The Australian Food and Grocery Council welcomes the Government’s announcement that it will introduce a range of measures aimed at reducing gas prices, following their discussions with Centre Alliance.

AFGC CEO, Tanya Barden, said “Many food and grocery manufacturers, particularly in the meat, baked goods, dairy, confectionary and tissue products sectors, rely on natural gas to power their production systems. The significant increase in gas prices over the last 5 years has damaged the competitiveness of food and grocery manufacturing, particularly at a time when other input costs are also escalating.”

“In addition, high gas prices hamper attempts to reduce carbon emissions. There are companies that have sought to reduce their carbon emissions by switching from electricity or coal fired boilers and ovens to gas, or installed gas cogeneration to produce cleaner electricity, yet haven’t been able to afford to run this equipment” said Ms Barden.

“In the US, gas development has contributed to lower carbon emissions and the resurgence of manufacturing, while here in Australia the opposite has occurred.

If Australia is to reduce its emissions and maintain a manufacturing industry, then affordable access to gas is an essential part of the energy mix” said Ms Barden.

“The AFGC has previously encouraged governments to adopt market based mechanisms to address gas shortages and a lack of competition, however we are disappointed and frustrated that states have not taken up the opportunity to safely develop their on-shore gas reserves.

While the introduction of the Australian Domestic Gas Security Mechanism has seen prices drop from about $18-20 per gigajoule to $10-12, they are still well above the prices needed to sustain a manufacturing presence in Australia. The Government has recognised this and the measures announced today will assist. There is still however an urgent need for states to do their part and lift the moratoria and put in place measures to safely develop their gas reserves, while ensuring the protection of valuable farmland.

As well as encouraging more gas supplies, we also encourage the Government to consider ways to increase competition at all stages of the gas supply chain, including retail” said Ms Barden.