Union pushes ALP to back domestic gas reservation

The Australian Workers Union (AWU) is heading a push to convince the ALP to support a domestic gas reservation scheme, ahead of the party’s national conference this month.

AWU national secretary Scott McDine told AAP the lack of affordable gas is bad for household consumers and bad for Australian manufacturers.

"We should be telling the multinational gas giants: yes, you can extract Australia's gas; yes, you can export it offshore; but you have to reserve a portion for us – that should be ALP policy," McDine said.

He added that “One in five heavy manufacturers will close (by 2019) if we don't start reserving a portion of Australia's gas."

AWU is heading a campaign called the Reserve Our Gas coalition. It has the backing of the ACTU and, significantly, of corporations such as Alcoa and Australian Paper.

However, the concept of domestic gas reservation does not have universal support within industry.

BHP, for example, said in a submission to the Australian Competition and Consumer Commission – “Government moratoria and other unnecessary restrictions on supply lead to distorted market dynamics and reduced incentives for investment. BHP continues to oppose gas reservation for these reasons.”

The miner said that government should concentrate on creating the conditions for an efficient energy market to be able to operate.

The AFR points to the example of Egypt – which supporters of gas reservation sometimes cite as proof it can be done – as evidence that the policy doesn’t work.

It says subsidies and reservation have actually reduced local gas supply in that country. Low prices mean that it is not worthwhile to extract the gas.