be a concern of every citizen.

Shell’s analysis is essentially that the world can no longer avoid three hard truths about energy supply and demand. The background, as they point out, is that the world population has more than doubled since 1950—it has more than doubled in my lifetime—and is set to increase by 40 per cent by 2050. The Shell publication continues:

History has shown that as people become richer they use more energy. Population and GDP will grow strongly in non-OECD countries and China and India are just starting their journey on the energy ladder.

The three hard truths are: firstly, a dramatic change, a step-change, in energy use. The Shell publication states:

Developing nations—

such as China and India—

are entering their most energy-intensive phase of economic growth as they industrialise, build infrastructure, and increase their use of transportation.

So we have demand going up. Secondly, supply will struggle to keep pace. Shell states:

By 2015, growth in the production of easily accessible oil and gas will not match the projected rate of demand growth. While abundant coal exists in many parts of the world, transportation difficulties and environmental degradation ultimately pose limits to its growth. Meanwhile, alternative energy sources such as biofuels may become a more significant part of the energy mix—but there is no “silver bullet” that will completely resolve supply-demand tensions.

The third point they make—the third hard truth—is that environmental stresses are increasing. They say:

Even if it were possible for fossil fuels to maintain their current share of the energy mix and respond to increase demand, C02 emissions would then be on a pathway that could severely threaten human well-being. Even with the moderation of fossil fuel use and effective C02 management, the path forward is still highly challenging, remaining within desirable levels of C02 concentration in the atmosphere will become increasingly difficult.

The issue confronting us all, and Shell posed this for those of us who are policymakers, is how we meet such a monumental challenge. I want to encourage the government to put energy and endeavour into the issue of feed-in tariffs. We have been having a bit of a discussion this morning about the gas explosion in Western Australia and the security challenges that that encompasses. One of the things that I think is necessary for us in terms of our being able to secure energy supplies in the future is greater production by distributed energy as opposed to centralised energy arrangements, which are more vulnerable to attack or to breakdown.

One of the elements coming out of the Ministerial Council on Energy is the issue of smart meter rollout. The Ministerial Council on Energy has made available a cost-benefit analysis and regulatory impact statement for smart meter rollout. They are available for public comment. A communique from the Ministerial Council on Energy, which was held on 13 June—so, very recently—said:

Ministers are committed to development of a consistent national framework for smart meters in the National Electricity Market, supporting distributors to be responsible for the rollout of smart meters. Ministers noted there continue to be some uncertainties about the costs and benefits of smart meters in some jurisdictions and that different staged approaches are being taken to support the further development of smart meters. Smart meters are to be rolled out in Victoria and NSW, with over five million smart meters expected to be deployed before 2017. Queensland and some other states and territories will undertake extensive pilots and business cases prior to a further national review of deployment timelines in 2012.

So that is the background. This bill is about energy market security. I think the recent Western Australian explosion should be concentrating our minds on this issue.

In relation to my view that there needs to be greater consideration given to the idea of feed-in tariffs, let me point out to the House that present non-renewable power producers are being subsidised by society and the environment, which is paying the costs of global warming via drought and other extreme weather events. Feed-in tariffs can reflect the real cost of carbon. They can be based on either so-called avoided costs of non-renewable power producers or the electricity price charged to the end user, supplemented by a bonus or a premium in order to account for the social or environmental benefits of renewable energy.

The intention is to encourage individual homes, factories and building sites to become mini power plants, meeting their own power needs through the production of renewable energy which does not emit global warming emissions. The vision I have is of communities where energy production is distributed rather than centralised and is therefore genuinely sustainable indefinitely. Renewable energy targets are important. They encourage large investments in renewable energy by companies, but they do not encourage localised distributed energy systems in the way a feed-in tariff does.

A study of the summer, peaking electricity systems of California noted that power from PVs is produced disproportionately, at times when the value of electricity is high. Evaluation of solar PV electricity production that uses only the average wholesale cost of electricity will tend to undervalue the power, so the benefits to the owners of solar PV in reduced electricity bills do not reflect the true, time-varying value of the power that the panels produce. I think that a feed-in tariff will build community awareness. It will answer the question so many families ask: what can I do? It will drive the cost of solar PV down. Solar PV generates power when it is most needed. It evens out the power load, it reduces the extreme peaks of the hot summers, and PV output over summer peak load weeks has been shown to correspond well to system load at regional nodes in Victoria, South Australia and New South Wales.

Solar PV also avoids transmission losses and avoids the need for poles and wires infrastructure. There is, for example, information from the Electricity Supply Association that $24 billion of electricity network and generation infrastructure is required to meet Australia’s growing power needs over the next five years. Anything we can do to reduce the need for that infrastructure is clearly worth while. Infrastructure costs are being driven by the need to meet demand peaks. In that respect, I think a lot of the talk about the need for baseload electricity is misleading. We need to provide economically rational signals to customers, and sometimes this does not happen.

The Queensland government estimates that, for every air conditioner installed, the electricity industry has to spend an extra $13,000 on more poles and wires to manage the load. Clearly, we can do better than that. It is also something that generates jobs. Ten years ago Germany had a solar PV industry of a similar scale to Australia’s. Now Germany has an industry of 110,000 jobs, generating 15,000 megawatts of solar PV power. Australia has fallen behind. It is estimated that in 2005 the solar PV industry here was responsible for just 1,300 jobs. So there is plenty that we can do in this area to do better than we have been doing in the past.

There are design issues, of course. There is the question of price, the question of duration, the question of means of metering and the question of degression rate. I commend to the House some of the work that has been done by organisations like the Moreland Energy Foundation in my own electorate and by BP Solar in New South Wales. In the ACT we have a private member’s bill from Mick Gentleman, and indeed the states have been looking at various arrangements in relation to feed-in tariffs. I think one of the things needed and one of the things that the government recognises is that there is a need for a national system, rather than different states going in different directions. But if we are to provide energy security in future, if we are to meet challenges like the gas explosion which has occurred in Western Australia, if we are to seriously tackle greenhouse gas emissions and climate change, then things like feed-in tariffs and encouraging people to meet their own electricity through the production of distributed energy are very important. I commend the bill to the House.

Luke Hartsuyker (Cowper, National Party, Deputy Leader of Opposition Business in the House) Share this | Link to this | Hansard source

Certainly the Australian Energy Market Amendment (Minor Amendments) Bill 2008 has been brought into clear focus by the events that have occurred in Western Australia. These events show quite clearly how dependent any modern nation is on energy, how fragile our energy supply can be and the potential for knock-on effects throughout the entire economy.

In Australia we spend around $50 billion a year on energy. Our energy exports are worth some $24 billion per annum. These figures take into account coal, oil, natural gas, electricity, renewables and other forms of energy. As a society we require ever-increasing amounts of energy to maintain our high quality of life. By 2020, domestic demand for energy is expected to increase by some 50 per cent.

In 2002, a report entitled Towards a truly national and efficient energy market was handed down to the COAG Ministerial Council on Energy. The report found that Australia’s energy markets could benefit from greater national consistency of governance and regulation. The ministers agreed that further reform to the sector would lead to greater investment in Australian energy needs by lowering the cost and complexity of regulation and by providing investors with greater certainty about regulation. The council also found that reforming the energy system would lead to greater competition between providers and would encourage the further development of natural gas and renewable energy sources. It was envisaged that the proposed reforms would also help to address the issue of greenhouse gas emissions from the energy sector.

To replace the variety of governing bodies and regulators that control Australia’s energy markets, two new statutory bodies were created. The Australian Energy Market Commission has the responsibility for rule making and market development. The Australian Energy Regulator, or AER, has the responsibility for market regulation. The AER is a constituent part of the ACCC but operates as a separate legal entity.

Initially, the reforms were applied to the national electricity market, but they are now being expanded to include national gas infrastructure. The latest round of reforms will bring gas access regulation into line with the regulation of the electricity sector. As a part of the reforms to the gas access regime, the industry has put forward a proposal for a bulletin board that will provide information about gas services and assist in response to emergencies—a very timely notion at this point in our history. The bulletin board will be an important step in creating greater transparency within the market.

These reforms have been planned with the cooperation of the energy sector, the state governments and the Commonwealth, and advice and input have been received from the ACCC and the Productivity Commission. These changes have not been advanced without detailed and careful consideration, and I believe they will make a difference to Australia’s energy future. As we move towards a carbon constrained economy, gas will play a vital role in the provision of our energy needs. The Australian energy market reform process will provide incentives for investment in this important area. Companies will benefit from a light-handed regulatory system, regulatory certainty and improvements to the rules around cost recovery for investment in expanding existing gas infrastructure capacity.

Although the reform process will be of benefit to the companies involved, I should note that the Rudd government has taken steps to discourage investment and exploration in Australia’s gas fields by introducing an excise on condensate. Condensate is created as a result of pressure and temperature changes brought about by the pumping of natural gas from a gas field. Gas reserves are generally more profitable if they contain a mix of gas and condensate. The Howard government worked hard to secure an additional 2.5 million square kilometres of seabed for oil and gas exploration, and this tax grab by the Rudd government can only discourage potential investors from exploring this new territory. You must always be careful to observe what this government does, rather than listen to what it says. Natural gas is a vital component in the fight against greenhouse gas emissions. It is inconsistent that the government would introduce a tax that will discourage exploration for this resource.

The main objectives of the gas market reform are enshrined in the National Gas Law. Underpinning the National Gas Law are six principles that will guide the development of the regulation framework for gas pipeline access. The first principle is that a service provider should have reasonable opportunity to recover the costs brought about by complying with a regulatory obligation or requirement. This is essential to ensuring that service providers will continue to undertake further investment in gas infrastructure. The second principle is that service providers should be provided with effective incentives to promote economically efficient investment in and provision and use of pipeline services. The third principle ensures that the regulator takes into account previous determinations by the ACCC about existing pipeline infrastructure. This ensures that a company’s previous investment in pipeline infrastructure is recognised and taken into account when making regulatory decisions. The fourth principle ensures that prices and charges for the provision of a specified service allow for a return in line with the risk taken to provide that service. The fifth principle ensures that the Australian Energy Regulator will take into account the cost and risk of over- or under-investment by a service provider in the network. The final principle ensures that the regulator will take into account the possibility of over- or under-utilisation of a service provider’s network. These principles will guide the development of the regulatory framework and ensure that service providers are not disadvantaged by the reform process.

At the heart of these reforms is the consumer. A key objective of the Australian energy market reform is the promotion of the long-term interests of energy consumers. As the effects of the market reform begin to flow through to consumers, we should see improvements in the price, quality, reliability and security of supply of natural gas. Although these reforms are primarily economic in nature, if the gas market and access to pipeline services are economically efficient, the flow-on effects will undoubtedly be positive for consumers.

In keeping with the goal of providing improved consumer outcomes, the National Gas Law will permit the Australian Energy Regulator to publish regular reports on the financial and operational performance of service providers. This will add transparency to the industry and will be of great benefit to gas users and consumers. In order to safeguard the reputation of service providers, the providers will have the opportunity to do a review of the performance reports before they are released to the public and to request changes to the reports, based on factual evidence.

Australia has large reserves of natural gas. This resource will become more and more important to our energy security as we move towards a carbon constrained society. Gas generally produces fewer carbon emissions than coal or oil based energy production methods. As such, it is essential in the fight against climate change. Making gas more accessible and attractive for consumers and encouraging further gas exploration are important objectives, and these reforms will help meet those goals.

The legislation under debate today is a minor technical amendment which reflects changes in the timing of the implementation of this legislation. I believe that these energy market reforms will have a positive impact on the energy sector and I offer no objection to the passage of this legislation.

Darren Cheeseman (Corangamite, Australian Labor Party) Share this | Link to this | Hansard source

The amendments in this legislation are another important step in the creation of a modern Australian energy market. Whilst the Australian Energy Market Amendment (Minor Amendments) Bill 2008 goes specifically to the regulatory issues on gas energy, it is worth reflecting on where Australia has come from and where it is going in relation to the creation of a national energy market.

It is also worth commenting, first of all, on the importance of our national energy market. The creation of a national energy market is of importance to every single Australian. Australia must have an efficient, integrated, properly regulated, transparent energy market. The energy industry affects every other industry. It affects, in one way or another, every Australian job. It affects our homes and our lives. It will affect significantly the future of our climate and our environment.

We have come a long way from the time when there was relatively little regulation over our energy industries. And, as an aside, I have to say that the regulation of our industries is a clear case of where some of the rhetoric coming from the other side is exposed. It is an example of where the rhetoric from the other side is exposed as nonsense. The flat-earth free marketeers on the other side are always saying how we should do away with government regulation and let everything flow free, uninhibited. I think clear, detailed and comprehensive regulation such as that we are developing today is just what the energy industry needs in Australia today. This multilevel regulatory environment is what will make our energy production, distribution and retailing much more efficient, safe, environmentally friendly, and equitable. In my view this sort of detailed and clear regulation is critical to the future of our planet. Energy is the key determinant of Australia’s future economic growth and prosperity, yet global warming threatens to change all aspects of life on earth. It is a conundrum that must be regulated. We must come a long way from the days when there was only regulation around government monopolies. We are moving into a new world where there is a comprehensive framework of regulation to create a national Australian energy market.

The Ministerial Council on Energy is at the moment developing a cooperative legislative regime to regulate access to gas pipelines on a national basis under national regulatory and rule-making bodies.The Australian Energy Market Agreement commits all Australian jurisdictions to developing and applying legislation as a part of that regime. The linchpin of the new system will be the National Gas Law. The National Gas Law will be established in South Australia and then applied through application acts in all other participating jurisdictions. Western Australia will pass complementary legislation too. The development of gas industries through this legislation is reaching a point of maturity, and I welcome this.

Australia is indeed a lucky country when it comes to gas. We have very significant reserves. It is very important to our industries and it provides a more environmentally friendly alternative energy source. I think Australians are just coming to understand the importance of gas to our industries, and our growing reliance on it.

What is happening right now in Western Australia is making us all take note. The gas plant explosion and fire on 3 June has cut 30 per cent of WA’s domestic gas supply, leading to thousands of workers being laid off. Perth’s skyscrapers and shops have shut down their lifts and turned off lights in an effort to save energy. The Royal Australian Navy has been called on to hand over 16 million litres of diesel for emergency electricity generation. This situation will have a flow-through to our national economy. That would surprise many; it certainly made me sit up and take notice. In fact, what has happened in Western Australia has made everyone sit up and take notice. I think it says that we should be taking the legislation before us very seriously and that perhaps we need to look more closely at assessing the financial and human risks of this burgeoning industry. I think that will happen and that in the future we will see much more robust risk assessment and new, best practice risk mitigation measures to protect this industry and related industries.

Australia’s gas resources and reserves are very, very significant. We are still discovering how extensive they are. Just within my region, in Bass Strait and the Otway Basin, discoveries are still being made. If we play our cards right—if we get the legislative regime right, if we get the regulation right, if we get the investment right—this industry has enormous potential. Our gas resources mean we can become an international leader in R&D in the methane economy. I note that the CSIRO are doing an enormous amount of work in this area, partnering with industry in a number of gas related production areas that hold considerable promise. The CSIRO are trying to work through technical issues and form future strategies on converting gas to liquids, on converting hydrogen from natural gas, on gas processing and on syngas manufacture. The CSIRO have developed networks, companies and research bodies across Australia and around the world. So the gas industry has a very big future in Australia, and it is important to get the regulatory environment right.

Under the Australian Energy Market Agreement, the Commonwealth parliament has to pass laws to apply the National Gas Law in the offshore area and external territories. More importantly, the Commonwealth has to consent in legislation to the conferral under state law of functions such as those of the National Gas Law on three Commonwealth bodies: the Australian Energy Regulator, the National Competition Council and the Australian Competition Tribunal. This is done through the Australian Energy Market Amendment (Gas Legislation) Act 2007.

I want to say a few words about the National Gas Law, which I have previously mentioned. The Gas Law is a critical bit of cooperative economic reform that will bring the economic regulation of gas transmission and distribution pipelines under the national energy market governance arrangements. The National Gas Law provides a clear, transparent and certain regulatory environment for the industry. It will better protect the interests of consumers. Not only are we coming up with good regulatory reform for our energy sector but we are getting on with the job of implementing it. The National Gas Law is now before the South Australian parliament, with passage expected in coming weeks. This will see the first gas pipelines brought under national regulatory arrangements.

We are getting on with reform and creating the national energy market at a pace. The Ministerial Council on Energy has achieved a significant milestone in the government’s energy market reform agenda through amendments to the national electricity law; the rules and regulations for this come into force on 1 January 2008. The regulation of electricity distribution now operates under a truly national framework administered by the Australian Energy Regulator. We have also achieved significant progress in addressing barriers to renewable investment and demand-side management in the national electricity markets. COAG is developing a national framework for transmission reliable standards. The government are putting in place arrangements that will guide the strategic decisions we need to make and prepare us for any threat to our energy security. I am sure the volatility of the Western Australian suppliers will add food for thought. In short, our Labor government are planning and implementing a reliable, affordable and more environmentally sustainable energy sector. We are looking ahead to see how we can develop a framework that will enable us to make decisions about our energy usage to grow our industries, create jobs, build stronger communities and at the same time take into account the pressing imperatives of climate change. This bill is another important step along this path, and I commend the bill to the House and congratulate the minister for his foresight.

Tony Windsor (New England, Independent) Share this | Link to this | Hansard source

It is with pleasure that I rise to speak to the Australian Energy Market Amendment (Minor Amendments) Bill 2008. In doing so I congratulate both the current minister and the Ministerial Council on Energy on coming together to put in place a national system. Even though in the minister’s speech he said that there are only minor changes in the bill, these are significant for energy across the nation. But I also recognise the former minister, the member for Groom, who led that committee for something like six years, for the work that he too put in on this national scheme. I think this is very important. Obviously gas is going to be an important ingredient in our future. I am pleased to see the member for Parkes here as well because our electorates are next door to each other and there is currently natural gas being found in certain localities. Santos has an exploration licence, the first for that company in New South Wales, and they will be drilling some pilot holes in locations in our electorates. So there could be substantial resources of gas as well.

I was also involved some years ago with the formation of what was called the central ranges gas pipeline committee, which looked at how to get natural gas from Dubbo to Tamworth. That has been successfully achieved. It took quite some time, as most things do, and there were some difficulties in terms of competition policy. I think this legislation goes some way to addressing this. In some areas of the nation there is not massive competition between various pipeline authorities or private sector investors. That was a problem with both the state based IPART, the Independent Pricing and Regulatory Tribunal of New South Wales, and the National Competition Council in relation to what could be charged by the provider of the pipeline. But, having said that, that pipeline is in place now and it is proposed that another pipeline come out of Queensland. There are various exploration activities going on. Eastern Star Gas is pumping gas near Narrabri as we speak.

The importance of this legislation is that it creates in a sense a national law, and that is a good thing. I think it is very important for the future of this nation, particularly moving into the carbon trading era and global warming, that we establish some national guidelines. There is one thing that the current government has to come to grips with if it is serious about global warming and some of its policy initiatives: it has to stop sending mixed messages to the electorate in terms of what the agenda really is. I will give two examples, one more recent than the other.

The first example is the change of heart over the rebate for investment in solar energy panels. I listened intently to the Minister for the Environment, Heritage and the Arts in question time a couple of weeks ago when he said that the market was overheated, that it was going better than we thought it would and that therefore we had to means-test the provision of the rebate. I think that is an appalling message to send to the wider electorate. It says: ‘Look, we think it’s a good idea and we’d like to encourage you to do it, but don’t take us too seriously because Treasury runs the place and it is not as concerned about global warming as maybe the minister, the Prime Minister or others are.’ It is a mixed message to the community.

The other mixed message is one that I have been noting for quite some time. The previous government set up a sort of grandfathered arrangement in terms of renewable energy. It failed, in my view, particularly in terms of biofuels. We have this absurd statute—which is still there; the current government has not removed it—where in 2011, I think, if you are a biofuel producer in this nation, you will be taxed as though you were a fossil fuel producer. Is the message that ‘we are trying to encourage renewable energy’—is that the message we are trying to get out to the broader community? Alternatively, is the message that ‘if you produce a renewable energy source’—in this case, biodiesel or ethanol in certain blends—‘we will see you as a source of revenue’?

I have heard the absurd argument—and the former Treasurer used this argument a number of times—that to remove a fossil fuel tax from a biofuel would be seen as a subsidy to the renewable energy marketplace. What an extraordinary use of economic language to come out with that sort of nonsense. Are we trying to encourage renewable energy—wind, wave, solar and biofuels? I think the previous speaker spoke about the fact that there would have to be a whole range of contributors if we are to deal with the issues that we are told global warming represents. If we are concerned, we have to stop sending these mixed messages to the community. The government says—and the words sound nice—‘We’re serious. We want renewable energy. But if you do that then we will tax you, so we do not really want it.’

We saw a similar farce go on in terms of superannuation—‘it is a good idea—save for your retirement’. It was encouraged by all, and then it was utilised by various governments, of both persuasions, as three sources of taxation—as a source of revenue. The original intent was for people to save for retirement, which the punters could see quite clearly. I think this is a great idea. Let us have national legislation on a whole range of these issues, particularly with an emissions trading scheme around the corner, but let us have consistency of the message. Do not mix the messages.

I would like to reflect on this in relation to the emissions trading arrangements that are being contemplated by the government. There is a degree of confusion—and it is in some cases deliberate—between those who purport to represent renewable fuels. I am very pleased to see my colleague the member for Ryan enter the Main Committee. I know he is very interested in renewable fuels. Most people would know that the people of Ryan are extremely interested in renewable fuels—hopefully at lower prices. There has been a mixed message in the energy versus fuel debate. There have been food riots in various countries of the world. What role does Australia have to play? What can we do? Should we be using agricultural land for the production of biofuels, for instance? Is that moral? Overlaying that—and this is what I would like to talk about today—is the imminent carbon emissions trading scheme. We are not quite sure how that will work. We are not quite sure how that will allow or not allow for agriculture because of the purported emissions of agriculture. It is a conundrum that we really need to address.

I will use an example, and a few members have heard this example before. Walgett is in the electorate of the member for Parkes, but the Walgett wheat grower is a very good example of agricultural production in Australia. It is roughly 500 kilometres from a port. It produces prime hard wheat, which requires nitrogen. We are told that nitrous oxide is part of the problem in greenhouse gas emissions. High rates of nitrogen are required to get the protein for that food grain to enter the food chain and to get a global price premium. That is the marketplace today. If you overlay an emissions trading scheme, a number of things will happen. I think the parliament needs to look at the implications. The Walgett wheat grower under an emissions trading scheme will leave a carbon footprint. Due to climate change, the Walgett wheat grower in recent years has made a massive change in farming technology. The member for Parkes would be aware of the no-till techniques that are used now. I spoke to the Prime Minister about this a few weeks back. That represents an enormous adaptation to reduced rainfall. We are being told that there is going to be reduced rainfall in parts of Australia, and that could have an impact on our productive capacity.

There have been similar changes in some of the grazing technologies across Australia, where similar benefits can accrue. That change means for the Walgett wheat grower effectively 150 to 200 millimetres more rainfall. That has been proven by the Department of Primary Industries and the CSIRO. It is available moisture to the plant. The old techniques of cropping used at Walgett, when it was highly marginal, meant that cultivation would take place continually and moisture would be released into the atmosphere. You would then be waiting for rain, and you would cultivate and let a portion of it go. By having a protective mulch of the previous crop’s residue on the surface, you keep the moisture in the ground. That has a whole range of other microbial and moisture infiltration impacts. Also, it impacts on the capacity to naturally sequest carbon in our soils. In some of our soils—that is, not all of our soils and not all at the same rate—it could have a significant impact. The Walgett wheat grower’s carbon footprint is much reduced on 20 years ago; nonetheless, he is still using energy to produce his crop. He leaves a footprint when he takes his crop from the farm to the silo. We have just been through the wheat marketing debate. He leaves another footprint when the train picks up the wheat from the Walgett silo and takes it to the Newcastle port. Then he will leave another footprint when the wheat goes in a boat from the Newcastle port to, say, Egypt—where we will attempt to feed the starving millions. So there are a number of footprints.

I do not know how that process is going to be treated in an emissions trading scheme. I do not think we are fully aware of how commodities traded internationally are going to be treated—bearing in mind that part of the grain in that boat is carbon in the form of starch. So what does all that mean in terms of those issues? We have an oversupply in grain and we sell it overseas because we cannot consume it here. We exchange some of that money for another boatload of oil to bring back to Newcastle which is then put on a train or a truck to be taken back to the Walgett wheat grower so that he can go around in circles again and produce the trading arrangements to buy the energy, the oil.

Surely—and people have heard me on this topic a number of times—we have to send a consistent message about this and look at other options to the absurdity of doing that. We need to look at ways of converting grain into energy sources at source rather than creating all these carbon footprints, particularly when the grower will be landed with the cost of that footprint. The international trade component may have some special dealing with that, but the transport movements cannot. If we are going to have a carbon footprint or an emissions trading scheme, we have to include transport. It is ridiculous for us not to. It makes a nonsense of the message we are trying to send.

I would urge the government to look very closely at those issues. Now, some would say, ‘Yes, but we need to provide for the world.’ Australia produces 1¾ per cent of the world’s grain trade in a good year. So we are not the big player. We cannot feed the world. We are not the big player that people make us out to be. We are big in the wheat export market, but we are very small in terms of the total grain production in the world.

The other policy implication that relates directly to energy and to carbon, if we are going to have carbon credits et cetera in the system, is land use. Let us say the Walgett wheat grower changed his land use to growing species of pasture, for instance, where the cellulose in the perennial grasses—that is, they are not planted every year—is not cultivated at all and it emits lower rates of nitrogen, which we are told is part of the problem in terms of greenhouse gas emissions, and he harvests that material. This is what they are looking at doing in the United States with a plant called switchgrass. The grass is converted at very good rates from the cellulosic material into cellulosic ethanol. That immediately removes the food versus fuel argument, because it is not a food product that you are converting into an energy product, but you still have the land use issue. By doing that you remove all of the transport movements, the various carbon footprints that they would have in terms of emissions, but you also potentially have a massive impact on the capacity to sequester carbon into the soil and convert it into humus and organic matter. Switchgrass has a very deep root system. It has been shown that it was the natural grass of the American prairies.

How serious are people who are arguing in this food-fuel thing about returning to nature if they are going to keep imposing a fossil fuel tax on the production of a renewable fuel? I get back to that point that I made earlier that we have to get serious about the mixed messages that are here.

Another point that I have raised in the other place a couple of times is: what about the starving millions? What do we do to help them? One of the things we could do to help them is sell the technology or give the technology that the Walgett wheat grower has been developing over the last 20 years. When I say Walgett, he could be in a whole range of places: Western Australia, South Australia, on the Darling Downs, or the central tablelands of Queensland—but give that technology to those people in those dryland farming areas.

I have previously used the example of the country of Sudan, which is at war with itself. It has 100 million acres of land similar to that at Walgett. It has the capacity to produce six times the grain that Australia produces. There is no need to have this farcical transporting of food across the world when we can teach these people to produce their own food through modern technologies. If we are serious about global warming, and I think most of us are, we have to make sure that the message we send is consistent.

The other issue I raised with the Prime Minister recently was for more research to be done into the measurement and retention of soil carbon under different cropping and grazing technologies. There may well be a way of developing systems where natural sequestration of carbon is part of the emissions program. Benefits may or may not go back to farmers in terms of some of the pricing or stewardship arrangements, but there would be real recognition of the contribution that agriculture could make, not only to the energy debate, through biofuels, but through soil health and soil sequestration. I think there is a role for agriculture. Those who are involved in agriculture say: ‘Under the first blush of Kyoto, agriculture is not in the deal. So let’s hope it will always stay out.’ They are kidding themselves; it will be part of the deal at some stage. Rather than, in a sense, being taxed on the negatives, I think we have to do more homework on the potential positives and put agriculture in a pre-eminent position. (Time expired.)

James Bidgood (Dawson, Australian Labor Party) Share this | Link to this | Hansard source

I speak today in favour of the Australian Energy Market Amendment (Minor Amendments) Bill 2008. This bill makes minor technical amendments to the Australian Energy Market Act 2004, the Australian Energy Market Amendment (Gas Legislation) Act 2007, the Administrative Decisions (Judicial Review) Act 1977 and the Trade Practices Act 1974. This legislation finalises a cooperative legislative regime that regulates access to gas pipelines on a national basis. Under national regulatory and rule-making bodies the Australian Energy Market Agreement commits all Australian jurisdictions, state and federal, to developing and applying legislation as part of this regime. This bill will ensure that the necessary Commonwealth legislation is in place to give effect to the National Gas Law. This process has the full support of the Ministerial Council on Energy and represents a bipartisan, cooperative and natural approach to regulating access to gas pipeline infrastructure.

The Natural Gas Law will reduce the regulatory burden on industry, improve service provider certainty and protect the long-term interests of consumers by (i) introducing a new light-handed form of regulation that regulators may apply, (ii) empowering the Australian Energy Regulator as the national regulator for gas access to improve the consistency of regulatory decision making, (iii) allowing for merits review by the Australian Competition Tribunal of key regulatory decisions, (iv) introducing strict requirements for timely regulatory decisions, (v) increasing information transparency and (vi) maintaining the greenfields incentives for new pipelines established by the MCE in June 2006.

This is all about ending the blame game. We are entering into a new phase with a new government with new ideas and new ways of doing business. We are moving away from the old federalism of: ‘It’s not our fault; it’s their fault’. We are moving into a new era. We are moving into a new era of cooperation—of consensus between federal and state governments. This is ending the blame game, which was definitely a hallmark of the last 11 years of the coalition government. So that is coming to an end.

I can honestly say that I have worked well in my time previous to this on Mackay city council and enjoyed good working relationships with people on both sides of the political spectrum. We always looked for consensus and outcome and were outcome driven. When it comes to energy, this is all in the national interest. We have to look at the common good and we cannot have self-interested parties involved here. We have to work for the common good of the whole nation in our energy needs, and that is particularly so here as well. Something that I experienced in my role in Mackay city council was working with state members Tim Mulherin, the member for Mackay, and also Jan Jarratt, the state member for Whitsunday. We had excellent working relationships with those state members.

But, unfortunately, the National Party member who held the seat of Dawson prior to me was obstructionist, quite frankly, and consistently so over the last 11 years. It was like trying to drag a horse to water and make it drink. There was just total non-cooperation. That is why the people of Dawson decided to vote for change. They decided to vote for new ideas, and they are looking for outcomes and results for the common good of all people, regardless of political persuasion. People on the other side need to remember that 10.2 per cent is in no way a safe seat when such obstructionist behaviour is taking place. I thought I would remind the member for Fadden of that.

I would like to mention Col Meng, the current mayor of the new Mackay Regional Council, which has taken in two other councils—the council of Sarina and the council of Mirani—and is now a regional council of over 100,000 people. I am looking forward in the upcoming weeks, on 29 June, to meeting with Col Meng, the new Mackay regional councillor. He will be hosting part of the community cabinet. Kevin Rudd and the cabinet will be coming to Mackay, and we will be meeting together with the local regional council and the state members and their representatives and we will be working together for the common good of all in all outcomes. That includes new ideas on energy.

The seat of Dawson is an exciting place to be. We have some great prospects, particularly with resources and mining. For example, the Queensland Resources Council has said that by 2015 we will need an extra 15,000 resource workers in Queensland, and one in four of those will be in the seat of Dawson. Bowen is halfway between Mackay and Townsville. My seat stretches from South Mackay to southern Townsville; it goes right up to the Ross River, and right in the middle is Bowen. Bowen is a town which is going to boom into a great city. There are a lot of good things going on for Bowen at the moment. Just 20 kilometres north of Bowen is a port called Abbot Point. It is one of the few natural deep water ports around the coast of Australia. Currently we are exporting 21 million tonnes of coal out of there. The Queensland ports corporation has briefed me, and we are looking forward to expanding that from 21 million tonnes a year to a goal per year of 50 million tonnes in the foreseeable future and long term 110 million tonnes.

This is going to add to the bottom line of this nation. We are exporting our resources, our energy-producing fuels. That is good news for Bowen because there is an accommodation crisis, as there is around the nation, and people are coming in, workers are coming in, and we are having to build. It is good for the economy of Bowen, good for the economy of Dawson and good, very good, for the bottom line of this nation. This Prime Minister, Kevin Rudd, understands that basic key infrastructure is essential in facilitating the movement of these resources out of our country as a major export across the seas to China, Japan and India, to name but a few.

I want to focus on Bowen, because it has actually been used as the site of part of Baz Luhrmann’s film Australia, which will be released in November of this year. That is going to add value to the whole nation as well, and Bowen is going to be showcased because a lot of the film was actually shot there. That is going to add to international tourism. International tourism is going to come into Mackay, the Whitsunday Islands and Bowen. So Bowen has an exciting future—right in the centre, right in the heart, of my seat of Dawson.

Another thing that is going to be going well for Bowen is that I am lobbying the Prime Minister, all the cabinet and my fellow MPs hard and advocating the need for the Aluminium Company of China to come and set up at Abbot Point. It is the ideal place to have an aluminium refinery. The reason? It is 20 kilometres to the nearest residential town of Bowen, so there is a natural buffer zone where these activities can take place. So I continue to lobby; I continue to advocate. I have spoken to representatives from the Chinese embassy and have made it very clear that they are welcome and we would love to have them at Abbot Point. I want to make that very clear and put it on the record here today.

These things do not happen unless there is cooperation, unless there is consensus and agreement—one thing I have made very clear. The previous mayor of Bowen, Mike Brunker, happens to be the new mayor of the new Whitsunday Regional Council, which now takes in what was the old Bowen council. Mike is absolutely passionate about Bowen because he has been connected with the mines in Collinsville and his family are in the mining industry. He is passionate about having a baseload subpower station somewhere between Bowen and Collinsville, which is about an hour west of Bowen. Again, we need a baseload power station and from the research and background reading I have done on the science innovation committee, I suggest, that hot rock thermal power is the most highly sustainable energy supply which can go up to baseload subpower station levels. Solar, wind and wave power just cannot reach those levels without absolutely massive saturation of whatever is being put forward; whether it is wind propellers or wave motion, it takes an incredible amount of set-up. But we have hot rock thermal in abundance in this country. I am pleased to say that it is possible between Bowen and Collinsville. We need that baseload power station not just for all the energy industries that are going to come in to North Queensland but to power up North Queensland.

I know the member for Kennedy, Bob Katter; I have to say I have had some very fruitful discussions with the member for Kennedy.

Opposition Member:

An opposition member—A good member.

James Bidgood (Dawson, Australian Labor Party) Share this | Link to this | Hansard source

He is a very good member indeed. He believes passionately in powering up North Queensland. When he heard me in my first speech in parliament say, ‘We need a baseload power station to power up North Queensland,’ he came to see me straightaway and he said, ‘Thank God we’ve finally got someone with vision who’s passionate about making these things happen’—like him. This is going to happen across the political divide, and this is my point. The previous government did not have the spirit of cooperation that this new government has. We are committed to being outcome driven for the common good of all people. That is the big difference, they are the new ideas and this is the new consensus

That is why this country, over the decades ahead, will benefit from a great Labor government. Kevin Rudd as Prime Minister is a visionary and he is forward thinking. That is why he has brought down such a fantastic budget, which builds on infrastructure. Because basic key infrastructure has been totally ignored for the last 11 years, it has been left to this government to fix up the failings of the previous government—because you have to have good basic roads and you have to have good basic rail in order to transport—

Opposition Members:

Opposition members interjecting—

Steve Georganas (Hindmarsh, Australian Labor Party) Share this | Link to this | Hansard source

Order! The member deserves to be heard in silence.

James Bidgood (Dawson, Australian Labor Party) Share this | Link to this | Hansard source

our resources, our coal, to the ports and make it a major export for this country. That is going to deliver to the bottom line of the economy of this country. Once we get the basics fixed up, which the other mob failed to do over 11 years, and get that income stream going, then we can invest in better health, better education and much better overall sustainability for our energy industry. It is when a government has vision that people thrive. It is when there is no vision that the people perish. You should never forget that, whatever side of politics you are on. You must have vision. You must have a goal as to where you are going.

I would just like to say that Bowen is an exciting place to be, right in the heart of the seat of Dawson. But, as you look to the north, you look to towns like Ayr, for example, a major sugar town in the Burdekin. Again across the political divide, I have spoken to the state member, Rosemary Menkens. I actually had a meeting with her and our Minister for Agriculture, Fisheries and Forestry, whom I took to Ayr. I rang up local community leaders—who are not on our side of politics—and I said, ‘Come and have a chat, because we need to talk about key things to do with sugar and how we can add value.’ Do you know what? There was consensus. Consensus works; it works. Those people said, ‘Wow! We thought that now that you were in government you’d just exclude us.’ I said: ‘No. We’re going to be inclusive, we’re going to be outcome driven and we are going to be consensus driven for the common good of all. We’re not going to be divisive. We’re going to build this nation. We’re a party of nation builders. That is what we are about.’ We have exciting plans in Ayr.

People came to the minister, Tony Burke, and we had had a discussion with about 25 people. We had farmers there who are farming 500,000 acres of sugarcane. They were saying, ‘Look, with the world prices for fuels and everything, we’ve got systems which we’ve seen working in Brazil and we could convert this sugar into ethanol.’ There are other plans, for bioenergies coming out of sugar and for cogeneration, particularly at the racecourse mill in Mackay, where the member for Capricornia, Kirsten Livermore, and I have been briefed. They have been working on a plan for 10 years, a feasibility study, but it was not viable until this last year, when global energy prices rocketed through the roof beyond the control of any national government. Now we in the seat of Dawson are well placed to add value to sugar and to meet energy needs. Cogeneration at the racecourse mill in Mackay is now a real possibility. It is a real possibility because the government are listening. The government are saying: ‘How can we help you? How can we make this happen?’ We now have a plan that is viable, and it is going to be an exciting time as I look forward to those mills presenting their cases to this government. I am excited about it because they are going to add value again to the bottom line. They are going to meet the energy needs of the local community as well. All these things are very important.

We have spoken about how we can add value to sugar in terms of energy and ethanol, cogeneration and bioenergies. We have spoken about that in Mackay and in Ayr. We have also spoken about that in southern Townsville, in Oonoonba, Stuart and Idalia. Also, Xstrata have been saying to me, ‘We need basic upgrades in port facilities, in road and rail infrastructure.’ It is this government which has come on board, having made a promise during the election. It is beginning to deliver, as the budget outcome, $95 million for the Townsville port access road. That is guaranteed, and in this financial year it is delivering the first $20 million to get the project started. That is basic infrastructure which is going to help with energy and access to the global market for exports, adding to our bottom line.

In conclusion, I speak in favour of this bill. Things like this only happen and work when you have a new vision for the country, a new vision with new federalism in mind, away from the old divisive ways of divide and rule and the blame game. We are moving forward to add to the bottom line of this nation, to the economy and to the energy needs of not just this country but also the world.

Michael Johnson (Ryan, Liberal Party) Share this | Link to this | Hansard source

I am pleased to speak in the parliament today on the Australian Energy Market Amendment (Minor Amendments) Bill 2008. This is essentially a technical bill. It aims to make minor amendments to existing Commonwealth legislation that will underpin the national regime for the regulation of gas pipeline infrastructure. The bill will amend the Australian Energy Market Act 2004, the Australian Energy Market Amendment (Gas Legislation) Act 2007, the Administrative Decisions (Judicial Review) Act 1977 and the Trade Practices Act 1974 to correct the year of enactment of South Australian and Western Australian legislation from 2007 to 2008. The federal opposition supports these minor technical amendments to enable the implementation of the cooperative energy reform agenda between the Commonwealth, the states and all stakeholders. It is a bill that goes to technical provisions but the concept or theme at the heart of it is energy security.

I know the people of Ryan that I represent will be interested in aspects of energy and some of the statistics on energy, given that they are Australians who want to make a contribution to the environmental solution and at the same time ensure they have living standards and opportunities for themselves and their families. So in the context of this bill I want to talk a bit about the nature of energy. Energy is the fuel of life. It makes plants grow. It keeps animals alive. And in our modern world it drives devices ranging from medical equipment that sustains life to sophisticated technology that takes space shuttles up into space. That is in a sense what energy is all about. Today, of course, people around the world exploit energy in many different forms. Essentially, fossil fuels—that is, oil, coal, natural gas—account for around four-fifths or 80 per cent of our total energy consumption. That is a significant share that has largely been unchanged for the last century or so. These fossil fuels dominate because they are seen to be cheap and abundant and they are able to be transported from their source into homes and businesses around the world, so the means of transportation of these sources of energy also makes them economically efficient.

Different energy sources are used in different sectors. Motorised transport, for instance, is fuelled pretty much by oil and, as we know, when the price of a barrel of oil goes up it has ramifications throughout the world, from the most advanced economies and the most sophisticated cities to the developing economies and the most remote villages in those developing countries. So it is very timely that the leading ministers and governments of the world can come together at this time to discuss how we might address the rising price of oil.

The energy used for heating is a mixture: gas, oil, wood, coal and other sources. For electricity generation, fossil fuels provide around 60 per cent of the global total, while nuclear and hydro-electricity contribute 15 per cent and 16 per cent respectively. On the other hand, renewable electricity sources, such as solar, geothermal and wind, are growing fast but still constitute only a small percentage—about two per cent—of the global total. Of course, all of us would like to see renewable energy sources increase, and I will be pleased to touch on that a little later in this presentation. Around 1.5 billion people still cook and heat their homes using traditional biomass sources such as wood and animal dung, so we must not forget that biomass still has a space in this energy debate for so many people around the world. Indeed, it is a source of life itself for so many of our fellow human beings, especially in developing economies where so many people still live in villages in remote parts of those countries.

Let us ask about the consumption of energy. I am sure that the constituents I represent in Ryan will be interested to know the make-up of energy consumption. Whether energy comes from fossil fuels, nuclear, hydro or renewables, we use it in three broad sectors: industry, transport and buildings. Industrial uses such as mining, manufacturing and construction consume around 30 per cent of the global total; personal and commercial transportation consumes some 20 per cent; and residential and commercial buildings take up some 16 per cent for heating and cooling, lighting, appliances and the provision of water and sewerage services. Interestingly, a significant 27 per cent of the energy generated across the world is lost during generation and transmission, so we do not really get the most out of the energy sources that we have available to us.

In my view, energy security, or the lack of energy security, is going to be one of the biggest issues of our times. Energy security for people around the world is right up there as an issue for the great leaders of this century to address. I foresee energy security, affordability, diversity and reliability as one of the top handful of issues that have the potential to cause serious, indeed profound, geopolitical challenges for the leadership of the major countries of the world. I think it is incumbent upon all of us now at the beginning of the 21st century, when we still have time, to lay down the architecture of an affordable, secure, reliable and indeed diverse energy system that will address varying demands—from those of the most sophisticated cities, such as New York, Sydney, Shanghai and London, to those of the emerging cities of the world whose energy demands will increase as their populations grow and become more prosperous. The world as we know it cannot go on at the rate and pace of Western energy consumption today. Our voracious appetite for all things that are energy intensive, from big cars to big houses to big boats and to big planes, cannot be sustained.

I think that all of us deep down know this, and yet for many of us collectively as a society, as a community, whilst we know this, we still choose to ignore it. Indeed, some of us choose to bury our heads in the sand at the mounting challenge that is coming our way in terms of adjusting our lifestyle and the way that we use our energy for our day-to-day purposes.

Yet, equally, I do want to say very strongly that in the world as we know it we cannot just switch off all our lights, and we cannot just stop using our motor cars, and we cannot go on strike against planes and we cannot stop flying. Doing these things is simply not on the cards for our 21st century world of business, commerce, enterprise and global interaction. We cannot be Luddites. We live in a world where opportunity, prosperity, technology and the brilliance of our scientists and our engineers will surely be able to provide a way forward that achieves a balance between sustaining our community and environment whilst at the same time providing an appropriate level of lifestyle where we can enjoy nature and its opportunities and not live in darkness.

We cannot turn the clock back. We cannot all go and live in caves, as some of the extreme environmental groups would have us do. In fact I do not even call those who advocate such things environment groups, such is their intellectual bankruptcy and extremism. The bottom line is that energy supply, security, affordability and diversity is a very complex issue and this is why, going to the theme of energy and energy sustainability, I want to express great dismay at the way that the new Labor government has approached a source of energy which I think can go a long way, in the years and decades ahead, towards bringing about that balance and that sustainability that we all must try to achieve.

I want to talk in this context about solar energy. We all know that the budget that was recently delivered by the Rudd Labor government delivered a real blow to the solar industry, to renewable energy, and certainly it delivered a blow to the constituents of Ryan, who very much want to make a contribution to the environment and energy debate by taking up solar. Before I go into some of the details of that budget and the government’s attitude, I want to make a statement about solar, and I quote from a book produced by a renewable energy company that manufactures solar panels, Suntech. It has got a very interesting quote there which I find to be profoundly interesting and insightful. I quote from its production entitled Powering a Green Future, where it says on page 30:

The sun delivers enough energy in one hour to meet global energy needs for an entire year.

I would have thought that that is an eye-opener for sceptics about solar and, indeed, for those who think that solar can in no way make an impact on our renewable energy diversity mix. It is a very interesting quote. As an aside, Suntech is an innovative company that is manufacturing solar panels, and its chairman and CEO, a Chinese Australian by the name of Dr Zhengrong Shi, is at the forefront of the international debate on renewable energy and of course, in particular, solar.

The energy received from the sun has enormous potential, and somehow we must get the greatest minds in our country and from around the world to find a way to channel that vast source of energy into a form where it can be used substantially beyond its already significant contribution in the homes and businesses across our country. As I said earlier, I think the federal budget really showed the true colours of the Rudd Labor government on the energy diversity mix and trying to contribute to the energy debate across this country. As everyone will know—and certainly everyone in my electorate of Ryan now knows—the government’s policy was to make it more difficult for many people to access the solar panel rebate the Howard government brought in during its time. I know that it is not fashionable to think highly of the Howard government when it comes to environmental initiatives. Interestingly enough, the solar panel rebate, which was very popular—and certainly very popular in Ryan—has been kept by the Rudd Labor government yet it seeks to exclude so many Australians from it.

The Howard government encouraged the people of Ryan to take up solar panels with this $8,000 rebate. The Rudd government, after it came to office, decided in the budget that any household on a collective income of $100,000 was deemed to be rich and therefore in a financial position not to need the rebate. So many, many residents not only of Ryan but from across the suburbs of the electorates of this country felt that they were being singled out and excluded from making a contribution. I want to say very strongly that those in the Ryan electorate on $100,000 would not consider themselves wealthy by any means; they are struggling like their fellow Australians around the country to pay for petrol and groceries and child care. So the decision to means test the solar rebate was only going to be an additional burden and force them to prioritise this below the essentials of putting petrol in their car and buying groceries for their evening meals.

So, in other words, the Rudd government’s decision to implement this threshold of $100,000 is a very retrograde step. It is not consistent with its election campaign commitment to very strongly promote the solar industry. I think that really highlights the hypocrisy. We heard a campaign commitment to a 20 per cent renewable energy target by 2020. This was to be achieved by significantly boosting Australia’s solar, wind and geothermal energy industries. But that was put in its place by a budget measure on solar that smacks people in the face.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Ryan is straying significantly from the bill. I have allowed him to do so, but I would really like him to come back to the bill before the House.

Michael Johnson (Ryan, Liberal Party) Share this | Link to this | Hansard source

Madam Deputy Speaker, I am speaking about the theme of energy. This bill is about energy.

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

It is on the theme of energy, yes. It is a minor amendment to national gas laws.

Michael Johnson (Ryan, Liberal Party) Share this | Link to this | Hansard source

If you are saying that solar is not part of the energy mix and diversity of our country, I would find that dramatic and astonishing. Solar is part of the energy mix, wind is part of the energy mix and geothermal is part of the energy mix—no less than gas; no more than gas. It is all part of the energy mix. Oil—

Ms Anna Burke (Chisholm, Deputy-Speaker) Share this | Link to this | Hansard source

Yes, but I would say that we are debating a bill for an act to amend the law relating to gas and for related purposes. I have allowed you quite a lot of leniency and I would like you to come back to the bill before the House.

Michael Johnson (Ryan, Liberal Party) Share this | Link to this | Hansard source

This is a very technical bill. The federal opposition supports it. Underlying it is energy, and I am not going to take a backwards step when it comes to representing the interests of the Ryan electorate and the people of Ryan—who I have the great honour of representing here in parliament for the third occasion—and their participating in contributing to and engaging in the energy debate.

We all know that so many of the world’s population are excluded from a full and fruitful lifestyle because, really, of fate. If we in the developing world can contribute in some large or small way then we should do that. I should say in concluding my remarks that, interestingly enough, some 30 per cent of the world’s population still live without electricity. Of the global population only one in six has access to the energy necessary for the high standards of living that we in this country enjoy. A billion people use over half the world’s energy and, by contrast, the billion poorest use only four per cent. We, in a very rich and prosperous country with a $22 billion budget surplus left by the Howard government, must surely be in a position where we can invest in technology and provide rebates and incentives that send a very strong public message and contribute to renewable energies that make our world a better place.

Chris Trevor (Flynn, Australian Labor Party) Share this | Link to this | Hansard source

I thank you, Madam Deputy Speaker, for the opportunity to speak on this bill today. The specific bill is the Australian Energy Market Amendment (Minor Amendments) Bill 2008. From the technical side of things, under the Australian Energy Market Amendment (Minor Amendments) Bill the Commonwealth government must pass legislation to apply the National Gas Law in the offshore area and external territories. Of greater importance is the need for the Commonwealth to consent in legislation to the conferral of functions under a state law on three Commonwealth bodies—that is to say, the Australian Energy Regulator, the National Competition Council and the Australian Competition Tribunal. This was perfected by the Australian Energy Market Amendment (Gas Legislation) Bill 2007, which meets the Commonwealth’s obligations under the AEMA by amending the Australian Energy Market Act 2004 to make it the Commonwealth’s application act for the NGL regime and amending the Trade Practices Act of 1974 on the conferral of powers on Commonwealth bodies by state laws as part of the NGL regime. This act also amended the Administrative Decisions (Judicial Review) Act 1977 to provide for judicial review of decisions made under the NGL. The Australian Energy Market Amendment (Minor Amendments) Bill 2008 is a mechanical bill to achieve this purpose.

In addition to progressing the National Gas Law, the Rudd Labor government, in a new era of cooperative reform with the states, has already made significant advances in implementing its plans for energy market reform and energy infrastructure. Only recently the Hon. Martin Ferguson MP, Minister for Resources and Energy, and I had the great privilege of announcing budget funding of more than $200 million to a Central Queensland clean coal demonstration project. The funding provides $206 million for the Callide-A oxy-fuel demonstration project in Biloela—a three-stage demonstration of carbon capture and storage technologies. The project involves a retrofit of technology to a 30mw unit at Callide A power station in Biloela that will allow capture and storage of approximately 17,000 tonnes of carbon dioxide a year for up to three years. CCS involves capturing greenhouse gas emissions, predominantly from coal fired power stations, before they are released into the atmosphere—with the gas then injected and stored deep under the ground in geological formations similar to those which have stored oil and gas for millions of years.

CCS is essential for the long-term sustainability of coal fired power generation. With 83 per cent of Australia’s electricity generated from coal, no serious response to climate change can ignore the need to clean up our coal. This project aims to demonstrate a complete and integrated process of carbon capture and storage at an operating electricity generator, and it is vitally important to the long-term future of the Central Queensland coal industry. This project will yield detailed engineering design and costing data and operational experience to underpin the commercial development and deployment of new and retrofit carbon capture technology for electricity generation. In addition, it will produce detailed geotechnical design and costing data and operational experience to support the development of geological storage projects with capacities in excess of one million tonnes of carbon dioxide per year.

The commitment of the Rudd Labor government to this clean coal project in Biloela combines the government’s commitment to tackling climate change with ensuring the energy and industry security of Central Queensland, where I live. There are also a number of major industrial developments under construction or investigation which will see my electorate of Flynn, in particular, and the Central Queensland area boom. The sleeping giant is awakening. Some of these developments include but are not limited to: Belvedere Coal in the Banana Shire; the Xstrata Coal seam in Wandoan; Anglo Coal in the Dawson Valley; the Monto coal mining project; Alinta Limited; coal seam gas producer Sunshine Gas Ltd, teaming with Japan’s Sojitz Corporation to develop a $570 million liquefied natural gas plant at Gladstone; the LNG International and Arrow Energy coal seam gas to liquid plant; BG; and seam gas Anglo Coal, a development program for the Mungi coal seam gas field in the Moura area within the central Bowen Basin—just to name a few.

The Rudd Labor government recognises that energy security for the electorate of Flynn, for Central Queensland and for all Australians is absolutely paramount to their continued wellbeing. This bill, I am proud to say, represents the government’s unswerving commitment to addressing climate change and to the energy industry of Flynn, Central Queensland and Australia generally. As the member representing the powerhouse of the nation, I wholeheartedly commend the bill to the House.

Martin Ferguson (Batman, Australian Labor Party, Minister for Resources and Energy) Share this | Link to this | Hansard source

in reply—In concluding the debate on the Australian Energy Market Amendment (Minor Amendments) Bill 2008, I firstly thank the member for Flynn for not only his informative contribution in the context of the issues currently before the chair but also what is clearly his view about the potential development of the area in which he lives and that he represents. I agree that Gladstone has a very bright future because of not only the importance of a range of industries such as coal and aluminium but also, all of a sudden, the issue of LNG. It is no longer just a west coast consideration; it is potentially a major industry for the east coast of Australia. In the very near future we could see key developments in the Gladstone region and in the Surat Basin, including the development of an LNG industry based on coal seam methane. That will be potentially exceptionally important for the east coast from the point of view of not only domestic gas but also exporting to the region in which we live—which is crying out for energy capacity at the moment. As the minister, I am pleased that we have a member representing this key industrial area of Australia who not only well appreciates the challenges to his own region to meet these demands for development but also realises the importance of them for the nation at large and the global community.

On that note, I brought this bill to the parliament on behalf of the government with the support of my colleagues on the Ministerial Council on Energy. The council desires that we continue our progress towards an efficient and effective national regime for the regulation of gas pipeline services. By passing the bill, the Commonwealth parliament will play a key role in facilitating the Ministerial Council on Energy’s cooperative gas access regime. This is not only of national importance; it is also about ongoing microeconomic reform in Australia—something which was the cornerstone of the Keating and Hawke Labor governments. It is about improvements in productivity and guaranteeing that Australian industry is competitive, especially in a very tough global community. This regime will be underpinned by lead legislation enacted in the South Australian parliament, to which the National Gas Law will be a schedule. The National Gas Law will then be applied by all remaining jurisdictions, including the Commonwealth but excluding Western Australia, through legislation known as the application acts. Western Australia will pass complementary legislation with contents similar to the National Gas Law, rather than apply the National Gas Law established by South Australian law.

This bill makes minor amendments to the Commonwealth’s application act, the Australian Energy Market Act 2004; the Administrative Decisions (Judicial Review) Act 1977; and the Trade Practices Act 1974 to correct references to the South Australian lead legislation and to the Western Australian government’s complementary legislation. These amendments are required to ensure that the Commonwealth application legislation correctly applies South Australian and Western Australian legislation in the offshore area, and correctly empowers the Commonwealth bodies under the regime. The National Gas Law has been subject to a rigorous consultative process engaging all relevant stakeholders. The final legislation has taken into account issues raised by stakeholders. I appreciate the assistance of stakeholders in finalising this legislative package. Passage of the bill will make minor technical amendments to the Commonwealth’s application act, which will allow the smooth implementation of the cooperative energy reform agenda. These issues were also subject to further discussion and report at the Ministerial Council on Energy meeting held in Canberra last Friday. I can inform the House that the bill has the full support of all my state and territory colleagues on the Ministerial Council on Energy.

I would like to thank all those members who have contributed to this debate. It might seem a minor bill in the minds of some people, but I regard it as a significant economic bill in terms of where we are going on the all-important energy front. I appreciate the contributions of the member for Groom, the former Minister for Industry, Tourism and Resources, who prior to the last election had responsibility for this area of government activity; the member for Wills, Kelvin Thomson; the member for Flynn, Chris Trevor, who I have already referred to; the member for Dawson, James Bidgood, a very good local member; the member for Corangamite, Darren Cheeseman, a fellow Victorian; and also the members for Cowper, Ryan and New England. I note and appreciate the member for Groom’s support as the former minister, and I would also like to place on record my appreciation of his work as Chairman of the Ministerial Council on Energy over several years. I now appreciate, as the new chairperson of that organisation, just how tough it is herding eight state and territory ministers together to get a uniform, common national outcome, and I give him credit for sustaining that process over a number of years. I also note his remarks in relation to the development of gas and other energy resources in Australia and his warnings that government should not interfere in the normal operations of the market—views which I share.

I note the member for Cowper’s remarks in relation to the removal of the excise exemption on condensate, and his unwarranted claim that this will have a disincentive effect on exploration. However, I simply say that, in my mind, the member understands the real situation on the ground. The recent budget changes which are currently before the Senate relate to excise payable on condensate and are only applicable to the North West Shelf. They will therefore have no impact on the taxation regime applying in areas yet to be explored. Therefore—and I stress this—the budget changes represent no disincentive to further exploration.

I also note the member for New England’s remarks in relation to biofuels. I appreciate that he has been a constructive contributor to this complex debate over many years but I reject his suggestion that the government is sending mixed messages to the community in relation to support for renewables. The government has consistently recognised that biofuels—in particular, second generation biofuels—are part of a suite of technologies to mitigate climate change and address Australia’s greenhouse gas emissions. The government is wholehearted in its support both for renewable technologies, including the renewable energy target and the emissions trading scheme, and for carbon capture and storage technologies. I note the member’s comments regarding the emissions trading scheme and urge him to put his views forward in response to the government’s green paper on the emissions trading system, which the Minister for Climate Change and Water, Senator Wong, will release for public discussion and consideration in July.

The member for Ryan made comments about support for solar activities. I simply say in response that the member should more thoroughly examine the recent budget papers and the commitments given by the government. There is a renewable energy fund of $500 million. There is also the $150 million Energy Innovation Fund, $100 million of which will be allocated for solar PV and thermal research and development, which is a very significant contribution. I would also remind him that, in terms of the development of solar and other renewables, he should not just have regard for government programs and potential grants, which will be allocated on a merit basis. He should also pay more attention to the potential impact on the renewable energy industry, and the encouragement it will receive as a result, of the introduction of the emissions trading scheme and the renewable energy target of 20 per cent by 2020. It is a package of climate change programs, and changes to the method of operation of the Australian community, which will be of considerable long-term benefit to the renewable industry. If anything, this package will be a world-first and provide leading-edge encouragement to the renewable energy industry.

Finally, I thank the member for Dawson for his comments on tourism, and I wholeheartedly support his enthusiasm for Film Australia. I appreciate the contributions of other members on both sides of the House. I think these debates are exceptionally important because they raise a range of issues of not only national importance but also local and regional importance to communities around Australia. I commend the bill to the House.

Question agreed to.

Bill read a second time.

Ordered that the bill be reported to the House without amendment.