House of Representatives

Second Reading Speech

Mr Ian MacFarlane (Groom-Minister for Industry, Tourism and Resources)

I move:

That this bill be now read a second time.

Under the oversight of the Ministerial Council on Energy, otherwise known as the MCE, Australia has made substantial progress towards an efficient and effective national energy market over recent years.

The bill I am introducing today represents a significant legislative step forward towards a truly national regime for the regulation of gas pipeline infrastructure, complete with national regulatory and national rule-making bodies.

The Australian Energy Market Amendment (Gas Legislation) Bill 2006 sees the Commonwealth take the lead in establishing the Ministerial Council on Energy's cooperative legislative regime for regulating access to gas pipelines. This regime, once established, will ensure that the regulatory framework governing our energy sector is sound. This is crucial to Australia's future energy security and economic growth.

The MCE's cooperative legislative regime involves the development of the national gas law and the national gas rules, which will be applied in all participating jurisdictions to create a harmonised national gas access regime. The Ministerial Council on Energy has committed to establish this regime by 30 June 2007.

The new gas access regime will be underpinned by lead legislation enacted in the South Australian parliament. Early next year, the South Australian parliament will enact the National Gas (South Australia) Act 2007, and the national gas law will be the schedule to that act.

The introduction of this bill does not affect the making of the national gas law. A draft of the national gas law was released for consultation on 7 November 2006. All MCE ministers will consider the outcome of that consultation process before agreeing to a final version.

The Commonwealth and all states and territories, with the exception of Western Australia, have agreed to introduce legislation, known as application acts, to apply the national gas law as law in their own jurisdictions. WA will pass mirror legislation with content similar to the NGL, rather than applying the NGL established by South Australian law.

This bill amends the Australian Energy Market Act 2004 to make it the 'Commonwealth Application Act' for the new gas access regime. The Australian Energy Market Act, once amended, will apply the national gas law in the Commonwealth's jurisdiction, ensuring that the new gas access regime applies throughout Australia, including offshore areas and external territories.

Under the current gas access regime nine different regulators make decisions and determinations, leading to uncertainty and inconsistency in the application of regulation. Under the new national gas law, the regulation of all gas transmission and distribution pipelines, except in Western Australia, will be undertaken by the Commonwealth Australian Energy Regulator, known as the AER. This crucial reform will lead to a more efficient and consistent regulatory decision-making process.

It is vital that the Commonwealth parliament take a legislative lead in establishing this regime by enacting legislative amendments that will appropriately empower the AER, and two other Commonwealth bodies-the National Competition Council (NCC) and the Australian Competition Tribunal (ACT)-to take on crucial functions within the new gas access regime.

To this end, this bill amends the Trade Practices Act 1974 (TPA) to explicitly allow the national gas law, when applied as a law of a state or territory, to confer functions, powers and impose duties on these three Commonwealth bodies.

The involvement of these Commonwealth bodies is an essential part of this cooperative scheme, and the Commonwealth must take the lead by legislating to provide for these functions and powers to be exercised. The South Australian parliament, and indeed parliaments in all participating jurisdictions, must see that the Commonwealth is committed to this cooperative scheme.

The AER, the NCC and the ACT will have important roles in overseeing and reviewing the proper operation of this legislative scheme to ensure economically efficient, competitive outcomes in the gas market that protect the long-term interests of gas consumers.

For example, important decisions made under the new gas access regime, including those made under Western Australian law, will be reviewable by the Australian Competition Tribunal. This will achieve greater accountability and consistency in decision making and better protect the interests of both consumers and investors in the gas sector.

This bill has the crucial function of allowing the greenfields pipelines incentives contained in the current gas access regime to continue to operate in the new gas access regime. These incentives were agreed by the Ministerial Council on Energy and allowed to operate by amendments to the TPA under the Energy Legislation Amendment Act 2006, passed in the winter sitting. The greenfields incentives support new investment in pipeline infrastructure within Australia and crossing our territorial waters to other countries, increasing Australia's energy security and benefiting Australian gas consumers.

Further, by applying the national gas law in Commonwealth law, this bill will help to lessen the regulatory burden on pipeline owners where they are subject to competition in providing natural gas services.

The NGL will also introduce a new light-handed form of regulation that allows pipelines subject to competition to negotiate commercial outcomes with access seekers, without the burden of direct involvement by the regulator. Only where negotiations fail will the Australian Energy Regulator become involved, offering a binding arbitration to resolve the access dispute. This form of regulation allows gas market participants to negotiate economically efficient outcomes, whilst creating a fair and effective access regime.

In summary, the amendments I am introducing today represent a significant legislative step towards a truly national gas access regime under a national regulator and a national rule-making body. This cooperative scheme will ensure that Australia enjoys the benefits of a competitive and efficient gas market, whilst minimising the regulatory burden on industry. This bill has the full support of my state and territory colleagues on the Ministerial Council on Energy. I commend the bill to the House.

Debate (on motion by Mr Crean) adjourned.