13 December 2022
Manufacturing Australia Submission Options to ensure the domestic wholesale gas market delivers for Australians
Security of domestic gas supply, at competitive prices, is vital to continued investment in many Australian manufacturing industries, as well as an orderly and well managed transition to lower emissions technology.
This short submission responds only to the “price cap” component of the consultation paper. A subsequent submission will respond to the remainder of the consultation paper, as has been requested.
- Manufacturing Australia welcomes the announcement of an emergency, temporary cap on wholesale gas prices for 12 months.
- Given the extraordinary disruption to global energy markets arising from Russia’s invasion of Ukraine, Manufacturing Australia regards the proposed cap as prudent, carefully designed and sufficiently rigorous given its reliance on independent analysis from the ACCC.
- Further, while the proposed cap is designed for Australian circumstances, it is important to note that intervention in domestic energy markets in some form or other is entirely consistent with the actions taken by many economies around the world to protect the interests of customers and avoid destruction of manufacturing businesses.
- A temporary cap on wholesale gas prices is necessary to avoid closures and job losses in Australian manufacturing businesses without contracts in place for the coming calendar year.
- This measure will also reduce the risk of repeating the severe disruption to electricity markets that was experienced in 2021 as a result of extraordinarily high gas spot prices.
- Failure to enact an emergency measure such as this is untenable, and risks unusually high energy prices hollowing out the domestic economy, forcing the closure of otherwise competitive and viable businesses, with lasting consequences.
Read the full submission here.