Julian Hill (Bruce, Australian Labor Party) Share this | Link to this | Hansard source

I move:

I don't think anyone in this place would disagree that unsustainable rising energy prices are a critical top-of-mind concern right across the nation. That applies to residents and businesses, and also to gas and electricity. Of course, the two are connected. Many people may not be fully aware of the extent to which rising electricity prices are actually driven by rising gas prices, given the important role of gas in the production of electricity.

Australia has seen its worst-ever gas crisis in the last few years under the Turnbull government, with devastating pain for residential consumers, pensioners trying to heat their houses and families trying to make ends meet. The government will tell us, no doubt, through this debate and elsewhere through the week, that it's all somehow Labor's fault but 'Don't worry, it's all getting better.' I will quote at the outset Garbis Simonian, the managing director of New South Wales gas user and wholesaler Western Energy Services Corp., on 25 July in response to the latest interim report from the ACCC as part of their gas inquiry. With regard to the prospects of gas prices rising beyond $10 a gigajoule, he said, 'Get ready for mass job losses.'

It's a personal view, I will state at the outset, shared by many in the community that one of the greatest policy failures in recent years in this country is the failure of Australian governments—and I say that in plural—to set a sustainable energy policy and stick with it. And I might say that that is alongside housing—that is a debate for another time. By 'sustainable', I don't just mean environmentally sustainable but a set of long-term rules for the market. We have been trying to settle this with the Liberal Party for over 10 years.

The No. 1 reason for rising energy prices is policy uncertainty, and that is a government failure. We had the government elected on the promise to get rid of the carbon price and somehow that was going to fix everything. That was a lie, and Australians are onto that. Have prices gone down? Does anyone actually think that has caused prices to go down?

No. You love to blame Labor but also you are hoping that people forget that you have been the government for nearly five years. You're a rabble.

We've returned to Canberra, after the six-week break, for a debate about the National Energy Guarantee, and we see the government is again a circus. We've got the former Prime Minister and the former Deputy Prime Minister out there, on TV all weekend and today, threatening to cross the floor and bring down the government's energy policy. We've got the member for Hughes over there who, no doubt, will rant at us soon. He does have a special talent: I do admire him for his ability to bring any speech on any topic back to why we should burn more coal in this country. It is a special talent that many of us have to sit through.

I think we're up to policy No. 4 or No. 5. It's almost one per year. We heard about the trilemma last year: reliability, affordability and sustainability. Fair enough. We agree. We should be able to walk and chew gum—to do those three things at once. But the government has just given up. They're just trying now to get something—anything—through their party room. The Prime Minister, it's now clear, believes in nothing. For the last few weeks he was energy agnostic. Now, desperate to hold the rebels in line, we've had extraordinary talk this morning that the government will underwrite a coal-fired power station with taxpayer dollars, one that industry doesn't want and people in the community don't want but the blockheads over on the right of the Liberal Party want. The Prime Minister is surrendering, waving the white flag and caving in to the climate denialists.

It's an undeniable fact that renewable energy is the cheapest form of new power. The children at Silverton Primary School in my electorate know this, as they explained to me when I went to visit them.

The environment minister is absolutely perfect for this job. I went to uni with him. He's a lovely bloke. And he doesn't believe in anything. So he's got the best crack, I agree, at getting something through your party room.

We've entered the peculiar situation, the ridiculous situation—in policy terms I think we'd summarise it as WTF—where Australia is now the world's biggest exporter of gas but doesn't have enough for domestic use. The Prime Minister could have dealt with this last year. He had the option until November 2017 to pull the export trigger and put in place gas controls and stop this nonsense, where we're selling all the gas to the rest of the world and we don't have enough for Australian business. The impacts on consumers are profound, but we've seen, for business and manufacturers, tripling and quadrupling prices flowing through to electricity and jobs being lost. Once lost, manufacturing jobs will not come back to this country. It affects hundreds, potentially thousands, of workers in my electorate and it is no accident. It was a personal failure of the Prime Minister to act last year when he had the opportunity. Now he's hostage to his little handshake deal with big business in the corner: 'Please, please, we'll shake hands; we'll be nice to each other. Please don't raise prices.' That's not good enough.

I apologise, in closing, that I have to leave early. I had scheduled time to stay for all of the speakers, but this shambles of a government are so incompetent they couldn't even get someone in the chair to open the debate at 11.00 am.

Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source

I thank the honourable member for his interesting contribution. I am assuming the speaker has a seconder for his contribution?

Mike Freelander (Macarthur, Australian Labor Party) Share this | Link to this | Hansard source

I second the motion.

Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source

Do you reserve your right to speak?

Mike Freelander (Macarthur, Australian Labor Party) Share this | Link to this | Hansard source

Yes.

Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source

I thank the honourable member. I give the call to the most honourable member for Grey.

Rowan Ramsey (Grey, Liberal Party) Share this | Link to this | Hansard source

Thank you very much, Mr Deputy Speaker. I'm very pleased that the member for Bruce has finally discovered that there is a connection between viable manufacturing industries and low energy prices, low energy costs, low input costs, and that we run the risk of exporting all our manufacturing industries and many others overseas—the irrigation industry, for instance. He seems also to have discovered that the best way to reduce prices is to increase supply. But the disconnect I see here is that the member for Bruce is a Victorian, a member of the Victorian Labor Party, and he has good friends, I presume, in the state Labor government.

The state Labor government has banned not just fracking but also exploration and drilling for gas throughout the entire state of Victoria. Goodness me. He wants extra supply yet his friends in the state parliament have shut down any new gas in Victoria. It is a preposterous argument. I think it's at point (c) where he actually mentions electricity, and he devoted a fair bit of his time to it, I might add. He said, 'Prices have risen by up to 200 per cent.' He again neglects to mention his friends in the state government, who have tripled the excise on coal, and now he complains about electricity prices impacting on manufacturing businesses. I know he's an intelligent man—I spent some time with him through the winter break, on a delegation—and I think he knows far better. I think he actually does know far better than this. It's just this sort of posturing that we get when we come to Canberra. I said this morning, at a doorstop interview, that we need people to leave parochialism at the door, to leave politics at the door and to actually make decisions for this nation's future. If he is absolutely serious about trying to reduce electricity prices in Australia, he will of course be backing the coalition as we put forward the NEG. So thank you very much, Member for Bruce.

Mr Hill interjecting—

He throws away a glib comment, but this is a serious issue that he is playing politics with, and the Victorian state government are at the centre of those politics, while they make decisions that impact greatly on their manufacturing industries and then try to pass the blame to someone else, when in fact it is their primary decision that is impacting in the greatest way at the coalface, let me say.

We can mention the Australian Domestic Gas Security Mechanism and the fact that the government hasn't actually enacted that mechanism. That is quite simply because the Prime Minister sat down with the gas suppliers, and gas was increased. It has been increased greatly. That has brought the spot price of gas from around $13 or $14 down to below $9. That's an enormous decrease. Spot prices, I know, are not long-term contract prices, but they are an indicator of where the market is. Australia is not going to go back to the days of gas prices of $3 or $4, because on mainland Australia our conventional gas supplies are dwindling. But we have enormous potential in tight gas supplies. But, as long as we have states—even including my own—that are locking up significant areas and banning the exploration for and extraction of tight gas, we will have prices that are above the international standard, and we absolutely should not allow that. But tight gas does not come out of the ground at $3 or $4. It is a $7 or $8 product. We have to get used to that. That has to be factored into the new energy mix.

This is taking into consideration the facts and leaving the politics at the door. They are the facts of the situation. Tight gas will cost $7 or $8. You're not going to run it down cheaper than that. People will not drill for it. And they certainly will not drill in those areas of Australia where they are banned from drilling and banned from fracking. We are allowing political loonies to deny the science. I get told on many occasions to listen to the science, but the same people who tell me to listen to the science on one subject do not want to listen to the science on another subject—in this particular case, the science on the fracking of gas. The science is sound. The technique is sound. It's used all over the world. It's been used in the Cooper Basin, in my state, for 40 years. We should get on with the job.

Tony Zappia (Makin, Australian Labor Party, Shadow Assistant Minister for Medicare) Share this | Link to this | Hansard source

I remind the member for Grey that this is Science Week. The member for Bruce has a science degree, and I'm sure that he has brought a scientific contribution to this debate. It's interesting how members of the government never seem to take responsibility for anything when they are in government, particularly with respect to responsibilities that fall fairly and squarely on the shoulders of the federal government, yet when they were in opposition they blamed the federal government of the time for all the woes of this country. In particular, I can well recall how we were told, at the 2013 election, that the carbon tax was responsible for all the high energy prices that people were paying around the country and that, if elected, the coalition would abolish the carbon tax, and energy prices would fall. Well, the carbon tax has been abolished, but energy prices continue to rise—a $630 increase or thereabouts in household energy bills in the past year alone. Quite frankly, they are likely to continue to rise unless this government gets on top of and puts forward a rational energy policy. For industry, those costs have been even greater.

What we have, after five years of this government—I remind members it is five years—is uncertainty in our energy supply, no credible energy policy, no credible climate change policy and no credible gas supply policy for this country. In fact, as we come into this week of sitting, energy, under the government's National Energy Guarantee proposal, will be the critical subject of debate in the coming few days, yet we know, when we look carefully at that policy, that it is nothing but another bit of government spin. The only guarantee that I can see is in the name, 'National Energy Guarantee', because the claims of guaranteed lower prices, emissions reductions and new energy investments simply don't stack up. Where is the guarantee for those claims? Indeed, if it is there, why is the government not prepared to release the modelling that they have pinned their hopes on?

The people that are being asked to invest tens of millions of dollars into the future energy supplies of this country can see through the spin, and they will not be conned by it. Therefore, if the government does not put forward a rational policy, it simply won't work. We also know that if the government were to adopt a 45 per cent emissions target by 2030 then, according to modelling by RepuTex, energy prices would be another 25 per cent lower.

Respected commentator Alan Kohler said, of the National Energy Guarantee:

… the NEG is a stupendously complicated idea that isn't really designed to achieve anything at all—except political agreement. The emissions reduction part of the policy is so complex that nobody at all can figure out whether it will work.

I think that sums it up beautifully. The fact that the government were trying to get an agreement out of it when they couldn't even get agreement within their own party about this policy tells its own story.

Gas is important to this country. As the member for Bruce quite rightly points out, we are the world's leading gas exporter, or close to it—we certainly will be shortly, if we're not today—yet we do not have enough gas supply for our own industries and our own community. We do not even have it at a competitive world price.

What we need, going into the future, is not only reliable supplies but also reliable supplies at affordable prices. The government's track record on that has been absolutely woeful. In the first instance, they blamed the states for all the problems, as we heard from the member for Grey. The reality is that, when we are the world's largest exporter of gas, fracking should not be part of the concern at all. Whether that happens or not is not the critical issue here. The critical issue is that we have gas, but it is not being made available for our energy supplies at a competitive price.

Our industries know that, if prices go beyond $10 per gigajoule, they cannot compete with the rest of the world. Currently, the prices range anywhere from about $11 to $14 per gigajoule, when the ACCC says they should be down to $8. That's what we need to be trying to achieve, because that will mean that our industries remain very competitive.

One commentator after another has looked at the energy problems of this country and made it absolutely clear that the National Energy Guarantee is not the solution. It is simply more spin from a government that has lost control of its energy policy and, in doing so, has lost control of the economy of this country.

Scott Buchholz (Wright, Liberal Party) Share this | Link to this | Hansard source

Before I give the call to the member for Hughes, may I remind those in the opposition that you were heard in silence. You suggested, Member for Bruce, that you may want to leave the chamber early. If you interject, I'm happy to oblige.

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

I was very pleased to hear some of the commentary from the other side, especially from the member for Bruce, because I think he put his foot in it when he said that he is listening to preschoolers. Preschoolers are telling the Labor Party what to do in their energy policy. The Labor Party of this nation wants to copy the failed experiment of South Australia. Even preschoolers should realise what an absolute nonsense that is.

We often have debates about policy in this House where one side suggests something and we theorise about what might happen. We argue about it—about the prospects and the unintended consequences. It's a debate about future policy—about what will actually happen.

But with Labor's policy of a 50 per cent renewable energy target, we know exactly what happens. We've run that experiment. It's called South Australia! We know what happened. It gave that state not only the highest electricity prices in the nation but the highest electricity prices in the world! Yet the Labor Party members walk in here, one after the other, and say, 'We want a 50 per cent renewable energy target, just like South Australia, because that will get prices down.' Pre-schoolers couldn't make that stuff up! Yet this is the policy that we are confronted with, recommended by those on the other side of the chamber.

From the time I've been here, I think you can put most members of the Labor Party into two categories: bald-faced hypocrisy or, especially during the last two terms of parliament, 'Why haven't you fixed up our mess quick enough?' Yet this motion, amazingly, covers both of those. A member of the Labor Party who comes from Victoria walked into this chamber and tabled a motion on the growing gas crisis in Australia—when the green left Labor Party down in the state that he comes from has a total ban on the exploration and development of both conventional gas and unconventional gas! When the Labor Party has that ban, and when we've got the ACCC and even the chief scientist of this nation recommending that that ban be lifted and each exploration be looked at on its merits, we have members of the Labor Party coming in here raising a motion about a gas crisis!

Of course, this whole problem goes back to the fact that, when the Gillard government gave those exploration permits, they simply didn't put in a reservation for gas. That is the root cause of this problem. I'll acknowledge that our side didn't argue that very well at the time, and we should have.

We also heard nonsense comments during this debate, about how the more intermittent renewable energy you put into the grid the cheaper the prices will go. But that is contrary to all the evidence. If we look at the evidence from overseas, there is a clear correlation: the more intermittent generation that is put into a grid, the more intermittent solar and wind that is in a grid, the higher the electricity prices are. The correlation is almost perfect. It's the same here with South Australia. When we hear mindless comments such as 'renewables are cheaper than coal', this is a disservice to our parliament. You are not comparing like for like if you are comparing intermittent generation with base-load dispatchable generation. Any plan to increase the amount of intermittent generation into our grid and displace our current coal generation, which is currently producing electricity at a cost of around $30 to $35 a megawatt hour, can only do one thing: drive electricity prices higher in this nation.

I am sure that all members have had contact from constituents complaining about electricity prices. I hope those from the Labor Party put their ideological biases aside, forget about green virtue signalling and trying to capture the green vote, and get on board with the coalition policy to get electricity prices down. The only way we can get electricity prices down is to get new base-load generation underway. (Time expired)

Matt Keogh (Burt, Australian Labor Party) Share this | Link to this | Hansard source

Western Australia is sometimes painted by those over east as behind the rest of the country. But one of the many things Western Australia can pride itself on—and something we are doing significantly better than the rest of the country—is gas. And that is not just producing gas, but keeping a fair share for Western Australia. WA has had a solution to this country's gas crisis for more than a decade. Under WA's domestic gas reservation policy, new gas developments must supply the equivalent of up to 15 per cent of their LNG export gas production to the WA market. While the price is open to the market, the effect is to maintain gas prices in WA below export parity. Meanwhile, the Turnbull government have been pushing the country's looming gas crisis under the rug for years. They have failed to adequately address this crisis and they have failed to ensure that there are sufficient, affordable gas supplies for the eastern states now and into the future.

Last year the Australian Competition and Consumer Commission commenced an inquiry into Australia's wholesale gas supply industry. The inquiry has highlighted the high prices being paid by Australian industry. The inquiry heard that, at best, short-term gas prices may have eased slightly from last year, recategorising them from—wait for it!—'outrageous' to 'just unsustainable' for large manufacturers. This is a win for the Turnbull government, apparently! I'm surprised they aren't running TV ads trumpeting such a tremendous achievement. These cost increases are seriously impacting on the ability of manufacturers to continue their operations. Prices currently sit anywhere between $8 and $11 a gigajoule. This is up to three times higher than the historical price. Many manufacturers that use gas, including chemical and fertiliser makers, for whom up to 50 per cent of their total costs are attributed to gas, find these prices unsustainable. The ACCC acknowledges that, even for companies whose gas is five per cent of their costs, the price increases we are now seeing could be the difference between profit and loss. We are hearing from many Australian manufacturers that finding gas contracts to keep themselves up and running is becoming nigh on impossible because more lucrative export contracts have already been locked in. This gas crisis is hurting Australian households and threatening manufacturing jobs all over the nation.

It doesn't just stop there. The flow-on effects of power prices from these increased gas prices even impact Western Australian workers. High energy consumers like aluminium smelters from across the east coast source their alumina from WA refiners, using bauxite mined in Western Australia. When eastern state smelters are affected by Mr Turnbull's reckless policies on energy, the jobs of WA workers are at risk too.

The price reduction and export restrictions that Australian manufacturers are crying out for will not come into play unless we see some real national leadership on this issue from government. The House must condemn the Prime Minister for failing to pull the export control trigger to ensure that Aussies are not being charged exorbitant prices for their gas. Australia is the second-largest exporter of gas to the world. In fact, soon it will be the largest exporter. We should have the cheapest and most accessible gas available for our industry and homes. The gas market, though, is the least transparent resource market in Australia, suffering high transport costs, higher regions of concentration and low levels of competition as a result. Why are Australians being punished for living in this great country of plentiful resources? Responsibility for every job in the manufacturing industry now falls on the shoulders of the Prime Minister and the Minister for the Environment and Energy—not only the jobs in the eastern states but the flow-on effects to Western Australian workers as well.

This government must act decisively now and find a solution to this gas crisis which is threatening countless jobs across the nation. Labor recognise the need for action with strong and effective policies to address the affordability and supply of gas to Australian businesses and households. It is why we are committed to a gas national interest reserve policy for the expansion of Australia's gas export industry. It is why we need a government that will pull the trigger on maintaining sustainable domestic gas supplies at a sustainable price. Australian gas users should have the first call on affordable gas before it is shipped offshore. We need a gas market that operates fairly and transparently in the national interest, where our gas industry retains incentives for new investments that benefit the national interest. Only under a Shorten Labor government will an affordable gas policy be secured to support Australian families with cost-of-living pressures and support Australian manufacturing jobs.

Tim Wilson (Goldstein, Liberal Party) Share this | Link to this | Hansard source

I'm glad to talk about the importance of how this government is working to deliver lower gas and energy prices for the Australian population, but I do so with a degree of disappointment that this opportunity has come in the form of a shambolic, hysterical, inaccurate motion put forward by the opposition, rather than not only focusing on what good work is being done and how this government is treating the issue of affordable gas as a priority but also making sure that we in this parliament reflect and understand the concerns of the people we are elected to serve and represent by giving voice to their concerns on the issues that affect them in an honest and transparent way.

That is the basis on which I will be engaging in this discussion, because, when it comes down to it, the opposition is no friend of cheaper gas prices for Australian households and industrial consumers. There is this curious attempt to whip up outrage about action taken by this government without any understanding or appreciation of the facts. Their shouting here in Canberra, like the member for Burke before me, is, frankly, embarrassingly shallow when we actually understand what is going on, particularly for Goldstein residents in the great state of Victoria, with who is selling them out in making sure that we have cheaper gas in Victoria in households and for the industrial consumers who provide the jobs that are needed to support Victoria.

Of course, the chief architect of gas shortages in Victoria is none other than the state government. We've had a constant attempt to engineer and manufacture outrageous gas prices because of ridiculous limitations and bans on actually extracting the gas that we have. The Andrews government has systemically vilified the LNG industry, with a moratorium on the exploration and development of onshore conventional gas until the end of June 2020. And it has a legislated ban on hydraulic fracturing and any other form of unconventional gas in the state.

For years now the coalition has stood up and called on the Victorian government to lift impediments on the development of the gas industry and to allow for exploration and development to put more gas into the market while also making sure that we're delivering more gas at a cheaper price and, critically, with proper environmental inspection and management to make sure that consumers know they're getting a product which will aid their state but won't be a negative on the environment—our precious environment. For years we have stood against the Andrews government in the interests of the families who fear their next bill in the letterbox and the manufacturers who are crumbling under the weight of growing electricity prices.

I see it all the time in the Goldstein electorate. We don't have much industry in the Goldstein electorate, but we do have industrious people. All across Moorabbin, Braeside and Dandenong there are so many businesses that rely on gas to be able to deliver the jobs to the people in our south-eastern community. They are telling me directly just how hard it is for them with rising gas prices and the complete indifference of the state government to their issues and their plight, and how it is undermining jobs growth in our community. It's time those on the other side of this chamber stood up and called out the Andrews government and its reckless behaviour in making sure that those businesses can't compete. When they can't afford the cost of those basic inputs, like gas, into their production, what happens is the prices go up, jobs and their competitiveness in the international market place go down and, ultimately, it suffocates jobs growth. There are so many car parts and so many diecast industries that operate across the south-east corridor of Melbourne and Victoria who are being sold out by this government because there is no understanding of the challenges they face.

But the Turnbull government gets it. That's why we put in place measures to make sure there is an increase in domestic gas supply. We actually know that, for all the gas we export to the world, we have to make sure we meet domestic demand first. We need to make sure that gas is not just accessible but that also affordable. We need to make sure that the Australian Domestic Gas Security Mechanism delivers that outcome. But at least our focus is on what we need to do, rather than to obstruct and increase prices for households. (Time expired)

Sharon Bird (Cunningham, Australian Labor Party) Share this | Link to this | Hansard source

There being no further speakers, the debate is adjourned. The resumption of the debate will be made an order of the day for the next sitting.