While contemplating and, let’s say, ‘debating’ the findings of the Finkel Review, the Government this week took steps to sure-up Australia’s gas supply – for the short term anyway.
Flanked by Ministers Frydenberg (Energy) and Canavan (Resources), Prime Minister Turnbull on Tuesday announced details of a plan to enable the Government to curtail gas companies exporting gas, when there is a prospect of a domestic shortfall.
Most Australians would be shocked to discover that despite plenty of gas being extracted – and bountiful reserves that are yet to be tapped- the buyers of Australian gas in Japan are paying less than Australian businesses.
What the Government’s intervention is seeking to do is to bring the domestic price back down somewhere near international parity when transport costs are taken into account.
Prime Minister Turnbull said having more gas available for domestic use would logically drive down gas prices for the Australian consumer. However, he would not be drawn on the exact cost relief.
“How they translate into retail prices or prices for industrial users is another thing, but on the wholesale market, on the spot market, you've seen prices come down," Prime Minister Turnbull said.
The Prime Minister’s announcement has generally been lorded as a common-sense, short-term measure to fix the gas crisis. The Opposition is pleased – Leader Bill Shorten called for this action back in April.
National Farmers’ Federation (NFF) Chief Executive Tony Mahar yesterday commended the Government’s action. Restraining international trade is not in NFF’s DNA, but we find ourselves in need of a short-term solution to a very real crisis.
“As an export-dependent industry, any restraint on international trade is not something our sector would normally subscribe to," Mr Mahar said.
“However, when it comes to the availability of a reliable and affordable gas supply, it makes sense that priority be given to fix the short-term crisis."
“Farmers rely on energy to power dairy plants, irrigation operations, shearing sheds and in horticulture – refrigerators and packing sheds. We rely on gas to produce chemicals and fertilisers that are used on farms every day. And processors and manufacturers rely on gas to add value to our food and fibre products” Mr Mahar said.
“Year in, year out, farmers have been battling power price rises, in some cases, in excess of 100 per cent. Combine that with a reduction in the ability for food and fibre products to be processed onshore and our farm sector is in a world of hurt. These costs damage a farm business’ profitability and ultimately, its competitiveness.”
Importantly, applying a tourniquet to the current gas crisis will free the minds of our elected representatives to consider the bigger picture.
“These actions will provide the Parliament space to consider fully what can be an enduring and politically-stable solution to energy reliability, affordability and sustainability,” Mr Mahar said.