Citizens Electoral Council of Australia

Media Release Friday, 6 October 2017

Craig Isherwood‚ National Secretary
PO Box 376‚ COBURG‚ VIC 3058
Phone: 1800 636 432
Email: cec@cecaust.com.au
Website: http://www.cecaust.com.au

Create a ‘national champion’ to solve the gas crisis

There is no shortage of natural gas behind the east coast gas crisis, just a free-market rip-off. Decades of successive governments prostituting national sovereignty and the Common Good to profiteering private interests have turned Australia’s gas industry into a private cartel, to which Australian households and businesses are a captive market. The Turnbull government’s planned “solution”, which it has been pursuing for over a year, is to browbeat state governments into rescinding their moratoria on coal-seam gas extraction—a cynical ploy to open up even more of the nation’s resource base to looting and further enrich the cartel, whose members just happen to rank among the Liberal Party’s largest donors.

Whilst state governments should not be allowed to unreasonably obstruct development on ideological grounds, neither is there any need for invasive, disruptive “fracking” given the amount of gas already available. The real solution is simple: the federal government should immediately put Australia’s oil and gas resources under the control of a “national champion”—a vertically integrated state-owned corporation that can develop them for the benefit of all, not the obscene profit of a very few.

Federal government agency Geosciences Australia (GA) estimates Australia has 885 trillion cubic feet of gas, enough to continue current rates of production for 106 years. And there is almost certainly far more than that, given that a) new gas deposits are discovered all the time, and b) GA’s estimate relies upon figures from the gas cartel companies, which are not legally obliged to disclose their reserves and have a vested interest in creating the perception of perpetually looming shortage. BHP petroleum chief Mike Yeager gave the game away, though, when he told journalists in May 2012: “We want to make sure that the market knows that the Bass Strait field still has a large amount of gas that’s undeveloped … We have a lot of gas in eastern Australia that’s available. It’s more important to let the citizens of Victoria and New South Wales [know], and to some degree, you know, even Queensland … there’s plenty of gas to supply those provinces for—you know, indefinitely.” (Emphasis added.) The deposits on WA’s North West Shelf are even larger.

What the Australian public too often fails to understand is that it is they who own those gas deposits (and all of Australia’s natural resources for that matter), to which, as the Australian Treasury explains, governments “assign exploration, utilisation and production rights to the private sector in return for certain payments”, in this case a pittance in royalties. Australian gas prices, the world’s highest, are really just an extortionate fee for the long-distance delivery of our own property—padded out to several times the value of the actual product, to support the gas cartel’s shareholder dividends and bloated executive salaries.

The ‘national champion’ solution

A vertically integrated state-owned enterprise, on the other hand, could deliver domestic gas at cost, while all export earnings would go straight into the public coffers. All Australians would benefit far more from cheap domestic gas, than from dividends from gas exports. This is hardly a revolutionary idea; in fact the majority of the world’s oil and gas is controlled by wholly or majority state-owned corporations. Only Western “liberal democracies” like Australia and the USA have been stupid enough to forfeit their energy security to the whims of the so-called free market.

Instead of the woefully inadequate Australian Domestic Gas Security Mechanism (ADGSM), a.k.a. the “gas trigger”, which goes only part-way towards ensuring supply and does absolutely nothing to end the gas cartel’s price gouging, the federal government must immediately restrict gas exports until all domestic needs are met; domestic prices should also be brought down to the export price less the cost of liquefaction and shipping.

A Commonwealth petroleum company should then be created to assume commercial and regulatory control over Australia’s oil and gas industry, taking over from state governments and existing federal regulators both. Its first order of business should be to audit the books of “gas giants” Santos, Woodside, Origin Energy and BHP, both to ascertain the true extent of their reserves and to investigate them for illegal cartel behaviour (as the Australian Competition and Consumer Commission has stubbornly refused to do). When such behaviour is inevitably found, the guilty parties (i.e. all of them) will be prosecuted, shut down and their assets absorbed by the Commonwealth company. Similar treatment is warranted for gas pipeline operator APA Group, which investigative journalist Michael West and energy industry analyst Bruce Robertson exposed in July 2016 as an unregulated monopoly charging such exorbitant prices that its shares had “delivered investors a return of 1,304 per cent” since it floated in 2000.

There is however one crucial step that must be taken before these solutions can be considered: the abolition of National Competition Policy (NCP), whose so-called principle of competitive neutrality stipulates that “Government businesses should not enjoy any net competitive advantage simply as a result of their public sector ownership”, thus forcing them instead to operate as for-profit corporations so that private companies can compete. The present crises in gas, electricity, manufacturing and even finance, prove that NCP has been an unmitigated disaster. It must end for the recovery to begin.

Click here for a free copy of the CEC’s New Citizen special report: “Defeat the Synarchy, Fight for a National Bank”, which features “The Money Power vs. the Whitlam Government”, recounting Whitlam’s and Rex Connor’s fight to take back control of Australia’s resources.

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