House debates

Monday, 24 June 2013

Private Members' Business

Natural Gas

12:36 pm

Photo of Michael McCormackMichael McCormack (Riverina, National Party) Share this | Hansard source

I too rise to speak on this very important private member's motion brought forward by the member for Throsby. It certainly reeks of a great degree of hypocrisy that it has been brought in on the last Monday of the last parliamentary sitting week of this 43rd parliament. If it is that important—and he talked about the urgent need for this parliament to discuss it—why has it not been brought to this parliament in any one of the last five years? Why has it not been brought up before now? In the last parliamentary sitting week, in which we are dealing with more than 100 bills—some of which relate to last year's budget—he expects us to want to bring it forward and speak about its urgency. There were some things in his speech that I do concur with, and certainly that industry concurs with, but to bring it up at this juncture—at this five-minutes-to-midnight point in time—is a little bit rich.

The eastern gas market, which covers New South Wales, the Australian Capital Territory, South Australia, Tasmania, Victoria, and Queensland, has previously been stand alone, unlike the Northern Territory and Western Australian markets, which are connected to export markets. This has kept gas prices in the eastern market low by international standards. From 2014 to 2017, three liquefied natural gas export plants will open at Gladstone in Queensland, and I know the member for Flynn is very much looking forward to the opening of one of the plants in the first quarter in 2015. There are 9,300 people working on its construction at the moment, more working on the pipelines and even more on the gas wells at places such as Dalby and Chinchilla in Queensland. These people are looking forward to finishing the construction and the member for Flynn is looking forward to it providing even more economic wealth for his electorate in Gladstone.

Historically, gas in the eastern market has been supplied on long-term contracts, at prices ranging between $2 and $4 per gigajoule of gas compared with export prices of around $7 to $9 per gigajoule. The consensus among analysts is that the price of gas in the eastern market will rise to around $6 to $8 per gigajoule in the next two to three years.

Last Monday, I heard from Paul O'Malley, the Chief Executive Officer of BlueScope. I recall his interview with the ABC on 20 August last year, where Ticky Fullerton talked about the Prime Minister's Taskforce on Manufacturing, which had been announced just four days previously. In answering the questions put to him, Paul O'Malley said:

I think being a manufacturer in Australia you're faced with some very high cumulative costs. There's a lot we can do to lower energy costs in Australia. Flexible workforce. We've got that here, but it's pretty high at the moment.

So, we compare our activity in the US where there is an increasing investment in manufacturing with our activity in Australia and you can see that there is a lot that can be done. Bottom line: we've got to lower the cumulative cost of doing business in Australia.

That last sentence is very interesting, because what have this government done to lower the cumulative cost of doing business in Australia? The answer is nothing. They have made it go up and up and up by imposing a carbon tax and by imposing so many other restrictions on being able to do business in Australia.

Mr Champion interjecting

I hear the member for Wakefield cry out. He should know just how much the carbon tax is hurting the manufacturing sector in his particular South Australian electorate. I know that certainly the shadow minister for innovation, industry and science, the member for Indi, on the very day that the manufacturing task force report came out, quite rightly said:

This report is just more talk, with no prospect or guarantee of any immediate or decisive action from Labor … They started out on industry policy in 2007, by trying to improve "dialogue", with "discussions" and a "forum" supported by "councils", a "partnership", a "review" and roundtables.

But it is all talk. It is all fluff and guff from this Labor government, which has done nothing to protect manufacturing. So it is a bit rich for the member for Throsby to come in here on the last Monday on the last parliamentary sitting week and talk about the urgent need to do something for manufacturing. Paul O'Malley said:

… from a manufacturing base you've got to look at your raw materials as a source of competitive advantage. But also, by the same token, economists say, "Export everything you can and get the best price." I think we have to take a bit bigger view of the Australian market and look through cycles.

What I have been focused on is the resources boom will end in Australia, and at that point we need to make sure that we've got a broad-based economy and we can't be economically rabid as we head down that path.

He is right, and we do need to have this discussion about a reservation policy. But in the last parliamentary sitting week? There are other more pressing issues, such as some of the other 100 pieces of legislation, including some of which were in last year's budget, which still have not been ticked off. They still have not even gone through the Senate. So goodness knows when the government thinks that that might be going to happen. Goodness knows when the member for Throsby thinks that is going to happen. As the member for Indi indicated when talking about manufacturing, 'Same old talk, no action.' It could apply to all of the things that Labor has put in place—unless it was something that was actually going to constrict Australia from doing business, such as the carbon tax or Labor's poor water policy. But I digress.

All this talk of a reservation policy has been to shore up the domestic gas supply, and there are some people in the industry who believe that it is necessary. Certainly Manufacturing Australia, of which BlueScope is a part, talk about how it is a myth that major advanced economies do not intervene in their gas markets. I did hear the member for Throsby speaking about that very point. Australia is the only country in the world which allows unrestricted exports of gas. That is true. Regulation and government intervention are a reality of gas markets internationally. All other comparable nations, including the United States of America and Canada, employ some form of intervention to ensure a functioning domestic market spreads the benefit of gas resources throughout the domestic economies. We do need to make sure that we put in place legislation which is going to make it easier for Australian businesses to do business, to make sure that Australian manufacturing is able to be the very best that it can be. That is why, hopefully, after 14 September the coalition will be returned to office so that we can make this nation the very best it can be. At the moment, farmers, manufacturing, business and particularly small to medium enterprises have been absolutely smashed by this Labor government and its policies, and the worst of those policies is the carbon tax. But certainly with manufacturing we have lost so many jobs out of manufacturing that one wonders whether, in fact, we can ever restore it to the heady days we had before this Labor government took hold.

A reservation policy will not deter investment in LNG exports or otherwise cripple the industry. I will accept that, and certainly that is the industry's viewpoint. The impact of intervention on LNG exports may well be, according to the industry, negligible. But, first and foremost, we have to get our economy right.

First of all, we have got to get the levers going so that we are actually enhancing business, enhancing manufacturing. To do that, we need to remove the ever-constricting carbon tax and we need to put in place the sorts of economy-boosting policies which are going to help price-sensitive industries for which gas is a material cost, such as steelmaking, brickmaking and chemical manufacture, all of which have struggled under good policy from this place and all of which will do better, I might argue, under a coalition government.

Mr Champion interjecting

I hear the member for Wakefield saying something about imagining. It is not imaginary. We are going to have an election on 14 September. His side of politics has done a bad job since 2007, despite all the promises that it made prior to the 2007 election. Prior to that, everybody thought: 'We need a change. We'll give the member for Griffith a go.' Then of course the member for Lalor saw to that. This government has unfortunately let the people of Australia down. It has certainly let the manufacturing industry down and it has certainly let down those people who want to get on and do the right thing by this nation to improve economic development, to improve our international competitiveness, to improve our domestic markets and to improve the family businesses and small businesses which have made this country great. Labor has let them down. The coalition will not do that. We will restore hope, reward and opportunity, and we will certainly remove the carbon tax.


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