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Wednesday, 8 February 2017
Page: 231

Senator XENOPHON (South Australia) (09:50): I and my colleagues in the chamber will support the second reading of this bill. I will be moving a second reading amendment that I will refer to shortly. We know that the structure of this bill is largely technical in nature. It aims to clarify the apportionment arrangements relating to certain petroleum deposits that straddle state and Commonwealth jurisdictions. That is in schedule 1 of the bill. Also, it aims to ensure the capacity of the National Offshore Petroleum Safety and Environmental Management Authority, NOPSEMA, to refund fees paid to it where necessary. I will not go into the technical aspects of that, but these seem like sensible technical amendments.

It does give an important opportunity both at this stage and at the committee stage of this bill to discuss broader issues in terms of the crisis we face in this country in terms of energy security and also the issue of gas suppliers. We know from Manufacturing Australia that what they are paying for gas is just extraordinary. There is a constant debate in this country about whether there should be a gas reservation policy. We know that the Palaszczuk government in Queensland has recently announced changes so that any new leases or tenements need to have a proportion reserved for domestic use. I know that many economists and, I dare say, the minister responsible will say that is the case. I mean that the minister in this place, Senator Canavan, would say that gas reservation does not work, but something has to be done to give security of supply and security in terms of prices and downward pressure on prices for manufacturers in this country and in my home state, where energy prices are sky-high and actually impeding investment in manufacturing and the jobs that are created in the manufacturing sector.

We have already seen since the GFC manufacturing in this country shrink from 12 per cent to just over six per cent of GDP and 200,000 jobs have been lost. We now have a situation in this country where as a percentage of our GDP manufacturing hovering just above six per cent is just bumping above Botswana and Rwanda, two countries in Africa that have never had a manufacturing base like we have had. We have seen a massive shrinking of it, and that has profound implications for our economy. It is a shadow of what Germany's GDP base of manufacturing is: 22 per cent, which is a jobs and industrial powerhouse for Europe.

I am concerned about ensuring that we get the balance right and that communities are heard in terms of CSG explorations. In my home state, on the Limestone Coast it is not CSG but it does involve drilling, and there are genuine concerns about fracking and the impact it can have on prime agricultural land. But there are gas suppliers in this country that do not pose the same environmental and community concerns, and we need to be able to unleash those. That is why I will be moving a second reading amendment in respect of retention leases. I do so to flag the issue. I do not propose to divide on that, but I would be grateful if the minister could indicate views on that. I will in good faith sit down, negotiate and discuss this issue further with Minister Canavan and Minister Frydenberg in respect of these issues.

This is an issue that relates to having competitive tension in the retention lease approval process. Currently, a company can retain a lease if recovery of petroleum or gas from the licence area is not yet commercially viable but is likely to become viable within 15 years. Every five years a company has to either commercialise the licence area or show that the licence area is still not commercially viable. On the face of it, the current rules are saying 'Use it or lose it,' but if you drill down into this—pun intended—it does not actually do that. It is a pretty weak set of proposals under the current legislative framework. It does not actually require that competitive tension.

It is my understanding that, under the current regime, there is theoretical competitive tension, in that another company can put forward a development proposal, but in practice there are major impediments to do so. That is because a company cannot get hold of the seismic surveys, the seismic work, that another company may have done, which could have cost many millions of dollars. I think we need to find a way around that. A new company may come in and say: 'We want to develop this gas resource. We will look at the seismic surveys.' They do it commercial-in-confidence. If they end up taking over that lease, they need to contribute fairly to the cost of the seismic surveys done by the previous company. That is a way around the impasse that currently exists. This is something that needs to be dealt with. Currently, a company has to make a binding commercial proposal, but they cannot do so because they cannot access the key information in terms of the seismic surveys and the like. This is the sort of thing that we need to do.

I do not have the figures in front of me, but if I happen to get a text from my office in the next 30 seconds, it might tell me how much gas is in the Bass Strait. In the Bass Strait, there are leases that a number of major oil companies have had for a number of years. My understanding is that the reserves are very significant. If we could tap those resources, it would, at least for the next few years, make a very big difference to gas prices in this country and to energy security in this country. It would also relieve, to a significant extent, the issue of communities having legitimate concerns about CSG and the impact on prime agricultural land. We do not have the same environmental and community concerns in the Bass Strait, given the history of the Bass Strait and given that it is gas—not petroleum—drilling we are talking about.

That is something that ought to be considered. That is why I will move the second reading amendment standing in my name, which will be dealt with at the conclusion of the second reading debate of this bill. Even if my amendment is not supported, this issue will not go away. There are too many manufacturers and too many jobs at stake to ignore the gas that is in the Bass Strait. Some local Australian companies would like to get access to that gas and have a go at developing it, but they cannot because the current rules act as a massive barrier.

I am very grateful to my office. Unusually, they are listening to what I am saying! They tell me that there is seven trillion cubic feet of gas in the Bass Strait. That is a big figure. It is a big figure like the Australia Post CEO's salary! Seven trillion cubic feet is a significant amount of gas that would make a real dent in the issues of energy security, which I know Minister Canavan and Minister Frydenberg are concerned about. This is a discussion I have had in good faith. I am flagging this amendment, not so much to make a political point but to say that this is an issue that cannot be ignored.

In relation to Senator Hanson-Young's amendment in respect of drilling in the Great Australian Bight, I and my colleagues will support that amendment. This parliament cannot bind future parliaments, but right now, based on the evidence that I heard at the Senate inquiry that I instigated in the previous parliament, I strongly support what Senator Hanson-Young has proceeded with. The precautionary principle should weigh heavily on our minds. It seems that there are not sufficient safeguards in the current framework. NOPSEMA has made the right call initially, but my concern is that drilling in that area, given the potential risks, is something that we should not countenance. I think an alternative such as accessing that seven trillion cubic feet of gas in the Bass Strait will make a significant impact on this country's energy security.

I have had another text from my office, and the caveat is that the figure of seven trillion is a total of the proven, probable and possible. Even allowing for various risk factors in regard to that, there is a hell of a lot of gas in the Bass Strait that could be unleashed. It seems to me that, because of commercial considerations, new entrants cannot have access to that gas under the current rules that are stacked against them. We should have a 'use it or lose it' approach, as they have in other countries. We need to use it, given the crisis that Australian manufacturing has in respect of jobs and in respect of energy prices. That is something that I will prosecute in good faith with Minister Canavan and Minister Frydenberg because that could be a short- to medium-term solution for the energy problems we are facing in this country.

I move the second reading amendment standing in my name:

At the end of the motion, add "but calls on the Government to make further amendments to the Offshore Petroleum and Greenhouse Gas Storage Act 2006 to improve competitive tension in the retention lease approval process in order to facilitate the earliest possible commercialisation of the exploration license area and increase the gas supply to the Australian market".