Business calls for action on gas price

Manufacturers are calling for the gas trigger to be reformed so it can be pulled quickly if prices rise too high, as the Albanese government begins talks with industry.

Australian Industry Group chief executive Innes Willox says the Australian Domestic Gas ­Security Mechanism needed to be ‘more useful with respect to extreme prices’.

Manufacturers are calling for the gas trigger to be reformed so it can be pulled quickly if prices rise too high, as the Albanese government begins talks with industry over changes to the mechanism.

Australian Industry Group chief executive Innes Willox said the Australian Domestic Gas ­Security Mechanism needed to be “more useful with respect to extreme prices”.

Mr Willox said the trigger should enable the federal government to “rapidly” force gas companies to divert supply to the domestic market under “extreme price conditions”.

“Today’s gas trigger was originally designed to respond to the risk of actual local scarcity driven by east coast export overcommitment,” Mr Willox said.

“The current design makes it impossible to use in response to the extreme and damaging prices now facing gas users.”

On Tuesday, Resources Minister Madeleine King announced the government’s intention to ­extend the ADGSM to 2030 to “help secure ongoing gas supplies to the next decade”.

The measure, implemented by the Turnbull government in 2017, was due to expire at the beginning of next year. But Ms King said the government was opening consultations with business “to ensure the government continues to have access to the emergency mechanism to reserve gas for domestic supply in times of a supply shortfall”.

“The current ADGSM is a complex mechanism that would, if invoked, take a long time to produce results,” Ms King said.

“The Albanese government is determined to make sure the ADGSM can work as an effective tool to enable Australians to have access to affordable energy.”

Energy Users Association chief executive Andrew Richards said the trigger needed to be invoked on price, rather than just on supply shortages.

“It has always been around sufficient volume but if you can’t afford to buy the gas then there is no point in having the volume,” he said.

“We think the two things need to be linked in some way.”

Wholesale spot gas prices were more than $40 a gigajoule on Tuesday, well above the $10 to $11 a gigajoule reported in February by the Australian Competition & Consumer Commission.

A new report from Energy Consumers Australia shows that just 40 per cent of Australians have confidence the energy market is working in their interests, while 88 per cent are concerned energy will become unaffordable in the next three years.

Energy Consumers Australia chief executive Lynne Gallagher said there had been a “stunning collapse of confidence and trust” in the energy sector.

“If we can’t show consumers the system has their interests front of mind and is able to deliver on them then Australians will be increasingly tempted to disengage from the energy system and try to go their own way,” Ms Gallagher said.

Australian Petroleum Production and Exploration Association chief executive Damian Dwyer warned changes to the ADGSM could send negative signals to international customers.

“Australian natural gas has a critical and ongoing role to play in the cleaner energy future mix, both domestically and internationally, but to do that it needs investment certainty,” Mr Dwyer said. “Australia needs to be ­conscious of the signal any consultation sends to our longstanding trade and investment partners who have invested in the Australian economy because of our investment stability and purchase our gas at great benefit to the Australian people.

“Just look at the $6bn in royalties over five years Queensland recently forecasted from the state’s LNG projects. These investors and trading partners are the same partners Australia will work with to build our future ­hydrogen export industry.”