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AWU calls for action in growing gas crisis

August 12, 2022

The AWU has called on the new Albanese Federal Government to take urgent steps to end the ongoing crisis affecting the soaring price of Australian domestic gas.

The recent AWU National Conference passed an emergency resolution calling on the Government to urgently expedite its review of the Australian Domestic Gas Security Mechanism (ADGSM), to include a price trigger and pull it, to give certainty to the nation’s manufacturers.

And it noted that a national gas reservation policy – something the union has advocated since 2014 – would have helped avoid the crisis.

The resolution coincided with an alarming ACCC assessment that found Australia, one of the world’s largest gas exporters, won’t have enough gas to meet local demand next year.

The crisis has emerged through a combination of gas shortages created by the Russian invasion of Ukraine, failures in national electricity markets, and record-setting cold weather.

AWU National Secretary Daniel Walton told the conference that while the Resources Minister had pulled the ADGSM “trigger”, this would ensure supply but not affordable prices, and in any case it would come into effect until the start of next year.

And while the Government had begun a review of the ADGSM, it needed to act to act faster.

“The previous Liberal Government left us all an unholy mess to clean up and we’ll have to move decisively to avoid disaster,” Mr Walton said.

“The ACCC analysis confirms what the AWU has been saying for a decade, that you cannot trust multinational gas exporters with Australia’s energy security.

“China, an ally of Vladimir Putin, gets more Australian gas each year than Australian consumers.

“This means that Australian companies are forced to buy gas for the same price, or even more, than manufacturers in Beijing, Seoul or Tokyo.”

Delegates from the heavy manufacturing sector told the conference of gas bills rising up to $700,000 a month at a Melbourne glass manufacturer and $1 million a month at a Newcastle steel maker.

“So much of the manufacturing sector relies on gas and those costs have risen astronomically this year. They just can’t afford to go on,” Mr Walton said.

“If they shut we will see thousands upon thousands of workers lose their jobs. This will have far reaching flow-on effects for families and whole communities.

The resolution:

  • Expressed alarm at the ACCC report.
  • Condemned massive gas companies for price-gouging Australian manufacturers and profiteering from the Russian invasion.
  • Noted Australia was already in an energy crisis prior to the current gas price spike.
  • Noted that without urgent action, thousands of manufacturing jobs are at immediate risk.
  • Noted that the AWU had, since 2014, called for a national gas reservation, and that other policy measures have failed to ensure affordable gas for manufacturers and households.
  • Called on the Government to urgently expedite its ADGSM review, include a price trigger, allow it to be immediately implemented, and to activate it, to give certainty to the Australian manufacturing industry and the hundreds of thousands of workers who rely on it.

The resolution noted that Western Australia, under former Labor Premier Alan Carpenter, had set up a 15% gas reservation policy.

ExxonMobil claimed at the time that the reservation would ruin the economics of its project, but WA now had a thriving offshore gas industry plus abundant and affordable local gas.

Mr Walton said the Government had other levers it could pull to bring the big gas exporters into line.

In July the UK’s Conservative Government introduced a windfall profits tax that recognised that oil and gas companies were profiteering from the Russian invasion of Ukraine, not from any great achievements of their own.

“Australia has a similar opportunity to take action now,” he said.

“If gas exporters want to avoid such a tax, then they should guarantee supply of affordable to the Australian domestic market.”

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