Rachel Mealey: Australia's biggest manufacturers have warned that thousands of workers could lose their jobs in the East Coast gas sector. While Western Australia enjoys cheap gas because of gas reservation policy, wholesale gas prices on the East Coast have tripled in the past decade. Now business leaders are calling for an East Coast gas reservation policy and a price cap on gas to guarantee affordable supply. Business reporter Rhianna Whitson reports.
Rhiana Whitson: Frustration in the manufacturing sector is at boiling point after years of policy interventions that have failed to bring down gas prices. In Sydney, Tony Dragicevich from aluminium maker Copprell is feeling the strain.
Tony Dragicevich: Look, we were paying, four to five years ago, we were paying about five to six dollars a gigajoule for gas. We're now paying around fifteen dollars a gigajoule.
Rhiana Whitson: High gas prices have been cited as a key reason for a growing list of major manufacturers closing up or scaling back. This year the nation's only architectural glassmaker, Oceana Glass, shut down.
Tony Dragicevich: So what we have today is thousands and thousands of containers a year of glass from China are being imported into the Australian market to service the window and door market, which obviously is very close to our heart because we do the aluminium framing. And it's just a crying shame that an industry that had been around for nearly a hundred years has had to shut down, partly because of high gas prices.
Rhiana Whitson: As the Federal Government conducts a review of the gas market due later this year, pressure is mounting. Today, Blue Scope Steel Chief Executive Mark Vesella will tell the National Press Club, Australia risks following the UK's path of de-industrialisation unless the East Coast gas market is fixed. The Blue Scope boss is a member of Manufacturing Australia, which is calling for an East Coast gas reservation policy and a ten dollar a gigajoule price gap to guarantee affordable supply. Ben Eade, CEO of the lobby group, says the government's twelve dollar a gigajoule price gap has simply not worked.
Ben Eade: Australia is one of the largest gas exporting nations on the planet and yet we see domestic customers paying up to three times what their industrial competitors pay in other parts of the world.
Rhiana Whitson: As energy analyst Joshua Ronsman from the Institute for Energy Economics and Financial Analysis explains, gas prices on the East Coast are linked to international markets.
Joshua Ronsman: Effectively I don't think we have a gas supply issue, we have a gas export issue. And so when we look at how much the LNG exporters in Queensland collectively have exported over the past decade, they've actually exported much more than they need to to meet their long term contracts. So they've exported what we would call uncontracted gas, that's gas that could have been sold into the domestic market instead.
Rhiana Whitson: The gas lobby is on board with a gas reservation policy, but only if it applied to new supply. It's also against any form of price controls. Here's CEO of Australian Energy Producers, Samantha McCulloch.
Samantha McCulloch: It ensures that we're bringing more supply into the domestic market. That's the key to putting downward pressure on prices in a sustainable way.
Rhiana Whitson: Ben Eade warns without reform, local manufacturing simply won't survive.
Ben Eade: In a country like Australia that is awash with gas, that has more than enough gas to supply both domestic customers first, but still have sufficient gas to have a thriving and globally significant export industry. This is not a case of choosing between the two, but unfortunately for the past 10 or 15 years, we have been choosing between the two. We've been choosing the interests of the export industry over the interests of domestic customers.
Rachel Mealey: Ben Eade, the CEO of Manufacturing Australia, ending that report from Rihana Whitson.