APPEA: AWU still puling in the wrong direction

The AWU continues to push a domestic gas reservation policy that would achieve little and would make all Australians, including Australian workers, poorer, APPEA said in a statement on Wednesday.

Responding to reports that the AWU will push the union movement to back a reservation policy, APPEA Acting Chief Executive Paul Fennelly said, “If you want to kill off investment, kill off jobs for workers, and drive up the gas price for manufacturers, then the measures prescribed by the AWU are an excellent way to go about it.”

Fennelly added that 1950s policy solutions won’t bring more gas to market or reduce costs for the Australian manufacturing sector,  noting it is strange the AWU is pursuing a policy that does not have the support of major manufacturing groups.

He said that gas producers noted that Western Australia’s gas reservation policy was a factor in driving investment away from that state and was a deterrent to bringing on new domestic gas supplies.

“Both the 2012 and 2015 Energy White Papers found that rather than increasing domestic gas supply, reservation would discourage new market entrants and would reduce supply competition, ultimately leading to higher prices,” said Fennelly.

The Productivity Commission also found in its recent review of the gas market, such a policy would reduce the welfare of all Australians by up to $24 billion over the period to 2032.

The AWU has continued to claim Australia is the only country that does not have a reservation policy. This is false, claims APPEA in its statement.

Countries such as the USA, Canada, the Netherlands, Norway and the UK allow the market to set wholesale gas prices, just as Australia needs to.

Fennelly said, “These nations do this for a very good reason: gas reservation actually makes worse the situation it is supposed to fix – by reducing the very investment needed to bring on new, or cheaper, supplies.”

At a time when governments are seeking to increase the competitiveness of the Australian economy and attract new project investment, gas reservation is the antithesis of the policy response most in the business community are looking for, Fennelly said adding that such policy is not implemented for any other commodity.

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Image: APPEA