Rex Patrick (SA, Centre Alliance) Share this | Hansard source

After lengthy discussions with the government to address concerns that Centre Alliance has about rising energy costs, and particularly the high electricity costs in South Australia, Centre Alliance has decided to support the government's personal tax cuts legislation. Supporting the tax cuts will reward hardworking Australians and provide a stimulus to the economy that almost all economists have called for, including the Reserve Bank governor. Controlling energy costs will help people on Newstart, workers, pensioners, small businesses and big businesses, all who have been struggling with high energy costs.

Centre Alliance does have a concern about stage 3, noting there is the potential for a slowing economy, but notes that the government have steadfastly refused to split the bill. We do not want to delay tax cuts and the stimulus effect they provide, and note that the parliament has the ability to react if we have a softening economy, should that occur somewhere between now and 2024, when stage 3 is due to come into effect. The gas measures developed by the government will make the economy more competitive, and that will serve to mitigate risk of a downturn, simply because we are an open trading economy and we need to make sure that our energy costs are competitive. Energy feeds into every sector of the economy. It doesn't matter whether you're cooking fish and chips for a living, running a tuckshop or running a chemical company; they all involve the use of energy. If our energy costs are high, we are uncompetitive, so it's really important that we make sure that these energy costs are reduced. The last thing we want to have happen is for people to get a rebate designed to help them and to help stimulate the economy only to find that that rebate gets gobbled up by energy companies.

Let me talk about gas. As I said, energy is used in every sector of the economy. If energy costs are high, it makes us an uncompetitive economy. Fifty-one per cent of electricity generated in South Australia is generated from gas. It is gas that sets the price in South Australia, Victoria and Tasmania. ACCC Chairman Rod Sims has forecast that gas prices will rise. I think everyone alive to that issue would be concerned about that. I point out that Centre Alliance went to the last election with a promise to force a reduction in energy prices. Let me tell you some gas facts. In 2013-14, Australians paid between $3 and $4 per gigajoule of gas. Then what happened was that six LNG trains were developed at Gladstone, Queensland to allow for the export of gas. In conjunction with that, production of gas in Australia tripled. Except there was a problem: it turns out the companies that were exporting the gas didn't quite calculate things properly and there wasn't enough gas in the reserves that they were planning to use to serve these export markets. As a result, they turned to the domestic market and started buying up gas that was otherwise there for Australians.

In 2017 there were South Australian companies coming to see former Senator Xenophon and me, as his adviser, basically stating: 'It's not the price that concerns us. We can't even get an offer for gas.' That's how short things were in the Australian market. Unfortunately, the gas companies simply decided to make sure they could fulfil their contracts with overseas entities at the expense of Australian companies—a totally unacceptable situation and one that lacks social licence. So Centre Alliance sat down with the government back in 2017—just so everyone can understand, this is a long-running discussion that Centre Alliance has been having with the government—and negotiated with them over concerns about people in South Australia not being able to get a gas offer. We negotiated the Australian Domestic Gas Security Mechanism. I did that with Senator Canavan.

The Australian Domestic Gas Security Mechanism allows the government to forecast supply. If there's a risk that the supply won't meet the demand in the domestic market, they can pull the trigger and, in effect, stop gas exports and then recommence them in a manner that ensures there is enough supply for the Australian gas market. Now, the interesting thing is that that mechanism has never been pulled, but the gas companies know that it's there. As a result, they have made sure there is enough supply in the Australian market now. Unfortunately, they've kept the price tight. They've only just provided enough gas to meet supply, and that has kept the price tight. So we ended up with this gas mechanism, and it did help to resolve the problem; however, we now need to address price. It has clearly addressed supply but not price.

One of the problems we have is that there are very few gas companies here in Australia; there's a cartel style operation going on here. Mostly it's foreign owned companies that are doing this, and I want to just talk to you about some of these companies that are here in Australia, exporting our gas. One of them is Shell Energy Holdings Australia Ltd, and I want to inform you that over the last four years that company has generated—it's thanks to our tax transparency laws that we know this—$53 billion of revenue, from 2013-14 all the way through to 2016-17. Do you know how much tax they've paid? They've paid $1.1 billion in company taxes. So $53 billion of revenue, and somehow, across those four years, they've only paid $1.1 billion in tax. Origin Energy Ltd earned $51 billion over the same period and paid only $108 million in tax. ExxonMobil Pty Ltd took in $33 billion of revenue over four years and paid zero tax in that time frame!

Now, I come from business. I understand the difference between revenue and taxable income. But I also understand the concept that companies need to make profit to survive. If you've got a company that year after year after year is not making a profit, there's something untoward going on, something strange going on, for that to occur. The big problem I have—we were talking about taxes, and the Greens are talking about services and facilities and so forth—is that we find that these companies, in paying no tax, are doing so whilst they benefit from our fantastic education system, where they've got educated workers and trained workers, where they've got workers who have medical cover, unlike in other countries where they may operate. They've got infrastructure that's been provided to them. They've got security provided by the various security and defence agencies in this country, and they've got the rule of law. They enjoy all of that, yet they pay no tax. And that's a totally unacceptable situation in my view. They enjoy the benefits of Australia's civil environment, but they don't pay for any of it.

These companies have lost their social licence. Last year we saw banks and financial institutions become the centre of attention for misconduct. This year it's the gas cartels. I'm calling you out. You are un-Australian. You are not contributing. You are happy to fill your contracts to meet your own commercial objectives at the expense of Australians who are struggling with energy prices. There are people in South Australia, elderly people, who cannot turn on their heaters during winter, cannot turn on their air conditioners during summer—a totally unacceptable situation—whilst these gas companies enjoy our gas to export for their profit that somehow is not booked here in Australia. Just as a general indication to any company that's not paying tax, I have the tax transparency spreadsheet from the ATO, and I'll be using it extensively throughout the next few years, naming the companies that are not paying tax, because in my view it's shameful. I get that some companies don't make a profit, and that's okay. But when you consistently don't pay tax, you are going to get called out.

So, we've had a tripling of production, yet the price of gas in Australia has also tripled. How does that work? We're now paying about $9 per gigajoule. Remember that I said at the start we were paying $3 to $4 per gigajoule. We're now paying 20 per cent more for our gas than our Asian friends are paying for our gas. How broken is that? And we're now seeing a situation where, around Australia, five import terminals are being planned, being looked at for development. We are the largest exporter of gas in the world, yet we are building import terminals? And some people tell me that that's a solution to the problem. It's not; it's a symptom of the problem. We have to do something about our gas prices.

ACCC Chairman Rod Sims said, in a press release about a month ago:

High gas prices remain a critical issue for domestic gas users and could see more businesses move or close on the east coast.

He pointed to an announcement by Dow Chemical that it would close its Melbourne manufacturing plant, in part because of high gas prices. That came after RemaPak, a Sydney-based producer of polystyrene coffee cups, and Claypave, a Queensland-based brick and paving company, entered administration, citing rising gas costs as an important contribution to the decision to go into administration. I'm also reliably informed by industry that some companies are deferring investment in this country and some are simply going elsewhere because of our high energy costs. There has been a market failure here in Australia, and where there is a market failure that is where governments intervene.

Centre Alliance has worked with the government on both short- and long-term actions to deal with our gas market concerns. A policy package will be announced. In terms of transparency—people are worried about something secret that's happened—the government has assured us that, over the next few months, they will announce their policies as they become fully developed. I've indicated some of the things that are likely to be in that policy. I've publicly talked about changes to the ADGSM to deal with the current lack of supply. As I said, there is supply but it's not sufficient supply to drive prices down.

In terms of market transparency measures—that is, measures to deal with the monopoly nature of the east coast gas pipelines—I'm not giving away any secrets there. Go and have a look at the ACCC's east coast gas market report, which talks about that. It says there's nothing unlawful about monopoly pricing, but we do have a monopoly situation with the east coast gas market and the government is looking at that. And we've heard Senator Canavan talking about longer term measures to ensure that projects deliver a surplus supply to the Australian gas market. Those are some of the things that Centre Alliance have talked to the government about, and we will continue talking to the government about them.

Back in 2017 we started talking not just about the ADGSM; we talked about 'use it or lose it' gas policies on retention leases. There were a number of things we talked about back in 2017, and there's been a continuum of discussion with the government about these things. So, whilst the Labor Party have been in their cabinet room working out tactics to play things out in this chamber, we've been working with the government on sensible policies moving forward.

Turning to Labor's criticism of what Centre Alliance have done, of course all we've done is ensure that workers will get a tax cut and we're ensuring that gas and electricity prices will fall. Let me read from The Advertiser editorial on Labor's position on this bill. It says:

Labor, however, dealt it-self out of the equation by a muddled strategy, appearing confused about whether or not to support tax cuts.

I don't think we'll know until later tonight whether they do or don't support tax cuts.

Returning once again to the question of transparency, which was raised in the debate associated with the suspension of standing orders, a draft policy suite has been developed. It's been developed sufficiently for us to understand its effect but not the implementation of it. Okay? So it's not finalised, and the Labor Party ought to know that it is not appropriate to release half-described policies that don't go to the implementation—that could also affect the market, actually. I've been given an assurance by the finance minister, Senator Cormann, that the government will, at some stage, announce these policies, and it's not too far off. They just have to properly bed them down in terms of their implementation. We are quite confident that it will produce results that will complement the tax cuts—lower taxes and lower energy prices, full stop.

Finally, we are mindful of the uncertainty in the economy. Perhaps the economy will turn in a southerly direction but, equally so, it could turn in a northerly direction. If you look at the budget papers, the assumption used for iron ore prices is $55 a tonne, and it's currently above $100, so the budget papers are relatively conservative. We took briefings from Treasury, the Reserve Bank governor, the ACCC chairman—from a whole range of people—looking at whether or not we should trust what was in the budget papers. But, even if it turns in a southerly direction, it is the role of parliament to deal with that southerly change. If, indeed, the Labor Party are of the view that there is a southerly change coming and that these tax cuts are not the right solution, they can embark on a campaign. They can come out and tell people that, at the next election, they intend to raise taxes. That's what they can do. If you think that's the solution, you're quite welcome to do that. You can get out there and campaign to increase taxes, if you really think this is the wrong outcome.

On balance, we think that this is the right direction to go. We recognise that in future there can be further changes. We recognise that the government will continue to listen to us on gas. There's no conspiracy here; just good policy development—good working between the crossbench and the government on this particular issue. So we're quite satisfied that, on balance, this is the right thing to do. Centre Alliance will be supporting the legislation as it currently stands.