Gas Reserves

The Hon. F. PANGALLO (15:49): I thank the Hon. Mr Hood. I actually called soccer games for 107 FM. I rise to speak on the astonishing predicament our resource-rich state and nation is facing. The next time you head to your local servo or hardware store to exchange your bottle of gas, take a moment to think about its contents and the journey it made to get to your barbecue. The LPG has made an extraordinary round trip: extracted from Australian wells, shipped to Japan at a cheap price, only for it to return with a mark-up of up to 60 per cent.

The Hon. I.K. Hunter interjecting:

The Hon. F. PANGALLO: Yes, 60 per cent. Australia, perhaps, sits on the world's biggest reserves of gas. I say 'perhaps' because we may never know what is here, for the cartel of the six biggest players who control the price of gas like to keep their reserves a secret. They are also responsible for creating the gas shortage that we are experiencing and a false price market. This mess is impacting on our economy and energy needs.

State and federal governments should wear some of the blame for their lack of foresight to develop a national energy strategy. Currently, we export 12 per cent of the world's gas, and it is climbing at such a rate that Australia will soon claim the gold medal as the market leader, yet incredibly here we are still having to endure domestic gas shortages while paying amongst the highest prices in the world for our own commodity that is abundant.

Two years ago, AGL—the corporate energy giant set to make $1 billion profit on the back of contemptible power bills it slugs consumers this year—shipped off a staggering 25 per cent of the nation's annual gas supply to China, Korea, Japan and Malaysia, raking in $2 billion in the process for its shareholders, all this while knowing that it was going to shut down its coal-fired Liddell power station and thereby put more stress on our already overloaded national electricity market.

We are giving away our most vital resources. Only last week, Chinese company CKI, which already controls much of our energy infrastructure, filed a $13 billion takeover bid for APA, the country's largest gas pipeline operator, which carries the lifeblood of our manufacturing industries and the economy. Hopefully, it sparks intervention from the Foreign Investment Review Board.

Gas is so vital for our energy needs, particularly if we become more reliant on what is dubbed as the 'unreliable electricity industry of renewables'. I am not against renewables or wind farms, but we do need an affordable and reliable base load power generation as a backup, and with coal disappearing from the picture gas must surely be the answer.

In South Australia we are streaking towards a renewable energy target of 50 per cent. Our major power stations are gas fired. One of them was mothballed during the 2016 blackout because of the price of gas being too high to produce electricity. Batteries, wind farms and rooftop PVs aside, gas prices caused by domestic shortages is still driving up our electricity bills.

Manufacturing industries will be the biggest loser. In 2014, a BIS Schrapnel report estimated losses of $59 billion and 91,000 fewer jobs. The chairman of the Australian Competition and Consumer Commission, Rod Sims, said recently that, despite the reforms announced by the Turnbull government a year ago, the east coast gas market was still broken. Bizarrely, coal-fired electricity is cheaper than gas-fired electricity.

So how should we respond to this crisis produced by corporate greed and cunning? Australia is the only gas producing nation on the planet that does not have a national reservation policy, allowing gas exports without restrictions. There is an exception in Western Australia—a reservation policy has been a feature of its markets since the 1970s. I will be pushing for similar legislation here where the state retains 15 per cent of the gas produced by each liquified natural gas project.

Earlier this week, in a Budget and Finance Committee meeting, I asked Dr Paul Heithersay, the deputy chief executive of minerals and energy from the Department of the Premier and Cabinet, whether a gas reservation policy had been considered. His response was blithely dismissive and lacking substance or conviction. It is no surprise that the oil and gas producers do not like it.

SA-Best carried a domgas reserve policy to the 2018 election and we will pursue it, because we believe it will significantly drive down electricity prices, boost manufacturing—especially with our big defence projects looming—and encourage hydrocarbon exploration and development. If it succeeds, we may well get that genie back into the gas bottle.