The Business Council of Australia (BCA) is pleased to provide comment on the Government’s Domestic Gas Reservation Scheme — Draft Design Framework (consultation paper).
The BCA is committed to working with the Government and all stakeholders in the coming weeks.
The BCA supports a well designed reservation scheme in the context of the Government’s Future Gas Strategy, principles and priorities that balances the needs of Australia’s energy sector, manufacturers and the broader Australian economy while supporting emissions reduction.
A poorly calibrated scheme that fails to appropriately balance the need for low domestic gas prices and strong investment signals will directly impede investment in new gas supply and deny industrial and commercial gas users the least cost gas supply they need to be internationally competitive over the medium to longer term. If this were to occur, then we’d be forced back to the reform drawing board a few years from now, to the detriment of Australia’s energy sector, manufacturing sector, and broader economy.
It is therefore crucial that the Government adopts the right model to ensure much needed energy policy stability and business investment for decades to come. Accordingly, the BCA could not support any scheme that was poorly designed and therefore inconsistent with the principles and priorities of the Future Gas Strategy.
In this submission the BCA makes some high level comments on the consultation paper.
- Any proposed policy design framework needs careful calibration to balance two critical objectives, that is,
supporting domestic gas prices that are i) affordable and ii) investable. - While there are a range of views on the details of the proposed policy design framework, there is alignment on several important guiding policy design principles.
- It is critical that government continue to engage with industry and take the necessary time required to work through the proposed policy design framework details.
The BCA also makes some important broader contextual comments in this submission.
- Investment competitiveness drives Australia’s prosperity and if we become less competitive for any reason, investment goes elsewhere, taking productivity, jobs, innovation and the future of Australians with it.
- Building energy system resilience and working with our regional partners to deliver energy security has never been more important given recent conflicts and their impact on global energy markets.
- In light of the above, projected domestic gas supply shortfalls and the fact that these shortfalls can only be addressed with ongoing investment, the BCA considers the success of any reservation policy to be contingent on an accompanying commitment by Government to open up more supply, deliver fast tracked approvals and greater certainty with respect to regulatory settings, and categorically rule out any additional taxes on the gas sector. These are bases on which the BCA will assess the merits of any scheme ultimately announced.
Finally, among the most important challenges and opportunities facing our nation is facilitating an orderly energy transition to net zero by 2050 — one that best serves our economy and our community. How our energy markets transition will have a strong bearing not only on our emissions levels, but on our productivity growth, our international competitiveness and living standards over the longer term.
In signing the Paris Agreement, Australia has committed to doing its part to limit global temperature increases to well below 2.0°C (and pursue efforts to limit temperature increases to 1.5°C) by reducing its emissions and achieving net zero by 2050. The BCA fully endorses Australia’s participation in the Paris Agreement and fully supports Australia’s climate legislation enshrining this participation.