Gas shortage? We have John Howard to thank

Then Prime Minister John Howard with the Chinese Chairman of the National People's Congress Li Peng at the Great Hall of the People in Beijing in 2002.

Much of the blame for the gas shortage that Australia is suffering domestically has been sheeted home to the Rudd-Gillard governments. These were politically weak Labor governments responsible for too many stuff-ups.

The allegation that in an unseemly rush to push up exports, huge amounts of gas were earmarked for export leaving the domestic market well short of the supply targets for that period, let alone the future, was so easy to believe. The obscenity of gas being priced cheaper for export than for sale to the domestic market became a reality. It is still the case today as the gas companies gouge profits for shareholders with scant regard for Australia’s national interest.

It was easy to accept that it was all the fault of Kevin Rudd or Julia Gillard that this somewhat ridiculous situation ever developed. With the average punter, the view seems to be that they had stuffed up so much that it was easy to apportion the blame on them. It was easy. It was also wrong.

I do not seek to defend Rudd or Gillard or their administrations. The record should be set straight, however, as to when the rot on gas price and supply set in. Way back in 2002, John Howard was about to head off for an official visit to China. He wanted to impress his Chinese hosts with a big announcement. Howard went to China and had his big announcement. Australia would supply liquid petroleum gas to China. The source would be the North West shelf, which was then just starting to come on line. As was the case then, export price was a matter to be negotiated between governments. The companies supplying the gas then had to agree to the price but didn’t really have much choice but to accept.

In their haste to have a big announcement, the Howard government virtually gave the gas away. The price agreed with the Chinese sent a chilling message to a furious Japanese government. The Japanese gas contracts with Australia were set at a much higher rate than that given the Chinese. The Japanese — Australian allies — could not believe how well the Chinese had been treated compared to them. The upshot of all this was a renegotiated deal with much lower price for the Japanese.

All the drama we are currently experiencing has its genesis on that visit to China by John Howard 15 years ago. This does not absolve the Rudd and Gillard governments, which were guilty of following a bad policy precedent. It just puts into perspective a discussion which is critical to Australia’s economic performance. It shows that neither side of politics comes to this table with clean hands. There should be room for bi-partisanship on an issue where the government and the opposition have both mightily contributed to today’s energy mess.

There is absolutely no sign of this happening as the Prime Minister endlessly attempts to jawbone the gas companies into submission. Labor continues to pretend that renewables provide the answers to our energy supply problems within a totally unrealistic time-frame. Even when this country is in real strife we can not only point out the greed of the gas companies as they chase obscene profits at the expense of Australia’s economic future, we should bemoan the complete absence of true statesmen and women in our country.

At a critical time for the nation, the likes of Malcolm Turnbull and Bill Shorten would rather score points than join forces to fix a problem as large as this.

Way back on the day of the Howard announcement in 2002, former Labor Senator Tom Wheelwright was living in Hong Kong working for Lucent Technologies. That day he took a call from a friend who was fairly senior in the Chinese government. The Chinese, he told Wheelwright, just could not believe the price John Howard’s government were prepared to accept.

Let’s start from square one and never again be regarded as mugs by the rest of the world.