Reform gas markets or face recession

Posted June 14, 2017

Australia will lose “tens of thousands of jobs” in the coming years and fall into recession if the Federal Government fails to tackle the gas price crisis gripping the nation, the Federal Member for Mayo Rebekha Sharkie said yesterday.

The Nick Xenophon Team MP made the comments while speaking in support of a crossbench-led debate on a national energy policy.

The Matter of Public Importance was put forward by the Independent Member for Indi Cathy McGowan and spoken on by all crossbench MPs.

Rebekha’s speech echoed comments made by Senator Nick Xenophon on ABC AM Monday morning.

She said Dr Alan Finkel wasn't asked by the Government to consider the gas crisis in his recently released review into the national energy market.

This was a critical oversight given the immediate energy crisis facing the Australian economy and the role gas had to play in the transition to renewables, she said.

“Australia has one of the largest proven gas reserves in the world, and yet we are exporting the bulk overseas,” Rebekha said.

"Australian businesses are paying three times the spot price of gas in the US and double the long-term contract price in Japan.

“A gas crisis is not imminent—it is already here.

“Unless we can bring prices back down to between $5 and $7 a gigajoule, we will lose tens of thousands of jobs in this country in the coming months and years.

“We need to tackle the gas crisis head on before it tips our country into an avoidable recession. This is the recession we don't have to have. This is the recession we have to dodge.”

Rebekha said the Nick Xenophon Team was working towards a solution, starting with its negotiations with the Government earlier this year over an energy package.

“A major focus of that package was to begin reforms in Australia’s industrial gas markets; to set Australia on the path towards sustainable long-term prices to keep our advanced manufacturers internationally competitive,” she said.

The measures that NXT negotiated included:

• A commitment from the Federal Government to use its powers to ensure Australian gas is directed to the domestic market if a voluntary agreement is not reached with gas companies by 1 July 2017, and a further commitment that longer-term public interest requirements will be applied upon all future gas export contracts;
• An agreement by government to implement gas pricing and capacity transparency recommendations of the ACCC gas and Vertigan inquiries by 1 July 2017 to ensure that businesses negotiating gas supply contracts are not negotiating in the dark;
• An agreement that the Productivity Commission will examine the effect and appropriateness of gas company joint venture arrangements in the market place where there are limited suppliers; and
• A ‘use it or lose it’ policy that will force gas companies that are sitting on huge gas reserves to bring cheap gas to market or hand the tenements over to companies that will.

“There is serious dysfunction in our gas markets, and we need to deal with this absurdity head-on,” Rebekha said.

“Companies talking to NXT are now being offered gas between $15 to $18 per gigajoule, as much as three times their previous prices.

“NXT has worked hard to obtain measures from the Government that will bring more gas onto the domestic market and help to bring down gas prices.

"But much more needs to be done, and urgently. We are running out of time for Australian businesses and tens of thousands of jobs.”