David Fawcett (SA, Liberal Party) Share this | Link to this | Hansard source

My question is to the Minister for Resources and Northern Australia, Senator Canavan. Minister, last year, Australia faced a gas supply crisis where prices were high and supplies were limited. What actions has the coalition government taken to improve gas supplies for businesses and consumers across Australia, and have they been successful?

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

I thank Senator Fawcett for his very important question. He is right to point out that early last year the country did face a crisis in gas supplies, a crisis that was putting at risk thousands of jobs, including in Senator Fawcett's home state of South Australia. That state has a proud history of manufacturing and it requires accessible and affordable supplies of gas to survive. The price of gas in Adelaide was $10 a gigajoule, a high for that region. Some businesses were receiving contract offers of $15 and $16—even $20 a gigajoule was offered in one instance.

As soon as the government received a report early last year from AEMO, the Australian Energy Market Operator, identifying a shortfall of gas potentially emerging this year and next, we convened a meeting the next week with the gas industry. The next month after that report we imposed a new framework for gas export controls to make sure that there was sufficient gas in Australia for Australian businesses and households. Later that year, in October, we came to an agreement with the gas industry for them to return gas to the domestic market such that export controls were not needed to be triggered. That agreement has led to 70 petajoules more coming back to the domestic market than previously from the gas industry. That has helped alleviate the gas supply situation and has helped bring prices down.

Last week the Australian Energy Market Operator updated their gas outlook report. Its great news that they now don't report a shortfall for next year. In fact, they report that we'll have 58 petajoules more gas than will be demanded next year, which will avoid the crisis situation we have had. In Adelaide, in Senator Fawcett's home state, the price of gas in the last three months has averaged $7.92 a gigajoule, down from the $10 level of a few years ago. This is good news for South Australian businesses and good news for businesses right across the country. The government is delivering better energy policy for our country to support businesses and jobs.

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

Senator Fawcett, a supplementary question.

David Fawcett (SA, Liberal Party) Share this | Link to this | Hansard source

Minister, what other actions has the government taken to improve gas supplies and lower prices, including those in my home state of South Australia?

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

We recognise that export controls are not a sustainable long-term solution to the situation we face. Last year we had to take significant action to relieve our situation. The long-term solution to this issue is to bring on more supplies of gas to alleviate the supply situation that we have. That is why we put aside $90 million in last year's budget to facilitate the supply of gas in Australia. Included in that was $26 million to support gas production projects directly. In Senator Fawcett's home state, $6 million will be provided to Beach Energy in Adelaide to construct a new gas processing facility in the Otway Basin to bring more gas online. In fact, this program will deliver an extra 25 petajoules of gas right across Australia by 2020. We've also accelerated gas market reforms to bring down the cost of pipelines and gas transportation around the country, and we are funding bioregional assessments to open up new fields and new areas across the country to bring new gas supplies online to, hopefully, help take pressure off prices further.

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

Senator Fawcett, a final supplementary question.

David Fawcett (SA, Liberal Party) Share this | Link to this | Hansard source

Minister, what challenges does Australia face in ensuring sufficient longer-term gas supply for businesses and consumers?

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

The Australian Energy Market Operator, in the report that it released last week, identified that, while there is no longer a projected shortfall in the short term, new gas supplies will have to be developed from next year and, further, more contingent gas reserves will have to be produced and bought online from 2021. The key risk to our gas market going forward is if unnecessary barriers to the development of those gas resources around the country remain. It's important that state and territory governments who want to support manufacturing businesses and jobs allow the natural resources in their states and territories to be developed, because, if the resources of Victoria, South Australia or New South Wales are not developed, gas prices will be higher. We know that Bass Strait is declining as a resource; it's becoming more costly. To keep the strong and competitive manufacturing sectors we have in this country, we must develop our natural resources in an appropriate and environmentally sensible way.