The Coalition’s domestic gas plan would lower prices – just not very much

by bpckle | Apr 9, 2025 | Media

It surprised many Australians when the Coalition announced a plan straight from the progressive side of politics: force large gas companies to reserve gas for domestic use – at a lower cost than they could sell it for overseas.

As a populist move during a cost-of-living election, it’s a good one. Australia’s gas producers sell 70% of gas extracted on the east coast overseas under long-term contracts, even as southeastern states such as Victoria face possible gas shortages. Western Australia has long had an effective policy requiring up to 15% of offshore gas to be reserved for domestic use.

After a fortnight’s delay, the Coalition has now publicly released the modelling behind its policy. Undertaken by Frontier Economics, the modelling indicates that reserving 50 to 100 petajoules of gas in the first year would cut wholesale prices by 23%. This would mean a 15% drop in prices for large-scale users – but only a 7% fall for household gas bills and a 3% fall in electricity bills.

This doesn’t sound like much, because it isn’t. Gas prices soared during the Ukraine war and haven’t yet returned to their pre-war levels. Labor has dubbed the plan “gaslighting”, and will rely instead on a gas policy released last year to open up more gasfields and build import terminals. Gas producers don’t like the Coalition’s plan, and neither does billionaire Liberal benefactor Gina Rinehart. Dutton’s plan isn’t crazy – it’s just not likely to make a big difference.

How would this gas reservation policy work?

The Coalition has proposed what it calls an East Coast Reservation Scheme, with the goal of progressively decoupling Australia’s east coast gas market from the volatile international market.

It has two parts. First, it would require new exporters, in the first year of operation, to reserve an additional 50–100 petajoules for the domestic market. Second, it would create a gas security charge, to be imposed on gas producers seeking to export “additional” (non-contracted) gas on the international market.

This would give gas producers an incentive to sell non-contracted gas to the domestic market, because they would get greater profits selling in Australia, even at a lower base price.

Further, the policy would prevent gas producers from charging domestic buyers international prices, setting a competitive price.

In effect, the gas security charge is akin to a levy or a reverse tariff. The levy can be avoided if producers supply up to 100 petajoules to domestic markets. That’s about as much gas as New South Wales’ gas pipelines deliver each year – 101 petajoules (PJ) as of 2022–23, or the equivalent of 26 full liquefied natural gas (LNG) carriers, which hold about 3.8 PJ on average.

What are the issues with this plan?

There are legitimate concerns. First, the policy does not directly address domestic gas pricing and won’t help with the cost of living crisis. Over time, it could create a more competitive domestic market, but the fact producers could make marginally more money selling gas on the domestic market doesn’t guarantee change.

Second, the policy does not directly address the looming gas supply crisis. That’s because existing gas producers would not be legally obliged to commit to more gas domestically – they could still export it. The obligation to commit an additional 50-100 petajoules to the domestic market only applies to gas exporters in their first year of operation.

If policymakers want to solve the supply crisis, they would be better served by imposing direct export controls in the form of a clear gas reservation mandate. This works, as Western Australia’s long experience shows.

How did we get here?

When Russia invaded Ukraine in 2022, it led to huge spikes in global gas prices and shortages in Europe as the world moved away from Russian gas.

In the 2010s, Australia had already been ramping up gas production. But in the wake of the Ukraine war, Australia became a major gas exporter. Producers traded as much gas as possible on the international market, selling it for over A$40/GJ. Meanwhile, Australia’s coal production was falling.

Domestic gas demand shot up, and prices went from $8 to $30 a gigajoule. In response, the Albanese government introduced an emergency price cap for the wholesale gas market, prohibiting producers from entering into supply contracts with domestic purchasers for prices above a cap, currently set at $12/GJ. While the cap did partly insulate domestic consumers, it was always intended as a temporary measure.

The Australian Competition and Consumer Commission recently predicted a gas supply shortfall of up to 40 petajoules in the southern states as early as September due to declining production in Victoria and South Australia as well as higher demand. Without access to uncontracted Queensland gas, supply will run very low. This is a significant energy security risk, and one the Coalition’s gas policy doesn’t directly address.

What’s next?

Australia is one of the world’s top three LNG exporters. The fact a gas giant could be facing domestic shortages is both unnecessary and embarrassing. Reaching this point represents decades of policy failure.

Reserving gas for domestic use works for the west coast, and it would work for the east. But the Coalition’s plan is not quite a gas reservation scheme. It doesn’t create a comprehensive reservation mandate and questions remain about its capacity to address domestic pricing and supply.

At present, it seems like a lot of effort without great benefit. Will households really notice their gas bill is 7% cheaper?

Samantha Hepburn does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

Adam Bandt says the Greens can deliver ‘real change’ – but the party should choose its battles more wisely

by bpckle | Apr 9, 2025 | Media

Greens leader Adam Bandt claims the federal election offers “an opportunity for real change”, saying his party would use the balance of power in the next parliament to help deliver serious policy reforms.

In a speech to the National Press Club on Wednesday, Bandt outlined the party’s election priorities and said the poll represents:

A once-in-a-generation chance to create a country where everyone has a right to the basics – food, health, and a home. A safe climate and a healthy environment. An economy which puts people before the profits of the obscenely wealthy and the excessively profitable.

The Greens broke new ground at the last federal election, snatching three new lower house seats and winning the balance of power in the Senate. The gains suggested the Greens were moving beyond their roots as a party of protest, and becoming a true policy force.

But the Greens broadly failed to make the most of its greater political presence this term. In the next parliament, it should focus on building political capital and picking its battles more wisely.

Meagre parliamentary success this term

As a traditional party of protest, the Greens have historically tended to stick firmly to the party’s policy agenda rather than make major concessions to the government of the day.

However, as the new Labor government focused on delivering its mostly modest reform agenda this term, the Greens party was forced to negotiate on its demands, much as the Teals have done.

The Greens helped Labor pass its signature climate change policy, the safeguard mechanism, which seeks to limit emissions from Australia’s most polluting companies. In return, Labor agreed to the Greens’ call for a hard cap on emissions under the scheme. But it refused to bow to Greens demands for a ban on new gas and coal projects, and limiting the use of carbon credits.

The Greens were then tested by Labor’s housing agenda – specifically, two schemes to make buying or renting a home more affordable.

The Greens initially teamed up with the Coalition to block the laws, arguing they would drive up housing prices and give tax breaks to property developers. The party’s opposition was at odds with public opinion, including most Greens voters.

The party eventually waved the housing bills through in November last year without winning any concessions from Labor, and after burning much political capital.

The chastened Greens helped pass a flurry of other legislation late in 2024, including Reserve Bank governance reforms and a supermarket code of conduct. In return, Labor offered Greens fairly piecemeal concessions, including more money for social housing electrification and a ban on fossil fuel subsidies under the Future Made in Australia scheme.

The Greens also offered to help salvage Labor’s troubled proposal to reform Australia’s environmental protection laws. It shelved its calls for a “climate trigger” – which would force regulators to consider the potential climate damage of a proposal before it was approved. Instead, the Greens insisted only on stronger protections for native forests.

However, Prime Minister Anthony Albanese intervened at the eleventh hour to scuttle the deal.

All this suggests the Greens party is yet to strike the right balance between pursuing its own policy agenda and supporting Labor to the extent that a healthy working relationship is achieved. So far, it has gained only meagre concessions, and its policy grandstanding has not worked.

Flare-ups outside parliament

Scoring political points outside parliament can be easier for the Greens than influencing policy within it.

Environmental conflict has always fuelled the Greens’ vote, and the party continues to campaign on issues such as protecting Tasmania’s native forests, opposing salmon farming and calling for a ban on new coal and gas projects.

But outside parliament this term, the Greens have faced controversies that may hurt them at the ballot box.

Greens senator Lidia Thorpe quit the party over its support for the Voice referendum, and Bandt copped criticism for allegedly failing to confront bullying claims against West Australian Greens senator Dorinda Cox.

The Gaza conflict triggered significant ruptures between the Greens and the pro-Israel movement. There were also reports that a new Muslim political movement may siphon votes from the Greens and hurt them electorally.

There is no ready formula, then, for the Greens to shore up – let alone expand – its vote outside parliament.

What’s next for the Greens?

The Guardian’s polls tracker suggests the Greens’ primary vote has increased since the 2022 election, from 12.3% to 14%.

However, the party faces several tough political contests to retain or extend the gains it won in 2022. And its disappointing results at recent elections in Queensland and the Australian Capital Territory suggest the party has its work cut out.

As ABC election analyst Antony Green has noted, Labor holds three seats with margins below 5% where the Greens have a chance. However, the Greens also hold seats on slim margins that Labor or another candidate could win.

The Greens’ lower-house gains at the last election came in the inner-Brisbane seats of Ryan, Brisbane and Griffith. The Greens will have to fight hard to retain all three next month.

The most recent polls suggest Labor will be returned by a narrow margin at the May 3 election – probably helped along by the return of United States’ President Donald Trump.

On Wednesday Bandt said the Greens “are within reach of winning seats right across the country and, in the minority government, we can make things happen”.

However, seven new Independents won lower house seats at the last election. Should that trend continue, and if Labor does need to form a minority government, the Greens may find themselves fighting for the balance of power on a crowded crossbench.

Picking fights or delivering policy?

If the Greens party wants to be seen as a serious political force, it must decide if its traditional political approach – hard-nosed policy opposition and picking political fights – is still the best strategy.

Bandt’s mentor, former Greens leader Christine Milne, got results from minority pacts with both sides of politics. She believed the Greens’ role was to build political capital and then, when an opportunity such as minority government arose, to spend that capital on achieving significant policy outcomes.

On Wednesday, Bandt indicated a willingness to work towards meaningful policy outcomes in the next parliament. He claimed the Greens were willing to compromise in the event of minority government, saying:

we understand the need to cooperate and to come up with an arrangement that forms stable, effective and progressive government […] We will go into any discussions with goodwill and with [an] open mind.

Kate Crowley does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.