The Albanese government has unveiled a major policy requiring gas exporters to reserve 20% of their export volumes for the domestic east coast market, a move aimed at exerting downward pressure on prices for households and businesses. The policy, set to take effect on 1 July 2027, will compel the three largest Queensland-based LNG exporters to preserve a fifth of their output for local customers.
Industry Reactions and Criticisms
The industry has condemned the measure as a heavy-handed intervention that could undermine Australia's reputation as a reliable trading partner. Samantha McCulloch, chief executive of Australian Energy Producers, criticised the final model, arguing it would crowd out smaller producers and risk future investment. However, gas-dependent manufacturers welcomed the announcement, with Manufacturing Australia calling it the most significant structural reform to the gas market in a generation.
Government's Stance on Gas Tax
The government declined to endorse a new gas tax in a Senate inquiry report tabled on the same day, providing further evidence that Prime Minister Anthony Albanese will not adopt the idea in next week's federal budget. However, Labor has left the door open to future changes, with government members of the inquiry calling for a review of gas tax options once the international oil shock sparked by the Middle East conflict has passed.
The Greens and independent senator David Pocock reiterated support for a 25% tax on export revenue to replace the petroleum resource rent tax. Greens resources spokesperson Steph Hodgins-May said, 'The time is now. The experts say we need it. The public wants it. The government should cut the crap and just do it.'
Context and Implications
The start of LNG exports from the east coast a decade ago linked the domestic market to the international market, leading to a tripling of prices and leaving Australian customers exposed to overseas shocks, such as Russia's war in Ukraine. Resources Minister Madeleine King stated, 'Our gas market will no longer be hostage to international markets.'
Climate groups dismissed the reservation policy as a distraction from Labor's resistance to a gas tax. The Climate Council's energy expert, Joel Gilmore, said the scheme must be an exit ramp for Australia's reliance on gas and a tool for a managed gas exit, not a lifeline for more drilling.
