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Federal Government backs AWU plan to guarantee affordable gas and save manufacturing

September 4, 2020

Gas prices could drop by more 40 per cent if the Morrison Government moves ahead with an AWU proposal to secure gas from east coast producers and make it available at lower prices for manufacturers.

It’s been reported the Federal Government is actively considering the plan which would save Australian manufacturing from imminent crisis and secure tens of thousands of jobs.

Fixing the energy and gas crisis is absolutely critical to Australia’s economic recovery from the COVID-19. The AWU’s position paper argues that the government can correct the current market failure and stop price gouging through the power of bulk government purchasing.

Gas producers have kept prices artificially high by selling huge quantities overseas, creating a shortage in Australia and locking in manufacturers to over inflated contracts for years at a time. Gas prices in Australia have remained high, while the international price for gas has crashed – sending Australian manufacturers to the wall.

AWU National Secretary Daniel Walton said if the reports about the government’s intent were accurate they could save Australian manufacturing.

“If the government follows through properly on today’s reports in the budget, it could save Australian manufacturing and tens of thousands of blue-collar jobs,” Mr Walton said.

“Since our union launched the Reserve Our Gas campaign back in 2014 we repeatedly warned the Abbott, and then Turnbull, governments that our manufacturers needed access to Australian gas at an affordable price to survive.

“It seems that finally, a stroke before midnight, the Morrison Government might be waking up to the urgency of the crisis and we warmly welcome that.”

The AWU has put forward a variety of proposals aimed at achieving the outcome of affordable gas since 2012.
This has included a national gas reservation scheme and, more recently, the idea of the government using its buying power akin to the Pharmaceutical Benefits Scheme to lower prices via bulk purchasing.

In a position paper, the AWU has recommended the government could buy around a third of all gas produced on the east coast, which would drive prices down due to its immense buying power. The Government could then sell the reduced priced gas to manufacturers and end their long term reliance on over-priced contracts and allow them to benefit from market variations.

If successful it’s been estimated that gas prices could fall from around $11 a gigajoule to a under $6 or under.

Mr Walton added: “This would be a game changer for Australia’s manufacturing sector which has been ripped off for years. Affordable gas should be a national advantage. Instead we have lumbered our manufactures – and the jobs they support – with uncompetitively high energy prices. It’s madness.

“The idea that our unconstrained LNG export market means foreign nations can get access to our gas at lower prices than locals should be enough to incense any Australian, including the Prime Minister. Big Oil and Gas multinationals are picking off Australian manufacturers one by one and gouging them with unfair prices. The government can step in and even up the negotiating playing field, just like it does Big Pharma via the PBS.

“A nation rich in natural gas should be a the best place to operate a factory, yet Australia has been stupidly squandering its luck.

“If we want a renewable energy future we need to shore up the grid with gas. This is the critical point many so-called environmentalists miss. You can’t throw a switch tomorrow and start powering the nation with solar and wind – especially not if you want to keep a manufacturing sector up and running during the transition.

“Aluminium, steel, glass – the world demands all of these things and they can and should be made in Australia. But if we want to keep and grow a cleaner and more efficient manufacturing sector we urgently need gas to be made available at an affordable price now.”
You can read the AWU’s economic recovery position paper here.

You can help the Australian Workers’ Union in its fight to protect Australia’s manufacturing history by joining the union today.

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