February 10, 2014
Australia’s abundant natural gas resources make it possible for our country to meet growing energy needs domestically and overseas over the coming decades.
These resources also create significant wealth for the country, by employing many Australians, delivering substantial taxation revenue, collections of governments and generating valuable export income.
Australia is on track to become the world’s largest liquefied natural gas exporter, but there is no guarantee it will hold this title for long.
Genuine threats are now emerging to the Australian LNG industry’s plans for further investment and development. The industry faces an uncertain global economic environment, rising operating costs and growing international competition. Strong competitors are emerging in North America and East Africa, rivals that will target the Asian markets that have underpinned the growth of our industry.
Australia’s LNG industry is at a point of transition.
In the next couple of years, several huge gas projects that cost a collective $200 billion to build will be starting production.
This unprecedented investment is estimated to have already created 100,000 jobs across the Australian economy.
It will push our industry’s annual tax contribution up from its current $8.8 billion to about $13 billion by the end of this decade.
But its contribution could be even larger – there could be another $100 billion of investment in Australian LNG.
This could deliver substantial and long-lasting benefits from export revenue, economic growth, regional development, and tax receipts.
In the next 12 to 24 months, decisions will be made about whether Australia’s next generation of LNG projects will proceed.
At this point in our history, Australia needs a policy environment that encourages investment and enhances national competiveness.
In its pre-Budget submission to the Australian Government, APPEA outlines several policy areas in which the Government can substantially improve legislative and regulatory arrangements so that Australia remains a competitive destination for oil and gas industry investment.
These policy priorities are:
1. Fiscal stability.
The government must deliver a stable, predictable and competitive taxation regime that encourages investment.
2. Market-based energy policy.
In all sectors of the economy — not just oil and gas — maintaining access to open and competitive markets is in Australia’s best interest.
3. Maintaining industry access to resources.
Policies that undermine the development of energy projects and curtail energy production impose costs on the Australian community, in jobs, in economic growth and ultimately in higher energy bills.
4. Regulatory reform: reducing red tape and green tape.
Australia’s oil and gas industry endures duplicative and inefficient regulatory approvals processes. Much inefficiency exists in the over-laps between federal and state government regimes. This adds to the time required to develop and deliver projects, adding to costs and the risks faced by investors.
5. Developing viable labour markets that encourage mobility, flexibility and productivity.
Government can facilitate development of a skilled workforce for Australian energy projects through more flexibility in labour markets and continuing access to overseas skilled labour.
Australia’s oil and gas industry has the potential to deliver enormous economic benefit in the coming decades, however Parliament must pursue policies that ensure the industry can foster the next wave of jobs and investment.
A copy of APPEA’s pre-budget submission can be downloaded here.