Leith Van Onselen - ‘The Treasury of Common Sense’

in the world. Amongst gas exporting jurisdictions. Now, as we know, the Coalition took a really good gas policy to the federal election, a promise to implement an East Coast gas reservation policy via basically imposing export levies on contracted gas. If gas companies were trying to export uncontracted uncontracted gas rather than supply it into the spot market domestically, they would they'd be slogan attacks, and the Coalition promised to lower the East Coast gas price to blow ten dollars

a gigadel, which is currently floats around twelve twelve dollars plus. Now, the counterfactur of this look is that if we don't reserve gas that imports East Coast Australia, despite the fact that we export nearly three quarters of our gas, most that goes to China, were slated to start importing gas down in the Southern States late this year or early next, and once we do that, the East Coast gas price is going to rock it because we will be paying

import parity prices. So at the moment, we're effectively paying export parity prices, which is the cost cost that we charge exports less the cost of liquifying those exports and then transporting it. But if we start importing that we're going to be paying the cost of liquefaction plus transport

then degap converting it back into gas. Now, just to show how good the Coalition's policy was, Shell Australia's chair Cecil Wake admitted during the election campaign that the coalition's gas reservation policy would reduce costs and that that person I said that, you know, it'll potentially push more supply into the market than there is demand and when that happens, it'll have the potential of driving prices even lower than

ten dollars a gig JB. Now that's almost a direct quote I'm paraphrasing, but that there is proof positive that the policy was going to be good if you've got one of the major energy companies going to force down the cost of gas. Now, the coalition also pleased to invest about a bid dollars in expanding the North South Pipeline which runs fro Queensland all the way down to Victoria,

as well as to expand storage down south. And why that's important is that in the North South pipeline has excess capacity most of the year, but just in the cold months of winter, it operates a capacity, so we

need to expand that and also expand storage. Now it is telling that Labour's Resource Minister Madeline King she during the election campaign she dismissed the coalition's gas policy as quote a thought bubble, right, and most of us thought that meant that Labor wasn't going to do reservation if they got elected. Thankfully. The AFR reported this week that the albany Is government's considering imposing the East Coast gas reservation policy is part of its review of the country's energy system.

for firming. So whenever there's not enough wind or solo, they're going to check on a gas turbine to quickly fill up the gap and then that pushes up the price. Now this is even more important because this week the Queensland State government announced that it's going to open up nine new areas of the state for gas exploration and they claim that by doing this they're going to increase supply and push down prices and et cetera. Now, I'll say, fron that that I fully support more gas exploration and

more drill, baby drill, yep. But it is largely futile if it's not a company by a reservation scheme that requires a significant share of that gas to be supplied domestically first. And the reason why you know this won't necessarily lower prices because we just have to look at

the last ten years. So since we started exporting gas out of Ladstone in twenty fifteen, we've literally doubled the volume of gas the production of gas in the East Coast of Australia, but we've actually supplied the domestic market with twenty five percent less gas. That's because we've just pushed it all off, pushed most of it off. We're

basically exported it. So we've doubled the supply, but we've reduced doubled the supply domestically, but we've actually supplied the domestic market with twenty five percent less and as a result we've got tripling in gas process. Right, So if Queensland opens up all these gas fields, yes, the Queensland will get some extra gas royalties for the state budget, which is a good thing, but it's not going to

necessarily lower prices and it's not going to imports. If that gas, at least it's a different portion of it is not pushed into the domestic market. So this policy from Labor is absolutely essential to ensure that we do get more supply. Have to do is copy the coalition's policy or if not, just look across the Western Australia. Australia's done yeah, you know.

for the past decade. Isn't that right?

that we haven't increased the nation's little stocks. I'm talking about new new machinery, you know, new tools, new infrastructure, et cetera, to keep up with the massive growth in the population, and as a result, we've gotten poor productivity growth. Now I've used this example previously just to explain this in a stylized example. If you run a cafe and you've got a coffee machine shared by two workers, and

you can make one hundred coffees. And now if you double the number of workers to four, you're not going to be able to double your output because you're still working off one machine. They'll have to wait for each other, there's congestion, all that sort of stuff. So you know, although you double the number of people you don't double your actually your productivity actually goes down because you can't make as many you can't double the amount you need.

You need two machines it's got. So that's effectively what Australias economy has done. We've grown the population like a science experiment, eight point seven million people this century so far, incredible,

and we haven't grown infrastructure. The amount of investment everything to go along with that, and as a result, the capital to labor ratios what economists call it, has been free for The Productivity Commission released a report this week on Australians productivity and actually pointed this fact out and it said that if this low rate of investment persists,

it will contribute to longer term productivity slow down. Now, the reason why most important is on Thursday, the Australian Bureau Statistics released its first quarter twenty twenty five CAPEX survey. So for the March quarter, and what I showed is that total volume of investment into equipment, plant machinery actually fell by one point three percent of the quarter. It's

down by nearly two percent over the year. And this comes at the same time as Australia's population continues to expand aggressively, and all this means is that we're going to have less capital equipment per worker because population is growing and we're not building the capital stock to keep up with it. And the long term outlooked the work is very poor because the federal government predicts an extra thirteen point five million people come into the country in

the next forty years. And that's like adding other Sydneyburn and Brisbane currently to Australi as popular. You need all the infrastructure, all the houses that in those cities, all the energy everything, all the business investment, everything to keep up with that. And I just can't see a way we're going to do it. We haven't done in the

last twenty years, and our protivity growth has suffered. So we keep just growing the population like the science experiment, and we can't keep up with that, whether it's housing, infrastructure, business investment, A protivity growth is going to stink and our living stands are going to stay nd.

Wales and Queensland. So per person we are twenty two thy nine hundred per person in net debt versus fifteen thousand in fifteen thousand tred in New South Wales at about nine three hundred Queensland, right, and we're all Overfrastructure projects have been massively over time and over budget. We've got we're drowning in bureaucrats. They've spent heaps on all this public service and all this rubbish, right, and the Federal government has effectively bailed out Victoria by handing it.

It's arded in competence by handed handing. At seven point five billion dollars of additional extra GST revenue over two years. I'm talking about the current year in now and for next year we're in New South Wales and going to receive one point one billion and Queensland's actually going to lose two point eight million dollars. Oh god. So effectively, because the Victoria's incompetence, the federal governments effectively give it

a bailout, giving it all as GST revenue. As a result of victory, is now going to receive a dollar dollar and seven cents in GST for every dollar raise. New South Wales has have fallen to eighty five cents per dollar raise and Queensland, Queensland's sorry, Queensland's eighty five cents, in New South Wales eighty six cents. So the reality is that Australian taxpayers are bearing the burden of Victorian government's financial incompetence. So we've got, you know, massively wasteful

product projects, massively drowning bureaucrats. And to make matters worth that these gas projects that Queensland has approved or is looking to approve as their royal to revenues go up because they're improving gas, their gest take will go down right. Whereas Victoria has banned new gas projects, which means that we're not going to get these rolesies that we could have got, but we're going to get rewarded for being for basically stopping investment with extra GST revenue.

the most migrants in the country. Right You're the biggest state and you need to be able to provide funding for infrastructure services for those for the massive influxing migrants that you have. But you've been hamstrung because effectively, your your GST take is a lot lessons should be and it's been siphoned off to Victoria.