The Gas-Led Recovery is a Subsidy for Exporters

The idea that gas is essential to Australian manufacturing, employment and the overall economy has been one of the federal government’s major claims of recent years. It became especially pre-eminent after the National Covid-19 Commission – a taskforce that included a number of gas company executives – recommended a “gas-led recovery” to follow the pandemic.

The cost of energy is undoubtedly a factor in the economic success of manufacturing. But data from the Department of Industry shows that, conversely, manufacturing has very little importance to the major players in Australian gas.

In FY2019, 5,419 petajoules of gas were produced in Australia. Of this, just 373 petajoules were used by manufacturers. Even less, 169 petajoules, were consumed by Australian households.

By contrast, LNG plants, which liquefy natural gas for export shipping, received 4,519 petajoules of gas, of which 4,094 petajoules was exported. This means that more gas is consumed by the LNG plants – in merely getting gas onto ships to be exported – than by all the manufacturers in Australia. The LNG plants also consume twice as much gas as all Australian households combined.

The National Covid-19 Commission’s report was rather dodgily never made public. However, this week’s Four Corners revealed that the report recommended hundreds of millions of dollars in government spending on gas infrastructure, as well as speeding the approval of new gas projects like Narrabri and the Beetaloo Basin. Evidently, this has far more to do with export profits than local manufacturing. 

All this would arguably be legitimate if the Australian taxpayer saw a share of that profit. But it was also revealed this week that Shell – which is developing the massive Gorgon and smaller Prelude projects off the West Australian cost – expects to pay no tax on the gas extracted, according to its annual report.

The Australian government currently makes less than half what it made in gas resource rent tax in 2000-01. Despite the country exporting the same amount of gas as Qatar, the Australian taxpayer earns 20 times less in gas royalties.

Labor’s Climate and Energy Minister Chris Bowen has repeatedly called the gas-led recovery “bullshit” and “a fraud.” 

“I say the same whether I’m talking to a forum at the ANU, at a forum in inner-city Melbourne, or at a politics in the pub in Gladstone in Central Queensland,” Bowen said last month.

“The regions which built our economy with cheap energy, the Central Queensland’s, the Hunter’s, the Latrobe’s, the Portland’s, the Illawarra’s, are exactly the same regions which will generate the electricity of the future in a renewable economy, because they have the access to the pipelines, the railway lines, the ports, and the space necessary for renewable energy generation. And so this is an argument that we must take to those regions and win.”

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