Bills

Hydrogen and Renewable Energy Bill

Second Reading

Adjourned debate on second reading.

(Continued from 26 September 2023.)

Mr PATTERSON (Morphett) (15:30): I will continue my remarks from yesterday. I mentioned at the outset that there has been a short turnaround from when this bill was introduced into parliament on the Thursday of the last sitting week and then coming before us again effectively the next sitting day, so I am still, in my role as the shadow minister for energy and mining, doing consultation.

I have had the opportunity at least to speak with some of the stakeholders: Livestock SA and Primary Producers SA. They represent a large segment of landowners and landholders, including those pastoral lessees. There has been some consultation, but I welcome the energy minister allowing the committee stage of the bill to be undertaken in the next sitting week, as we will definitely have some questions.

I will continue my comments, albeit with the short amount of consultation that we have had, and look to continue that going forward. Last time, we were talking through some of the concerns that had been raised with me that needed to be worked through and they will probably be raised in the committee stage.

Going through the bill, as with most bills in the early stages, there are objects of the act. Pastoral stakeholders endorse engagement with Aboriginal people as set out in the objects in clause 3(d). They are also looking to have an additional object being included in the act which would endorse and provide a similar regard and assurance that there will be engagement and benefit to the broader relevant rural and regional communities, encapsulating them as significant stakeholders.

Certainly they should be because a lot of these designated lands are in the regions mostly and may be in some of the state waters in South Australia, as I experience as we go past beautiful Glenelg. You might not say that is regional, but certainly most of the affected areas in the designated lands are rural and regional.

That would take into account the important role that the regions have played, especially pastoral lessees in the pastoral sector since the very early days of European settlement. They have been vital to the state's economy, making sure we are fed, making sure they more than carry their weight, and also allowing exports either interstate or overseas. That has a great economic impact and we want to see that continue and be put in a place of great importance as an object in the act.

Consultation is really important with these bills. As I said before, there is broad support for renewable energy. What we do not want to see is it put in the wrong place when there are opportunities to put it elsewhere. Social licence becomes very important. In one of the submissions the Australian Hydrogen Council made that point, saying that they consider that gaining social licence from the community is every bit as crucial as a licence gained under the legislative framework.

Consultation with stakeholders should be thorough and meaningful and consider impacts on stakeholders outside the immediate renewable energy area, the release area, but also those who may be impacted by the conduct of licence activities there. Of course, it sounds eminently sensible when you put it that way. Certainly for release areas that are proposed over the pastoral areas—that take in pastoral leases—looking to get pastoral land stakeholder consultation is very important. Livestock SA certainly raised these concerns as well. They said:

The fact that the requirement to consult with pastoral lessees is not explicit in the Bill is of great concern. In the Bill, the only stated consultation requirements for pastoral land is with the Minister responsible for the administration of the Pastoral Land Management and Conservation Act…This is manifestly inadequate…

The current proposed approach essentially treats a pastoral lessee as if they have no substantial interest in the land.

You can see from that that some stakeholders are concerned that, when the consultation on these release areas first was spoken about, that land was referred to as 'government land' rather than 'pastoral land'. They interpreted that as the government seeing it as its land and not seeing them as really important and having a prime importance in terms of government decision-making because, as I said before, pastoral leases have really had an important role in the development of these areas in South Australia.

The fact is that previous state governments have been able to give certainty to pastoral leases. What that has meant is that they are a very stable and enduring form of tenure because of that recognition. A good example is that when it comes to looking to transfer ownership of these, the results are that they are very liquid. It is easy to have a change of ownership. The values are quite negotiable and stable, which is important for pastoral properties. That comes from governments really being very careful and stable around how to treat pastoral leases. I will finish off by saying that another point made by the stakeholders was:

Consultation with the pastoral lessees should be mandatory and should occur before there is any proposed declaration.

Another important stakeholder in pastoral land is the Pastoral Board. Their role is to ensure that pastoral lands are competently managed and also protected for future generations as well, not overstocking them, not denuding the land but actually having that custodianship, which has held our state in great stead. Another point is that, rather than the minister having only to consult with the minister responsible for the pastoral act, the stakeholders consider there needs to be a reference in the legislation to the Pastoral Board. Livestock SA made the point:

It should be a requirement under the legislation for the Minister responsible for the Pastoral Act to consult with the Pastoral Board, before responding to any authorisation requests from the Minister responsible for the implementation of the [Hydrogen and Renewable Energy] Act.

That gives a bit of a flavour in terms of trying to get pastoralists to feel like they have a bigger say in what goes on in this act. Another area where it is important that stakeholders have a say is the access agreements, of course, once a release area has been declared and a licence given out to renewable energy companies, that these access agreements are able to be on a bit of an equal footing in terms of negotiation, both for the native title holders with the Indigenous land use agreement and for the pastoralists in terms of their access agreements as well.

A number of the stakeholders feel that there are ways to learn from what is done with other acts within the Department for Energy and Mining. They think that this act itself could draw on the framework that has been set up in the Mining Act, which would help to provide greater protection for the landowners. One of the recommendations from stakeholders was:

The provision of payment by a proponent for the reasonable costs of obtaining legal assistance…as well as the need for these payments to incorporate fees for professional advice, not just legal advice…

Out of the consultation that was done between the draft bill and the bill that landed, it seems that this has been recognised to some extent.

Another aspect of the Mining Act that is there to help landowners is the Landowner Information Service. It seems, in the briefing that I received, the government have indicated they will be expanding the Landowner Information Service to also cover these renewable energy projects. While it is early in its infancy—it has been in place for only two or maybe three years now—that at least gives comfort. There is potentially inequity between very substantial real estate interests of the pastoral land. When landowners' interests are compared with those of these massive companies coming in, some of them international and well resourced, there is a bit of asymmetry there, so the Landowner Information Service would help but so would potential compensation as well.

Similarly, it was pointed out that in the Mining Act there is a prescription of 'exempt land' that helps to provide restrictions on what mining activity can occur near homesteads, for example, near significant farm infrastructure, and it was pointed out that there does not seem to be an equivalent provision in this bill. One stakeholder said:

…there are no restrictions included in respect of 'exempt land'. The kind of operations proposed under the Bill are potentially just as likely as a mine to have an impact on a sensitive receiver, such as a house. The Bill should be amended to include provisions dealing with sensitive receivers and incorporate the notion of 'exempt land'.

There are not just impacts on built infrastructure that the pastoralists are concerned about; there are also impacts on biodiversity because many of these designated land areas contain fragile ecosystems, and pastoralists want to ensure that any release areas take this into account when they are considered.

There are certainly prime, very economic and productive parts of pastoral land, and maybe some that are more arid as well, so maybe not as productive. Really, with either of those there needs to be focus on what the priorities are. Do we prioritise food and fibre even though renewable energy is prospective but, because of the vast areas involved, potentially that renewable energy could go elsewhere?

Equally, we do not want to see land denuded because at the moment there is a lot of effort put in by the pastoralists to produce the meat and wool. Of course, they do not want to be associated with bad farming practices with desolate land left behind. They actually have great stewardship of the land so that their brand can be not only very healthy but also you would say clean and green and has good environmental impact as well.

Going to this as well, the South Australian Nature Alliance has warned that in South Australia solar farms were the leading cause of native vegetation clearance between 2016 and 2018. When you look at carbon emissions, one of the sources of carbon emissions comes down to land use and land clearing. So there are some issues there, but certainly biodiversity is an element here.

One thing that is raised is around compensation. If there is a licence that goes ahead and results in a wind farm or hydrogen generation going onto pastoral land, what are the compensation measures? The bill allows for that in clause 79, making the point that it includes any damage caused to the land, any loss of productivity and any other relevant matters which will go into determining the compensation that is due. Stakeholders have flagged that 'any relevant matters' is potentially somewhat vague and may benefit from having a bit more detail provided on what that might actually countenance, as in fact has been done in similar interstate legislation.

Stakeholders have pointed out that such detail could consider the value of the subject land. It could also take into account the loss of commercial opportunity which the landowners presently have in their dealings with renewable energy generators; also, maintenance and repair of important access roads, stock routes, fences and other infrastructure; considering the relocation of dams, water points, fences and other infrastructure; the impact on remaining farming activities and on the land that is not being used, including what the productivity loss is and impact on the whole-of-farm operations, including what the stock impacts might be; and some biodiversity control matters as well.

It could also take into account in particular, bearing in mind where these lands are located, in the more arid areas of the state, the reduction in the availability of water at any level in the soil profile, whether it is groundwater or aquifers that are required for natural pasture or crop growth to help support design stocking rates as well. They are some of the thoughts around what compensation could consider.

Another one brought up was around carbon farming. In another bill before us there are matters there, but it has been pointed out that there are significant opportunities in pastoral land to look at changing grazing practices in these areas and in so doing allow the natural vegetation to come back and out of that have increased carbon captured, effectively, in this vegetation as well.

The amounts are significant. One point raised is that if there is an existing project the landowners are potentially growing this and getting carbon credits, and then if the wind farm comes on top of that and removes that vegetation there is a contract via the carbon credits contracted relationship to provide those. While they do not see this as a barrier to allowing wind farms on there, because they are not going to go everywhere where that vegetation has been able to grow back, certainly if the loss due to carbon credits can be considered in the compensation as well that may well help to again get this coexistence, where it is not having to choose one or the other but things can coexist as well.

I spoke earlier in the bill, of course, about how once the renewable energy proponents are provided with access to the designated land they will be required to pay a rent to the state government for the use of that land. Questions are asked about the value of that. It is expected that the framework for this proposed rent will be released via regulations once the bill has been progressed through parliament.

In terms of the pastoralists, there are certainly concerns that if the rent that the government charges is too high it will ultimately impact on any rent or compensation that is able to be paid to the pastoral lessee, to the native title holder. As it is at the moment, it would be negotiated under the access agreements of either of those two mentioned parties.

The only payment that is legislated for the pastoral lease at the moment is by compensation for loss of access to the land that the renewable energy project takes up and benefits which classify rental that could be paid to the pastoralists. The way it is explained is that the bill signs on that, so it does allow that, but of course the economics are that it is too much, there is less money the government takes, potentially the renewable energy company says there is only so much money we can put towards a rental, whether it is to one body or spread across the three, and so you can see that the more one has the less the other gets.

The Australian Hydrogen Council made the point in regard to this, saying the imposition of rent levied at market value prior to the industry reaching commercial sustainability will act as a disadvantage to investment, going on to say:

We consider that rental payments under REILs or HGLs should be a nominal amount to allow the industry to develop.

Subsequently, Livestock SA also said:

Any agreement must include those issues of free commercial negotiation which presently apply in relation to the development of renewable infrastructure.

They went on to say:

We propose that a definition of 'compensation' be included in Section 4—Interpretation, which is clear on its extension beyond the common understanding of recognition of loss, to include remuneration for the sale of the RE generated on their land.

As I said before, while the actual amount of rent is yet to be revealed in regulation, there certainly are valid concerns that, with the state's debt growing in the recent budget and projections that the interest that the state government is going to have to pay per year will rise from $800 million per year up to $1,600 million per year, the government will be desperately looking for any revenue it can get its hands on.

What we do know is that the government we have here is certainly introducing a new measure of getting income, getting revenue. Some stakeholders have even said you could call this a tax. It certainly was not in place before this government was elected, it certainly was not announced as a policy going into the election and it certainly flies in the face of the Premier's commitment to have no new taxes.

In addition, where this money seems to be going—it is generated in the regions, in these areas of designated land. It seems from the briefing I have had that this money will be going into general revenue rather than remaining directly in the regional community, which is what the current regime under the Pastoral Land Management and Conservation Act effectively would allow. Now, Livestock SA were alert to this, and they went on to say:

…a portion of the rents received from the renewable energy companies to support the ongoing protection, restoration and maintenance of the pastoral lands.

At the moment, the existing regime on pastoral land sees that revenue go into the Pastoral Land Management Fund to then be disbursed. In this bill that has now been broken. We know these significant renewable energy projects are going to place additional pressure on the actual pastoral land on which they are placed.

This will also require more oversight as well from the Pastoral Board to ensure that that land is maintained. Additionally, if there is an opportunity to ensure that money is raised in these pastoral lands that can help fund the maintenance and upgrades to public access roads and stock roads, which is desperately needed, that will certainly be supported by the pastoral sector. As I said, Livestock SA made the point:

We recommend the government thoroughly consult with the relevant regional communities to determine the expenditure of the revenue raised to ensure it aligns with their regional development objectives.

So they are some of the concerns in terms of the monetary side of things.

Another concern—and I spoke about it—is around one of those licences that can be granted: the special enterprise licence. Now they can be granted in relation to both the designated land, but also in relation to freehold lands, and this can be for hydrogen and renewable energy enterprises that are of major significance to the economy of this state. Really, the threshold will come down to what constitutes 'major significance'.

You can understand by way of example in times of war the need for the government to compulsorily acquire land to gain access to pastoral land if it is to put in place defence establishments that will actually be there to ensure the defence of the nation. I do not think you would find too much opposition throughout the community to acquisition of land there or to repurposing of land. That is by way of example. I am not trying to make out that this is on a wartime footing.

Similarly, we have here in Adelaide at the moment the South Road upgrade that has resulted in compulsory land acquisitions. They are really hard things to do. In terms of what are the other options, there really is only a narrow corridor where this land can go, and so it is very hard to look for other spots, whereas when we talk through renewable energy installations, and looking at the vast amounts of land throughout the state where these could go, it would really have to be a very high bar, you could say, for something to go on a particular piece of freehold land.

You would have to explain why such renewable energy infrastructure or hydrogen generation infrastructure could not be located elsewhere, so, as I said, quite a high threshold. Would it be, say that the whole national electricity grid would collapse unless the infrastructure went on that exact location? Again, while it is hard that freehold land could be affected in this way, I do not think the broad community would have a problem with that. I think what we would want to watch out for is that it is not just for any sorts of renewable energy infrastructure just because an energy proponent could not come to an agreement with a freehold landowner.

The freehold landowners, especially, would need to be given reassurances that this will not effectively become a mechanism to enforce renewable energy projects wherever. That is good to hear and we can, of course, explore that in the committee stage. Stakeholders made the point that no criteria whatsoever are specified as to what constitutes major significance, so that is something we can explore in the committee stage as well.

The other aspects to the special enterprise licence are concerns that the minister can set guidelines, meaning there is little to no scrutiny regarding the rules in respect of a special enterprise. We can work our way through that and I am confident those concerns will be answered.

There are other questions around the bill. Early in the bill, clause 7 gives the minister the opportunity to explore for renewable energy resources, so there are questions around that. We understand how that affects Crown land or state waters, as they are quite controllable by the government, but what does that mean for pastoralists in terms of access to land? What does that mean for freehold landowners as well, when they go through this?

There has been a significant amount of work done to roll out renewable energy infrastructure throughout the state, principally on freehold land, but there has also been some significant work put in by renewable energy companies in some of the pastoral land areas. That has involved work with pastoralists, native title holders and renewable energy companies who have been able to reach agreement on some form of an access agreement, but perhaps they have not reached the stage of lodging a planning application. They have questions around whether they will have to start this work again when this bill is introduced, because it includes the concept of release areas and competitive tenders.

The Australian Hydrogen Council made the recommendation that the Hydrogen and Renewable Energy Bill take into account agreements that have already been executed. This includes existing agreements with pastoral lessees and relevant parties relating to native title. In terms of existing projects in place, as I said, there are a significant number of these projects on freehold land at the moment.

As we transition through this bill, it seems the transition provisions state that, even though these are on freehold land, they will need to have licences attached to them, and that now comes with a fee. That fee is presumed to be on a cost-recovery basis but, nonetheless, it is a licence fee—a fee that they were not having to pay beforehand. Potentially, there is a grace period associated with this which will allow them time to apply for these licences. Of course, the renewable energy companies are probably not wildly supportive of this because they are now paying a fee that they otherwise would not be, but it seems like they are accepting of this provision.

Another area that is worth bringing up is concern regarding adjoining land. If there is a proposed area directly adjoining another landowner, what could the potential effects of this be? It might be—as has sometimes been pointed out in the Mining Act as well—that the actual most significant impacts are not so much on the land where the project is, but they could well be on the adjoining landowner. An example of that is transmission lines. Where a project has to have transmission lines go through to connect it up to the grid, these transmission lines may potentially need to go through the land of an adjoining landowner.

That is a bit of a snapshot in the time I have had so far of some of the points that have been made around this bill. Ultimately, the pastoralists certainly understand and support the need for renewable energy, not only to help the state but also to help them as well. If it can work well and they can work cooperatively, it can be of benefit. As has been said, if they get access to some form of rent or benefit via payments for having these installations on their land, that helps droughtproof their property.

They are really concerned that they are being consulted adequately. They are being told that the way their concerns will be addressed is via regulations, so they are having to take this on trust in some way. Via the committee stage, we will try to allay those concerns and build up that trust and help ensure that they are consulted in the drafting of regulations that ultimately will be filed in parliament.

The industry have made the point that, if they do not feel that they have been consulted properly by way of the formulation of regulations and that they are not brought along with it, these regulations should not just be accepted. They should really look at the potential for parliament to scrutinise them properly and potentially disallow them if they are not living up to the statement and reassurances they have been given verbally.

We are still consulting with stakeholders to understand what concerns have been addressed and what concerns remain outstanding, and certainly this will lead to questions in the committee. As we are continuing to consult with stakeholders, we look forward to the passage of the bill through the remainder of the second reading debate and the committee stage.

Debate adjourned on motion of Hon. B.I. Boyer.