Australia needs better energy security and rights to explore petroleum related resources

Mr STEPHEN JONES (Throsby) (10:54): The Offshore Petroleum and Greenhouse Gas Storage Amendment (Cash Bidding) Bill 2013 and related bill deal with our energy security and the efficient allocation of rights to explore for petroleum related resources. A stable and internationally competitive offshore exploration investment regime is critical to this objective. I think that view is shared by members of all the major parties in this country.

Each year the Commonwealth engages with stakeholders and releases offshore petroleum exploration acreage for competitive bidding by those in the industry who wish to prospect and explore. The amendments in these bills before the House introduce a range of tools to achieve a more efficient allocation of exploration permits. They are not new. In 2012 the Labor government made an announcement that we would introduce cash bidding for offshore petroleum permits. In fact, this returns to a system that had previously been used in Australia in the mid-1980s. In fact, it was used up until 1992. It has been used successfully in other jurisdictions including in the United States in the Gulf of Mexico, where they have massive resources and a lot of interest from explorers to exploit those resources. It has also been used recently in Queensland for onshore coal tenement titles. It has been proven around the world to be one of the more effective means of having an open and transparent mechanism for distributing these rights and ensuring that there is a fair return to taxpayers.

Pursuing this, last year the then Labor government decided that cash bidding would be used from 2014 onwards to allocate offshore petroleum acreage in mature areas and in areas containing known petroleum accumulations. So these bills, in effect, build on the work that the previous government did in the area and seek to make amendments to cash bidding for petroleum exploration permits functions to make it more efficient. Under a competitive cash bidding system, applicants offer cash bids for the right to explore with exploration permits being awarded to the highest cash bidder. So this legislation follows from the 2010 future tax system review, which recommends a move to cash bidding for these sorts of petroleum exploration permits.

The bills contain a compulsory payment of a 10 per cent deposit from all bidders as part of their cash bid—in essence, to ensure that we have bona fide bidders only and that people are not squatting on their rights. This is relinquished to the Commonwealth if the highest bidder fails to accept an offer. It is designed to guarantee that the bidder will accept the offer. The creation of a reserve price is to ensure that the Commonwealth does not sell the permits below their public value. And, finally, there is a prequalification of potential bidders for technical and financial capacity to hold an exploration permit to ensure expeditious processing of permits. It includes provisions to ensure that where there are two or more equal highest bids, a highest bidder will be determined and offered the exploration permit. Using cash bidding as the method to allocate petroleum exploration permits for mature areas, or those known to contain petroleum accumulations, is intended to prevent overexploration where none or little may be required.

The 2013-14 budget predicted that the reintroduction of cash bidding would provide around $160 million in additional revenue from 2014-15 alone, through to 2016-17. In a tight revenue environment where the present government is militantly denying itself sources of revenue from Australia's mineral wealth, measures such as these are absolutely critical—not just now, but well into the future—so that Australians, no matter what state they live in, benefit from the resources that all Australians own.

I said at the outset that these bills are a part of our total package of measures to ensure that we have resource security now and into the future. To that extent, I welcome the bipartisan support for this legislation and other measures. Of course, more needs to be done. I have in mind in particular the crisis that we are about to face, particularly in the Eastern States—particularly in New South Wales, Victoria and Tasmania—around the supply of natural gas. So if we are going to address energy security issues, and if we are going to have an efficient market for our energy resources, then we should be looking at each and every one of these pressure points. The position with the eastern gas market is something that requires urgent attention and legislation before the House.

You would know, coming from the Territory, Deputy Speaker Griggs, that Australia has an abundant supply of natural gas resources. We are set to become the second or third, if not the largest, exporter of natural gas in the world based on the abundance of our exploitable supplies. Against this background, it must strike Australians, whatever their political hue, as passing strange that over the next couple of years we are about to face a shortage of natural gas in the eastern states because of a failure of government policy to protect supplies for domestic users. The reason for this is that as large natural gas trains come on line in Northern Queensland they are going to be sucking up natural gas from right around the east coast and leaving domestic users, particularly manufacturers on the east coast of Australia, with a potential shortage of supplies and a doubling of prices. So whilst we are considering legislation which is about the efficient allocation of rights to explore our petroleum resources, we should also be considering policies and legislation before this House which deal with this impending crisis.

We are facing a situation where natural gas prices for domestic users could double by 2020. We have had a lot of hue and cry about the impact of a carbon price on electricity bills. All I can say is that domestic users have seen nothing yet. If we are going to address the impact on domestic manufacturers and householders, particularly in the eastern states, of soaring energy prices, then we are negligent unless we address this impending crisis.

It is not just me saying this; it is the large retailers of natural gas supplies in the eastern states and the large manufacturers as well. According to the managing director of New South Wales's largest gas supplier, AGL, when Gladstone comes online:

Gladstone is going to be like a giant vacuum cleaner for the East Coast gas market hoovering up all the gas it can get its hands on.

And they predict that natural gas prices are going to double for energy users on the east coast of Australia—potentially, further driving manufacturers offshore and seeing people switch from clean or relatively clean sources of energy such as natural gas back to electricity. As many manufacturers have told me, they have done the right thing in reducing their carbon footprint by switching from coal to natural gas, and unless this issue is addressed they will be switching back to coal—not because they want to but because the market will drive them that way. So if we are going to consider legislation that deals with our future energy security and ensure that we are benefiting all Australians with the wealth of natural resources that we have, then we should also be considering these important issues.

I do not want to see this situation for consumers in my state of New South Wales. I see the member for Paterson over there; he should be equally concerned about the potential impact on manufacturers and households in his electorate. I know he has had a lot to say about the impact of carbon pricing on power bills for businesses and households in his electorate. He should be worried sick about the impact on businesses in his electorate of a doubling in gas prices because of a failure of governments to address this impending crisis. It is within our gift to do it, and it is no wonder that the large manufacturing businesses in this country have formed an alliance to lobby all sides of parliament to do something about this issue. They are deeply concerned that a failure of policy in this area will see manufacturers go offshore.

Government members interjecting

Mr STEPHEN JONES: I am asked by the members opposite what I did when I was sitting on the other side of the House. I was the only member who brought this matter before parliament, and I did not enjoy any support from members opposite when I brought this before parliament as a private member's matter. I enjoyed no support from members opposite on this particular issue. There were declaratory cries and crocodile tears but no support and no action. Now you have the opportunity to do something about it. You have retailers and manufacturers crying out for action on this issue. You are now in government. It is time to act like a government and not like an opposition and address this impending crisis.

So I welcome the fact that you have picked up one of the bills prepared by Labor when we were in government to address the efficient allocation of exploration licences in the petroleum industry, but the job cannot stop there. If we are going to address energy security in this country then we cannot take our eye off the main game. It strikes Australians as bizarre that we are one of the world's wealthiest nations when it comes to natural gas resources yet we are going to be paying one of the highest prices for natural gas in this country, not because we have to but because of a deliberate policy by government to ensure that Australians pay some of the highest prices for natural gas in the world.

I commend the bill to the House. I think it is good legislation, but if members of this House are truly interested in ensuring that Australians reap the benefits of our bountiful supplies of energy then we have to address these impending crises, and I see no action at the moment. I see a big cry from industry. I see a big cry from gas suppliers saying, 'Complete the picture; do something about this.' So I call upon those opposite to do something about it, and you will enjoy support at least from this member of parliament in any efforts that you are able to make to ensure that businesses and households in my electorate and the adjoining electorates are not faced with some of the world's highest gas prices. While those opposite are whinging about the modest impact of a carbon price, they are taking their eye off the main game, and that main game is the price of gas in this country. I commend the legislation to the House.