Citizens Electoral Council of Australia
Home

Printer-friendly version

Citizens Electoral Council of Australia

Media Release Friday, 16 November 2018

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
 

Gas pipelines should be public utilities, not private monopolies

The following release is from an article by Richard Bardon printed in the 14 November Australian Alert Service.

When the Morrison government on 7 November flagged its intention to veto the takeover of gas pipeline operator APA Group by Hong Kong billionaire Li Ka-shing’s company CK Asset Holdings Ltd (CK Group), it made the right call for the wrong reason. Certainly the sale would have resulted in “an undue concentration of foreign ownership … in our most significant gas transmission business”, as Treasurer Josh Frydenberg stated in a media release—though it is difficult to imagine that a British or US company would have faced the same opposition as a nominally Chinese one (in fact CK Group is headquartered in the Cayman Islands, a British offshore tax haven). But given that gas pipelines are a) natural monopolies and b) vital to the national economy, they ought not be controlled by any private interest, foreign or domestic—let alone by a price-gouging, tax dodging outfit such as APA. A government serious about Australia’s national security—or, for that matter, about reducing the cost of energy—would put all such critical infrastructure under the control of public authorities obligated to the Common Good, not private corporations that profit by ripping off Australian businesses and households.

Per Frydenberg’s press release, APA “is by far the largest gas transmission system owner in Australia, owning 15,000 km of pipelines representing 56 per cent of Australia’s gas pipeline transmission system, including 74 per cent of New South Wales and Victorian pipelines and 64 per cent in the Northern Territory. It also supplies gas for part of all mainland capital cities’ consumption, gas-fired electricity generation assets and liquefied natural gas exports.” As gas industry analyst Bruce Robertson revealed in July 2016, it is also the most secretive and most profitable company in what is perhaps Australia’s least regulated corporate sector (yes, even compared to the banks).

“Not only is our East Coast gas market controlled by a cartel of three producers, Santos, Origin Energy and the Exxon/BHP marketing nexus in the Bass Strait, but gas distribution is also controlled by a fabulously profitable pipeline troika”, Robertson reported. The biggest and most successful is of course APA, “one of the very best performers on the Australian Securities Exchange (ASX). Since floating in 2000, its shares have delivered investors a return of 1,304 per cent. In share market vernacular, this is a ‘13-bagger’, increasing in value 13 times its original investment in 15 years. … Their shareholders’ gains though have been their consumers’ losses. How does an essentially dull business deliver such scintillating profits though? It runs unregulated monopolies charging its customers monopoly prices.” The Australian Competition and Consumer Commission (ACCC) has likewise called out APA and its fellow pipeline operators Jemena (co-owned by the Chinese and Singaporean governments) and QIC (Queensland’s government-owned but “independent” funds manager) for price gouging. In the April 2016 report of its Inquiry into the East Coast gas market, the ACCC noted that deregulation over the preceding 20 years had left less than 20 per cent of pipelines on the East Coast subject to any form of regulation whatsoever, and that “internal analysis carried out by one pipeline operator … indicated that it is earning 70 per cent more revenue than it would if it was subject to full regulation” (emphasis added).

To add insult to injury, Robertson reported that APA had paid no tax in the 2015 financial year despite an income of $1.5 billion. “APA forecasts it will pay tax and booked a $171 million tax expense through its income statement”, he wrote. “Due however to its complex stapled trust structure it is incumbent on its trusts’ members to pay the tax, many of whom are domiciled overseas or who are super funds paying half the corporate tax rate.”

End private monopolies’ control of public assets!

Just like the electricity grid, gas pipelines are a vital artery of Australia’s economy. Besides its obvious use as a fuel for households, industry and vehicles, and increasingly (thanks to over-reliance on intermittent “renewable” sources) for the on-demand generation of electricity, natural gas is also an essential input for the manufacture of fertilisers, explosives, plastics, paint, and glass, to name just a few. High gas prices have already forced several manufacturers to scale back production, move overseas (where Australian gas is often cheaper than it is here!), or simply shut down, and many others have warned they may follow suit. Much of this has of course been driven by the gas export “boom”; but both it and the pipeline rip-off are the result of deregulation, privatisation and other neoliberal “reforms” that have gutted our once-proud economy over the past 35 years. This must end now.

The Citizens Electoral Council has long called for the nationalisation of Australia’s oil, gas and raw materials—the common property of all Australians, but which successive governments have prostituted to greed-driven corporations for a pittance in royalties (and fat campaign contributions). That goes for the associated infrastructure as well.

Click here for a free copy of the latest issue of the Australian Alert Service.

Click here to join the CEC as a member.

Click here to refer others to receive regular email updates from the Citizens Electoral Council of Australia.

Follow the CEC on Facebook Follow @cecaustralia on Twitter Follow the CEC on Google+




Citizens Electoral Council © 2008
Best viewed at 1024x768.
Please provide technical feedback to webadmin@cecaust.com.au
All electoral content is authorised by National Secretary, Craig Isherwood, 595 Sydney Rd, Coburg VIC 3058.