Ed Husic (Chifley, Australian Labor Party) Share this | Hansard source

Thanks, Deputy Speaker Young. It's great to see you again. You're working very hard for that role today, I might add, sir. I also want to commend my friend the member for Adelaide, who referred to a regulator as a superhero. I think you referred to the AER as superheros—that's maybe the first time in the parliament that regulators have been spoken about so effusively, so well done, Mr Georganas.

I welcome the opportunity to speak on the Competition and Consumer Amendment (Australian Energy Regulator Separation) Bill 2025, because I think it is important for the Australian Energy Regulator, particularly at this point in time, that we give them the independence, the efficiency and the resources that they need. As to independence, while the AER have been under the umbrella of the ACCC, it does not suggest for one moment that the ACCC has impeded their ability to do their job. But this will give the AER the ability to progress the work that it is doing in a very important space and allow it to act decisively and transparently in the interests of households and businesses, who depend on affordable energy. When it comes to our gas and electricity, Australians deserve a fair deal, and it is important that we have a regulator that's oversighting that.

The AER, as I indicated, long operated as a part of the ACCC, a structure that made sense 20 years ago. But, really, times have changed, and it doesn't remain the case that it makes sense today. The AER regulates billions of dollars in network revenue and oversees hundreds of energy market participants yet still relies on the ACCC for staff and resourcing. We want the bill to address this, and that's what it does. It separates the regulators; it makes the AER a fully independent Commonwealth entity with its own staff, its own budget and its own governance. It will be able to make decisions faster, cleaner and more efficiently, respond to market circumstances and enforce rules in real time. It's one of the three bodies overseeing an area of particular interest of mine—the national gas market. It's notionally referred to as a 'gas market', and I want to come to whether or not that term is a sustainable one in this day and age.

The three bodies—AER, AEMC and AEMO—have operated for 20 years without full financial or operational control. The separation empowers the AER to strengthen its independent oversight of energy markets, in particular gas infrastructure, pricing transparency and competition conditions. It does a lot of work in the gas space, which I want to reflect on, and I hope that it does more work in it.

The ACCC does quite a lot of work. I commend the ACCC. Twice a year it does a very important overviews of the performance of the so-called gas market in this country. If I had one suggestion, one area of reform is a much more dynamic approach to assessing the state of the gas market. The way it operates at the moment is that the ACCC releases a report every six months but that report reflects on data captured six months earlier—so it releases a report in the middle of the year talking about summer prices and a report at the end of the year talking about winter prices. There's got to be a much more dynamic way to measure the behaviour of the so-called market, the prices that have been achieved in that market and the contracts that have been offered. If there is reform to be done, it is that this work needs to happen on a much more frequent basis. We're on the cusp of, for the first time, seeing inflation data being reported not on a quarterly basis but on a monthly basis. If we can do that on something as big as that in the economy, we can definitely move quicker on reporting on gas pricing.

I've intimated a few times that there is a label applied here—'the gas market'. It's very important to emphasise that this is not a gas market. This is not a situation where there is equal power between the supplier and the buyer. This is a market where there is extraordinary market power held by the gas companies themselves, who set price and contract terms in ways that, frankly, operate against the national interest. Their pricing is way out of line with international pricing, despite, I'd say, misleading suggestions to the contrary. They provide contract terms particularly to Australian manufacturers that are, frankly, unacceptable for manufacturers who rely on gas for feedstock. These are unacceptable terms.

The sad reality is—and it's been reflected upon by the ACCC in its twice-yearly reports—that, with the measures that have been put in place like the heads of agreements, the gas trigger and the code of conduct, it is hard to see that there is a demonstrable effect or a significant downward pressure on prices as a result of these interventions. They've been treated as a joke by the gas companies themselves, who make out that they have compromised and been able to do a better deal for consumers—but quite the contrary exists.

Some of the behaviour of the gas companies and their executives is extraordinary and portrays completely tone-deaf behaviour by them. Exhibit A is a Santos executive—I don't think it is extraordinary that we have Santos being tone-deaf; they've demonstrated their capability to do this time and again. Mark Vassella, the CEO of one of the biggest steel manufacturers in this country, BlueScope, spoke to the National Press Club and talked about how their overseas competitors could get gas in the US at $3. Santos executive Stephen Harty disputed that, saying that there was no such thing as $3 gas in the US, and then went on to quote Henry Hub gas prices at $4.90 a gigajoule in Ohio—this is in an op-ed that Mr Harty submitted to the Australian Financial Review on 21 October—and then said that the average industrial gas price in Ohio, where BlueScope's North Star plant is located, 'was more than $17 a gigajoule, higher than Australia's gas price cap of $12 a gigajoule'. Mr Vassella may want to investigate and respond to those claims. Santos, by the way, buys up a lot of domestic gas supply so it can top up its export loads and flog those off at much higher prices, which puts pressure on the local gas market. Be that as it may, we can come back to that at another time.

Let me give you an example. I said that was exhibit A of the tone-deaf nature of gas executives. The gas executive said:

If manufacturers are concerned about gas prices, why are they not investing in new gas supply sources?

That is like asking a buyer in a market to invest in supply. You turn up to the market to obtain supply. When the customer objects to the price of supply, the supplier says, 'If you think you could do better, go do it,' which is just bizarre logic.

On top of that, the Santos executive said:

The truth is manufacturers do not have the appetite for the large amounts of capital—

No wonder—or, as the kids say, 'No duh'—

They want risk-free, long-term contracts on a cost-plus-margin basis.

Oh, the horror! The horror that manufacturers would want a better price for their energy!

I come back to the point that this is not a market; this is dictated to by companies with great market power. When manufacturers go and seek a contract length of greater than 12 months—this parliament needs to know that that rarely happens. Manufacturers that need gas as feedstock cannot get a contract longer than 12 months. Why? It's because of the profiteering of these gas companies that want to maximise profit and refuse to do a longer contract, because they hope that, at the end of the 12 months, they can get a better price. This is what we're dealing with.

Those opposite will go on about why gas prices are so high, but they'll do nothing about it. When we tried to cap gas prices, they voted against it. Their answer, taking the cue from the very gas companies that thug our manufacturers, is, 'We'll just get more supply.' Yes, we can get more supply, but we need to disabuse ourselves of the notion that more supply alone will result in a better price. It can put, to some extent, downward pressure on price, but it's not the answer alone.

We need to get more supply at better prices of an Australian resource—our gas, our prices. We should not be dictated to by export prices. The cost of doing business in this country for these gas companies who say, 'If you do anything against us you, we'll take our capital away'—as if, when they are fleecing the export market—is to give us a much better, much more competitive gas supply arrangement, with fairer contracts at way better prices. I would argue that the $12 cap, in this day and age, is too high. It should be lower. Australia should have the courage to argue. With bountiful supply of our own resource, we should demand a better price because it confers on us great commercial and economic strength.

Most other countries get it. Most other countries are prepared to stand up for themselves, as should we. Instead of having these executives, like what we've seen out of Santos, say, 'If you don't like it, go get the supply yourself,' and, 'If we don't like it, we'll take our capital elsewhere'—this is just tantamount to trying to thug the market, but it also defies common sense. They should do a better deal. Given that 80 per cent of our gas is exported, they're doing very well. They're doing very well on a historical basis. These gas companies are doing very well relative to when they made the investment. They were charging $3 a gigajoule and they have now got $12 a gigajoule. They've made more than enough profit to be able to do a better deal for Australian consumers.

While I'm at it, if we're talking about regulatory arrangements which we are expecting the AER to benefit from, can we please stop just watching foreign buyers get our gas—demanding to have access to it and saying it's a sovereign risk if they don't get it at the right price—and then resell it? We have had countries resell Australian gas after demanding access. No-one has a problem with foreign buyers using gas for themselves, but if they tell us we can't change our gas arrangements or our gas prices and they then sell the same amount of gas as east coast households and businesses use—this is extraordinary.

We cannot sit by and watch Japan and Korea resell our gas, which Japan in particular has done it for four years in a row, when we have been crying out for uncontracted gas at a better price. This type of stuff needs to be tackled—our gas, our prices. We need it for our manufacturers. The gas companies are making 'more money than God', in the words of President Biden when he talked about some of the gas companies in the US. They are not being short-changed. This resource is in bountiful supply. It is being exported, and a lot of money is being made out of it. We should have the courage to insist on a better deal for Australian manufacturers. It's something that we should be fighting for, because it is important.

As we said coming out of the pandemic, we need to make more things here. Gas is a key input for many of the manufacturers. We need to take a strong stand on this to be able to provide it. We can't just listen to the claims of the gas companies that say, 'If we just get more supply, you'll be right.' No. We need more supply directed here at a much more competitive price and on contract terms that are longer than 12 months. Those three areas are what we need to focus on, and I urge the House to do so.

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