How did a fundamental reform so critical to the national interest shift from the lunatic centre to the sensible fringe?
Australia’s failed East Coast gas market is critical to the entire economy. Unless it is fixed, Australia will have permanent stagflation, industrial hollowing out, and a failing energy transition.
The subject is hardly a fringe issue. It is the core of living standards, which has been marginalised by mainstream politicians who have become irrational.
This level of corruption is unacceptable to anyone with even the slightest degree of integrity.
Ed Husic has demanded strong action to end “profiteering” among gas exporters and to force them to sell cheaper fuel for Australian use, as the former industry minister broke ranks with his Labor colleagues to support an independent MP’s motion regarding energy prices on the east coast.
In a stinging rebuke to what he called Australia’s “timid” approach to gas market regulation, Husic delivered an impassioned speech in parliament where he said “tinkering at the edges” of reform would not fix a “fundamentally distorted” gas market.
“The cost of doing business in this country for multinational gas firms is that they must provide a gas price in line with historic pre-pandemic levels, and this should apply to any new field that’s opened too.
“We need strong action; a complete rethink of the terms on which Australian resources serve the Australian national interest.”
…The motion by the independent MP Nicolette Boele called on the government to “only allow uncontracted gas to be exported after it has been offered to the domestic market at a reasonable price”.
Gas, as we all know, determines the marginal cost of electricity, which in turn shapes our energy prices.
When I started campaigning for this reform over a decade ago, it was a difficult argument to make. Few understood the gas or power markets. Most attempts to bring clarity would founder on detail.
That is no longer the case. Most people these days engage in the argument. And a vast majority of Australians support taking steps to disconnect local gas prices from international ones.
Yet, despite the discussions, no effective action is taken, and the proposals being considered are so weak that even Labor’s own MPs are rebelling against them. The centre has become the lunatic.
Party politics constrain the centre, while independents engage in free debate at the fringe.
Thus, demanding an LNP policy for a Labor reform makes perfect sense.
Redirecting spot gas sales from global markets to local markets is a fantastic idea. But it is not sufficient in itself.
As the Dutton reform proposal exposed, such an approach does not address the fundamental problem of a lack of competition in gas supply.
The gas cartel will cut production to ensure the local market remains tight.
You need a regulatory measure to prevent the gas cartel from cutting production. As Dutton proposed, a combination of ‘use it or lose it’ laws and export levies does the trick.
My view is, why stop there? Why threaten outcomes when you can make them a reality?
Let’s get straight to the point and implement a 100% export levy on any gas molecule exported that exceeds $7Gj.
This leaves the cartel very profitable while delivering $7Gj gas locally and a significant windfall for the Treasury.
There is nothing in the reform that breaks export contracts. If LNG producers want to recontract supply to elsewhere, that’s up to them.
$7Gj is profitable for every molecule of gas in the ground in QLD, NSW, SA, and VIC.
