Gas industry concerns that price caps on fossil fuels will damage investment and supply have been shrugged off by the majority of parliament, with lobbying efforts from fossil fuel companies unsuccessful in scuppering Labor’s plans.
Despite weeks of strong public criticism from coal and gas companies about the proposed price caps and increasingly apocalyptic claims of energy disasters if skyrocketing profits were reined in, the parliament will pass the government’s proposal on Thursday.
Labor always had the numbers to pass the legislation through one chamber of parliament, but support from the Senate crossbench was far from guaranteed.
The Jacqui Lambie Network, the Greens and other independent senators took time to weigh their positions. Guardian Australia has been told several key senators were not approached, or only had cursory meetings with, gas industry representatives in recent days.
Several were surprised to not have been lobbied harder behind closed doors, considering vociferous public criticisms from fossil fuel companies and the Australian Petroleum Production & Exploration Association (Appea) peak body.
Some executives called the government’s consultation a “sham process”; Shell paused its heads of agreement supply deal with the government; the Appea CEO, Meg O’Neill, rang alarms on “energy shortages and gas rationing”, while the peak body again threatened a well-funded ad campaign.
One senator said they’d only had brief meetings with the gas lobby; others said they’d received almost zero correspondence from opponents of the gas price caps, and had been lobbied more strongly to support the bill by business and union groups.
It’s understood the Greens, vocal critics of the gas industry, were not approached.
The crossbench may not have been the gas lobby’s main concern, as executives focused on direct interaction with ministers. When major players met with the treasurer, Jim Chalmers, in the last fortnight, they were given no inclination the government proposal would impose a “reasonable price test”, potentially capping future profits on new developments.
The government kept their biggest stick well hidden. Industry players claimed they were blindsided with the open-ended test that is intended to outlast the temporary price caps for gas and coal.
The provisions for a “reasonable” rate of return for gas investments only surfaced when Treasury posted the draft of amendments late on Friday. Politicians briefed on the government’s plans on Saturday by Anthony Albanese say the reasonable test did not get an airing.
The ACT’s chief minister, Andrew Barr, who took part in Friday’s national cabinet, also says the longer-term consequences were not thrashed out. Agreement was, instead, “in principle”.
The policy unveiling was “shrewdly planned and executed”, an official from one big energy company told Guardian Australia. The gas industry had “got comfortable” with the price caps, they said, but they said there was “no excuse for the lack of engagement” on the reasonable pricing test.
On the other side of the ledger, with some industries crying out for power bill relief, the Energy Users Association of Australia, AiGroup, and lobbyists for aluminium, chemicals and manufacturing also secured meetings with ministers, particularly the industry minister, Ed Husic, to lobby for controls.
The AiGroup publicly urged senators to back the bill.
Statement by @The_AiGroup CEO Innes Willox on the energy price intervention Bill: we've asked the crossbench to pass it (with accompanying messages on temporariness of caps, plus need for gas substitution push).
— Tennant Reed (@TennantReed) December 14, 2022
[since then: they agreed to pass it and govt agreed to substitution] pic.twitter.com/nEGYaiAvbv
The gas industry and members had been very public in their complaints – until Wednesday, when they got time to make their case to Albanese directly. Appea later declined to comment, not even to discuss the mood of the morning meeting.
Guardian Australia understands the company bosses, including from Woodside, Shell and Origin Energy, made their case about “when you do this, this is what happens”.
Gas companies would probably have repeated arguments made publicly that they have to constantly invest to maintain supply, with many gas wells typically having small volumes and short lifespans.
The PM and government officials present were said to be “receptive” to their arguments. “But there was not a lot of scope for movement,” one gas official said.
In the parliament, Jacqui Lambie and Tammy Tyrrell quickly backed the proposed changes on Monday, despite harbouring some reservations over the process outlined by the government and the rushed nature of the bill – the full version of which has not been sighted as of Wednesday evening.
But it wasn’t until Wednesday afternoon, as politicians slowly filtered back into Canberra ahead of Thursday’s extraordinary sitting day, that the government got its wish. Within an hour, both the independent senator David Pocock and the Greens party leader, Adam Bandt, said they would vote for the energy legislation, securing a Senate majority regardless of the final position of the Coalition.
The opposition leader, Peter Dutton, said he backed the $1.5bn in power bill relief for low-income households, but opposed the price caps.
Numerous non-government MPs told Guardian Australia they were not convinced the gas industry concerns about the impact of reining in their profits would resonate with the public.
Husic, who for months prominently called on fossil fuel giants to not come down on “team greed”, came to a Radio National interview on Tuesday well-briefed on salient figures. He pointed out that Shell, Woodside and Santos had recently made multibillion-dollar profits, doubling or quadrupling their windfalls and even enjoying share price increases on the day the government’s price cap plan was detailed.
“All the predictions that the world would end haven’t occurred,” he said.
“So when these firms are making claims about the viability of projects, this is about them trying to maintain their profits in extraordinary times.”
