Centre Alliance has written guarantee of government gas policy

The Centre Alliance gets written pledge on gas reform, in exchange for backing tax plan.

Minister for Finance Senator Mathias Cormann. Picture: Kym Smith.

Centre Alliance has received a written guarantee outlining the Morrison government’s gas policy, which the key minor party demanded in exchange for its support for the $158 billion personal income tax cuts package.

The copy of the draft gas policy, which has been signed by the government, was given to Centre Alliance senators last night ahead of a crucial vote in the Senate today on the tax cuts.

Centre Alliance senator Rex Patrick told The Australian in June he wanted a “clear understanding” of the government’s intention on gas, and the details in writing, before supporting the tax cuts.

Senator Patrick told The Australian the document detailed the measures of the government’s gas plan and the timetable in which they would be rolled out “over the next few months”.

Finance Minister Mathias Cormann, who as the government’s Senate leader has led negotiations with the crossbench to win enough support for the tax cuts, ruled out doing any special deals in order to legislate the package.

Seizing on the written draft gas policy handed to Centre Alliance, opposition treasury spokesman Jim Chalmers said: “Cormann’s claims to not be doing deals have been exposed today as complete rubbish.

“These deals show his claims were farcical from beginning to end. No wonder he’s such a diminished figure.”

Senator Patrick assured the Senate chamber there was no agreement with the government that said “if you vote for the tax cuts, we will do this” but confirmed he had a draft policy document detailing gas measures.

Labor is demanding Centre Alliance table the document.

“We are now quite satisfied the government is moving in a really good direction in relation to gas prices. That’s the status of things, there is no written agreement that says ‘you do this and we will support tax cuts’,” Senator Patrick said.

“There is a dialogue that’s taken place, there are e-mails that have been exchanged, there’s a draft policy document that, once again, (it) would be irresponsible to table something that is in draft, that is not fully considered.

“Tabling something or producing something that is not completed can actually be harmful because the government is still working through a whole range of options and they need to do a whole bunch of checking off on those options.”

Senator Cormann said there were “absolutely no special deals”.

“What we have said consistently is that we would work with non-government senators in relation to public policy issues and we are seeking to secure alignment with non-government senators around important public policy priorities and indeed the government has a longstanding policy priority to deliver lower electricity prices, lower gas prices,” he said.

“We will continue to work with senators in relation to these matters but these decisions have to stand on their own merit, they have to be taken on their own merit and they will continue to be taken on their own merit.”

Deal risks show down with gas industry

However Mr Morrison’s tax cuts deal with CA has put the government on a collision course with the gas industry.

Australia’s petroleum and gas lobby this morning slammed Centre Alliance’s raft of gas reforms, which it claims to have secured in exchange for supporting the federal government’s full tax cuts bill.

The minor party today said it had secured changes to the gas pricing trigger, new transparency measures for the gas market and a long-term plan to boost domestic gas supply in order to pass the tax cuts package through the senate today.

Finance Minister Mathias Cormann confirmed today that the government had “talked through” gas reforms with Centre Alliance senators Rex Patrick and Stirling Griff, and announcements would be made in due course.

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The Australian Petroleum Production and Exploration Association today said there were no needs for any changes, and wanted more details from the government.

“APPEA needs to hear directly from the Government on the specifics of the proposed gas deal before commenting further,” an APPEA spokesman told The Australian.

“But we see no need for changes to the Australian Domestic Gas Security Mechanism (ADGSM) at this time.

“The ADGSM is up for a review in 2020 and the gas market transparency work will follow on from ACCC recommendations that were recently made public.

“The Australian gas market is comprised of multiple gas suppliers competing to win local business.

“AEMO’s 2019 Gas Statement of Opportunities has confirmed that the gas market is well supplied until at least 2023.

“That why it is important that identified gas resources in NSW, Victoria and the NT are able to be developed as soon as possible.”

Centre Alliance says it has achieved changes to the Australian Domestic Gas Mechanism, new transparency measures for the gas market and long-term plans to ensure surplus domestic gas supply.

Senator Patrick says the gas reforms he has negotiated with the government will “cause lower electricity prices” but won’t say if he has a signed commitment for the policies.

“We’re gonna have a bunch of people, hardworking Australians, that get a tax cut,” Senator Patrick told ABC radio this morning.

“What we’ve done with the Government is negotiated a range of policy measures that they will announce over the next couple of months. And we have a very clear understanding of what those policies are. And we anticipate that they will have a positive effect for consumers on pricing.

“It’ll be good for consumers … it might be bad for gas companies.”

The Centre Alliance deal has received some cautious praise from other business groups.

AI Group chief executive Innes Willox today said the gas reforms could be promising if increasing efficiency and fuel switching were part of the broader push on gas prices.

“Today’s deal between the Government and Center Alliance is the product of commendable focus and flexibility to elevate the gas issue and address it. The agreed policies may provide critical pieces of the puzzle,” Mr Willox said.

“This provisional welcome comes with two major caveats.

“Firstly, there is not yet any detail on the measures agreed. As Ai Group has argued, the specific settings in policies around export control triggers, prospective reservations or national interest tests will make the difference between success, failure and irrelevance. Whether prices come down, go up or are completely unaffected as a result of this deal will depend on the follow through.

“Secondly, the rise in gas production costs and the distance between end users and most new resources mean that gas prices will never return to their former levels. Demand side responses — increased efficiency and, where it makes sense, fuel switching — will be needed to limit long term impacts on commercial and industrial users, power prices and households.

“Industry will be working with the Government to ensure the detail of the reforms agreed delivers for energy users.”

The Finance Minister today declined to say the government has “horse-traded” with crossbench senators for their support for the full tax cuts package and said Scott Morrison has a long-term commitment to boosting domestic gas supply and bringing energy prices down.

“We’ve been prepared to engage in good faith with those senators about public policy issues that are important to them and they will be decided on their own merits and will be announced when we’re in a position to do so,” Senator Cormann told ABC radio.

“The government has a longstanding policy commitment to bring energy prices down. We have a longstanding policy commitment to boost the domestic supply of gas, in particular in the east coast electricity market.

“We’ve sat down in recent weeks with Centre Alliance, we’ve sat down with Senator Lambie. We’ve talked through these policy issues, we’ve talked through the measures the government has already announced, we’ve talked through the measures the government is developing at present.

“That is just normal parliamentary process engaging in good faith with elected members of parliament.”