Dutton to force more gas into domestic market in power price pitch

With his nuclear power plans at least a decade away, and no new gas fields imminent, the centrepiece of the policy will be to decouple the domestic gas price from international prices by forcing current exporters to direct between 10 per cent and 20 per cent more product into the domestic market.

“The only way to drive down power prices quickly is to ramp-up domestic gas production,” he said.

This, he argued, would effectively create a domestic gas reservation and create a buyer’s market for local gas.

“And this will drive down new wholesale domestic gas prices from over $14 per gigajoule to under $10 per gigajoule,” he said.

“This is just the start. We will immediately audit development-ready projects with a focus on the southern states.”

Dutton will force the extra gas into the domestic system by threatening exporters with penalties. There will be no interference with their long-term export contracts, but they will have less excess gas to offer on international spot markets.

“This is all about ensuring Australian gas is for Australians,” he said, anticipating a backlash from the export giants.

Currently, about 450 to 500 petajoules of gas are directed to domestic use. Under the change, that will have to increase by 50 to 100 petajoules. One petajoule can power about 45,725 homes for a year.

His speech, the last major pitch before the election is called, comes after the Coalition slipped in the polls over the past month.

Dutton framed the election as “a sliding doors moment for our nation”.

“For so many Australians, aspiration has turned to anxiety, optimism to pessimism, and national confidence to national uncertainty,” he said.

“The truth is, Australians can’t afford three more years of the Albanese government.”

After this week’s budget showed debt heading above $1 trillion and at least a decade of deficits, Dutton reiterated he would cut spending if elected.

He nominated for immediate abolition Labor’s off-budget $20 billion Rewiring the Nation Fund designed to connect major renewable energy projects, and its $10 billion Housing Australia Future Fund “under which not a single additional new home has been built”.

As well, the Coalition would not proceed with the $16 billion production tax credits for green hydrogen and critical minerals.

He also vowed to “reverse” the extra 41,000 Commonwealth public servants appointed under Labor’s watch, saying that would save $7 billion a year once implemented and $10 billion over the forward estimates. He promised no cuts to frontline services in health, disabilities, veterans or defence.

If elected, Dutton said his four immediate priorities would be to legislate his energy plan, legislate to cut permanent migration by 25 per cent and increase housing; introduce a Keeping Australians Safe Bill; and enshrine in legislation guaranteed funding levels for health, education and essential services.

Attempting to play to his strength as a national security hawk, Dutton also confirmed he would announce a “significant funding commitment” to defence commensurate with the strategic challenges confronting Australia, amid speculation the Coalition was mulling increasing military spending to 2.5 per cent of gross domestic product.

“We will again invest in defence to play our part as a credible partner to deter aggression and maintain peace,” Dutton said. “My intention is to energise our domestic defence industry. And to re-tool the ADF with asymmetric capabilities to deter a larger adversary.”

In an appeal to the Coalition’s small business base, Dutton pledged to set a target of 400,000 apprentices and trainees in training across Australia, promising small and medium enterprises a $12,000 incentive payment to support them in employing a new apprentice or trainee in critical skills areas for the first two years of their training.

Reflecting the volatility across the nation, Coalition sources said there were up to 41 seats potentially in play at the election, about twice the usual amount.

With Labor starting with a notional 78 seats, and the Coalition 57 out of a 150-seat parliament, this meant both leaders would be stretching themselves and their resources thin over the five-week campaign.

“I will be a strong leader and a steady hand,” Dutton said.

“I will make the tough decisions, not shirk them. I will lead with conviction – not walk both sides of the street.”

In an attempt to dilute Dutton’s gas policy, Resources Minister Madeleine King announced she had secured an extra 9 petajoules of gas for domestic use after the Australian Competition and Consumer Commission identified a winter shortfall in the third quarter of this year.

But the ACCC, hours earlier on Thursday, suggested the government go harder, more in line with what Dutton has proposed.

“The east coast supply and demand balance is projected to worsen further over the next few years, which will increase the impact of LNG producers’ decisions on the market,” ACCC Commissioner Anna Brakey said. It remains crucial that LNG producers have regard to the domestic outlook before making any significant variations to export volumes or schedules.”

”To ensure that the east coast gas market has enough gas this winter, including through any significant demand or supply shocks, we recommend that the Australian government work with LNG producers to secure additional gas, which is currently uncommitted, for the domestic market.”

The gas plan is similar to that called for earlier this week by progressive Senator David Pocock, the welfare sector and unions.

But Australian Energy Producers chief executive Samantha McCulloch said the proposal to deliberately oversupply the gas market in an attempt to artificially reduce prices “would be yet another damaging gas market intervention that will drive away investment and exacerbate the supply challenges in the longer term”.

Energy analyst Saul Kavonic said “the party of free markets is imposing Soviet price controls” which would hamper investment.

“Whichever way the gas industry turns, they are being whacked. The Coalition is imposing price controls while Labor is partnering with greens to stop investment.”

As already announced, Dutton’s energy plan also included halving fuel excise by 25¢ a litre for one year at a cost of $6 billion, arguing it would provide faster, more economically responsible and ore meaningful relief than the budget night tax cut top-up which would be $10.30 a week, or $536 a year, by 2027.

Labor seized on the commitment by Dutton and shadow treasurer Angus Taylor to try and repeal those tax cuts if elected.

Dutton argued that his petrol tax deduction, worth $14 a week for a one car household, and double that for two, would come immediately and be cheaper in that it would be turned off after one year for a total cost of $6 billion.

Labor’s tax cut would cost more than $7 billion a year once fully operational.

“We just can’t pretend that we’ve got endless amounts of money, and we took a decision that giving the fuel tax cut now to families straight away is a better option than providing 70¢ a day in 15 months’ time so we will do our plan instead of Labor’s,” Dutton said.

Albanese mocked the opposition’s pledge to campaign with a promise to repeal tax cuts.

“They are the first opposition to ever say ‘if you elect us to government, we will increase the taxes for every single taxpayer’.”

“Every single taxpayer will pay more tax if they’re elected at the election in May.”

One senior Coalition source, speaking on condition of anonymity, said the decision was taken because “we can’t go to the election being Labor-lite”.

This was a reference to the Coalition already copying Labor’s policies on Medicare and lower prescription prices.

Another said the fuel tax cut was designed to resonate in the suburbs and the regions, where the election will be fought and won.