NATIONAL GAS (SOUTH AUSTRALIA) BILL

Committee Stage

In committee.

Clause 1.

The Hon. R.I. LUCAS: As I said in my second reading contribution, I was interested in seeing the responses the government would give to the questions put by my colleague the Hon. Mr Hood. I congratulate him on the work he and his office put into the second reading. I have seen and heard the government's reply and do not believe that it addresses one of the key issues raised by the Hon. Mr Hood. Without going over the whole argument, the Hon. Mr Hood quoted some gas price figures in South Australia compared with Victoria and New South Wales, and I asked the government specifically, first, whether it accepts the figures produced by the Hon. Mr Hood. The minister made no comment specifically on that issue. In the past when various figures have been quoted the minister has said that they are not accurate or do not give a fair reflection, and so on, but there was none of that flavour in the minister's response. Does the government accept that they are a fair reflection of gas prices for consumers in South Australia compared with the eastern states and, if so, can the minister indicate what he believes are the reasons for that significant differential?

The Hon. P. HOLLOWAY: The officers have not had the opportunity to check those prices, but there is some suspicion that they may not be accurate. They do not in any way relate to the bill, in any case: the bill would have no impact on those prices.

The Hon. R.I. LUCAS: Pricing issues are canvassed in the national gas market. In terms of the regulation, ultimately we will look at pricing issues and their impact. When we discussed the national electricity market there was a huge debate on the cost of electricity in South Australia compared with other states, so I do not believe that with the national gas market we cannot talk about pricing differentials between gas prices in the various states and say that it is not part of this. ESCOSA and soon to be the Australian Energy Regulator, in varying stages after transition, will make regulatory and other decisions that will impact on the price of gas in South Australia compared with other states. We had this debate in relation to electricity, and members of the current government when in opposition were critical of the price of electricity in South Australia compared with other states, so I do not accept the argument that this bill has nothing to do with price. Is the government's answer that it has no idea why gas prices are higher in South Australia? If that is the case, so be it: let us say so and we can move on.

The Hon. P. HOLLOWAY: In answer to the last question, we did say that there will not be a flat price because there will be differentials between the markets, which will reflect transmission and distribution costs within that market. The Hon. Mr Hood could inform us whether he was talking about retail prices at those locations. Obviously they will reflect the various transmission and distribution costs to those locations.

The Hon. R.I. LUCAS: Is the government saying that the structure of the gas market in South Australia is such that transmission and distribution charges within South Australia result in significantly higher prices for both industrial and residential consumers in this state?

The Hon. P. HOLLOWAY: The honourable member quoted places like Bordertown. I am not certain whether Bordertown is on a distribution grid, as that obviously would be one big factor. The specific areas serviced by the distribution network are: Adelaide, the Barossa Valley, Berri, Peterborough, Port Pirie, Mount Gambier, Murray Bridge and Whyalla, so one assumes that Bordertown is not on the grid. Its price was compared with Kaniva and Mildura, which are almost certainly on the grid. He also referred to Renmark. Berri is on the grid, but it appears that Renmark is not, so again that probably explains the differentials.

The Hon. R.I. LUCAS: At this hour, I do not want to prolong the debate; I know the government wants to get the bill through. I understand that the house is trying to expedite the passage, but officers have not been able to investigate closely the claims the Hon. Mr Hood has made. Is the minister prepared to give the committee an undertaking on this issue whereby officers will look at the issues raised by the Hon. Mr Hood and, if there are problems with the prices, they will come back with a considered response in relation to what the various issues are that might have led to what are significantly higher prices in South Australia compared with Victoria and New South Wales.

The Hon. P. HOLLOWAY: If the honourable member really wants that information, I guess we can get it. I do not think it detracts from the point that, if these locations, such as Bordertown and Renmark, are not on the grid, that will reflect different factors than those other places that one presumes are on the grid. That is the obvious answer. However, we can check that out. I guess I can undertake, on behalf of the officers, that we will do that with those particular cases. However, whether that provides any useful information is another matter because we might be comparing apples with oranges rather than like with like.

The Hon. R.I. LUCAS: I thank the minister for that undertaking to correspond with the Hon. Mr Hood and myself. I will not pursue those particular examples, because I understand they have not been able to be checked. However, the government's advisers must be in a position at the moment, as we were with the national electricity market, to be able to make general commentary in terms of some measure of average gas prices on grids on an 'apples and apples' comparison. Is it fair to say that, on that 'apples and apples' comparison, consumers in South Australia are paying higher prices for gas than Victoria and New South Wales?

The Hon. P. HOLLOWAY: The only advice we can provide from the officers is that, generally speaking, Victorian gas is cheaper than South Australian gas because a much larger volume of gas is being distributed over a much wider area; therefore, the distribution costs per unit are less than they would be in a smaller network. That may not be the case with New South Wales. There are different factors in New South Wales; I guess the distribution link is longer and, presumably, transmission would be more expensive. But, generally speaking, if it is lower in Victoria that would be the reason for it.

The Hon. R.I. LUCAS: Can the government indicate whether the sort of information that I have asked for is available through ESCOSA or any other government department or agency, that is, an 'apples and apples' comparison of the price that residential, commercial and industrial consumers pay for gas, on average, in South Australia compared with New South Wales and Victoria?

The Hon. P. HOLLOWAY: One could presumably get the cost in Melbourne versus the cost in Adelaide, for example. We do not have that information with us but, if the honourable member really wants it, I suppose we could get it.

The Hon. R.I. LUCAS: I am happy with that undertaking. As I have said, I do not want to delay the debate. When we talk about the national gas market, we spent days or weeks talking about the comparative cost and price of electricity when we debated the national electricity market. So, a debate about the national gas market and the issues the Hon. Mr Hood has raised I think are absolutely integral to this whole debate.

There may well be valid reasons why we pay more for gas in South Australia compared with New South Wales and Victoria. We as the former government thought there were valid reasons we paid more for electricity, although the then opposition did not accept those. The issues of long transmission lines and distribution lines, the fact that we generated more electricity through natural gas, rather than coal, which New South Wales and Victoria did not, meant that, inherently, we had high cost inputs going into the price of electricity in South Australia. The now government (the then opposition), however, did not want to accept any of those lines of argument. It may well be that it has to now in relation to natural gas.

I am happy with the undertakings the minister has given, and I do not intend to delay the debate on that issue any more.

The Hon. M. PARNELL: I want to make an observation and ask a question about the uniform nature of this legislation. In the second reading explanation, it states:

Under the proposed reforms, the new National Gas Law, the regulations made under the National Gas (South Australia) Act 2008 and, now, the National Gas Rules, will be applied in all Australian jurisdictions by application acts which apply our law, regulations and rules.

I understand that that means that an act of parliament will be passed in other jurisdictions which basically says, 'We adopt the South Australian act.' I received information late this afternoon that last night New South Wales passed an act to accept the South Australian act. Is that correct?

The Hon. P. HOLLOWAY: Yes, that is correct.

The Hon. R.I. Lucas interjecting:

The Hon. M. PARNELL: The Hon. Rob Lucas says, 'Pre-emptive strike.' People might wonder why this is important. It seems to me that, if you are looking for an abrogation of our legislative responsibility, you need go no further than this regime because what we have had is an insult across the states. It is an insult to the people of New South Wales that their parliament has passed a law when it does not know what it contains because we have not yet passed our law. I have amendments that have not yet been dealt with; we will get to them shortly.

What an outrage for the people of New South Wales that their parliament has passed a law the contents of which it is uncertain. It is an insult to the people of South Australia as well, because the pressure, obviously, that that puts on us is to say, 'Well, it's a national uniform scheme. There can be no amendments. There is no scope for any changes, however sensible.' So that is an insult to us as well. I know that we saw it with the national electricity laws, we are seeing it now with gas and we will see it again, but what an appalling way to treat the voting public of Australia whatever jurisdiction they are in, that laws are passed of which they do not know the content, and the pressure is put on the lead state not to make any changes.

We are going through the motions here. We are able to ask some questions; I guess there is a democratic exercise there but, in terms of amendments, the pressure is very much on legislators here not to propose or to accept any amendments. Really, if we were honest, we are not the lead legislative jurisdiction; we are not the lead legislator: we are the lead rubber stamp. I think that is an outrageous way to pass laws in this country. Having got that off that my chest, I will move my amendments when we get to them.

The Hon. P. HOLLOWAY: I think it would be far more outrageous and economically stupid if, as a country or as one nation with an interconnection of grids, we have a whole series of different rules across state boundaries. In Europe, where they have 30 countries all speaking different languages, they can get a greater degree of uniformity and cohesion in their legislation in some parts then we can.

Surely, in relation to something like national gas we can get some cohesion within our legislation. There are significant national benefits. That is why we have developed COAG; that is why competition policy and the savings through that have been documented at many hundred millions, if not billions, of dollars of benefits in having that uniformity. Overall, through those uniformity policies I am sure that as a small state we would benefit to the tune of many, many hundreds of millions of dollars each year.

The Hon. SANDRA KANCK: I do not think that anybody is disagreeing with what the minister has just said in terms of what value we get. The problem I think that at least some of us on the crossbenches see—and I do not know whether the Hon. Mr Lucas finds it the same—is that one wonders what we are even doing here bothering to debate this legislation. The reality is that we have had no input into its makeup; it is something that has been agreed beforehand by a set of ministers. I do not know whether anyone else has had any input into formulating this bill, and I would be interested to know from the minister just who has been consulted in the process.

The Hon. P. HOLLOWAY: With the development of these bills—we have indicated that when we dealt with the electricity—there is very extensive consultation. There were two exposure drafts for this bill before it took its final form. There is very extensive consultation. Let us be frank too: these are highly technical pieces of legislation, and the reality is that few members of parliament are likely to get down and into the nitty-gritty technical detail of these sorts of bills. Perhaps the Hon. Mr Lucas does.

The Hon. R.I. LUCAS: I have great sympathy with the comments that have been made by all members in this debate because, as an individual legislator, I share the frustrations of the Hons Parnell and Kanck have expressed but, as a former minister of a government, when you do have things like national gas markets and national electricity markets, I understand why you need to have consistent legislation.

One of the clever techniques this parliament could adopt, given our lead legislator role, is that we could delay the legislation in this parliament sufficiently until all the other states had passed their adopting legislation and then we could change it. It would only work once, because we would lose lead legislator status. It is extraordinary that the others enact legislation prior to ours; at least they should go through the pretext of waiting for us to pass it before they pass theirs, and I understand that frustration.

I am sympathetic to that. The only other point I would make is that I doubt very much whether minister Conlon and indeed probably all the other ministers at the moment actually understand the legislation that is going through the council. It is actually only being driven by hard-working and very competent officers who work on this as their livelihood, and the point that the Hon. Mr Holloway made is almost entirely accurate. It is certainly my experience that, in trying to debate some of these issues as they were, not in relation to national gas but national electricity, and have a debate with some ministers in the past, they had no comprehension at all of the details of the legislation.

Ministers get a summary brief from their offices which says, 'Here is what has been arrived at. These are the major issues.' The major issues are identified by the officers after they have consulted with some within the industry, and I think it is fair to say that there are consultation drafts and people can make submissions in the early stages within the industry, in the national generators and the national gas forums—all those sorts of things that are done at that level.

Again, I am not going to delay. This is a very interesting and important debate, and we can perhaps have it on another occasion about how do you actually engage the cross-benchers and opposition, because we are not involved in this debate, either. We will come to the discussion about potential amendments as we did about national electricity and say, 'Hey; even if we were in 100 per cent agreement with the amendments that are being talked about, the dilemma we have is that there is this national agreement and what we are going to do in relation to it.'

The Hon. SANDRA KANCK: I have a question regarding the consultation drafts. Were any environment or social justice groups invited to have input on the discussion drafts?

The Hon. P. HOLLOWAY: My advice is that there were public consultations, and they were released on the ministerial council website so, obviously, there were a number of forums.

Clause passed.

Remaining clauses (2 to 22) passed.

Schedule.

The Hon. M. PARNELL: I move:

Clause 23, page 41, lines 27 to 31—Delete clause 23 and substitute:

23—National gas objective

(1) The objective of this Law is to promote efficient investment in, and efficient operation and use of, natural gas services for the long term interest of consumers of natural gas with respect to price, quality, safety, reliability and security of supply of natural gas while taking into account the principles set out in subsection (2).

(2) The following principles are relevant to the objective of this Law:

(a) decisions under this Law should take into account principles of ecologically sustainable development;

(b) recognition should be given to the long-term environmental and economic impacts associated with greenhouse gas emissions arising from the use of natural gas;

(c) reasonable and reliable access to natural as should be viewed as an essential service within the community.

(3) For the purposes of subsection (2), principles of ecologically sustainable development will be taken to be principles of ecologically sustainable development applying under the Environment Protection and Biodiversity Conservation Act 1999 of the Commonwealth.

To reflect briefly on the comments of the Hon. Rob Lucas—namely, that we could delay this bill until all the states have passed their enabling legislation and then provide the country with true leadership—I am very tempted that we should go down that path. Now that I realise that I represent the citizens of New South Wales in relation to this amendment (and I think the Hon. Rob Lucas said other states as well), I look forward to meeting my new constituents before the next election.

My amendment is very similar to one I moved in relation to the National Electricity Law, and it goes to the heart of the new system, that is, to the national gas objective. As it currently exists in clause 23, the national gas objective is purely an economic objective. It talks about promoting 'efficient investment in, and efficient operation and use, of natural gas services for the long-term interests of consumers of natural gas with respect to price, quality, safety, reliability and security of supply of natural gas'.

Those are economic drivers for decision makers under this legislation. My amendment seeks not only to adopt all those economic criteria but also to add to them the following principles: first, decisions under this law should take into account principles of ecologically sustainable development; secondly, recognition should be given to the long-term environmental and economic impacts associated with greenhouse gas emissions arising from the use of natural gas; and, thirdly, reasonable and reliable access to natural gas should be viewed as an essential service within the community.

I went through each of these principles in my second reading contribution, and I will not go through them all again, other than to say that I do not think they should be regarded as contentious. They are entirely consistent with most other pieces of natural resource legislation we have in this state, at least, and at the commonwealth level. For example, with respect to the principles of ecologically sustainable development, I have taken as my meaning of that phrase the existing commonwealth law, and that is the meaning of ESD in the Environment Protection and Biodiversity Conservation Act 1999.

So, I have not even made up a new definition. I have just said that we should recognise that this natural resource, this fossil fuel and this essential community service (because it is all those things) is not just something driven by economic priorities. It is also an integral part of our environment and our society, and I am saying that we should recognise that.

This afternoon, I had an extensive conversation with the shadow minister (Mitch Williams), when we talked through these amendments. I do not think that he minds my saying that he was very sympathetic to what I am trying to do. He could not really point to them and say that they make no sense, that they undermine the regime or that they impose unacceptable burdens. There were no meritorious reasons that these ought not be accepted.

However, as the Hon. Rob Lucas says, we are all in a difficult position, because our various executives have got together and decided what our laws should be, and here we are effectively being invited to rubber-stamp them.

Whilst supportive of uniform national approaches, I for one am not prepared to be a rubber stamp to the extent that I turn my back on sensible amendments that incorporate into our legislation recognised environmental and social principles. It just makes sense that we do it, and I do not think that it undermines the uniform national legislation. It does not require any more licensing, it does not alter fee structures, and it does not provide for any different consultation regime. In fact, it does nothing other than require decision makers to think about the environment and society when making decisions, not just economics.

It seems to me that, if we cannot accept such a simple principle, then heaven help us across a whole range of issues that come before us. I think it is short-sighted in the extreme for us to pretend that this is entirely an economic measure and that no mention of society or the environment should be countenanced. With those words, I urge all honourable members to support this amendment.

The Hon. P. HOLLOWAY: Not surprisingly, the government opposes the amendment, and the mover (Hon. Mark Parnell) has himself suggested one of the reasons. I point out that the objective contained in the current bill is designed to promote efficiency to benefit the long-term interests of consumers with respect to price, quality, reliability and security of supply. The objective is the same as that included in the National Electricity Law, but it is tailored to natural gas services.

The objective guides the Australian Energy Regulator (AER), the National Competition Council (NCC) and the Australian Energy Market Commission (AEMC) in performing their functions. As highlighted in the debate on the National Electricity Law, having a single overriding objective has the benefit of clarity and avoiding the potential conflict that may arise where a list of separate and sometimes disparate objectives is specified.

It is important to align the gas and electricity objectives to ensure the consistent application of the economic regulatory framework over the long term. The principles that are proposed to be taken into account in respect of the national gas objective may give rise to conflicting interpretations that have the potential to undermine the provisions of national gas services for the long-term interests of consumers of gas.

While environmental objectives are very important, and the South Australian government is actively seeking to take leadership in responding to climate change, clearly the AER, the NCC, the AEMC and regulated network businesses are not the most appropriate bodies to determine the environmental policy priorities of governments across the energy sector. As with other policy objectives that are not directly addressed as part of the national gas law, such as industrial relations, occupational health and safety and specific environmental protection, the broader environmental objectives, including principles for ecologically sustainable development and reduction of greenhouse gas emissions, are best addressed via policy specific legislation. For example, the commonwealth government's Mandatory Renewable Energy Target (MRET) has achieved increased renewable energy and has indirectly impacted on choices in the Australian energy market without having changed energy-specific legislation.

The commonwealth has committed to increasing the MRET to 45,000 gigawatt hours by 2020 (almost five times the current target of 9,500 gigawatt hours by 2010), which will require a substantial increase in renewable energy capacity across Australia. In addition, the commonwealth has committed to implementing a broad-based emissions trading scheme by 2010 that should, over time, provide incentives to fundamentally transform the energy supply industry towards low emissions generation capacity.

The government supports the principle that reasonable and reliable access to gas should be widely available to the community. Providing a legislative framework that supports investment in the ongoing development of the gas industry is an important part of delivering improved access to gas infrastructure, which the government considers will be assisted by this legislative package. So, for those reasons, the government opposes the amendment.

The Hon. SANDRA KANCK: QED, which is shorthand for the Latin words 'quod erat demonstrandum'. It was a term that was used, I think, in the 1940s and 1950s when students studying advanced maths in high school were taught Pythagorean geometry. One began with a proposition, worked through the mathematics and, at the end, came up with the statement QED, or 'to be demonstrated'. That is what has happened here. We have once again demonstrated that putting up an amendment to this national legislation is, effectively, a sham. We have proven it on a number of occasions.

I think that the minister's argument—that what is in this bill reflects what is in the national electricity law, therefore we should not change it—is illogical, and certainly circular. As lead legislators, we have attempted to alter the national electricity law when it has been before this chamber previously by putting in a requirement to take into account social and environmental concerns. I do not think that it is asking too much of these decision makers to take it into account. It is not establishing a policy: it is asking them to take it into account. It will not make any difference. I still think—as I thought when we dealt with the electricity laws—that this is worth fighting over.

The committee divided on the amendment:

AYES (2)

NOES (18)

Majority of 16 for the noes.

Amendment thus negatived; schedule passed.

Title passed.

Bill reported without amendment.

Third Reading

Bill read a third time and passed.