There's also the direct cost-of-living dimension I've already spoken about. Because gas remains one of the most expensive sources of electricity generation, wholesale electricity prices are heavily influenced by the price of gas. As domestic gas prices have increased, electricity prices have followed. At the same time, Australia's LNG export sector is projected to decline over the coming decade, including under the federal government's own Future Gas Strategy, due in part to ageing gas fields and shifting global demand.

A well-designed reservation scheme should support Australia's managed exit from gas, not entrenched long-term dependence on it. It should also recognise that not all gas users are the same. Some industries genuinely have limited alternatives available today. Certain heavy industrial processes continue to rely on gas and will do so until practical substitutes emerge. By contrast, many residential, commercial and lower-heat manufacturing users already have access to efficient, affordable and cleaner alternatives through electrification. This is why a number of stakeholders, including the Climate Council, have proposed demand-side compliance mechanisms alongside any reservation scheme. Such measures could fast track the ability of Australian households, particularly disadvantaged households, to access the cost-of-living and health benefits of efficient electric homes. They could help manufacturers realise the productivity, affordability and competitiveness benefits of electrification while protecting jobs. They would help preserve finite gas supplies for industries that genuinely need them, while reducing pressure for costly gas infrastructure expansions. And importantly, they would support Australia's climate goals by reducing fossil fuel consumption.

Turning specifically to this bill before the House, this is highly complex legislation. I note, too, that it's been rushed through the house while the Senate Standing Committee on Economics inquiry is still underway and being debated in the Federation Chamber—the secondary chamber designed for less contentious and uncontroversial parliamentary business. Given the significance of these reforms and the far-fetching consequences they may have for consumers, industry and the broader economy, that is far from an ideal process.

This bill contains three core elements. First, it establishes a licensing regime requiring LNG exporters to hold an export licence from January 2028, backed by substantial penalties for non-compliance. Second, it creates a domestic supply obligation, or DSO, that determines how much gas a licence holder must provide to the domestic market. The obligation is set at 20 per cent of covered exports, adjusted for a range of factors including existing contracts, domestic reservation arrangements and infrastructure constraints. Third, it imposes requirements concerning financial assurance, notification of changed circumstances and cooperation with regulatory requests.

I do want to acknowledge that the government has made several sensible improvements from the original exposure draft and in response to stakeholder feedback. The bill no longer automatically requires exporters to reserve 20 per cent of exports for Australians. Instead, exporters are required to reserve up to that amount, meaning only the quantity actually needed by the domestic market. That is an important change and responds to stakeholder concerns that a blanket 20 per cent obligation would substantially exceed forecast shortfalls and risk locking Australia into greater gas dependence. The Grattan Institute has modelled that requiring exporters to direct the equivalent of 20 per cent of LNG exports into the east coast market would effectively flood the market for the next decade. It found that a even five per cent reservation would be sufficient for the foreseeable future.

Reservation levels should be determined carefully and adjusted regularly according to actual market need. If obligations are set too high, they risk creating unintended consequences, including incentivising new gas developments that may ultimately become stranded assets and facilitating long-term gas lock-in by flooding the domestic market and undermining electrification. The government has also responded to some concerns regarding ministerial discretion within the scheme. Nevertheless, significant concerns remain. While moving away from an automatic 20 per cent reservation is welcome, many stakeholders argued that an independent authority, potentially the Australian Energy Regulator working alongside bodies such as the Australian Energy Market Operator, should be responsible for determining and adjusting reservation levels annually based on actual demand forecasts. There are also concerns regarding the treatment of existing contracts and the potential for loopholes, including issues raised in relation to the Santos GLNG project in Gladstone.

The Australian Conservation Council, Australian Council of Social Services, Australian Workers' Union and Australian Industry Group have called on the government to do these things. Firstly, they call for removing open ended provisions allowing rules to prescribe new methods by which a licence holder could satisfy their domestic supply obligation requirements, retaining appropriate ministerial discretion while preventing investment in future gas supply being used to meet these obligations. They've called to provide that a licence holder cannot meet its domestic supply obligation by its own gas consumption unless it supplies the free-up gas domestically. It introduces a fairness requirement that, where a licence holder DSO is determined via demand calibration, the volume should be with reference to the share of exports. These are just some of the sensible suggestions being put forward through the inquiry process, and I encourage the government to consider these amendments, including those proposed by the crossbench.

More fundamentally, stakeholders have argued that exporters should be able to reduce their obligations by funding verified durable reductions in domestic gas demand through electrification and fuel switching. Such an approach would preserve scarce gas supplies for industries that genuinely need them, while accelerating the transition to cleaner alternatives. There are also questions about how this bill interacts with existing state reservation schemes. Western Australia's domestic gas reservation policy has operated since 2006.

While the principle behind the scheme is sound, the system highlights the risks of weak design. There is no comprehensive statutory framework. Reservation obligations are governed through individual agreements with exporters. Transparency is limited. Enforcement powers are weak. There are no meaningful penalties for non-compliance and limited ministerial powers to compel compliance. Indeed, a report of the Western Australian parliament found that LNG exporters had supplied only a little over half the volume they were required to reserve for the domestic market. A federal reservation framework should learn from these shortcomings. A national scheme could operate alongside state arrangements while ensuring exporters provide gas when and where it is genuinely required. Similarly, I believe this bill risks repeating some of the very problems that have plagued the petroleum resource rent tax. Complexity, exemptions and carve-outs can produce schemes that look robust on paper but fail to deliver in practice. We should be cautious about creating another framework so complicated that its effectiveness is gradually weakened over time.

In conclusion, Australia must ensure that our resources work, first and foremost, for Australians, we must ensure that gas companies pay a fair return to the community, we must protect households and businesses from unnecessary energy price shocks, and we must not lose sight of the fact that Australia's long-term energy future lies not in greater dependence on gas but in the transition to clean, affordable, reliable renewable energy. While the reservation scheme established by this bill is welcome and may help direct more gas to the domestic market, it does nothing to ensure Australians receive a fair return for the sale of their resources. And, given the complexity of the scheme and the limited scrutiny it has received, there remains a risk of unintended consequences. Ultimately, it is a distraction from the real reform Australians are calling for: making gas companies pay their fair share through a gas export tax.