PMB – Gas prices

Monday, 5 September 2022

Mr PITT: It’s always a pleasure to follow the member for Paterson—one of the few on that side who is relatively sensible, I’ve got to say. I rise to support the motion. There are some fundamentals around gas in Australia, there are facts around gas in Australia, there are deliverables around gas in Australia and then there are the premiers and their decisions around gas in Australia. We have only to look at Victoria to know why there is such a challenge in Victoria and such a shortfall in gas; it’s because they’ve had a moratorium on exploration. If you do not explore for more gas, you will eventually run out. These are the fundamental propositions of how it works. You have a resource which has a finite life which will eventually run out.

The Bass Strait has been a great boon for Australia and it has been an incredible boon for Victoria, particularly for Victorian manufacturing, because it has meant not only the availability of oil to go into Australian refineries but also the availability of cheap gas that is geographically located very close to demand, which has built up in Victoria over a long period of time. Bass Strait is now coming to the end of its available life in terms of its deliverables. There’s still some more that can be milked out of the Bass Strait, and there are a number of companies out there looking at those opportunities which will add on to gas in Victoria. But the fundamental concept being put forward by those opposite and others—that you can take gas from 2,000 kilometres away, at the Gladstone export hub, and put it into Victoria and still have the same price as when you were taking it from Bass Strait just down the road—is completely flawed. It cannot be done. It is physics. If you have to transfer gas, whether that’s via a pipeline or via other mechanisms, it adds costs. This is very, very basic economics. It adds costs. I say to those Victorian manufacturers that utilise gas: if you do not get the state government on board to deliver and develop more of your own resource, you are going to have challenges into the future because, quite simply, you cannot supply into the future at the same rate and at the same price as you’ve seen out of Bass Strait and elsewhere for so many decades.

There is not a shortage of gas in this country; there is gas everywhere. In fact, we are one of the highest exporters of gas in the world. We have great demand for Australia’s resources, but we have issues around where it is geographically located. We in the previous government worked very hard to deliver things like the Beetaloo Basin—one of the biggest gas plays on the planet right now. What did we strike? We didn’t strike resistance; we struck opposition from those who were then in opposition. They couldn’t even bring themselves to vote against a motion in the Senate looking to stop the work that we were doing to bring this gas on earlier, because we knew there would be demand. So for those opposite to stand up and say that it is all the coalition’s fault is purely wrong. It is complete nonsense. We have looked to deliver gas in the Beetaloo. In fact I, as minister, signed off on any number of projects and exploration permits in offshore, as is the responsibility of the minister.

I have to give credit where it’s due. At the moment, Minister King is making good decisions for the country around the resources sector, and you need to maintain that stability. What we’ve seen in places like Queensland is the Labor state government making decisions on royalties without consultation, imposing them straight up on industry and taking billions of extra dollars. That affects a company’s ability to make decisions, including final investment decisions, and it affects their ability to make long-term planning strategies around where they will put capital, because capital will move. In fact, I had a discussion with a number of individuals this morning from the sector. They are looking at South America because it is more stable and because they have fewer issues around changes with regulation and with taxes and royalties. For onshore coal in Queensland, we now see one of the highest royalty rates and taxes in the world. Who pays that price? Well, it is regional Queensland, because those new projects will be in those locations, and that’s where those jobs will be, and that’s who’ll pay the bill.

We hear about bills all the time, but what we don’t hear about from those opposite anymore is the $275 reduction that they promised at the last election for the Australian people. Yet we continue to see electricity prices increase. The reason for that is pretty straightforward: we’re not generating enough capacity to meet demand. When there is a shortfall, it drives up the wholesale price, which drives up the retail price for consumers. I say to those opposite that one of the most important things that need to be done is to keep the lights on. If we cannot provide reliable, affordable energy in this country, whether it’s through gas or electricity, then manufacturing will leave, and we need to maintain that manufacturing base. It is critical for our national security, and it is in our national interest to maintain it. I’d suggest they get on with doing just that.

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