‘The gas belongs to us’ say former Western Australian premiers despairing at energy crisis over east
For former Western Australian premier Colin Barnett the reaction at international meetings first came as something of a surprise.
But pretty soon he began to expect it.
After a while, he could even see the dark humour involved.
“They weren’t laughing at me,” he said of WA’s quite singular Australian state policy of quarantining 15 per cent of gas for its own market.
It is a stance that saw WA labelled hillbilly by the east coast press, and saw another WA premier labelled “a wrecker” by former Liberal minster Ian Macfarlane — now chief executive of the Queensland Resources Council — at energy forums.
Mr Barnett, who served as a Liberal premier between 2008 and 2017, cast his mind back to the discussions with global leaders as debate raged this week about Australia’s lack of gas security.
He was joined by the architect of WA’s domestic gas reservation policy, former Labor premier Alan Carpenter, in a display of political unity between the two former rivals.
Amid warnings that spiralling gas prices on Australia’s east coast could send some manufacturers broke and spur an outbreak of food price inflation, Mr Carpenter and Mr Barnett decried what they labelled the “stupid” decisions of successive governments.
Consumers paying the price
In a rare interview since leaving politics in 2008, Mr Carpenter said it defied belief that Australia had allowed itself to run short of gas supplies when it was the world’s equal-largest producer.
He said a succession of political leaders had been persuaded by false arguments against domestic obligations, lamenting that it was ordinary consumers who were paying the price.
“The oil company executives are all very well paid,” Mr Carpenter said.
“If their bills go up 10 times they have no problem paying it.
The 65-year-old said the root of the gas crisis on the east coast lay in the unwillingness of federal Coalition and Labor governments to impose domestic gas obligations on Queensland’s liquefied natural gas export industry before it took shape.
But he argued those mistakes had been made worse by a series of blunders in energy policy in subsequent years.
“I argued with the then federal minister Ian Macfarlane and the Labor spokesman, who I think was Martin Ferguson, that they needed to put in place a gas reservation policy or they would face critical problems in future years,” he said.
“Ian Macfarlane just condemned me up hill and down dale.
“In international oil and gas conferences he said I was a wrecker.
“He was supported by the mainstream media who said this was a hillbilly policy which would destroy the economy.
“Now, 16 years later, we see what the reality is.
Companies ‘don’t own the gas’
Under WA’s policy, 15 per cent of gas reserves within the state’s jurisdiction are quarantined for the local market where the fuel makes up more than half its energy needs, including about 40 per cent of its power generation.
Mr Barnett said Mr Carpenter “quite correctly” formalised the policy to look after the interests of the people who ultimately owned the gas.
“The gas doesn’t belong to the companies,” Mr Barnett said.
“The gas is not owned by the companies – that’s the bottom line.
“Some of them behave as though it is.
“Australia has got every right to expect some of that gas to be preserved for the Australian economy.”
According to Mr Barnett, gas projects were often majority foreign-owned, including by sovereign governments and major gas users such as Japan and China.
He said this often placed an inherent tension between the gas producers and Australia’s interests because the companies wanted every molecule available for export.
While supporting foreign investment in Australia’s natural resources, he said the eastern states’ experience showed what can happen when safeguards for domestic consumers were not built in.
Gas exporters ‘not to blame’
“The companies that built these massive LNG projects are basically overseas-owned,” Mr Barnett said.
“Their obligation as overseas-owned, particularly where governments are involved — and I’m not against that — is to supply their own domestic markets of China and Japan, which are the two biggest markets.
“That’s what they’re responding to.
“But they couldn’t, at least not in Western Australia.”
In a statement, the lobby group representing oil and gas producers said WA’s domestic gas market was “vastly different” to the one on the east coast because of its smaller size.
Australian Petroleum Production and Exploration Association acting chief executive Damian Dwyer said gas exports were not to blame for the high prices in the eastern states.
“It is because of a 50 per cent increase in gas use due to coal-fired power generation outages and the inability of renewables to increase generation when it is required.
“We must look at the long-term, big picture, and that is bringing on more supply, not more regulation, because there are already several mechanisms in place to maintain affordability, supply, and market transparency.
“Indeed, the industry has already acted to ensure gas flows to where it is needed using the mechanisms put in place to help us do so.”
‘Governments can be powerful too’
Looking back on his own time in office when he stared down oil and gas giants including Exxon to introduce domestic gas obligations, Mr Carpenter was adamant.
He said the decision to impose a reservation policy in WA was a “tough one” that had to overcome fierce resistance from industry, but governments were empowered to look after the public interest.
“The oil and gas industry is very powerful,” he said.
“It’s very powerful and it’s very sophisticated.
“But when you’re in government you can be very powerful as well.
“We showed that in Western Australia.”
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