Gas mess will get worse and wider

The federal government’s Soviet-style attempt to control both the price and supply of gas will have seriously damaging impacts way beyond the immediate pain imposed on consumers and businesses.

The spectacular and all-but immediate failure of the collectively wet-behind-the-ears Albanese Government’s Soviet-style attempt to control both the price and the supply of gas will have seriously damaging impacts way beyond the immediate pain imposed on 26 million Australian consumers and hundreds of thousands of businesses.

Yes, it might have put a cap on the price of gas – but only at the wholesale level, not what Australians actually pay at the retail level. But even if so, as is already clear, at the cost of likely limiting supply into the immediate future and making the already previously looming long-term supply shortfall that much worse. It’s almost as if the Albanese government actually set out to replay the Soviet experience – when for decades Russians had the cheapest food and other consumer goods in the world; only trouble was there were no goods to buy.

Indeed, the cap hasn’t even started and it’s already failed the fundamental test set by the trio responsible: PM Albanese, Treasurer Chalmers and Energy minister Bowen.

I very deliberately exclude Resources minister Madeleine King, who’s known from the start it’s a croc and must increasingly be wondering what sort of bizarre ‘Back to a Whitlam lunacy future’ she’s stumbled into being part of.

Prime Minister Anthony Albanese. Picture: Evan Morgan

Back in early December when the trio proudly unveiled their “Responsible and meaningful action on gas prices”, Chalmers said the cap would turn what was going to be a 44 per cent increase in retail gas prices through 2023-24 into only a 23 per cent increase.

Further, with most of that 23 per cent “having already occurred”.

Whoops, missed by just that much. Consumers around Australia are now getting increases of 20-30 per cent, on top of what they’ve already copped.

Some are showing bills up more than 50 per cent. And that’s as at now, January 2022: who knows, who can impossibly say, what further rises will flow through over the next 18 months.

So, gas prices have not only already blown above what they were supposed to be after the price cap; they are on track to blow much higher than what was going to happen without the price cap! Further, where exactly did that estimate of how wonderful would be the effect of waving the ‘Price Cap Magic Wand’ come from?

Ah, you probably guessed it: Treasury.

Would that be the same Treasury that poured $40bn-plus down the JobKeeper toilet?

The same Treasury that can’t even do its day job: that half way through the 2021-22 year forecast the budget deficit for that year would be $99bn and it came in at just $32bn?

So we have the immediate mess; but it’s an immediate mess that just worsens the long-term mess that was already building, as a consequence of governments from the Albanese one down trying their damnedest to stop any further gas development.

While demanding the delivery of unlimited supplies; and now at a price fixed by politicians and bureaucrats; and with it all ‘enforced’ by lawyers from the ACCC who have zero understanding of business in general and even less of the complexities of the gas industry in particular.

Indeed, that same ACCC had already warned us in mid-2022 that we faced a massive gas supply shortfall this year; and that, self-evidently, was before the government came up with its doozy of a plan.

Furthermore, back in December, the at the time acting Treasurer (finance minister) Katy Gallagher claimed – presumably using Treasury – that the cap and the similar move on coal prices, would also “dampen” electricity prices by 13 percentage points in 2023-24 and lop 0.5 per cent off the CPI. If that doesn’t happen the whole outlook for the economy, inflation and interest rates changes dramatically. For the worse.