The energy debate

What’s the difference between Queensland and New South Wales?

This is not the start of a comedy routine but a highly relevant question about the coal seam gas political circus that is threatening trouble for NSW energy customers before they are much older.

Under Labor governments in Canberra and Brisbane a regulatory environment was established that, to date, has seen 3,524 coal seam gas drilled in Queensland, setting up an industry that is today providing a third of the east coast’s gas supply and will soon fuel LNG exports.

South of the Tweed River, with a federal election looming, both the Gillard and O’Farrell governments are making up new CSG rules as they go along in order to pander to swinging voters in western Sydney, the Hunter Valley and the Northern Rivers region.

Both sides are willing to throw away an important year of development in the race to secure a new gas supply for NSW – where 95 per cent of the contracts fuelling more than a million household and business customers start rolling off in 2014.

The upstream petroleum industry is right in describing the Tony Burke manouevre to introduce an industry-specific trigger in national environmental regulation as a textbook example of how to stymie resource development with absolutely no benefit.

Burke, who has adopted the role of a poor man’s Graham “Whatever it takes” Richardson for the election year, in effect is asking the New South Welsh to give his party their votes now and to shut their eyes to the consequences for their budgets down the track.

Sydney media, who worked themselves in to a frenzy over power price rises over the past 18 months, are not focussed on impending spikes in gas prices while they play the CSG game as a football competition – the “baddies” from big business versus the “maddies” from the environmental movement with the “goodies” from the farming community making up the league.

Politicians from the ALP and the Coalition, who have spent the past year sitting at the Council of Australian Governments table pledging to reduce environmental green tape and to deliver consistent, efficient regulation, are vieing with each other to support the NIMBY side.

What’s the difference between Queensland and New South Wales?

In the former, the farming community has signed 3,500 landholder agreements with the CSG companies and picked up $100 million in grants from the industry.

In the latter, only 332 agreements have been signed.

In the former, the CSG industry now claims it employs 27,584 people, adding 8,000 since mid-2012.

In the latter, where unemployment is a substantial political talking point, the industry has 326 workers and has added six in eight months.

For Julia Gillard and Tony “Whatever it takes” Burke, this situation is a political free hit. 

However many million words the commentariat expend on the federal election  “contest” in the next six months, it’s already “game over” for federal Labor with the added benefit that they don’t have to worry about damaging a Labor state government – the ALP hasn’t a prayer of being back in power in Macquarie Street before 2019, if then.

So Gillard and Burke are free to abandon the national interest – represented by culling green tape and setting up “one stop shop” regulation with the states – in favour of self interest in the shape of “saving the furniture” as their ship sinks.

The sad truth for the community in New South Wales is that it seems nothing can now save it from much higher gas prices with the implications that has for large and small businesses as well as struggling householders.

A fed-up investor, Metgasco, which has suspended its New South Wales operations until the politicians clean up their regulatory act, flung this thought over its shoulder as it set out for Queensland and elsewhere: “(We) expect NSW gas supplies to tighten severely over the next few years and for (business) to face gas shortages and greatly increased prices.”

The company says the latest U-turn by the O’Farrell government – to create “no-go” zones without consultation only months after introducing what it described as the world’s toughest regulatory regime for CSG – has delivered an atmosphere of substantial uncertainty for energy investors in the state.

Metgasco’s CSG resources in the Clarence-Moreton Basin alone are estimated to be 20 times the annual gas requirements of New South Wales and the ACT.

Just how poorly the business community views these goings-on is well illustrated by an unusual joint media statement last week from the Australian Industry Group, the Energy Supply Association, the Clean Energy Council and the Australian Petroleum Production & Exploration Association.

Collectively, they decried recent arbitrary decisions on environmental approvals for energy projects, called on governments to “stop playing politics with Australia’s energy future” and reminded all members of the political pigpen that the rules for project developments need to be “sound, consistent and realistic.”

They added that “knee-jerk policies” are undermining development and that the cost will be paid by the community in jobs, the ripple effect on economic growth and higher bills.

I can find exactly one media outlet (the Australian Financial Review) that deemed this worthy of reporting but you can bet your last cent they will all be on hand in about 18 months time when the “shock horror” – that’s from a headline in The Age a few months ago – of gas price spikes are visited upon us.


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