Craig Kelly (Hughes, Liberal Party) Share this | Hansard source

I'm pleased to rise to speak on the Liquid Fuel Emergency Amendment Bill 2017. The reason for this bill is the International Energy Agency places an obligation upon all their members to have a stockpile equivalent to 90 days of their imports of oil. For many years, since we became a member of the International Energy Agency, it was something we didn't have to worry about here in Australia. We had our Bass Strait oil on stream and we were almost, for most of that time, either oil self-sufficient or very close to it. In the year 2000, the supply of oil from Bass Strait started to dry up, but, contrarily, while our supply was drying up, our demand for oil in this nation was increasing. Today, we face a prospect in this nation where we are more reliant on imported oil than at any time in our nation's history. Even before the discoveries of the Bass Strait oil, we are now more reliant on oil than at any time of our history.

As for meeting our obligations under the International Energy Agency, it was estimated in April 2017 that we only had 51 days' equivalent worth of oil imports against a requirement of 90. That makes us the only member of the International Energy Agency to be in breach of those obligations. The first question is: how relevant is that 90 days? Ninety-one days doesn't make you secure; 89 days doesn't make you insecure. It's an arbitrary line about where it is. As well as an international obligation, we also need to be looking out for Australia's national interest. What level of oil do we need in the country—a reserve holding in stocks—that could get us through a crisis?

In relation to that, I note that the Australian Institute of Petroleum has argued that that 90-day requirement should be reviewed, considering it was set back in 1974 and that global oil markets have evolved sufficiently in that time. The Australian Institute of Petroleum has questioned the logic of investing in oil stockholdings, suggesting that there 'is no evidence that the substantial cost of emergency stockpile is justified on energy' grounds, noting that 'Australian fuel supplies have not been disrupted' even during global supply disruptions. Similarly, Caltex has argued that increasing Australia's oil stocks to 90 days of net imports 'would make very little difference' to Australia's fuel security and suggested that the high cost of investing in a strategic fuel reserve 'would need to be met either by increased fuel prices or diversion of public funds'.

There would be a very, very significant cost to this economy, to this nation, if we were to meet that 90-day requirement with physical stocks of oil in this country. Effectively, by going with the mechanism of purchasing tickets, we are running the gauntlet on our nation's national security of ensuring that we have enough liquid fuel in this nation. In contrast, we look at what they have done in the USA. It wasn't that long ago in the USA that the term 'peak oil' and their concerns and their reliance on imported oil from the Middle East was a major political issue. In fact, it was President Obama who said, 'We can't drill our way out of oil,' while others said, 'Drill, baby, drill.' Thankfully, that is what the USA did. They developed new techniques of drilling. I would like to quote a very significant quote. It is from Allen Gilmer, the co-founder and executive chairman of Drillinginfo. He said of the new discoveries of oil in the Permian Basin in West Texas—and this seems almost contradictory:

We should view the Permian Basin as a permanent resource—

of oil—

The Permian is best viewed as a near infinite resource—we will never produce the last drop of economic oil from the Basin.

That is what their situation is in the States. Here in Australia, we have Labor and the Greens wanting to stop every possibility of oil exploration. We have members of the Labor Party in this debate talking about how they are concerned about oil security in this nation, and yet at every opportunity their state colleagues seek to block, with their Greens mates, oil exploration and gas exploration in this country. That puts our nation at a significant risk, and it imposes a significant cost to the economy.

Then we had the amendment moved by the hapless member for Port Adelaide, the shadow minister for energy. I would like to read part of his ill-considered amendment to the House. He said:

… the Government’s lack of national energy policy … is causing an investment strike in new electricity generation …

This just shows how completely out of touch the shadow minister for energy is. There is no investment strike; there are billions and billions of dollars—I estimate, on the back of an envelope, around $7 billion—worth of investment in new generation facilities, in wind turbines and Chinese solar panels. There is no investment strike in those, but the problem we have is that those sources of energy generation are intermittent and are unreliable. Whatever investment we have, we must have it backed up, and backed up 99.9 per cent, if not 100 per cent, by dispatchable power.

What are the Labor Party doing? They say they want to close down all the coal-fired power stations in this nation. We don't have enough dispatchable power in the marketplace at the moment, and the Labor Party, with their friends the Greens, want to close down the rest of the coal-fired power stations in this nation. How are we going to get the electricity to run this economy? It's not only liquid fuel that we should be concerned about in the security of this nation, but there is also electricity that we should be concerned about in this nation. Without electricity, you cannot run your hospitals, you cannot run your public transport systems, you cannot run your list of high-rise buildings. This economy grinds to a halt if we cannot continue to supply it with enough electricity.

What do the Labor Party do? They want to invest this nation's precious capital in building more intermittent and unreliable sources of electricity generation. We have seen that with the cost of the Renewable Energy Target and federal schemes, which was a $60 billion subsidy—by 2030, a $60 billion subsidy. And that is only the federal subsidy!

On top of that, you have to add the state subsidies—even the Grattan Institute has estimated an additional $14 billion subsidy. It's simply a reverse Robin Hood: taking from the poor and giving to rich green people $14 billion worth of subsidy. Then you have the hidden costs of hooking all these wind turbines and solar panels up to the grid—billions of dollars of further cost to the economy. And then there's the cost of what it does in distorting the market. When you force intermittent and unreliable electricity generation into the grid, the more you put in, the higher the cost because you have to back it all up 100 per cent. That is why the Prime Minister is correct to look at projects like Snowy 2.0, the expansion of the Snowy Hydro Scheme, because you have to back it up.

We have a crisis in this nation. We have a crisis with our liquid fuel, with our greater reliance on imports; we have a crisis in electricity generation; and the third place, which is also mentioned in the member's amendment, talking about the government's failure to ensure adequate and affordable gas supply—whose fault was that? It was the state Labor government of Queensland and the Rudd-Gillard government that were clearly warned that, if they went down the track of opening up all the gas exports without putting steps in place to ensure that we had sufficient supply in Australia, gas prices would skyrocket, and that is exactly what happened. So we have three issues putting the energy requirements of this nation at risk, all caused by the Labor Party.

As for the member for Port Adelaide's motion about the investment strike in new generation, the simple reason there is an investment strike in dispatchable power, be it coal or gas, is that anyone that invests in a new coal-fired electricity generation plant knows that they need a commercial return over at least 30 years, and they know that, in that time, there is a grave risk of a mad, left-wing, Green-Labor government taking control of policy in this country and pulling the rug out from underneath them. That is why there is an investment strike.

We need to do better. We need to acknowledge that the cost of energy is one of the most important things for driving wealth creation and prosperity in this nation. You combine that with human ingenuity and risk-taking—it is low-cost energy that is the force multiplier that creates wealth. If we want to fund all the social programs that we talk about in this parliament, like continuing to fund the National Disability Insurance Scheme at a cost of $22 billion a year, and if we want to fund our health care, our hospitals, our schools, our roads, our public transport, our aged care and our pensions—if we want to fund all those things, we must have low-cost energy in this country. And yet every single policy lever that Labor can put their hands on pushes up the price of electricity to Australian consumers.

We need to get drilling. We need to understand that the oil capacity development that we have in this country has fallen off the edge of a cliff. We need to ensure that we get our gas drilling started again. We wish that the Labor members from Victoria would talk to their state counterparts about the nonsense of pursuing a 40 or 50 per cent state renewable energy target and the dangers to the economy of locking up all their gas supplies, but we don't hear a peep from them. All we hear is that they don't want to pursue the Paris targets, which the government's agreed to, of a 26 to 28 per cent cut; they want to pursue a 40 per cent cut. I would like a member of the Labor Party to explain to me how we are going to get a cut of 40 per cent in our liquid fuels? You may want a 50 per cent Renewable Energy Target in electricity, but what are you going to do to liquid fuels? How are you going to get that cut of 40 per cent in this nation's liquid fuels? How will you get it in aviation? How will you get it in trucking?

See this speech in context