Archive for September, 2016

Playing with fire

In thinking about the Victorian government’s controversial moves against the natural gas industry (banning hydraulic fracturing out of hand and extending a moratorium on conventional gas developments onshore to 2020), I’d like to toss a quote in to the debate from Rod Sims, chairman of the Australian Competition & Consumer Commission.

It’s taken from his participation in a forum in Melbourne in May and he was referring to the ACCC’s inquiry in to the competitiveness of wholesale gas in eastern Australia: “I hadn’t really realised how many manufacturing plants we have that use gas. I was very surprised how many there are, how big they are and how many people they employ; they’re making plastics, fertilizers, glass and a whole range of (other) things. So, if you think we don’t have much manufacturing in Australia, we have a hell of a lot of it and gas is pretty important to a lot of it.”

Nowhere is this more true than in Victoria and yet, in throwing a big political wrench in to the future gas market only days after the CoAG Energy Council emoted on how important it is to provide greater east coast supply, the Victorian Premier, Daniel Andrews, could not find one word to say about manufacturing — which contributes almost 11 per cent ($31 billion) of gross State product and is the largest employer of full-time jobs (295,100 people at last count) in his State.

These days politicians take to Twitter to get across their key messages. What Andrews tweeted was “In a national first, the Andrews Labor government today announced a permanent ban on the exploration and development of all onshore unconventional gas.”

He did want to talk about jobs, claiming in his media statement that his move will “protect the clean, green reputation” of State agriculture, employing more than 190,000 people” — who, may I point out, depend on fertilizers in a substantial way and on food processing plants, both significant users of gas.

Agriculture, by the way, contributes $11.6 billion to Victoria’s GSP.

Andrews’ Industry Minister, Wade Noonan, also wasn’t interested in the anti-gas move’s impact on manufacturing. His tweet declared “Victorians have made it clear they don’t support tracking.”

Contrast all this, then, with the reaction to the Victorian step by the South Australian Treasurer and Energy Minister, Tom Koutsantonis, who urged gas companies to come to his State “where the assessment and approval of projects is left to expert regulators, not politicians,” adding that this country has “the best regulatory systems in the world” and they should be trusted to protect the environment, agriculture and communities.

What’s more, Koutsantonis pointed out, the Victorian decision is “bad news for the NEM” because the availability of gas for generation will continue to be constrained and for the environment because gas is “a much cleaner form of generation than coal and an essential component in the transition to a low-carbon future.”

And he’s a senior Labor figure.

The Shell Australia chairman, Andrew Smith, nailed the egregiousness of the Andrews’ announcement pretty well, too. “Today’s move,” he said, “means every Victorian household and business will pay higher energy prices moving forward. In a State that depends most on gas, this means fewer jobs, lower growth, less investment and a higher cost of living.”

It was, he added, a decision made without any scientific basis — noting that bad policy can be rewritten but, “once manufacturing jobs are lost, they rarely come back.”

The Australian Energy Council CEO, Matthew Warren, who told a newspaper the Victorian government had “succumbed to populist sentiment on fracking,” said in a statement that the move was shortsighted for an administration wanting to pursue a large-scale increase in use of renewable energy for power production. “The plan to install more than 5,000 megawatts of wind generation means that Victoria’s electricity system needs to be increasingly reliant on gas as a flexible back-up fuel.”

Malcolm Roberts, CEO of the Australian Petroleum Production & Exploration Association, pointed out that Victoria has benefited from decades of conventional local gas production and accused Andrews of “playing politics” with the State’s energy future, reminding the government that, apart from the use of gas in 80 per cent of the State households, 27 per cent of the fuel consumed by local industry is used as feedstock for such essential products as glass, bricks and fertilizers.

And, he added, the dairying and food processing industries are heavy users of gas.

Now can one for a moment believe that the Andrews government does not know about all these values? Of course it does, but it has a higher priority — looking after its own political hide at a time when it is not exactly popular with a great chunk of the Victorian community. Kicking the gas sector is applauded by inner-city post-modern materialists and rural activists, the foot soldiers of the Victorian Labor faction on which Andrews & Co depend for support.

A senior political writer on “The Age” newspaper in Melbourne summed it all up as “easy politics,” going on to prate the conventional anti-fossil fuel lines of the Fairfax mass media and to claim that this was a decision with no “big, near-term economic implications.” Even he, however, could not fathom why the fracking ban had been twinned with the conventional gas moratorium, settling for it to have been pursued to deliver a simple “clean, green” message.  And, he declared, “the constituency in favour of gas development is small.”

If this is representative of the mindset in Spring Street, Melbourne, then Andrews is playing with fire in more senses than one.

Even the Australian Workers’ Union, a stalwart of the Labor movement, is tipping a bucket on the moratorium, arguing it “threatens industry, jobs and job creation while deflecting investment from the State.” Its spokesman declared: “We cannot keep on closing doors and expecting jobs to magically appear from nowhere.”

Not related to this issue but worth quoting in this context is a thought from the maiden speech in Federal Parliament this week by Tim Wilson, the new MHR for the blue-ribbon Liberal seat of Goldstein in Melbourne (vacated at the last poll by the retiring Andrew Robb). Wilson declared “cynicism pervades modern political life.” He’s not wrong.  But real life has a way of re-asserting itself — as recent other developments have reminded us.