The same geniuses who hiked up domestic gas prices, raked in the profits and left Australia with bupkis to show for it are trying to convince us (once again) that Australia has a gas supply shortage requiring huge taxpayer subsidies.
So, let me explain how the gas industry shafted us all once - and why we shouldn't fall for it again.
To begin with, virtually nothing Australians have been told about the gas industry is true. To bust a few myths: there is no gas supply shortage in Australia, the gas industry creates hardly any jobs, and gas is a fossil fuel that's only slightly less dirty than coal once you count the fugitive emissions it leaks - which, it turns out, have been significantly underestimated. So far, so bad. But it gets worse.
Here's how the gas industry shafted Australians over the past 10 years. As my colleague and Australia Institute chief economist Richard Denniss has pointed out, Australia once had abundant and cheap domestic gas. The federal government then allowed the gas industry to build massive LNG gas export facilities so that gas companies could sell Australia's cheap gas overseas for higher prices, simultaneously driving up domestic gas prices.
Just as Ireland was exporting potatoes to England during the Irish potato famine, Australia had abundant and cheap gas - we just allowed companies like Santos to export it overseas for bigger profits. On the east coast of Australia, gas production roughly tripled, and so did domestic gas prices.
In the past few years, Australia has overtaken Qatar as the largest producer of liquefied natural gas. But Qatar is better at managing its mineral wealth. In one year, Qatar received $26 billion in royalties from LNG production, while Australia received around $1 billion from our poorly designed Petroleum Resources Rent Tax. Gee, wouldn't it be nice if we had an extra $25 billion in gas royalties right about now?
Sadly, a pattern of waste is emerging with desperately needed government spending, and it's no accident.
This week the ACCC also released a report showing that 18 LNG shipments, equal to 10 per cent of annual east coast demand, was sold at "prices substantially below domestic gas price offers". This means Santos and Origin prefer to export gas for less than they can sell it for in Australia, rather than reduce prices to Australian customers.
The gas industry has sold most of our cheap gas overseas. Now, it is trying to convince the Australian public that mining expensive, harder-to-get unconventional coal seam gas will bring domestic gas prices down, which is rubbish.
Well, fool me once, shame on the gas industry; fool me twice, shame on the government.
No project better demonstrates what a poor investment gas is than Santos' Narrabri CSG development. But don't take my word for it. If you dig into Santos' own financial statements, the company values the project at zero. But in the cost-benefit analysis Santos provided to planning authorities, the project was valued at $1.6 billion. Santos then found half a billion dollars between the couch cushions and revised that upwards to $2 billion in the last week. Fracking for harder-to-reach CSG is expensive, relative to conventional gas mining, yet Santos has low-balled the operating costs at a cheap $2.40 per gigajoule. Public estimates for operating costs are around $7 per gigajoule.
The greenhouse gas emissions from Santos's Narrabri CSG are estimated to be 128 million tonnes over the life of the project. That's equivalent to a full year of NSW greenhouse gas emissions. After the horror bushfire season Australia endured at the beginning of this hellish year, avoiding investment in projects that cause global warming and more extremely hot days should be a no-brainer. Santos is relying on taxpayers to revive a dud project that will increase our emissions and make global warming worse, drive up NSW gas prices, and won't generate much for Australia in the way of royalties. But whether you look at it on economic, environmental or employment grounds, gas projects do not stack up as sound investments.
Sadly, a pattern of waste is emerging with desperately needed government spending, and it's no accident. When the pandemic hit, the gas industry that ripped us all off for 10 years immediately got included in a powerful hand-picked commission with direct access to the Prime Minister. The National COVID-19 Coordination Commission is stacked with fossil fuel executives advocating for massive taxpayer subsidies to the gas industry. Meanwhile, the entertainment and arts sector, which employs almost 200,000 Australians (or nine people per $1 million, compared to the 0.3 jobs per $1 million created in the gas industry), had to wait four months for a modest $250 million package to be announced, none of which has yet been spent. The construction industry creates far fewer jobs than education, per $1 million spent, yet the university sector has been left to whither on the vine, while the construction sector got an uncapped program to subsidise home renovations - not that the HomeBuilder program has had much take-up. Foxtel got a multimillion-dollar taxpayer-funded handout, while the ABC - which saved lives during the bushfires - got a funding cut.
If Australia did want to spend its taxpayer dollars wisely, boosting JobSeeker is close to perfect policy. Every dollar of JobSeeker gets spent in the local economy, yet the government is going to reduce the supplement that's keeping unemployed people above the poverty line. Likewise, childcare and aged care are job-rich sectors, yet childcare workers got booted early from JobKeeper at the same time as free childcare ended - and aged care is a disaster after years of underfunding and privatisation.
The Labor government spent wisely and avoided recession during the global financial crisis. If Australia wants a fast economic recovery this time too, our government needs to be smarter than this.
- Ebony Bennett is deputy director of independent think tank the Australia Institute. Twitter: @ebony_bennett