Gas Industry

Mr HUGHES (Giles) (14:50): Thank you, Mr Speaker.

The Hon. A. Koutsantonis interjecting:

The SPEAKER: The Treasurer is called to order.

Mr HUGHES: My question is to the Minister for Mineral Resources and Energy. Can the minister outline to the house any incentives available to encourage exploration and production of new sources of natural gas in South Australia and what has been the reaction to these incentives?

The SPEAKER: Can the Treasurer help the house?

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (14:50): I will do my very best, sir. I thank the member for this question and his continued support for locally produced natural gas as an important transitional fuel as we advance this state towards its inevitable low carbon future. Sourcing natural gas that then travels shorter distances and therefore more cheaply through pipelines to our industries, to our residential customers, is an important part of this state's economic success.

Support for natural gas is a central element of our energy plan. If you want to keep downward pressure on energy prices for industry and homes, you need to remove, not create, obstacles to gas production. If you want to create investment certainty for the companies spending millions of dollars in their search for new discoveries in the state, you need to support their endeavours, not threaten them with bans.

Our energy plan included $24 million for the first round of PACE gas and a further $24 million to fund a second round. Five projects, four in the Cooper Basin and one in the Otway, were successful in the first round that would generate up to $174 million in new investment in local production. By accepting these grants, gas sourced from these projects will first have to be offered to local electricity generators, then industrial customers and, thirdly, South Australian domestic customers, but we did not stop there.

Our energy plan also includes an Australian first—PACE Royalty Return, which allows eligible landowners to share 10 per cent of the state's royalties to create new revenue streams to supplement their incomes. That is because we wanted landowners to regard discoveries of gas on their property as a reason to celebrate. To kick off PACE Royalty Return, new acreage in the Otway Basin is being offered to explorers.

I was asked about the reaction to the gas incentives in our energy plan. Firstly, Matt Doman, the local voice of APPEA in South Australia, and I understand a former candidate for preselection in the Liberal Party, says, and I quote:

The State Government has taken decisive action [and APPEA] encourages other states to consider the measures South Australia has embraced to secure affordable and cleaner energy from natural gas.

Rebecca Knol, the Chief Executive of SACOME, says:

The importance of these grants cannot be underestimated.

In relation to the PACE Royalty Return, Ms Knoll says SACOME is supportive of the collaboration. The National Farmers' Federation's president, Fiona Simson, welcomed South Australia's plan to 'adequately compensate farmers'. Deputy Prime Minister Barnaby Joyce, no less, said that our royalty sharing arrangements should be rolled out nationally. Finally, business commentator Matthew Stevens, writing in the Australian Financial Review, says PACE Royalty Return 'should resound nationally as the most important single initiative in a new energy plan that is otherwise rational and generally positive'. He continues:

When it comes to the extractive industries, there are few states that get the regulatory and fiscal regimes as right as South Australia.

That is from the Australian Financial Review. I also welcome the support from an unexpected quarter, the member for Bragg.

Members interjecting:

The Hon. A. KOUTSANTONIS: Yes. I quote her from 20 March 2017:

A gas-fired operator to the government have proposed with a back-up battery storage proposal, the $550 million proposal, may be one of the best options that can be looked at.

Thank you, deputy leader. We appreciate your support and your endorsement of our energy plan.