Manufacturing Australia Calls for Restriction on Gas Exports

Australia could lose thousands of jobs and up to $28 billion in economic value could be wiped out if governments fail to intervene to ensure competitively priced gas remains available for local manufacturers, an industry body said.

A gas supply crisis is about to hit Australia’s East Coast because gas currently devoted to domestic manufacturing is being diverted to export, leaving Australians to pay one of the world’s highest gas prices despite having one of the world’s largest supplies, a report by Manufacturing Australia said.

Natural gas makes up 15-40% of the cost base of common products like fertiliser, alumina, cement, bricks and roof tiles. 

Manufacturing Australia's report predicts that, without intervention, the shortage of supply and unprecedented price shock could result in the loss of 12% of manufacturing value add and 9% of manufacturing jobs.

There were several options available to Governments to strike a balance between exports and domestic value adding to gas, Manufacturing Australia Chairman Sue Morphet said. These include introducing a National Interest Test for export such as in Canada, ‘use it or lose it’ provisions, reserving a small percentage of gas for domestic market use such as in Western Australia or other arrangements such as royalty arrangements or tax incentives.

“There are around 4,000 ongoing jobs in LNG export. Around 5% of these could be at risk if government intervened in East Coast gas markets in order to save almost 200,000 jobs in Australian manufacturing. I think that’s an equation most Australians would regard as a ‘no-brainer’,” Morphet said.