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Wednesday, 14 November 2018
Page: 8122

Energy


Senator PATRICK (South Australia) (14:30): My question is to Senator Canavan, representing the minister for the environment and energy, and relates to energy costs. Minister, I listened intently at February estimates as you boasted that there had been a significant reduction in the wholesale gas prices on the east coast of Australia and went on to say that gas prices have come down to single digits over the past year. You stated that the signing of an MOU with gas exporters was key. Last estimates, you were silent on the topic. Why was that? Was it because AEMO's most recent Quarterly energy dynamics report reveals that gas prices have increased across all markets, compared to quarter 3 of 2017, despite a reduction in demand, and that average prices in the declared wholesale gas market are the second highest on record? Isn't your one-page MOU not worth the paper it's written on, and haven't you again lost control of gas prices?

The PRESIDENT: The Minister representing the Minister for Energy—I'll take that question as being for Senator Canavan.



Senator CANAVAN (QueenslandMinister for Resources and Northern Australia) (14:31): I thank Senator Patrick for his question. Gas prices have fallen this year, compared to last, across the Australian east coast. Indeed, right now, I'm advised that the gas price in Wallumbilla, which is a hub for gas prices in Australia, near Roma, is $8.55 a gigajoule. That compares to the price when it peaked, in February last year, of $12.49 a gigajoule. It's a reduction of 22½ per cent over that period.

In saying that, Senator Patrick is correct that in the past few months, as outlined in the report he indicated, there has been upward pressure on oil and gas prices around the world, and that, of course, has flowed through to Australia as well. Largely, that's as a result of factors outside the federal government's control, of course. It's around the decisions of OPEC and issues around sanctions in Iran.

More recently, however, we have seen reductions of oil prices and gas prices in North Asia that have started to flow through to the Australian market. More importantly for us now, what the agreement we've got with gas producers is meant to do is make sure that Australian consumers and Australian manufacturers have access to Australian gas first, which they do now. That will ensure that prices here in Australia do not go above those overseas, as they did early last year, before the government acted. That is the case right now. Right now, the gas price at Wallumbilla, as I quoted before, is about $2 a gigajoule lower than prices prevailing in Asia—a huge turnaround from the situation that existed early last year. Indeed, that is also reflected in the gas that is being delivered from Queensland coal seam gas fields to the rest of the market. For the last 12 months, around 100 petajoules—around a fifth of the east coast market—has flowed from Queensland to other markets, when early last year there was a net outflow from Queensland compared to the rest of the country.

The PRESIDENT: Senator Patrick, a supplementary question.



Senator PATRICK (South Australia) (14:33): Minister, yesterday, in response to a question by Senator Hume, you rose and stated almost with pride that South Australia currently has the highest electricity prices in the world. Doesn't AEMO's report state that 2019 electricity futures prices rallied over the quarter? In the five years of coalition government, we've had EIS, Finkel, CET, NEG, NEG-plus and now a fair dinkum scheme. Why should my constituents believe anything the coalition says about reducing power prices?


Senator CANAVAN (QueenslandMinister for Resources and Northern Australia) (14:34): I apologise if Senator Patrick misinterpreted the tone of my answer yesterday. It was not given with any sense of pride; it was given with a sense of shame. I think it's a shame for the country that prices in South Australia are some of the highest in the world. Action needs to be taken, and that is why, as I outlined yesterday, we've made sure that large energy companies no longer have access to challenge their regulatory decisions. That's helped bring $6 billion off power bills. That's why we've taken action on gas prices, as I outlined earlier. That's helped lower electricity prices as well. Indeed, the wholesale electricity price in the market, which covers South Australia, is down 18 per cent this year compared to last year, thanks at least in part to those actions. But, as I said yesterday, there's a lot more to do in South Australia. In particular, the report that Senator Patrick has been outlining outlines how the Energy Regulator has had to intervene over the last quarter to restrain renewable energy output to 10 per cent just to keep the lights on. That's why it's misguided to keep going for large Renewable Energy Target mandates which break the market and push up prices.

The PRESIDENT: Senator Patrick, a final supplementary question.



Senator PATRICK (South Australia) (14:35): Minister, I've been approached by energy intense companies who are now being asked to pay gas contract rates of around $14 per gigajoule. They are starting to stress again, and there are some at risk of closing down and laying off hundreds, if not thousands, of workers. Has the government been approached recently by companies expressing a renewed concern? If so, what are you doing to help them? If not, have they just given up on your government?


Senator CANAVAN (QueenslandMinister for Resources and Northern Australia) (14:35): Senator Patrick, I keep in regular contact with large energy users, particularly large gas users, given the action the government has taken in gas markets on these issues. Indeed, I have had meetings in the past couple of months, both collectively and individually, with gas users around the finalisation of the heads of agreement that you mentioned, and the government remains in constant contact with gas producers as well, to make sure we get good outcomes in these still-challenged markets. I do note that Brickworx, a large-energy manufacturer in your state, has recently concluded a gas agreement. Others have also had large-scale agreements concluded. There still remain other companies that are negotiating, and we're doing everything we can to make sure that the heads of agreement is met and that gas producers do offer Australian gas first. But I must say that heavy manufacturing in Victoria and South Australia specifically does need more gas produced in southern Australia. They need the Victorian government to end their moratorium. They need other governments to lift moratoriums. More gas supply in Victoria and South Australia is the sustainable answer for strong manufacturing. (Time expired)