Anthony Chisholm (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Minister for Resources and Northern Australia, Senator Canavan. Yesterday the minister was quoted as saying that the government had met its objectives on gas. Can the minister guarantee that Australian manufacturers using gas as a feedstock will be able to access the gas they need, at a price they can afford, to stay in business?

Matthew Canavan (Queensland, Liberal National Party, Minister for Resources and Northern Australia) Share this | Link to this | Hansard source

I thank Senator Chisholm for his question. What I can say is that manufacturers in this country have a much better chance of accessing that gas under this government than they did under the previous government. We know that because the shadow energy minister for the Australian Labor Party, Mark Butler, said last year that everyone knew gas prices would go up when the LNG terminals were built. But the previous Labor government did nothing. They knew prices would go up, but they did nothing to protect the jobs and investment of this country and our manufacturing sector.

When we saw gas prices were at high levels early last year—certainly close to the prices in North Asia, if not higher—this government introduced the Australian Domestic Gas Security Mechanism, which for the first time gave Australian governments the opportunity to control gas exports if needed. We would always prefer to make sure that we can manage these issues in gas markets through agreement to make sure that markets are allowed to be free and open and transparent. That is why, after introducing that mechanism with the gas industry, late last year a heads of agreement was signed to allow 64 petajoules of gas to come back onto the domestic market. What that has led to is that the ACCC concluded in December last year that, this year, rather than facing a deficit of more than 50 petajoules of gas, we now potentially have an expected 20 petajoules of gas available for manufacturers. It is a better outcome.

That does not mean there is not more work to do. That does not mean that manufacturers in this country are not under pressure. But, through the action the government have taken, we have helped alleviate the pressure they were under. The prices have certainly come down and they have come down to levels that better reflect international prices and the cost of production here in Australia.

Scott Ryan (President) Share this | Link to this | Hansard source

Senator Chisholm, a supplementary question.

Anthony Chisholm (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

Is the minister satisfied that Australia's largest manufacturer of fertiliser, Incitec Pivot, will not be forced to close its Queensland Gibson Island plant? Can the minister confirm that, if they were to close, it would result in the loss of around 1,500 jobs?

Matthew Canavan (Queensland, Liberal National Party, Minister for Resources and Northern Australia) Share this | Link to this | Hansard source

I thank Senator Chisholm again. I am sure that Senator Chisholm does not want to see the Incitec Pivot factory close. Nor do I. We want to try and make sure there is a future for fertiliser manufacturing in this country, and last year we made the announcement about the Australian domestic gas security mechanism at Incitec Pivot's manufacturing facilities on Gibson Island. I believe it's the only facility in the country that produces urea, an important input to farming. We want to see that continue. I have spoken to gas producers in only the last few weeks about what options might be able to help Incitec Pivot maintain and access gas for the long term. But can I say that, if we want to keep that there for the long term, we need some of these state and territory Labor governments to allow gas to be produced in this country, not to have a situation like in Victoria, where they have a moratorium on conventional use of gas, or the Northern Territory, where they're sitting on potentially game-changing gas resources and have not done anything in the year and a half they have been in government. We need long-term supplies of gas to guarantee manufacturing in this country.

Scott Ryan (President) Share this | Link to this | Hansard source

Senator Chisholm, final supplementary question.

Anthony Chisholm (Queensland, Australian Labor Party) Share this | Link to this | Hansard source

Has the minister received any advice from the Minister for Agriculture and Water Resources on the extra costs for Australian farmers if Incitec Pivot ceases production? Is it the case that a different supplier will mean large additional costs for the re-equipping necessary for a different fertiliser? How much will this add to the cost of living for the average Australian?

Matthew Canavan (Queensland, Liberal National Party, Minister for Resources and Northern Australia) Share this | Link to this | Hansard source

I have not received advice directly from the minister for agriculture on this issue, but what the government has done is commission a number of reports from the Australian Energy Market Operator and the Australian Competition and Consumer Commission in the past few years to assess the kinds of impacts that Senator Chisholm has raised. In particular, in early, I believe, 2016 the Australian Competition and Consumer Commission produced a report about the potential for higher gas prices to flow through to other industries, including commercial and industrial industries like those that produce fertilisers. At the time, the ACCC said that markets were working and no further action was needed, but last year in the gas supply opportunities report the Australian Energy Market Operator identified a deficit in gas markets, and that's why we have taken action to introduce the domestic security gas mechanism, which gives the Australian government the potential to allow more gas to stay domestically, provide more gas to manufacturers like Incitec Pivot and ultimately protect those jobs in our manufacturing sector.