Canberra must stop blaming states over gas prices

Anti coal seam gas protests near Tara in Queensland. Pic: Andrew Quilty

With the exception of Western Australia every state in Australia is going to suffer from much higher gas and electricity prices.

Investment in energy using industrial plant will be curbed and consumers will be forced to cut back on retail expenditure because of rising gas and electricity costs. Inflation might break out.

Federal Environment and Energy Minister Josh Frydenberg blames NSW, Victoria, Tasmania and the Northern Territory for virtually stopping gas exploration — particularly as there is plentiful gas to be found.

Yet, in my view, solving the problem does not start with the states. Its starts in Canberra with Frydenberg and Deputy Prime Minister Barnaby Joyce the two ministers who must act first.

Neither at this stage has grasped the fundamental problem — farmers must be entitled to a share of the revenue for the gas that is under their ground. I know this right to minerals revenue goes against our national fundamental assumptions, but the game has changed,

When Dow Chemicals chief Andrew Liveris came to the ADC Leadership Retreat in 2014 and later travelled around the country he set out a detailed plan for Australia to avoid the very thing that has happened--- gas shortages and higher power prices.

Liveris explained to the nation that we must start by giving farmers rights to substantial revenue from gas found under their land. That way the economics of farms would be transformed and they would become supporters of exploration and development, not opponents.

Liveris explained that Australian experts needed to go into the rural town halls and community centres to explain just how simple and non-threatening “fracking” was.

At the moment the states are in a hopeless position. The farmers are refusing exploration, which stymies the Coalition, and the Greens do not want any form of hydrocarbon energy. That frightens the ALP because of the Greens’ invasion of inner ALP city seats.

And there is an environmental scare campaign being run in NSW and other parts of Australia by radio commentator Alan Jones. If we are to get out if this gas mess not only must we fix farmers’ incomes but Frydenberg has get to get up to full speed on fracking and take the debate up to Jones on radio --- along with touring the country.

Meanwhile in Queensland happy farmers are enjoying receiving about $200,000 a farm for access to their land and Australia is one if the largest users of the fracking technique, albeit in one state and most of the gas is exported.

While it was back in 2014 Liveris explained that if gas were freed up petrochemical companies would love to invest in Australia. Of course in his new role in the US of boosting manufacturing investment Liveris will now be trying to channel that money into the US, helped by Trump’s lower tax rates.

But Australia bristles with opportunity if only the blockages could be removed.

Victoria has a moratorium on conventional onshore gas exploration to 2020 and a permanent ban on unconventional gas exploration. If Gippsland and other area farmers were given rights to revenue greater than Queensland I think you would find a very different attitude to exploration.

And if the Coalition promised a major petrochemical investment in the Latrobe Valley you might even find that the people there would vote for jobs rather than for the ALP. That’s what happened in the US, which saw the Democrats beaten in their “safe” states by Trump. .

NSW has reduced its footprint for gas exploration licences from 60 per cent to about 8.5 per cent of the state’s total, with most licences bought back by the state. The best gas areas are drought prone and successful exploration would enable farmers to insulate their incomes against drought as well as having jobs for their children instead of seeing them go to Sydney. That’s what is happening in Queensland but the Queensland farmers “keep their mouths shut” because, if they talk about it, they get into controversy with the Greens.

It’s true that in the early days the gas groups in Queensland behaved abominably. But since then much better arrangements with farmers are in place.

Changing the laws to give farmers an entitlement is complex and will involve the states. But the action starts with the Commonwealth.

And Barnaby Joyce, who is in real danger of being decimated by One Nation, should join with Frydenberg to lead the charge.

And to underline the importance to farmers who do not have gas themselves Frydenberg made the following statement earlier this month: “Just before Christmas I met a delegation of food manufacturers who had operations across regional Australia. (My emphasis).

“Between them, they employed almost 10,000 workers and they included some of the biggest names from the dairy, vegetable and fruit processing sectors.

“Their concerns were the same. Rising electricity and gas prices were placing severe pressures on their cost structures while negatively influencing future decisions about further investment and employment”.

And Mr Minister, fixing that problem is not about just blaming the states. The action starts with you.