SPEECH: Petroleum and Other Fuels Reporting Bill 2017, Petroleum and Other Fuels Reporting (Consequential Amendments and Transitional Provisions) Bill 2017

Aug 17, 2017

Mr CONROY (Shortland) (18:11): I want to compliment the member for Wakefield on his well-thought-out contribution. It was a tour de force, going from 1930s Australian politics to a quick survey of the global national security environment. It was very enlightening. It’s my pleasure to rise and talk on the Petroleum and Other Fuels Reporting Bill. I’m pleased to join my colleagues, particularly the member for Port Adelaide, who moved a great second reading amendment that allows us to discuss what this bill really tries to go to, which is improving energy security and energy policy in this nation.

As my colleagues have pointed out, the Australian gas market is one of the least transparent markets in the country. There are very significant issues, in that nobody knows how much gas is produced, who holds it, how much the gas is sold for and where it goes. This bill establishes a mandatory reporting regime for fuel information. The government will be able to monitor energy security, facilitate compliance with international reporting and stockholding obligations, and enable the publication of fuel statistics for use by business investors, academics and government. So Labor are supporting this bill because its provisions will require gas companies, for example, to disclose gas supply information to the government, and we will no longer have to rely on voluntary disclosures. But the reporting provisions in this bill do not provide a solution to the wider gas and energy crisis that has occurred on the government’s watch, and this is what I want to address in the time that I have left to speak.

We face a national energy crisis in this country, and there are two separate but related crises. The first one is around gas, and this government has been sleepwalking towards this gas crisis for the last four years. Despite all the posturing by the minister for energy and the Prime Minister in question time, it is not a sufficient excuse to blame it on the last Labor government. You might be able to cop that if the government had been in power for three weeks, but they’ve been in power for 4½ years. They don’t act like it, as today’s events show, but they’ve been in power for over four years and they’ve done nothing to solve this national gas crisis. What we have seen is four years of inaction, and suddenly they’ve woken up and they’ve got a problem, but all we have now is talk. All we have now is talk.

What we have got is talk by the Prime Minister, who has quite courageously—and I use that term in the Yes, Minister sense—promised that he will halve gas prices. Gas prices have skyrocketed to over $20 per gigajoule, and the Prime Minister has promised to halve them, to bring them back down to $10 per gigajoule. I wish him every success in that endeavour. My manufacturers and my households will be very pleased if he achieves this. Sadly, he doesn’t have any real, concrete policies that will achieve this end. What we have seen is four years of failure and a promise to halve the price, but in the meantime we’ve got gas prices at record levels. And who’s suffering because of this? It’s my manufacturers. I met with the Australian Industry Group in the Hunter Valley a few weeks ago, and they were telling me some very shocking statistics about what their members are facing. Manufacturers were saying that they were used to writing gas contracts in the range of $4 to $5 a gigajoule. They’d had a conversation with a supplier this time last year who was saying, ‘We can get you those contracts for $8 to $9 a gigajoule.’ Those manufacturers chose to see whether the market would stabilise in the year post that conversation. Sadly, the market hasn’t stabilised—in fact, it’s gone in the wrong direction—and now those same contracts have been offered to them for prices of between $15 and $20 a gigajoule. This is quite outrageous.

Part of the problem, besides the cost impact on manufacturers, is that this is well above export parity pricing. It’s fair to say that, with a massive growth in exports that’ll come on with the LNG trains at Gladstone, you would expect the Australian price to equalise with the export parity price. But it’s far exceeding that now. We’ve got scarcity pricing, and that’s all down to this government’s failure to act in the last four years. It’s not as if it hasn’t had alternatives being floated around. I’m proud to say that I signed a letter in support of a campaign by the Australian Workers’ Union in late 2013 calling for a gas reservation policy—a policy that’s worked quite well in Western Australia. It was a policy put in place by a conservative government and continued by successive Labor and conservative governments, and it’s a policy that hasn’t dented their exports of gas. Gas exports are going gangbusters in Western Australia, but they’ve also got an adequate supply of gas for their domestic manufacturing and household consumption.

I was proud to sign this letter, and I’m proud to be part of a campaign that led to Labor embracing out of the 2015 national conference a national interest test which we took to the last election—a policy that was mocked and derided by the Minister for the Environment and Energy, who now must be sorely tempted to embrace that policy. That policy very clearly states that any new development of gas fields for export must increase domestic supply at the same time. It’s all fair to increase gas exports by exploiting new resources, but only if you can show how this exploitation of new gas will actually increase supply domestically. That’s very important if we’re to ensure adequate supply for the domestic industry and, secondly, suppress the prices that are currently facing the industry.

These price rises don’t just flow to manufacturers using gas with a feedstock or onsite power production. They are one of the two key drivers for the very massive increase in electricity prices we’re seeing around the country right now. In my home state of New South Wales, household consumers are facing 20 per cent price rises as of 1 July, and it’s down to two reasons. The first is the massive increase in gas prices on this government’s watch, and the second is the massive policy uncertainty in energy policy that this government has also perpetuated in its four years of mismanagement.

On gas, gas-fired power is the marginal price setter in the market. Gas-fired power through combined cycle gas turbines and open cycle gas turbines is the marginal producer in the Australian electricity market. It sets the price by being the last producer to enter the market. So, if gas prices go up, a direct result is that electricity prices will go up in the wholesale market. We’ve seen that over the last three or four years. We’ve also seen massive policy uncertainty, meaning that we’ve had a lot of retirement of very old power generation in this country. The coal-fired power fleets in New South Wales and Victoria are very old, Mr Deputy Speaker Buchholz. Your home state of Queensland is quite lucky: you’ve got comparatively young coal-fired power stations. But, in Victoria, the average age of the coal-powered fleet is 44 years old, and in New South Wales it’s 35 years old. So it’s quite natural that these power stations are reaching the end of their natural life. They are being retired because the companies that own them don’t see a commercial justification to undertake the very significant capital investment required. In the case of Hazelwood, they were looking at a $400 million build just to bring it up to current occupational health and safety standards. These companies are not making these investments. That capacity is coming out of the market. Because of the policy uncertainty around energy policy in this country, there is not sufficient investment coming in.

We have very tight capacity in the National Electricity Market and that’s leading to price rises. The energy sector itself is saying the policy uncertainty on energy policy, generated by this government, is driving prices up. The Australian Energy Council is the peak body for all generators in the country. This isn’t a front for the Labor Party. These aren’t mad greenies or a forum for renewable energy companies. This is made up of serious players, such as AGL, EnergyAustralia and Origin. They are saying that the policy uncertainty is equivalent to a $50 carbon tax. That is how much it is adding to the cost of wholesale electricity. That is now flowing through to households. The cost of inaction by this government is now flowing through to household bills.

For 15 years this country has seen hypocrisy and economic illiteracy by those on the other side. We had Prime Minister Howard sticking his head in the sand, when he was in power, on the need to drive new investment in renewable energy. Then we saw the overthrow of the member for Wentworth, when he was opposition leader, for daring to support a carbon pollution reduction scheme. That would have provided policy certainty to the energy industry, which would have allowed them to make investments for 40 years. Since then, we have seen the member for Warringah embrace Direct Action, a fig leaf for his opposition to taking action on climate change—fiscal recklessness on a grand scale is what the member for Wentworth called it. That was his sole energy policy—Direct Action. It was a policy that had very little relevance, if any, to new generation investment in this country.

Since then, we have seen an assault on the renewable energy target, an assault so incompetently implemented that the government’s own Warburton review shows it actually reduces power prices in this country. We had to reach a compromise: around a 23½ per cent renewable energy target. We then saw the commissioning of the Finkel review, a well-considered review that had some good recommendations in it. Its draft preliminary findings recommended an emissions intensity scheme. What happened then? The energy minister merely mentioned he was open to an emissions intensity scheme and the world ended. Within 12 hours he was bullied and cowed back into his box by the member for Warringah, by the member for Hughes—who is really the minister for energy in this government—and by a coalition of conservative reactionaries who threatened to revolt and roll the Prime Minister. Within 12 hours this government had pulled an emissions intensity scheme off the table. Dr Finkel, having seen the writing on the wall, said, ‘I’ve got to provide a report that will provide concrete recommendations that have a snowball’s chance of getting through parliament.’ So he moved to a slightly less effective policy around a clean energy target. He made an assumption that the coalition hadn’t ruled it out yet, so there might be a vague chance of having a debate on it. He recommended a clean energy target as the centrepiece for his 50 recommendations.

The Labor Party have supported that. The Labor Party have said an emissions intensity scheme remains our preferred policy, a policy endorsed by almost every stakeholder in the energy industry. But in the interests of solving this energy crisis, a crisis that can only be solved by a bipartisan settlement on energy policy, we’re prepared to negotiate on a clean energy target. That’s our current position. We’re waiting to see what the government does. We’re waiting for the Minister for the Environment and Energy and the Prime Minister to get their writing instructions from the members for Hughes and Warringah on what they can agree to. This is incredibly important, because if we don’t reach a bipartisan settlement we will not get the billions of dollars of investment we need into the energy industry to solve this crisis. The Finkel report’s modelling found that, if a clean energy target is adopted, we will see electricity prices at $175 per annum lower than they would otherwise be. So the inaction on the government’s side is a recipe for higher electricity prices.

Returning to the intent of this bill, I think the measuring of petroleum and other fuels is really important, particularly in the gas industry, if we’re to solve the gas crisis. We must solve the gas crisis and we must solve the investment strike in the energy sector if we’re to get new investment flowing, if we’re to suppress electricity prices so that my manufacturers have a chance of succeeding in the next century, exporting and providing the jobs that this country needs and, as importantly, so that consumers and households don’t pay as much as they are currently paying for electricity. I represent the suburb of Windale in the Lake Macquarie region. This suburb is the poorest region, the poorest suburb, in the entire state of New South Wales. They’re the ones who are copping it in the neck because of this government’s failure on energy policy. They’re the ones who are suffering. They’re the ones who are making hard decisions about whether they pay the electricity bill or feed their kids. I don’t say words like that lightly. They’re the hard decisions that these households are making right now, because this government is incompetent, this government is divided and this government is putting its own narrow, day-to-day survival ahead of the interests of the Australian people. That’s why history will condemn them and that’s why history will say that they should have bitten the bullet and come up with a decent energy policy.

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