29 Mar 2015
If you want to kill off investment, kill off jobs, and drive up the price of gas for manufacturers then the measures recently prescribed by the Australian Workers Union are an excellent way to go about it.
Which is strange, given the union says it is trying to do the opposite.
No one disputes that Australia possesses enough natural gas to meet both export and domestic demand. That’s why a world-class LNG export industry is in full swing; an industry that has created thousands of new jobs.
So why is the union championing the notion of a gas “reservation”?
It’s a notion that has been derided as economic voodoo by all and sundry the world over.
Take for example what has happened in countries such as Egypt, Indonesia, and Algeria following the imposition of such protectionism. In short, these gas-rich countries faced worsening gas shortages and worsening prices.
What we do know is that NSW has no gas under development to reserve despite having enough gas resources to meet current demand for 500 years.
At a time when gas prices are rising by more than 10 per cent, the state continues to import 95 per cent of its supply.
Developing gas resources is an expensive business. So is piping gas thousands of kilometres from Victoria, South Australia and Queensland into NSW.
There is a better and more cost-effective way to meet our energy challenge.
More gas, not more regulation, is needed to develop local gas resources and the Australian gas industry has long held the expertise and technological know-how to safely achieve that outcome.
Commodity prices may be an uncertainty beyond the control of government but there are areas where governments can manage risk and even take advantage of the present situation.
Now is a good time to redouble efforts to remove red tape, to streamline project approval times, improve our tax efficiency and competitiveness, and to make regulation an advantage in Australia’s global competitiveness rather than a burden.
Australia has made some progress here recently but there is a lot more that can be done to enhance the investment environment for the upstream petroleum industry, now moving towards its seventh decade of being a national economic advantage.
The Council of Australian Governments, made up of federal and state ministers, has firmly dismissed possible gas market interventions via a ‘‘gas reservation’’ policy, recognition it would present no viable way to secure gas supply or put downward pressure on gas prices.
There are a number of Australian companies willing and able to produce natural gas in NSW for NSW.
They should be allowed to get on with the job. The AWU membership probably stands to benefit as much as anyone.
First published in the Newcastle Herald, 30 March.