Manufacturing Australia Chairman, Mark Chellew, has released a 13 point market reform action plan that aims to restore competition to the domestic gas market and avoid widespread manufacturing job losses.
The plan urges joint action by Federal, State and Territory governments and industry, and says gas market reform should focus on four key goals: establishing transparent and functional gas markets, securing domestic and export supply, developing appropriate infrastructure and providing incentives for new production.
Mr Chellew described the gas supply and price challenges as a “severe threat” to domestic manufacturing, and warned that up to 83,000 direct manufacturing jobs could be lost if market reforms are not fast tracked to restore confidence amongst industrial gas users.
“The Energy White Paper has the right vision of a gas market with diverse suppliers, additional supply, appropriate infrastructure and competitive, transparent, trading markets,” said Mr Chellew.
“But we are a very long way from that ideal now and there is a lot of work to be done if the Australian gas market is going to enable long term manufacturing investment.”
The action plan outlines a highly dysfunctional gas market that has rapidly consolidated and transformed with the establishment of an export Liquefied Natural Gas industry.
“Just a handful of economic interests now control the vast majority of Australia’s current gas reserves, while regulatory barriers, infrastructure constraints and the lack of transparent markets and trading hubs prevent new gas supply, and new suppliers, from entering the market,” he said.
Small Business Federal Minister, Bruce Billson, has agreed that gas market participants have complained that a lack of transparency was hampering efforts to buy gas.
“Our wholesale gas markets are based on confidential bilateral contracts with a comparatively small number of suppliers and infrastructure owners,” Mr Billson said.
“Participants have complained about a lack of transparency in the gas market and the information asymmetry facing those trying to access gas.
“The Australian Government wants to ensure there is adequate competition to allow participants to operate. This ACCC inquiry will establish if Australia’s eastern gas market is operating effectively.”
The association says that Mr Chellew’s recent announcement that the Australian Competition and Consumer Commission (ACCC) will examine competition in the Australian gas market is a very welcome start, but reforms must move quickly.
