HANSARD EXTRACT
|
Energy Legislation Amendment Bill 2006: Second Reading |
| 1 June 2006 |
Mr HAYES
(Werriwa) (12.18 p.m.)—In
his second reading speech on the
Energy Legislation Amendment Bill 2006,
the Minister for Industry, Tourism and Resources said:
A secure, reliable and affordable energy supply is a fundamental
input to
Australia’s
economic wellbeing.
You wonder, from the lack of action on the part of this government
when it comes to securing its long-term energy supplies, how much
reliance can be placed on that statement. You would also wonder,
considering the government’s failure to implement the
recommendations of the Parer report of 2002, and indeed the
recommendations of the 2004 report conducted by the Productivity
Commission.
In the Parer inquiry, Parer was charged with
identifying the deficiencies in all our energy markets, but hardly
any of the recommendations contained in that report have been
implemented. He found, for instance, energy and gas sectors in
particular were burdened by excessive regulation, affecting both
efficiency and certainty within the market. In 2004 the Productivity
Commission specifically reviewed the gas access regime. But what did
we have in the report delivered in 2004? COAG promising to respond
to that report by the end of 2006, 2½ years later. So I do not get
all that up-beat in looking at this government’s attention to energy
security for the wellbeing of
Australia,
although I do welcome the measures in the bill before us today.
There is no doubt that the provisions contained
in this bill are important ones. They provide a greater degree of
investment security in the gas pipelines, which investment security
is set to become increasingly important in delivering the energy
resources required to support our manufacturing and other
value-adding industries in securing our economic growth.
This bill amends part IIIA of the Trade
Practices Act to remove existing barriers to investment in gas
pipelines. As a result of these changes, those seeking to construct
new gas pipelines will have the ability to obtain an up-front ruling
on whether full price regulation in the access regime should apply
to the new project. Should the pipeline not meet the full coverage
criteria, it will be granted a full exemption for up to 15 years. I
cannot disagree with that policy, as it is the exact same policy
that the member for
Hunter, the then opposition spokesman for energy,
took to the last election.
I will return a little later to contrast the
position adopted by the government and the opposition when it comes
to energy security, but I now want to deal with the second mechanism
contained in the bill. This mechanism introduces a price regulation
exemption, also for a period of 15 years, for new pipelines bringing
in foreign natural gas to Australian markets, subject to certain
obligations. We have just heard the member for
Solomon speak on the importance of PNG gas. That is critical. One
thing that we should not lose sight of is that investments in
pipelines are quite significant. They require decisions and
assessments to be made on levels of return over projected periods.
Being able to secure foreign gas for Australian markets is
absolutely critical in the development of the Northern Territory’s
industrial mechanisms, but in addition it will at some stage be
critical in its position in relation to a national grid.
Naturally, both mechanisms involve competition
and public interest assessments which will be made by the National
Competition Council before final decisions are made by the minister.
That in itself is an important change. These mechanisms are
important and provide a greater degree of regulatory certainty for
companies looking to make the significant investment required to
construct gas pipelines. Greater regulatory certainty leads to
greater investment certainty, and this investment is a key to
exploring and developing competitive energy markets that will
satisfy
Australia’s ongoing energy needs.
We all have to be conscious that
Australia is a gas-rich nation. Currently we have in the vicinity of
140 trillion cubic feet of known gas reserves. In layman’s terms,
that is in excess of 100 years supply at our current rate of usage.
Over the last 20 years we have been finding gas a lot faster than we
have been able to invest in it. Some time back, in one of my former
occupations, I had the opportunity to represent workers in the oil
and gas fields in the North West Shelf and the Timor Sea. As a
consequence, I regularly visited areas of Woodside, the
Rankin
A platform, West Australian Petroleum, Chevron when they operated
Barrow Island, BHP Petroleum, the Challis Venture and Jabiru.
They were out there trying to develop our oil reserves. By and
large, in most wells that were drilled, if oil was not
discovered—and no great volume has been to date—an abundance of
liquid natural gas was. One of the problems for us is that 95 per
cent of our natural gas reserves are found in north-west
Australia
but 90 per cent of our population and the vast majority of our
industry based market is on the east coast. Pipelines are going to
be absolutely essential if we are to capitalise on the fact that we
are a gas-rich nation.
True reform of
Australia’s energy sector can only come through strong leadership.
Strong leadership needs to drive the energy sector forward to create
and maintain the environment needed to undertake the considerable
investment necessary to develop the Australian gas industry, and it
can only be shown by the leadership of the national government.
Leadership by our national government with the cooperation of the
states and territories is a precondition to sustained investment in
the Australian gas industry. To date the action and the leadership
required have sadly been lacking. Considering the gas reserves of
Australia, you would wonder why it has taken so long for the changes
contained in this bill to be introduced—changes that will support
investment in gas pipelines.
Investment in the transport networks required
to transport gas from areas of resource development and production
to consumers is an absolutely critical element of the long-term
viability of our gas production. Naturally, the viability of
companies investing in construction of gas pipelines is dictated by
elements in the market for gas transport, such as the number of
participants and the price that can be charged for the use of
individual transport networks. Consequently, when considering
investment in gas pipelines, a degree of certainty about the
regulation of the transport price is an important element in the
viability of a project. Investment figures to develop gas fields are
staggering. In
Western Australia consideration is under way to bring gas from the
Gorgon field onshore in a 90-kilometre pipeline to intersect with
the Goldfields gas pipeline. These billion dollar investments need
to be developed to bring gas from those fields to the market; hence,
a degree of regulatory certainty is necessary in order for such
investments to proceed.
Of course, there is a fine line between the
creation of regulatory certainty and the creation of infrastructure
monopolies. For this reason, I am pleased to see that the minister
has not decided to grant himself sole power to determine who is
granted the exemption under the provisions of this bill. Independent
assessment of the competition and public interest aspects of the
exemptions will be conducted by the National Competition Council.
Unlike the Minister for Employment and Workplace Relations, who has
determined that he will be the final arbiter of every single
contract and certified agreement made in this country, the Minister
for Industry, Tourism and Resources has decided that he will not
take upon himself similar powers. As I said, decisions on exemptions
will be made by the National Competition Council.
It is pleasing to see the provisions of this
bill introduced, as it is yet another occasion when this
government—quite frankly, a government which is out of puff in this
area of reform—has decided to adopt one of Labor’s election
policies. It is good to see the member for
Hunter in the House, Mr Deputy Speaker, because you will find his
DNA all over this. He was the architect of the policy that was taken
to the last federal election. It is pleasing to see that the
government has adopted our policy, and hopefully the government will
start to adopt some of the other policies that Labor has brought
forward for securing Australia’s energy resources.
While the government is concerned with
narrowing the debate to nuclear energy—a move, I have to say, that
by itself is somewhat limiting—I am sure that the energy security of
this country does require consideration of a wide mix of energy
resources. That narrowness is in stark contrast to the position
which has been put forward by the Labor Party. Recently the Leader
of the Opposition outlined Labor’s view on securing
Australia’s energy future in his blueprint on developing the
Australian fuel industry. Labor has accepted that
Australia’s
national government needs to provide solid leadership when it comes
to securing our energy future. Labor realises that Australia’s
energy future will not be secured by hope alone. Labor knows that
there will be a desperate need to invest in infrastructure to access
our rich but, unfortunately, very remote gas fields. Labor knows
that areas in the Pilbara, the Kimberleys and the Timor Sea are not
supported by the ports, the roads, the airports, the townships, the
power, the water supply, the hospitals and the schools they need to
support the development of those gas fields to a productive resource
into the future.
The opposition recognises the long-term
implications of having no plan to secure our energy independence. It
realises the implication of having no plan to reduce our reliance on
a decreasing global supply of oil and transport fuels and it
recognises the importance of taking efforts to insulate the
Australian economy from the impacts of the significant energy price
rises that we are experiencing today. This stands in stark contrast
to the government’s plan, because the government just does not seem
to have one. It does not have plans to increase investment in
research and development in any industry, let alone investment in
research and development of our energy sector.
The cooperative gas access regime has created
barriers to investment in new pipeline infrastructure, and the
provisions of this bill will act to remove those impediments to
create an investment environment that has greater regulatory
certainty and provides more efficient investment. I acknowledge the
provisions contained in this bill have been agreed to by all state
and territory governments through the Ministerial Council on Energy
and acknowledge that the peak bodies of the industry—namely, Energy
Networks Association and the Australian Pipeline Industry
Association—also stand in support of these measures.
The amendments to the Trade Practices Act and
other acts provided for in this bill are an important step in future
developments of the Australian gas industry and they underpin
investment decisions that will assist in securing
Australia’s long-term energy needs. Energy in all its forms is the
lifeblood of modern economies. The demand from the emerging
economies of China and India certainly add to the global demand for
energy resources, and it is incumbent upon this federal government
to show leadership when it comes to developing the Australian energy
sector. This leadership must extend beyond simply exporting gas for
a few cents a tonne. It must extend to securing export revenue that
reflects the true value of our energy reserves and it must also
extend to securing a sufficient level of resources to support
Australia’s energy needs well into the future.
Competitive supplies of energy are needed to
supply the manufacturing industry and our various other value-adding
industries. That is absolutely critical to developing an economy.
Investment in those industries will be subject to boardroom
decisions being taken on energy security within this country.
Therefore, it is absolutely imperative that we address the security
of our energy supplies. It is absolutely imperative that we develop
our gas markets. As I said earlier, we are considered a gas rich
nation and we need to take all steps to make sure that we can
economically bring that gas to market to give ourselves a
competitive advantage, whether it be in manufacturing or other
value-adding industries. Investment in the future of our energy
supplies must be undertaken. It is absolutely essential for the
further prosperity of this country and it will be significant in
developing jobs in the future for all Australians.
I support the bill. I support Labor’s second
reading amendment. I think there has to be a wide view taken by
legislators when it comes to developing our resources. In 2002 the
Parer report came down, identifying the deficiencies in our
industries and making recommendations for how we can improve those
deficiencies. We cannot sit idly by and wait until world markets
overtake us. We are in a global competition. We do need to advance
the position of
Australia on behalf of Australians, and I support the bill.
Return
to Speeches Menu.
