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Debate on the export of gas and cost of living

June 25, 2024:

I rise today to express the concerns of my community of Mackellar and of the broader Australian public about the function, or malfunction, I should say, of the gas industry in this country. We are the second-largest exporter of gas in the world yet we frequently hear that we are on the brink of a gas shortage in this country. Firstly, I would like to state clearly that, in 2024, we know we must transition away from the production and burning of fossil fuels if we want a safe and secure future for our children and grandchildren, so, while in the short term we need to continue using gas to ensure our energy security as our energy system transitions, the way the gas industry currently operates in Australia is nonsensical and not in Australia's best interests. Australia produces more than six times the amount of gas we need to supply our manufacturing industry, our power stations, our homes and our businesses, but more than 80 per cent of it either heads overseas as LNG exports or is used to convert natural gas into liquified natural gas, LNG.

Additionally, the gas industry pays less tax per unit produced now than at any other time in the past 35 years. In fact, young people pay more each year in HECS and HELP debts than gas companies pay through the petroleum resources rent tax. Compare this with other places around the world. Qatar is a country that exports a similar amount of gas to Australia yet it collects 20 times the amount in revenue from its gas industry as Australia does. Norway has been taxing the export of profits of its oil and gas industry at 78 per cent since 1996 and, no, it hasn't impacted investments there. With this revenue, the Norwegian government has built a public sovereign wealth fund, which is now worth over $2 trillion. The pitiful rate of our own petroleum resource rent tax means that we are missing out on vast amounts of revenue that could be used to pay for our hospitals, our health and our education.

So where does our gas go? Japan is the country most heavily reliant on our gas exports; 43 per cent of their gas comes from Australia. When our federal parliament passed the Safeguard Mechanism last year, which is our nation's only policy to address industry emissions in line with our Paris Agreement commitment, the Japanese government and the Japanese fossil fuel giant INPEX said alarming things would happen if this impacted Australia's future export of gas. The Japanese Ambassador to Australia said in a speech to this parliament in March last year: It's hard to imagine the neon lights of Tokyo ever going out, but … this is exactly what would happen if Australia stopped producing energy resources.

Similarly, the chief executive of INPEX, Japan's largest oil and gas company, said last year, 'Australia's quiet quitting of the LNG business has potentially very sinister consequences for peace, stability and prosperity of the region, if not the world.' Such hyperbole has not withstood the test of time or scrutiny. Japan's LNG consumption has dropped by 25 per cent in the last decade and is expected to fall by another 25 per cent by 2030. Analysis from the Institute for Energy Economics and Financial Analysis, released in May, shows that for the past three years not only has the LNG supply far exceeded domestic consumption in Japan but Japan has been exporting more LNG than it actually imports from Australia. Further, two major Japanese utilities sell LNG to Singapore, a country that currently receives nearly 30 per cent of its LNG from Australia. This begs the question of whether Australian gas could be competing with itself via Japan. Also problematic for Australian households and businesses is that gas companies in Australia can set domestic gas prices higher than the
international market prices.

Lastly, because we export the vast majority of our gas it is now being suggested we may actually need to start importing gas to supply the Australian market. The big question is: if we had to start importing gas, would we be buying it back from Japan?