Chemistry Australia CEO Samantha Read has called on southern states to heed the warning from the ACCC that increased domestic gas supply is needed to bring down prices.

Ms Read welcomed the ACCC Gas Inquiry July Interim Report and statements from ACCC chairman Rod Sims, highlighting that southern states are risking their industrial base if more isn’t done to improve domestic gas supply and competition.

“These independent findings and implications must now be fully understood by Governments,” said Ms Read.

“$10 gas cannot be the new baseline if we want to keep industrial manufacturing on the east coast. Manufacturers are telling us that $10 is above the uppermost limit for viability and investment. Having gas available, but at a price that effectively drives manufacturers out of business, is not meeting the needs of the market.

“The report provides evidence of the very early improvements for gas users from a coordinated approach to supply, increased market information and price discovery. It also recognises the significant amount of work that still needs to be done by all stakeholders to ensure Australian gas is affordable for Australian industrial consumers.

“It is encouraging to see the downward trend in gas spot prices from historic highs. It shows that the work and vigorous reporting regime by the ACCC, AEMC and other Federal Government interventions have had effect. However, members are not reporting similar relief in gas contract pricing. The recent trend of doubling and tripling of contract prices year-on-year, is unsustainable.

“We are not giving up on east coast manufacturing. We believe there is more work to be done, especially while moratoria and other supply constraints remain in place.

“The Northern Territory is a good example of implementing a considered best practice exploration and development strategy, and provides valuable insights for other jurisdictions.

“The fractured policy landscape between the states, territories and federal governments is extremely damaging. It is making southern states increasingly uncompetitive for manufacturing within Australia, let alone globally.

“Adding $4 per gigajoule onto gas piped from Queensland to Victoria is a matter of survival. For large industrial users, shifts of $1-$2 per gigajoule can add millions of dollars in input costs. This puts jobs at immediate risk, as well as having a ripple effect through supply chains, and the many small to medium Australian business that depend on them.

“The 2014 Deloitte Access Economics Report into east coast gas transformations forecast losses of $118 billion in manufacturing output and 15,000 jobs between 2014 and 2021. This may be conservative given the scale of the transformations that have eventuated. Southern states will likely bear the brunt unless we see a substantial shift in Victorian policy and the pricing outlook.

“There have been unprecedented interventions to bring much needed relief for gas users from the ACCC, AEMC, Federal and Queensland Governments. We are calling on the Victorian Government to add its support to the urgent efforts,” said Ms Read.

Gas is particularly essential to the business of chemistry. It’s important for process energy, and it is also a non-substitutable ingredient for advanced manufacturing. The Australian chemistry industry uses 10% of Australia’s domestic gas for its molecular properties to create a huge range of products essential to our everyday lives. These include fertilisers for our crops, cleaning products for health and hygiene in our homes and hospitals, and smart packaging to keep our food fresher for longer.