Mr BOWEN (11:19 AM) —Labor will be supporting the Australian Energy Market Amendment (Gas Legislation) Bill 2006. I do not propose to detain the House for too long but will be briefly outlining the reasons for the opposition’s support. The legislation is the federal government’s part of the bargain in establishing the national framework to regulate access to gas pipelines. The national gas regime proposed in this bill was negotiated between the Commonwealth and the states and territories through the Ministerial Council on Energy. It is the latest stage in the implementation of the principles and the letter of competition policy to the gas industry. We believe it will have real benefits for consumers and provide certainty for the industry. It is certainly the case that we should have certainty wherever possible in these matters, and for this reason the Labor Party is happy to give this bill bipartisan support.

Cheryl Cartwright, the CEO of the Australian Pipeline Industry Association, said in the Australian Financial Review on 26 May last year:

As Cameron O’Reilly, the Executive Director of the Energy Retailers Association of Australia, said a few months after that on 29 September 2006:

That is why the opposition indicates that it is happy to support this bill, so that the industry has an indication that it is the policy not only of the government of the day but also of the alternative government.

The proposed national regime will replace the current nine different regulatory regimes operating across the country. It is another step in implementing the Ministerial Council on Energy’s reform agenda, which will ultimately see a national gas law, NGL, and national gas rules. The regulatory framework will underpin the proposed national gas law due to be in place by 30 June 2007. Under this cooperative regime, state and territory laws will confer functions and powers to the Commonwealth minister and agencies, including the Australian Energy Regulator, the Australian Competition Tribunal and the National Competition Council. The bill ensures that the Australian Energy Regulator can perform the functions and powers conferred on it by the national gas Commonwealth law and regulations, as well as for the Australian Competition Tribunal, the National Competition Council and the Commonwealth minister. In addition, the Federal Court will be given jurisdiction to deal with matters arising under the new laws.

My attention was drawn to an article yesterday in the Australian Financial Review entitled ‘Gas regulation at flashpoint’, in which a number of commentators in the industry state their concern about the powers to be conferred on the Australian Energy Regulator, particularly the powers to investigate matters of competition. The article by Annabel Hepworth states:

Obviously, that is an issue of concern to the industry; therefore, it is an issue of concern to the opposition. The opposition will be supporting this bill, but I encourage the minister or his representative to address these matters in summing up the debate because it is important that we encourage more investment in the gas pipeline industry and that we take no steps to discourage it. On balance, we will be supporting this bill because we are confident that it will be an encouragement to industry and not a discouragement, but the minister does need to address the matters raised by industry in that article.

The national gas law will include a form of regulation under which pipeline owners can negotiate commercial outcomes with access seekers, subject to competitive pressures. Only when these negotiations fail will the Australian Energy Regulator become involved and offer a binding arbitration to resolve the access dispute. The states and territories are to pass complementary laws to give effect to these changes, effectively transferring their power to regulate these matters to the Commonwealth. The regulatory framework proposed in the bill will operate alongside the new national gas law, which will be passed by each state and territory. South Australia will be taking the lead early this year through the National Gas (South Australia) Act 2007 and the other states will then follow.

I know that some in the industry have expressed concern that access under the national competition policy is a disincentive to investment and a disincentive to laying more pipes. I have not been convinced by these arguments. We would need to see evidence that this is the case in the gas industry. In matters of national access, a genuine balance needs to be reached. To ensure maximum competition, we need to get the balance between granting access to competitors and not providing a disincentive to investment.

While I am not convinced that this bill will be a disincentive to the laying of gas pipelines, we do need to get the balance right across the market generally. I am glad that the honourable member for Batman is here, because I know he also has strong views on this. We saw the recent—

Mr Randall interjecting—

Mr Martin Ferguson —Especially on you!

Mr BOWEN —Especially on the member for Canning. The honourable member for Batman is not the only one who has strong views on the member for Canning, but he is also not the only one who has strong views about the national—

Mr Randall —You have strong views on the deputy speaker!

The DEPUTY SPEAKER (Hon. BK Bishop)—I think we will have some order in the chamber.

Mr BOWEN —I think Deputy Speaker Bishop does a fine job. I have a strong view on that.

Government members interjecting—

The DEPUTY SPEAKER —Order!

Mr BOWEN —We recently saw the high-profile Fortescue and BHP case. I am not convinced the system got this one right. The Treasurer failed to exercise his right to override the decision to grant Fortescue access to the railway line, which was a pity. His failure to act had the same consequence as if he were to have acted—deemed refusal—but it would have been better if the Treasurer had come out and explicitly outlined his reasons. That is why the government should, in my view, accept the recommendations of the Export Infrastructure Task Force. The task force recommended an efficiency override for applications for the declaration of export related facilities under the national access regime. The task force said that this test would ‘minimise the risk that access regimes would disrupt the very areas of the economy that have performed best in the management of export related infrastructure’.

My personal view is that there is a strong case for some legislative prescription which would codify what is and is not part of the production process and therefore provide more certainty for investors. I stress that we should not lose sight of the fact that the national access regime is a very important part of national competition policy. It is a positive development that has opened up access to infrastructure in this country, but we cannot for one second let it become a disincentive to investment. We need to get the balance right both in this bill and in national competition policy generally. It is a positive development that there will be a coherent national approach to the access regime for gas pipelines. It will be a light-handed regulatory approach, which is appropriate. We do not want to discourage investment in pipelines. Some 95 per cent of Australia’s gas production is located in the north-west of Australia, but 90 per cent of the population lives in the south-east, so we need pipelines to get the gas from the north-west to the south-east.

Establishment of secure national gas market infrastructure is vital to meeting Australia’s growing national energy demands. The speedy passage and implementation of this legislation is in the nation’s interest, and it is critical to ensuring our energy market and its export potential. There are over 140 trillion cubic feet of known natural gas reserves. The private sector now owns the majority of this resource. Transmission pipelines and substantial private sector investment will be required going forward.

These reforms are being implemented against the background of unprecedented demand for energy resources. The Australian Bureau of Agriculture and Resource Economics estimates that, by 2030, electricity generation will need to grow by 73 per cent to meet demand and that gas demand will increase by 50 per cent. The bill we have today will pave the way for the $30 billion in investment that the energy industry estimates will be required over the next 15 years for energy infrastructure projects. This bill will be an important first step in reaching that investment.

While Labor supports the bill and the implementation of the national gas law and the national gas regime, the federal government must push ahead with a second wave of gas reform, which is scheduled to come on line before 1 January 2008. There is much more to be achieved with competitive gas reforms.

The example of the benefits of these reforms is best seen by our experience in the electricity market. Average world prices have fallen by 19 per cent since the early nineties, delivering real benefits to businesses and to households. I noted again in today’s Financial Review, as opposed to yesterday’s, a report by Adrian Rollins and Duncan Hughes, which reports on a Productivity Commission finding that the potential benefit from further competition reform would result in an increase in gross domestic product by almost two per cent, adding about $17 billion to the national economy. Of course, gas is a very important part of that energy reform which is necessary.

The Productivity Commission’s 2005 Review of national competition policy reforms has put this in the context of the importance of pushing forward with the ministerial council’s energy market reform agenda. It says:

By getting the national access regime, the NGL and the next wave of reforms in place in a timely fashion, the energy industry will have more confidence in the long-term investment decisions that they need to make.

In December 2003, the Ministerial Council on Energy announced its reform program. It included a reform program that was supposed to take three years to be fully implemented. Of course, that was four years ago. In August last year, the Ministerial Council on Energy announced that some of the proposed energy reforms would be pushed back from 1 January this year to 1 July this year. It was the Ministerial Council on Energy that in 2003 set in trail what was supposed to be a three-year time frame for establishing a national regulatory regime for electricity and gas. Here we are early in 2007, we have already fallen behind the MCE’s timetable, and the commencement of the national gas law has been pushed back to 1 July this year.

I am not seeking to make a political point here; I do not hold the Commonwealth government entirely responsible for that. This is a matter of some negotiation between the different levels of government. This is not a matter for the blame game and certainly on this side of the House we are not going to play the blame game. But all governments need to do better.

Mr Randall interjecting—

Mr BOWEN —I am glad the honourable member for Canning agrees that this is not a matter for the blame game. All governments need to ensure that there are no further delays in the implementation of the national gas law. Any delay creates uncertainty which can be both crippling for those seeking to make long-term investment decisions and concerning for them.

Labor understands the need to set the right regulatory framework that promotes competition and efficient economic outcomes in the gas industry. Labor supported the Commonwealth’s first instalment of reforms through the Energy Legislation Amendment Bill last year, although the opposition were keen to remind the minister at the time about the Commonwealth’s sluggishness in moving forward with the next wave of economic reform and the strengthening of the Trade Practices Act, and we would renew that reminder today.

Getting the national regulatory framework right is essential for the investment climate surrounding gas transmission and generation. The second wave of Ministerial Council on Energy led reforms is being developed by the ministerial council’s retail policy working group in consultation with a stakeholder reference group. The nation does need to move forward urgently with more microeconomic reform. We cannot rest on the laurels of previous achievements. We cannot say that national competition policy is over and there is no more reform necessary. One thing that the Prime Minister and I would agree on is that there is an ever-receding finishing line on economic reform; there is always more to do. This bill is one step in that ever-receding finishing line. The government needs to progress quickly to ensure the second wave follows soon thereafter. I commend the bill to the House.