18 September 2024

ALAN HAYES

 

WHILE Aussies continue to subsidise the greed of international corporations, Chevron, Impex, Santos, Shell and Exxon, the Federal Government has to deal with a massive budgetary hole blow out that could be as much as $3-billion as iron ore prices slump due to the falling demand from China. Iron ore has already tumbled thirty per cent this year as China grapples with weak growth and a stagnant property market.

 

China’s property bust is now becoming Australia’s own iron ore headache – putting too many eggs in the one basket and giving our gas away for free.

 

The problem for Jim Chalmers and Anthony Albanese is that China is by far the world's largest buyer of Australian iron ore. It was taking 85% of everything we mined, and now, with a continuing decline in iron ore export to our biggest buyer, it means that the government will reel in spending – impacting even more on families trying to cope.

 

So, lets look at position we now find ourselves in!

 

If we were receiving royalties and taxes from gas exports we’d still be riding the crest of the wave and we'd be awash with money.

 

As previously reported by the Grapevine, around 80 per cent of Australia’s gas is exported overseas. Gas corporations have paid ZERO royalties on almost all of all gas exports. In fact, the government collects more revenue from HECS than it does from the Petroleum Resource Rent Tax.

 

Australia has an abundance of gas. In fact, Australia is one of the biggest exporters of gas in the world, alongside Qatar, who produces only 50 per cent more oil and gas than us. Yet they receive six times more government revenue from its oil and gas industry.

 

Putting aside the political rhetoric and government and gas industry excuses as to why we give our gas away for free, Qatar earns A$76-billion from gas while Aussies get scammed. Despite the Australian Government’s Future Gas Strategy, gas is “critical” to the nation’s economy, we continue to march downhill.

 

Gas resources are owned by the community and a royalty is a purchase price for the resource. The community expects a fair return for the loss of its non-renewable petroleum resources, so, why are we getting it? The fact is the Australian people receive no return at all, fair or otherwise.

 

Over the past four years alone, Australia’s royalty-free exports totalled $149-billion – it’s staggering that this is being propagated by the Federal Government. The billions of dollars in forgone revenue each year from effectively giving away Australian gas for free could be invested in a sovereign wealth fund or used to raise productivity and increase living standards of Australians by funding schools, hospitals, renewable energy, and other needed public infrastructure – even fill the budgetary hole caused by China’s falling demand for our iron ore.

 

Batting for the wrong side

 

The question that needs to be answered is “why doesn’t the Federal Government  impose any royalties on the gas extracted by projects in its jurisdiction. There is, however,  one exception: gas produced from the North West Shelf (NWS) fields off the northwest coast of Western Australia.

 

The NWS is treated differently to other gas projects because it was established much earlier, and because it received huge state government subsidies.

 

And as previously reported, Senate estimates hearings have revealed that the accumulation of tax credits under current rules could mean that much of the LNG industry could avoid paying PRRT indefinitely. Yet we call ourselves the clever country!

 

The elephant in Australia’s LNG market – a domestic gas conundrum

 

With most of Australia’s gas exports being given to gas companies for free, and low royalty rates levied on the gas for which royalties are paid, Australia is receiving a very small amount of revenue from the LNG industry. This stands in contrast to the record profits currently being made by the LNG export industry.

 

It is these obscene profits that are costing Australians in the hip pocket, exacerbated by parity pricing to guarantee supply to domestic markets that has become the elephant in the room.

 

The fact is that the gas companies, no matter what public relations spin they may put on it, want to sell their fuel at the highest possible price.

 

If domestic consumers were prepared to pay the equivalent of international LNG prices, it's likely that the gas companies would be fairly agnostic as to who they sell to. But why should Australians be held out to ransom for a resource that they own and the gas companies are exploiting for FREE.

 

The problem is that domestic buyers will almost certainly say natural gas, at a price close to export LNG parity, is unaffordable, and residential consumers, also facing, what seems to be never-ending and massive increases in energy bills, will baulk at export-parity pricing - putting pressure on politicians to ensure both gas and electricity becomes cheaper.

 

Yet the gas industry lobby group, the Australian Petroleum Production and Exploration Association (APPEA), continues to cry “we pay our fair share!” Deluded, they also point out that there is plenty of natural gas available in the domestic market, which has always been at odds with the government's consumer watchdog, the Australian Competition and Consumer Commission (ACCC).

 

Where does east coast coal seam methane gas (CSG) sit in the equation?

 

Asian gas prices are several times higher than Australian gas prices and because virtually unlimited ex­ports of CSG have been approved, east coast gas companies, such as Origin and AGL, can now also demand Australian consumers compete with Asian customers to buy Australian gas.

 

Regardless of claims by the gas industry that more gas mining is needed and will drive local gas prices down, it will not – a claim that has been ridiculed by commentators. (Gittins, Industries CSG campaign is a con. Sydney Morning Herald.).

 

Even the gas industries' own modelling, in report by Allen Consulting for gas company AGL, clearly shows that gas prices will be virtually the same whether or not varying much at all if you increase CSG mining along the eastern seaboard, in particular NSW where AGL's principal gas extraction operations are.

 

Adding to the domestic conundrum

 

The gas industry ‘spin doctors’, not to be left sitting on the fence cowering from the ’truth dogs’ yapping and snarling at their feet, crank up the ‘verbal spinning wheel’ and reframe or modify the perception of the truth to reduce any negative impact it might have. Most notably, bringing out the old favourite – jobs, jobs and more jobs.

 

Gas fields, including domestic gas fields that cover farmland and forests, are approved largely on the basis of the claims they make about jobs and economic benefits. The gas industry employs some people and generates eco­nomic activity - but often not to the extent claimed by industry advocates.

 

The gas industry is highly mechanised and a very small employer. It employs around 0.2 of one per cent of Australian workers.

 

Let’s not forget about ‘gilding-the-lily’ with the other outrages claim, to justify that they are good corporate citizens: indirect jobs!

 

All industries create indirect jobs, but few talk about them as much as the gas industry. "Jobs multipliers" used by the gas industry to make claims about the indirect jobs they create have been recognised as "biased" by the Australian Bureau of Statistics, who no longer publish multipliers for that reason.

 

If all industries claimed to provide as many "indirect jobs" as the gas industry does, it would add up to more than three times the amount of jobs that actually exist in Australia.

 

So, is gas mining really good for Australia?

 

Harking back to the Albanese Government’s ‘Future Gas Strategy’ and their claim that gas is “critical” to the nation’s economy, you cannot but wonder as to what country they are referring to – because the facts don’t stack up for Australia.

 

Notwithstanding all that royalty-free gas that is being given away, economic modelling by one of the main CSG companies operating in Queensland, Arrow Energy, found that there project alone would displace 1600 jobs in other industries and crowd out $440 million of manufacturing activity. And that's just one project of many of those now pulling gas from the coal seams along the east coast of Australia!

 

But there is also the impact of gas price rises caused by allowing unlimited CSG exports.

 

Economic modelling by Deloitte Access Consulting shows that gas price rises caused by CSG exports have cre­ated a $69 billion bonanza for the gas industry (mostly global oil and gas majors), but will cost the manufac­turing industry in Australia $118 billion dollars.

 

A dance with the fantasist fairies

 

As the gas industry continues it's ‘dance of deceit’, they have admitted reluctantly that there is plenty of gas, despite the public being sold the old favourite bill-of-goods: ‘not enough gas for the domestic market’, which means higher prices.

 

There’s plenty of gas, and plenty of ‘greed’ and immoral behaviour to boot! Australia has almost tripled gas production within just a few years. It is one of the largest and fastest expansions of gas mining anywhere in the world, ever.

 

Central Coast resident, Andrew Thomson said, “I use bottle gas to cook with and the price has almost doubled in the past two years.”

 

So, why aren’t Aussies getting their fair share of gas at lower prices? Why aren’t Central Coast residents receiving cheaper gas bills? A question that should be asked of our Federal representatives: Member for Robertson, Dr Gordon Reid and Member for Dobell, Emma McBride, who supported the Federal Governments ‘Future Gas Strategy’.

 

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