Coalition aims to lower domestic gas costs

Katina Curtis, AAP Senior Political Writer
Australia is the world's largest LNG exporter but more needs to be done to lower domestic prices

Businesses and households could find themselves with lower power bills as the federal government seeks to shore up Australia's domestic gas supply.

But criticism has come from several quarters that not enough will happen in the short term.

The Morrison government will bring forward a review of its mechanism to force gas exporters to consider domestic supply levels, potentially examining the use of price as a trigger.

It will investigate a national gas reserve scheme, following the examples of WA and Queensland, but won't decide on any options until February 2021 at the earliest.

It will also take a look at pipeline regulation and extend the consumer watchdog's monitoring role of the market until 2025.

While Australia remains the world's largest LNG exporter, more needs to be done to lower domestic prices and secure supply, Resources Minister Matt Canavan says.

"While we are proud that Australian gas powers industry around the world, we must also be able to reliably and affordably harness gas to grow our own industries and create more Australian jobs," he said.

"Price and supply are inextricably linked. To put downward pressure on prices and shore up supply, we need more exploration and production."

Centre Alliance senator Rex Patrick, who held talks with the government on gas measures during the income tax laws debate, said the gas companies needed to be called to account.

"The gas companies have basically maintained only just enough (domestic supply) to ensure the mechanism didn't get triggered but keeping their prices high," he told Sky News.

"People have to understand this is gas that is owned by the Australian public and we allow these companies to take it out of the ground."

Senator Canavan also took aim at states and territories for restricting supply for "political purposes".

He and Energy Minister Angus Taylor want state restrictions eased in tandem with the establishment of any national reservation scheme.

They said past approvals of large export projects hadn't adequately considered the impact on the domestic market.

Victorian premier Daniel Andrews was broadly supportive of a reservation, but said his government was firming up its ban on unconventional gas project.

"We should be unashamed in saying 'we are going to reserve the gas we need for our businesses and our homes, for us'," he told reporters.

But gas producers warned any push to quarantine a portion of the fuel for Australian use could drive prices even higher.

"While governments may seek to intervene in markets for political purposes, there should be no illusion that intervention is without costs - not least of which that sovereign risk can adversely affect confidence in the sector," Australian Petroleum Production and Exploration Association chief executive Andrew McConville said.

Business groups also were cautious in their welcomes, with the Business Council of Australia saying a careful balance was needed.

"An interventionist approach is risky in terms of our attractiveness as an investment destination, so we are pleased to see the government will undertake a considered and detailed review process," chief executive Jennifer Westacott said.

Labor's energy spokesman Mark Butler said there needed to be action now to bring prices down.

"If you read the fine print there's no action until 2021 at the earliest," he told reporters in Sydney.