Guest essay by Eric Worrall

Australian manufacturers are demanding cheaper energy to remain globally competitive.

Gas action plan sets up clash over price

Public ownership of new gas pipelines, underwritten gas supply projects and a national gas reservation policy are being considered among measures to try to turn back the clock on east coast gas prices and fuel a manufacturing-led economic recovery.

The controversial proposals from the Andrew Liveris-led manufacturing taskforce would take government involvement in the gas supply sector to a new level in Australia and have set the scene for a renewed clash between manufacturers and gas producers over prices.

But they have also triggered calls from some manufacturers for more immediate action to help restore competitiveness at ailing plants that are struggling with price hikes over the past few years.

“What is missing is more immediate measures, a bridge to this brave new world,” said Stephen Bell, chief executive of basic plastics manufacturer Qenos, which on Wednesday asked staff to opt into a 10 per cent pay cut because of the impact of the COVID-19 pandemic

“We haven’t got 5 to 7 years to wait, so we need an intervention.”

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Read more: https://www.afr.com/companies/energy/gas-action-plan-sets-up-clash-over-price-20200528-p54x69

I watched an interview tonight with Stephen Bell of Qenos, the situation is very simple; Aussie manufacturers compete with overseas companies who pay $4-6 / gigajoule of gas. Aussie companies currently pay $20 / gigajoule.

This unsustainable price difference gives overseas manufacturers the freedom to offer their product at prices energy intensive Aussie manufacturers cannot match. This disaster is largely the fault of Aussie state politicians who have imposed gas fracking moratoriums and other anti-business policies.

Aussie manufacturers are clinging on in the hope that someone will listen. But time is running out. If nobody listens, Australia will lose what is left of its energy intensive manufacturing industry.