22 April 2016

Governments must act on ACCC Gas Market Inquiry to boost manufacturing

Manufacturing Australia (MA) has welcomed the ACCC’s report on its inquiry into the East coast gas market.

It is now crucial and urgent that Federal, State and Territory governments, and gas industry participants, act on the report. If we do that, we will see new jobs and economic opportunities created in the gas supply chain, instead of supply constraints and uncertainty chasing away manufacturing investment and putting jobs at risk.

Manufacturing Australia Chairman, Mark Chellew, said the ACCC’s final report confirmed MA’s position that the development of the liquefied natural gas plants has caused major structural changes in the domestic gas market, and that while there is no silver bullet, the solution is a combination of more gas supply, more gas suppliers and regulatory reforms to make the market more transparent and competitive.

“The ACCC makes it very clear that blanket moratoriums and restrictions on new gas supply are coming at a very high cost to energy consumers – especially Australian manufacturers,” Mr Chellew said.

“Federal Energy Minister, Josh Frydenberg, is rightly calling on State and Territory Energy Ministers to respond to the report when they meet in July. Each State and Territory has much to gain, or lose, depending on how they implement this report.”

Mr Chellew welcomed the ACCC’s proposed measures to increase transparency and competition in the gas market, saying that regular publishing of the LNG netback price and gas reserves data, and reforms to pipeline regulation, would help to restore confidence in the market and encourage investment.

He also welcomed the ACCC’s commitment to additional investigation into joint marketing arrangements for gas in the Gippsland Basin, saying it was crucial that those arrangements be reviewed in light of the huge structural changes in the gas market since they were introduced.

“But the most important thing here is urgency. Manufacturers have been raising the alarm about this issue for years now, and we continue to highlight the issue in all of our dealings with State and Federal governments. We can’t afford for this to be just another report that doesn’t lead to action,” he said.

“Gas prices in Australia are still very high by international standards and confidence in the gas market is low. That will push manufacturing investment offshore and drive up unemployment unless governments can create an investment environment that encourages more supply and more suppliers, while ensuring a competitive and transparent market.”


Media contact: Ben Eade, Executive Director, 03 9023 9117