Mr NORTHE (Morwell) (15:43): It gives me pleasure to rise this afternoon to speak on the Petroleum Legislation Amendment Bill 2020. Part of the bill’s remit is to extend the moratorium on all onshore conventional gas exploration and production from 30 June 2020 to 30 June 2021. The bill then seeks to, from or on 1 July 2021, provide for a restart of exploration and production activities for onshore conventional gas. As preceding members have noted, importantly this is not to deal with fracking activities—and that ban certainly continues on any fracking activities with respect to gas.
It would be fair to say that gas and indeed the energy network and market have been the subject of a great deal of discussion and debate and deliberation over the preceding years, and it has certainly been at some times a volatile and controversial topic. Back in 2014 when bans on onshore gas exploration—conventional and unconventional—were introduced in Victoria they were generally well received, and there were a number of reasons for that. But a lot has changed over the past six years in regard to where we are as a state in terms of gas, electricity and indeed the wider energy market.
The reality is that gas reserves offshore have certainly become more scarce over that time. At the same time production costs have risen markedly, and indeed the cost of gas to consumers has also escalated over that time. I think any commodity that you have where there is a scarcity of course the market drives up the price, and that is not always necessarily a good thing for the consumers at the other end. As other members have pointed out, the gas export market has certainly played a role in the cost of gas over that period of time.
The Bass Strait gas and oil fields are certainly relatively close to my electorate, and I know a number of people who are employed in the industry. It is a really important industry for Gippsland but also for Victoria in terms of its energy needs going forward. As I did say, in Victoria at the time in 2014 we had a reasonable supply of energy, and indeed the costs of energy and electricity at the time were relatively low. In fact Victoria was looked upon as a great state to do business with from that point of view. But given what has been happening with the offshore gas sector and industry and the closure of Hazelwood power station in 2017, circumstances have certainly changed dramatically since that point. From a local perspective, jobs and the certainty of jobs in my community have been lost, and that is incredibly disappointing. Since that time, the costs of electricity, whilst relatively stable now in terms of a pricing perspective, did go through the roof at the time and over the future years. The competitive advantage that Victoria had in many respects was lost.
Without debating it too much, as we all deal with COVID-19 from an industry and business perspective, of course those particular states, territories and nations that have relatively low-cost electricity and security of supply do have an advantage. But at the time, unfortunately and really troubling for me, we lost that security of supply in Victoria, and we have now become in the last couple of years a net importer of electricity. What comes with that is higher transmission costs. We have got to the point which I think is pretty hard to fathom in 2020: having to pay companies to close their businesses on hot days or have diesel generators as backup certainly is not a good thing. We are having more and more renewables come online, and that is a positive outcome, but for the foreseeable future in my view I really do think that gas and coal will certainly continue to play a vital role.
For those who say that you can close down power stations tomorrow and we can be 100 per cent renewable, I would ask people just to have a look at the facts that come with the network and the grid that we operate within. I must say, digressing slightly, over the summer I read an interesting book by Matthew Warren called Blackout that goes to the heart—and I think it was a really balanced view—of having a look at renewables and non-renewables but also having regard for the system and the grid in which they operate. It is not as simple and easy as people might perceive—transitioning to 100 per cent renewables.
Nonetheless, one of the topics that has also been raised in the debate has been around the issue of resource royalties. That is something that I think we really need to be conscious of—about how the royalties system will operate with respect to gas and onshore conventional gas into the future. Presumably the government will take some royalties for that purpose, and that is understandable. I am not opposed to that, but what I would say is that in recent times it has been disappointing to see the massive increase in coal royalties in my electorate—just three years ago an increase of $252 million in coal royalties and an introduction recently of gold royalties as well. So I just caution the government by saying that whilst it is understandable their royalties do occur, what that level is can ultimately dictate the price of the commodity at the end of the day.
Also, when reading through the second-reading speech and the bill, one of the things that was missing for me was how the arrangements will be in place with landowners. This is critically important from my perspective. Over time, in various capacities, I have seen farmers’ land being acquired in certain circumstances where I could say that they have drawn the short end of the straw. It is important that if we are going to have these activities on private land, then landowners need to be engaged with that. It is imperative that we have a fair and just system in place to recognise farmers and farming families.
I note the coalition have proposed some amendments that deal with right of veto for farmers, and I think that they are sensible provisions and something that has been discussed out in the community for a long period of time. Having said that, I do note other aspects of the bill that require increased consultation with the community at various decision-making levels and require decision-makers under the act to take into account the additional social, economic and environmental factors. One of the interesting points, too, that is important to raise is that it obliges the holders of production licences for offshore petroleum under the act to provide domestic consumers with an equal first or reasonable opportunity to buy any new petroleum discovered under the acreage release areas from 2018 onwards. Again that has been the subject of much debate and consternation over a point in time, and I think that is a very good provision of the bill.
Just in closing, with everything that is going on at the moment in terms of COVID-19 and the economic impacts to business and industry in Victoria and indeed across the world, it just really makes sense to me that we have to look after our own backyard and ensure that we have adequate supply of energy in this state. Opening up this program for onshore conventional gas exploration and production I think is a sensible move. It has obviously been called for by industry for some period of time, but if we can provide that security of supply and if we have got adequate resources, I really believe in the market. It will drive down prices and give Victorian businesses and companies a competitive advantage. People talk all the time about, ‘Well, we have lost a lot of manufacturing to overseas’. There are myriad reasons for that, but I am sure one element of that is the cost of essential services and sources such as power. We might not be able to compete on labour against some countries, but it would be nice to think that we can compete when it comes to security of energy and energy supply—and prices are a big factor of that. So I do commend the government for bringing in this bill. I think it has been very well supported across all political parties, and I will view with interest the amendments as proposed by the coalition.
