Gas Industry

Mr HUGHES (Giles) (15:19): My question is to the Minister for Mineral Resources and Energy. Can the minister inform the house of the likely impact of the proposed Australian domestic gas security mechanism on South Australia's natural gas industry?

The Hon. A. KOUTSANTONIS (West Torrens—Treasurer, Minister for Finance, Minister for State Development, Minister for Mineral Resources and Energy) (15:19): I would like to thank the member for his question and his continued support for the state's upstream petroleum sector and the many jobs and economic opportunities it creates for our state. Natural gas is a central element of Our Energy Plan. This government understands that to keep downward pressure on prices you have to encourage energy companies to explore and extract gas from local reserves. More supply and greater competition work together to deliver better prices for the consumer, whether it is a family heating their home, a gas-fired power station generating electricity, or a manufacturer using gas to make products for use here or abroad.

We do not impose artificial barriers to exploration or production of natural gas. We have an approval process that lets the science decide whether a proposed well cannot or can go ahead, yet South Australian producers are about to be punished by the commonwealth government for the sins of other states. The proposed Australian domestic gas security mechanism will, from 1 July this year, limit the export capability of South Australian gas producers. Rather than boost supplies to meet demand for gas from the east coast, the mechanism penalises producers that are already extracting gas from the Cooper Basin.

This mechanism will allow the commonwealth government to impose export controls on energy companies when there is a forecast shortfall of gas supply in the domestic market rather than tackle the reason for that shortfall. South Australia and Queensland are being hit hard simply because the Turnbull government wants to make sure the lights stay on in Sydney. Our South Australian gas isn't being redirected back to South Australia, but South Australian companies and their shareholders will be penalised simply because we are producing gas to meet the obligations of international contracts.

Again, the Abbott/Turnbull government has turned its back on South Australia. We have seen it all before. Whether it is the River Murray, closing down Holden, or their failure to reform the national energy market, again and again the interests of South Australians and shareholders based here in South Australia are sacrificed to the interests of the east coast.

This gas mechanism hurts Santos and Beach. Santos is the largest ASX-listed company, headquartered here in South Australia, and it has a higher representation of South Australian-based shareholders. It penalises South Australia and doesn't encourage one extra molecule out of the ground but just a pea and thimble redirection of supply from one market to another. This government doesn't impose moratoriums on gas exploration and production. This government doesn't distinguish between conventional and unconventional gas molecules provided that the science backs the mitigation of risk.

We want them all to be put to work to meet the demands of consumers, for the profits of South Australians and South Australian businesses. Quite frankly, it is crazy that our country, with our significant gas reserves, should be imposing export restrictions just because we are putting unnecessary impediments in the way of local production, much like a gas ban in the South-East that the opposition is proposing.

Gas is an important transitional fuel as we make progress towards a low carbon future. That is why this government provides incentives to produce gas and exploration, not restrictions based on fear and petty politics. If the Turnbull government is genuinely interested in securing gas supplies for the east coast, it should be calling on members opposite to abandon their policy of a ban on fracture stimulation in the South-East. The most clear and present danger to the gas industry in this state is the opposition and the Leader of the Opposition. They will drive costs up, they will drive explorers out, they will hurt South Australia's energy producers.

The SPEAKER: Point of order.

Mr VAN HOLST PELLEKAAN: Standing order 98.

The SPEAKER: You say the Treasurer is debating?

Mr VAN HOLST PELLEKAAN: Debating and he is not responsible for opposition policy.

The SPEAKER: I uphold the point of order. I am going to return to the leader, but if ever there was a case for asking questions calculated to elicit relevant information, questions framed in accordance with standing orders, Oakden is it, so I ask the leader not to use his questions to make impromptu speeches or expressions of opinion. In short, dispense with the yah-boo politics. Leader.