What’s the difference between Queensland and New South Wales?
This is not the start of a comedy routine but a highly relevant question about the coal seam gas political circus that is threatening trouble for New South Wales energy customers before they are much older.
Under Labor governments in Canberra and Brisbane a regulatory environment was established which, to date, has seen 3524 coal seam gas wells drilled in Queensland, setting up an industry that is today providing a third of the east coast’s gas supply and will soon fuel LNG exports.
South of the Tweed River, with a federal election looming, both the Gillard and O’Farrell governments are making up new CSG rules as they go along in order to pander to swinging voters in western Sydney, the Hunter Valley and the Northern Rivers region.
Both sides are willing to throw away an important year of development in the race to secure a new gas supply for the state – where 95 per cent of the contracts fuelling more than a million household and business customers start rolling off in 2014.
The upstream petroleum industry is right in describing the Tony Burke manouevre to introduce an industry-specific trigger in national environmental regulation as a textbook example of how to stymie resource development with absolutely no benefit.
Burke, who has adopted the role of a poor man’s Graham 'whatever it takes' Richardson for the election year, is in effect asking the New South Welsh to give his party their votes now and to shut their eyes to the consequences for their budgets down the track.
The Sydney media, which has worked itself in to a frenzy over power price rises over the past 18 months, is not focused on impending spikes in gas prices. Instead it plays the CSG game as a football competition made up of a league of 'baddies' from big business versus 'maddies' from the environmental movement and 'goodies' from the farming community.
Politicians from the ALP and the Coalition, who have spent the past year sitting at the Council of Australian Governments table pledging to reduce environmental green tape and to deliver consistent, efficient regulation, are vying with each other to support the NIMBY side.
So what’s the difference between Queensland and New South Wales?
In the former, the farming community has signed 3500 landholder agreements with the CSG companies and picked up $100 million in grants from the industry.
In the latter, only 332 agreements have been signed.
In the former, the CSG industry now claims it employs 27,584 people, adding 8000 since mid-2012.
In the latter, where unemployment is a substantial political talking point, the industry has 326 workers and has added six in eight months.
For Julia Gillard and Tony Burke, this situation is a political free hit.
However many million words the commentariat will expend on the federal election 'contest' in the next six months, it’s already game over for federal Labor, who have the added benefit that they don’t have to worry about damaging a Labor state government – the ALP hasn’t a prayer of being back in power in Macquarie Street before 2019, if then.
So Gillard and Burke are free to abandon the national interest – represented by culling green tape and setting up 'one stop shop' regulation with the states – in favour of self interest in the shape of 'saving the furniture' as their ship sinks.
The sad truth for the New South Wales community in is that it seems nothing can now save it from much higher gas prices and the implications they will have for large and small businesses as well as struggling householders.
Metgasco, a fed-up investor that has suspended its New South Wales operations until the politicians clean up their regulatory act, flung this thought over its shoulder as it set out for Queensland and elsewhere: “(We) expect New South Wales gas supplies to tighten severely over the next few years and for (business) to face gas shortages and greatly increased prices.”
The company says the latest U-turn by the O’Farrell government – to create 'no-go' zones without consultation only months after introducing what it described as the world’s toughest regulatory regime for CSG – has delivered an atmosphere of substantial uncertainty for energy investors in the state.
Metgasco’s CSG resources in the Clarence-Moreton Basin alone are estimated to be 20 times the annual gas requirements of New South Wales and the ACT.
Just how poorly the business community views these goings-on is well illustrated by an unusual joint media statement last week from the Australian Industry Group, the Energy Supply Association, the Clean Energy Council and the Australian Petroleum Production & Exploration Association.
Collectively, they decried recent arbitrary decisions on environmental approvals for energy projects, called on governments to “stop playing politics with Australia’s energy future” and reminded all members of the political pigpen that the rules for project developments need to be “sound, consistent and realistic”.
They added that “knee-jerk policies” are undermining development and that the cost will be paid by the community in jobs, the ripple effect on economic growth and higher bills.
I can find exactly one media outlet (The Australian Financial Review) that deemed this worthy of reporting, but you can bet your last cent the media will be all hands on deck in about 18 months' time when the "shock horror” (that’s from a headline in The Age a few months ago) of gas price spikes is visited upon us.