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Overhaul gas market & red tape now: Chemicals and Plastics Industry - 8 August 2013

The Plastics and Chemicals Industries Association (PACIA) is calling for both political parties to find a solution to the supply and price of natural gas and to fix red tape around our industry. Action is needed urgently in the national interest.

The chemicals and plastics industry has developed a Strategic Industry Roadmap that points the way to growth in investment and jobs rather than a business as usual model that will see contraction. Global and domestic population growth and economic development provide Australia with growing markets and opportunities. Australia needs to be in the best position to use its competitive advantages and benefit from these opportunities.

Both parties should have policy that provides adequate supplies of competitive domestic gas as well as supporting export of LNG.

“Companies in the chemicals and plastics industry are unable to negotiate access to long term and competitively-priced natural gas supplies beyond 2016. We’re facing a ‘gas cliff’ in less than three years’ time: a devastating prospect for our industry and the broader economy we enable,” said Margaret Donnan, Chief Executive of PACIA.

Natural gas is an essential fuel for many chemical and plastics companies. More importantly gas is a vital feedstock to transform into plastics, fertilisers and products for the mining industry.

“As well as exporting LNG overseas, there is a great economic return in also utilising our gas in Australia. The National Institute of Economic and Industry Research has found that for every dollar of gas sent overseas we forgo $21-24 in domestic industrial production.

“What that really means is that Australia gives up $255 million in lost industrial output for every $12 million gained in export output. By any measure this is just plain wrong – Australia loses out on jobs and diversified, high end manufacturing,” she said.

Importantly PACIA does not propose a “reservation” of gas supply for the local market. Rather, the Association is proposing targeted tax incentives as more sensible, sustainable mechanisms to restore certainty to local gas supply.

Ms Donnan said Australian chemical and plastics manufacturers directly employ 60,000 people, with a turnover of approximately $40 billion per annum, contributing to $11.6 billion to Australia’s GDP, making up 11.5% of Australian manufacturing.

“If Governments and industry do not take heed of the Roadmap and the initiatives we propose, ours will continue to be an industry in serious decline. Accepting a strategy of ‘business as usual’ will have negative impacts on many of our 60,000 employees, the economy and ultimately society. We need action for the good of our Australian economy.” Ms Donnan said.

Another high priority for the future of the industry is urgent reform of the regulatory environment.

“COAG has already agreed to reforms suggested by the Productivity Commission in 2008. Now, five years later, the majority of these reforms have not been achieved. The inconsistencies and complexities in the existing state and federal regulations create unnecessary costs to companies, which must complete on a global market” Ms Donnan said.

“Furthermore, the Australian Government regulator of industrial chemicals – the National Industrial Chemicals Notification and Assessment Scheme (NICNAS) – needs much clearer institutional roles and responsibilities. We urgently need to streamline the introduction and regulation of newer, better, safer chemicals, products and technologies by accepting the outcomes of assessments of chemicals made by respected overseas regulators, including those in Canada, the EU and the US.

The Strategic Roadmap for the chemicals and plastics industry also flags a need to:

  • make Australia more attractive to “footloose” capital investments
  • align the industry’s R&D capacity to emerging “megatrends” and
  • build the industry’s customer base, through market research and Government supported trade delegations

The Roadmap is an evidence-based, industry-wide strategy, which is heavily informed by two CSIRO reports: “Strategic Directions: towards sustained growth of the Australian chemicals and plastics industry” and “Elements in Everything” which identifies the current profile and future trends of the chemicals and plastics industry in Australia.

“We are calling on both major political parties to offer policies to the Australian people that will help grow industry and manufacturing in Australia and grow our nation, create new investment and high quality long term jobs.” said Ms Donnan.

The “Strategic Industry Roadmap”, “Strategic Directions: towards sustained growth of the Australian chemicals and plastics industry” and “Elements in Everything” are available for download by visiting www.chemistryaustralia.org.au

 

Media contact: John Fetter 0412 311371
Released 8 August 2013 

About PACIA

PACIA is the pre-eminent national body representing Australia¹s $40bn chemistry industry, whose businesses directly employ 60,000 people and contribute approximately 11.5% of total Australian manufacturing production. PACIA members comprise a broad range of companies positioned across the entire value chain.  Members include chemicals manufacturers, importers and distributors, logistics and supply chain partners, raw material suppliers, plastics fabricators and compounders, chemicals and plastics recyclers and service providers to the industry.  These businesses range from small family-owned companies and innovative medium-sized enterprises, to leading national and multinational enterprises.

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