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Tuesday, 13 June 2017
Page: 6230

Ms SHARKIE (Mayo) (15:54): Australia is suffering badly from its uncoordinated and ever-changing energy policies. Governments of both persuasions have been unable to create policy certainty. Without certainty, investors will not risk making the large-scale investments necessary to drive down prices and end market volatility. Future generations will look back with disdain on this extended period of inaction. They will look back on the vision of a frontbench passing around a piece of coal and shake their heads at all of us. I remind the government that coal is not good for humanity. In the absence of governments setting the framework in the national interest, the private interests of corporates are filling the vacuum. The result has been a growing concentration of market power and ever-rising prices. In South Australia, we are the canary in the coalmine in this new era. South Australia faces the highest and most volatile energy prices in the country.

I would like to devote my time today to talking about our gas supply. This is an integral part of the mix for base-load power as we transition to a renewable energy future. I commend the member for Melbourne on his vision for Australia being the lead renewable energy country. We can do this. Industrial gas is a critical input into most of Australia's manufacturing base, including steelmaking and the food production sector, which is important in my electorate. Australia has one of the largest proven gas reserves in the world, and yet we are exporting the bulk of it overseas. As a result, the price of industrial gas at home has increased dramatically. Companies are now being offered gas between $15 to $18 per gigajoule, as much as three times the previous price. This is such a big market failure that AGL is considering setting up a $300 million hub to import some of that exported gas—it is Australian gas that we sent overseas and yet after a return journey they still think they can make money off Australian customers.

A gas crisis is not imminent—it is already here. Unless we can bring prices back down to between $5 and $7 a gigajoule, we will lose tens of thousands of jobs in this country in the coming months and years. I echo Senator Xenophon's statements exactly when he said:

If we don’t deal with the gas crisis, Australia will see its living standards decline substantially and it will plunge us into very high levels of unemployment …

The Finkel review was not asked to look at gas prices—and yet that is the immediate energy crisis that we are facing in this country. We need to tackle the gas crisis head on before it tips our country into an avoidable recession. This is the recession we don't have to have. This is the recession we have to dodge.

The Nick Xenophon Team is working hard towards that aim. Earlier this year, we negotiated and obtained an energy package with the federal government. A major focus of that package was to begin reforms in Australia's industrial gas markets to set Australia on the path towards sustainable long-term prices and keep our advanced manufacturers internationally competitive. The measures that NXT have been able to achieve include: a commitment from the federal government to use its powers to ensure Australian gas is directed to the domestic market if voluntary agreement is not reached with gas companies by 1 July 2017, and a further commitment that longer term public interest requirements will be applied upon all future gas export contracts; an agreement by government to implement gas pricing and capacity transparency recommendations of the ACCC gas and Vertigan inquiries by 1 July 2017 to ensure that businesses negotiating gas supply contracts are not negotiating in the dark; and a 'use it or lose it' policy that will force gas companies that are sitting on huge gas reserves to bring cheap gas to market or hand their tenements over to companies that will.

To conclude, in Australia we are paying three times the spot price of gas in the US and double the long-term contract price in Japan. Why is it that the gas we are exporting to Japan costs twice as much here as it does there? There is serious dysfunction in our gas markets, and we need to deal with this absurdity head on. The Nick Xenophon Team has worked hard to obtain measures from the federal government that will bring more gas onto the domestic market and help to bring down gas prices. But much more needs to be done, and urgently. We are running out of time for Australian businesses and tens of thousands of jobs. I urge the Australian government in the strongest terms to take action on reforming our gas markets before it is too late. Stop playing with coal and see renewable energy for the future that it is. We need to do this—we cannot just keep sitting in here for years and years with one side debating the other.