George Eustice savage Australia free trade deal
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Australia’s Labour Prime Minister Anthony Albanese is hoping to push through legislation this week which will impose a price cap on wholesale gas and coal prices. Despite the Prime Minister’s lobby for the legislation, the industry has warned that a price cap will not have a positive impact on the sector.
The invasion of Ukraine has seen wholesale gas prices in Australia’s east coast double compared to last year.
Meanwhile power has quadrupled in some states as global energy markets continue to skyrocket.
The price cap proposed by the Prime Minister will lower energy bills for households and manufacturers who are dependent on gas.
PM Albanese will meet with representatives of the gas sector as he faces huge industry opposition to his proposal for a one-year cap on gas and coal prices.
The sector has warned the government that its plans to cap prices will reduce investment and on Sunday, lobbyists demanded an urgent meeting to raise their concerns about the “reasonable pricing provision”.
The Australian Petroleum Production and Exploration Association (APPEA) includes key corporations including Exxon Mobil Corp and Shell Plc who warned the move would reduce new supply and increase gas prices.
The APPEA has said the proposal will grant the government “unprecedented powers” to intervene in the gas market, including the “ongoing power to regulate prices permanently”.
Albanese told Australian Broadcasting Corp on Monday that he would meet with industry figures this week.
Speaking on ABC Radio he said: “We will meet with them when we meet with them this week. I spoke with some of the companies involved…over the weekend.”
The Prime Minister states that the concerns risen by the industry are overstated and that the plan would be based on the cost of production along with an agreed profit margin after the one-year cap expires.
The PM clarified that this plan is subject to consultation and is not part of the legislation going through Parliament this week.
He said: “This is jumping at shadows. We’ve come up with measures which are responsible, that won’t have a negative impact on investment.
Industry Minister Ed Husic told Sky News that the provision being discussed by the Government should be a last-resort plan for regulators if gas contract negotiations between buyers and sellers fail.
A spokesperson for Esso Australia said: “This reckless free market intervention by the government will divert investment away from Australia to other nations that support fiscal stability and free markets.”
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The revelation of the intervention plan on Monday saw shares in Origin Energy, a major gas producer on the east coast, fall by almost eight percent.
UBS analyst Tom Allen said: “No one anticipated that the government was going to introduce legislation allowing them to soft-regulate gas prices into perpetuity.”
A special session of Parliament will be held on Thursday to vote for the gas price cap to be set at 12 Australian dollars (£6.65) per gigajoule and 125 Australian dollars (£69.23) per tonne.
The plan is hoped to head off forecast increases in power prices by 56 percent and gas by 44 percent in the two years to June 2024.
Given the wide support to reduce energy bills, the Australian Prime Minister is confident that the legislation will pass.
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