Big business pans long-term energy price freezes

Big business and industry is urging Anthony Albanese to abandon aggressive energy market intervention amid warnings it will drive up energy prices and lower energy security.

Anthony Albanese with Resouces Minister Madeleine King. Picture: NCA NewsWire / Gary Ramage

Big business and industry are urging Anthony Albanese to abandon aggressive market intervention, warning it will drive up energy prices and lower energy security in the long term.

In a submission about a proposed code of conduct for the sector, the Business Council of Australia urges Labor to implement a formal trigger for the removal of price caps as soon as practical and implement a long-term gas strategy.

Amid rising concern from gas producers that Labor’s market intervention could stifle new investment in gas, Resources Minister Madeleine King in an address to industry on Tuesday will argue that Australia needs more gas and that demand for domestic gas will not be met through existing supply.

In a speech to the Australian Petroleum Production and Exploration national conference seen by The Australian, Ms King will say that more investment in gas resources will be needed into the future but that Labor’s recent safeguard mechanism reforms will ensure development occurs in line with net-zero targets.

Major gas retailers have warned against “overreach” in the government’s proposed code of conduct for gas producers and that any mandatory rules should be implemented “temporarily with caution, precision and regular review”.

The Australian Energy Council, representing major energy companies including AGL, Alinta, Origin and Energy Australia, urged Labor not to extend price caps to retailers, arguing such measures would diminish incentives for innovation and efficiency.

The Australian Aluminium Council, whose members include producers Alcoa and Rio Tinto, said a long-term price cap would reduce gas supply by encouraging larger producers to sell gas via offshore contracts.

In its new submission, the BCA said Australia was already experiencing the “chilling impacts” of market intervention, with contract negotiations having been halted and concerns expressed by major energy trading partners, including Japan.

“The proposed gas market measures (original and revised) risk deterring investment in Australia’s energy sector and putting upward pressure on energy prices and energy security risks in the future,” the submission said.

The warnings come after major business groups including Australian Chamber of Commerce and Industry and the Australian Industry Group warned against stringent price caps being imposed for longer than necessary.

Unions are calling for Labor to commit to maintaining price caps for at least five years to provide certainty for both gas producers and users.