22 Mar 2022
Opinion Article: Andrew McConville writes in The Australian’s Future Australia on the nation’s competitive advantage
We are ready for the future. But is Australia?
Emerging from the pandemic, the nation has a once-in-a-generation opportunity to make policy decisions that will build the foundations for the future growth and resilience of our economy.
The oil and gas industry is one of the keys to this outcome given our competitive advantage and central role in most of the major challenges of our times: energy security, jobs and investment, regional and global development, addressing climate change, speeding decarbonisation and complementing the growth of renewables.
The way we address these challenges will have a big impact both in the way the industry operates now and how we are planning for the future.
Decarbonised energy is a ready-made opportunity and our industry is well-placed to deliver.
We are already committed to reducing greenhouse gas emissions to net zero by 2050 and we will be critical to getting there, replacing coal, stabilising renewables and through technology like carbon capture and storage (CCS) or hydrogen production.
We have a competitive advantage in a new low carbon, cleaner energy sector because of our expertise and knowledge, scale, trade pathways, understanding of geology, provision of feedstocks and access to existing pipeline and storage infrastructure.
We also have the capabilities to deliver jobs and essential supplies as part of transitioning to a decarbonised energy system.
The oil and gas industry is putting its money where its mouth is. APPEA members have invested over $5 billion on decarbonisation solutions including CCS and hydrogen.
Just last month, ExxonMobil’s Esso Australia Longford Gas Plant in Victoria announced construction of a decarbonisation facility that would purify emissions, allowing them to be reused in food and beverage production. From gas plant waste to bubbles in your beer glass.
Australia has too often suffered from complacency in its attitude to the booming resources sector: that the industry would keep delivering for the economy and filling government coffers, driven by endless streams of domestic and foreign capital investment. No more.
The competition for investment dollars is intense and there is more pressure than ever on investors to find less risky investments and too much regulation, too much intervention, creates risk.
Australia may be seen as relatively stable globally while our energy sector is considered safe and reliable. But too often the cost of doing business in Australia is too high.
Our political leaders must do better – we must be more competitive and we must be brave enough to make the changes required to improve Australia’s international competitiveness.
We need to produce policies that create globally competitive industries with large scale investments – like oil and gas. We need competitive company tax, we need sensible transfer pricing and investment allowances, we need to be able to fully capitalise labour costs in large projects and we must reduce environmental regulatory duplication and overlap. This does not mean less regulation, just better regulation.
We must support initiatives such as investment allowances and immediate deductibility of wage costs, promote the creation of new job opportunities and underpin investment in new technology. Initiatives like those outlined in the Technology Investment Roadmap must be fully supported and be a centrepiece of the innovation agenda.
These are not measures that simply attend to our playing field in oil and gas. They build competitiveness for the wider business sector and ultimately turbo charge the national economy.
They will deliver for Australia, and they are the kinds of big picture, widescreen decisions people from all sides of politics talk fondly of decades later.
To miss this chance would be reckless and risk depriving future generations of the extraordinary opportunity that ours and other industries present.
Now is the time for our political leaders to recognise that, in many cases, there is no substitute for what the oil and gas industry delivers.
If we can together build a better, more competitive business and investment environment, then the oil and gas sector is ready to help the nation meet the challenges of our future.
Andrew McConville is Chief Executive of the Australian Petroleum Production & Exploration Association (APPEA).