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Rising gas prices could cost manufacturers billions: report

AUSTRALIAN manufacturers have called for more government intervention in the burgeoning gas export industry following the release of a report predicting higher gas prices could result in $120 billion in lost manufacturing production by 2021.

The Deloitte Access Economics Report was commissioned by the Australian Industry Group and other manufacturing peak bodies to predict the local impact on Australian manufacturers of the gas export rush.

It predicted the manufacturing industry would face "painful consequences" following gas price hikes caused by the export push.

In one scenario it predicted a $120 billion reduction in manufacturing output by 2021, and the loss of almost 15,000 jobs, with the latter widely considered a conservative estimate.

While it also estimated an overall positive impact on GDP, "both costs and benefits are very unevenly spread across sectors and regions".

In a statement, Manufacturers Australia said the report's findings echoed a previous study "which also found that the unrestricted export of LNG from Australia's east coast was creating supply constraints, market dysfunction and skyrocketing prices".

"We have been warning federal and state governments for almost three years that a "hands off" approach to the transition to gas exports would be disastrous for domestic industry," chairman Sue Morphet said.

Manufacturers Australia executive director Ben Eade said the current situation was on a "winners and losers" trajectory, with gas exporters taking all the benefits, and consumers losing out.

He said measures needed to be in place to ensure there was sufficient supply of gas to domestic users at competitive prices.

Curiously, oil and gas lobbyist APPEA and anti-coal and gas group Lock the Gate both welcomed the report, but for polar opposite reasons.

While APPEA used the report as an opportunity to call for the softening of regulation and an increase in production, Lock the Gate and NSW Greens MP Jeremy Buckingham argued the opposite. He blamed the report's predicted $21 billion loss to the NSW economy "firmly at the feet of multi-national gas companies pursuing coal seam gas for export".

Lock the Gate national co-ordinator Phil Laird said margins in manufacturing were "wafer thin" and the price increases could "devastate" small-scale manufacturers, particularly in the regions.

"Our country has a lot of gas but it's not enough to satiate the whole world's gas needs. The prices are only going to go up," he said.

Topics:  australian industry group gas



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