Gas cartel runs wild on Grattan Institute advice


As the East Coast gas cartel once again runs wild:

Driving a new power shock:

It is becoming ever more clear how damaging the combination of weak-minded politicians and industry-captured Grattan Institute policy advice has been.


In 2013, the Grattan Institute campaigned against domestic reservation of gas as QLD LNG exports took off.

Grattan #1

Grattan lobbied hard against East Coast gas reservation in 2013

After the resulting local gas shortage crippled the energy transition, the Grattan Institute advised the Victorian Government last year that the solution to its own gas shortage was to push households into electricity.


Energy Minister Lily D’Ambrosio jumped on the idea even though it achieved nothing because households use so little gas, and more is needed for power anyway:

Now, it has become clear that the minister ignored her own department to follow industry-captured Grattan advice:


Victoria has been warned homes and businesses cannot switch to electricity in time to avoid frequent gas shortages, which the state’s own energy department expects to hit as soon as 2026.

A briefing note from department officials last year – obtained by the state opposition under freedom of information laws – cautioned Energy Minister Lily D’Ambrosio about looming annual gas shortages.

The minister was warned “electrification in Victoria cannot occur quickly enough to address these shortfalls”, and that new sources would be needed to “maintain reliable supply to gas consumers and to support increasing utilisation of gas power generation”.

“Shortfalls in 2026/2027 cannot be supplied from New South Wales or South Australia as it is projected that all southern states will be in deficit and there is limited pipeline capacity to import into Victoria,” the July 2023 briefing note compiled by the Department of Energy, Environment and Climate Action said.

Finally, today, Origin Energy, who sponsors the Grattan Institute, has done its deal to fleece NSW taxpayers while continuing to pump coal:

NSW’s largest coal power station will remain open for at least two more years, with an option for a further two after Origin Energy struck a deal with the state government.

The deal states unequivocally that Eraring will close by 2029 at the latest.


Australia’s largest electricity retailer may receive compensation if Eraring makes a loss. This figure is capped at $225m a year. If Eraring makes a profit Origin may have to pay NSW up to $40m. The compensation scheme runs only during 2026 and 2027.

Nice of them to pretend NSW might make money. Because Origin is shipping out so much East Coast gas, power prices are certain to remain high, but as households continue to flee the grid, the daily “duck curve” will steepen and coal power losses will steepen.

I’ll offer odds of another extension when Snowy Hydro 2.0 misses more deadlines.

Grattan Institute justification is incoming!

About the author
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.