Australia's Gas Crisis
Federation Chamber - Private Members Business - 13 August 2018
Watch Matt's speech here
Mr KEOGH (Burt) (11:33): Western Australia is sometimes painted by those over east as behind the rest of the country. But one of the many things Western Australia can pride itself on—and something we are doing significantly better than the rest of the country—is gas. And that is not just producing gas, but keeping a fair share for Western Australia. WA has had a solution to this country's gas crisis for more than a decade. Under WA's domestic gas reservation policy, new gas developments must supply the equivalent of up to 15 per cent of their LNG export gas production to the WA market. While the price is open to the market, the effect is to maintain gas prices in WA below export parity. Meanwhile, the Turnbull government have been pushing the country's looming gas crisis under the rug for years. They have failed to adequately address this crisis and they have failed to ensure that there are sufficient, affordable gas supplies for the eastern states now and into the future.
Last year the Australian Competition and Consumer Commission commenced an inquiry into Australia's wholesale gas supply industry. The inquiry has highlighted the high prices being paid by Australian industry. The inquiry heard that, at best, short-term gas prices may have eased slightly from last year, recategorising them from—wait for it!—'outrageous' to 'just unsustainable' for large manufacturers. This is a win for the Turnbull government, apparently! I'm surprised they aren't running TV ads trumpeting such a tremendous achievement. These cost increases are seriously impacting on the ability of manufacturers to continue their operations. Prices currently sit anywhere between $8 and $11 a gigajoule. This is up to three times higher than the historical price. Many manufacturers that use gas, including chemical and fertiliser makers, for whom up to 50 per cent of their total costs are attributed to gas, find these prices unsustainable. The ACCC acknowledges that, even for companies whose gas is five per cent of their costs, the price increases we are now seeing could be the difference between profit and loss. We are hearing from many Australian manufacturers that finding gas contracts to keep themselves up and running is becoming nigh on impossible because more lucrative export contracts have already been locked in. This gas crisis is hurting Australian households and threatening manufacturing jobs all over the nation.
It doesn't just stop there. The flow-on effects of power prices from these increased gas prices even impact Western Australian workers. High energy consumers like aluminium smelters from across the east coast source their alumina from WA refiners, using bauxite mined in Western Australia. When eastern state smelters are affected by Mr Turnbull's reckless policies on energy, the jobs of WA workers are at risk too.
The price reduction and export restrictions that Australian manufacturers are crying out for will not come into play unless we see some real national leadership on this issue from government. The House must condemn the Prime Minister for failing to pull the export control trigger to ensure that Aussies are not being charged exorbitant prices for their gas. Australia is the second-largest exporter of gas to the world. In fact, soon it will be the largest exporter. We should have the cheapest and most accessible gas available for our industry and homes. The gas market, though, is the least transparent resource market in Australia, suffering high transport costs, higher regions of concentration and low levels of competition as a result. Why are Australians being punished for living in this great country of plentiful resources? Responsibility for every job in the manufacturing industry now falls on the shoulders of the Prime Minister and the Minister for the Environment and Energy—not only the jobs in the eastern states but the flow-on effects to Western Australian workers as well.
This government must act decisively now and find a solution to this gas crisis which is threatening countless jobs across the nation. Labor recognise the need for action with strong and effective policies to address the affordability and supply of gas to Australian businesses and households. It is why we are committed to a gas national interest reserve policy for the expansion of Australia's gas export industry. It is why we need a government that will pull the trigger on maintaining sustainable domestic gas supplies at a sustainable price. Australian gas users should have the first call on affordable gas before it is shipped offshore. We need a gas market that operates fairly and transparently in the national interest, where our gas industry retains incentives for new investments that benefit the national interest. Only under a Shorten Labor government will an affordable gas policy be secured to support Australian families with cost-of-living pressures and support Australian manufacturing jobs.