Industry group warns gas deal will ‘cost jobs, shutdowns’

Australian manufacturing firms are being offered gas contracts more than triple from a year ago amid warnings the government’s deal with LNG exporters would not stem industrial job losses.

Australia-Pacific LNG in eastern Queensland.

Australian manufacturing firms are being offered gas contracts of up to $35 a gigajoule – more than triple from a year ago – amid warnings the Albanese government’s deal with LNG exporters would do nothing to stem industrial job losses.

Australian Industry Group chief executive Innes Willox said the surge in gas prices could lead to “job losses, deferred investment and possible plant closures”.

He said the heads of agreement struck on Thursday between the government and major LNG exporters would do “nothing to stop this”.

Under the agreement, LNG ­exporters agreed to provide an extra 157 petajoules for the domestic market next year and charge domestic users no higher than international customers.

“Sky-high gas prices will lead to one of two outcomes for gas-­intensive businesses: some will be able to pass increases on because their global competitors are in the same dire situation. That will mean even more pressure on households and inflation,” Mr Willox said.

“Some won’t be able to pass costs on because their competitors are shielded by longer contracts or their governments’ policies. That will mean ending production in eastern Australia. We have heard from multiple manufacturers who expect to make a call on this by year’s end.”

Energy Users Association chief executive Andrew Richards said firms were being forced to pay ­between $30 and $35 a gigajoule for contracted gas.

“Supply of gas shouldn’t even be a question that we are having to answer,” he said. “We don’t have a supply problem we have a price problem and the heads of agreement really just further entrenches our links to those volatile international markets.”

Mr Richards said the issue was “already leading to job losses”.  “Food processors will pass the increased costs on to consumers at the supermarket. So this is a key driver to the cost-of-living issues we are having,” he said.

“If this is the future I don’t think there is any doubt we will lose manufacturing and we will be relying more and more on imports from places like China.”

Manufacturing Australia chief executive Ben Eade.

Manufacturing Australia chief executive Ben Eade said the government’s agreement “smashes investment confidence for gas customers while entrenching super profits for gas producers”.

“It will do nothing to meaningfully reduce gas prices, instead condemning more Australians to paying global spot gas prices ­already at unsustainable highs,” Mr Eade said.

“The federal government and Australia’s gas producers had an opportunity with this agreement to shield Australian customers from the extremes we’re seeing globally, but they have chosen not to. Customers are right to be ­severely disappointed.”

Resources Minister Madeleine King warned on Thursday that gas prices would not return to pre-Ukraine war levels of less than $10 a gigajoule. The government was working on a reformed gas export “trigger” that could be invoked when prices were too high.

Industry Minister Ed Husic said, the government would now focus on measures to lower prices.

He said gas producers “have got to recognise that they have a role to play in meeting the national interest and not working against it”.

“The focus on price is going to be critical not just for ensuring that households can have access to gas at prices that they’re accustomed to,” Mr Husic told the ABC.

“We’ve been elected with a clear focus on revitalising manufacturing, and there is a national interest in doing that, not just in terms of the jobs it creates and the way it helps firms.”