Hot air
Businessman Andrew Liveris undercuts his own rhetoric by championing fossil fuels

If you set aside his management clichés, suppress any moral qualms about his having worked as special adviser to murderous dictator and Saudi prince Mohammed bin Salman, and suspend disbelief over his view that more of your hard-earned money should be invested in fossil-fuel subsidies as the world melts down … if you could do all that, businessman Andrew Liveris gave a very interesting speech to the National Press Club today. Liveris spoke with oomph about the three big trends he said would define the 21^st century – anti-globalisation, digitalisation and sustainability – and there was lots to agree with as he lectured us on the importance of diversifying away from exporting commodities to China, revitalising manufacturing based on green technologies, and resetting the skill base. All good stuff, but it was undercut somewhat by Liveris’s latest work as chair of the manufacturing taskforce of the opaque National COVID-19 Coordination Commission, which was responsible for much of the “gas-fired recovery” strategy announced yesterday by Prime Minister Scott Morrison and Energy Minister Angus Taylor to a mix of disbelief and condemnation. “I’m so delighted to be standing here the day after yesterday’s announcements,” said Liveris, commending Taylor and Resources Minister Keith Pitt on a “major piece of work”. It was hard to get over the disconnect between, on one hand, Liveris’s rhetoric about facing up to the challenges of this century, and, on the other, his push to plough taxpayer subsidies into a polluting technology from centuries past: gas. 

As well as the Australian Energy Council’s negative reaction to Morrison and Taylor’s announcement yesterday, the Grattan Institute’s energy director, Tony Wood, told the AFR that the government’s threat to build a new gas-fired power plant was “overkill” that confirmed the worst fears about the federal takeover of Snowy Hydro. “You now have a government that is not only overseeing a market, but it now has its own team in the field,” Wood said. “The private sector would be asking why they would build a new gas-fired power plant in the Hunter when they are going to get drowned by Snowy 2.0 when it comes online.” Economist Brian O’Callaghan, who is leading an Oxford University study into global stimulus efforts during the pandemic recovery, told the Nine newspapers that Australia was the only one of 20 countries studied that was backing fossil fuels, with others either focused on renewables or not committed. There was, however, support for the government’s gas-focused strategy among heavy manufacturers such as Brickworks, Adbri and Orica, which hoped the plan would lead to lower gas prices and improve transparency on pricing. 

The problem is that nobody is really addressing the root cause of our high gas prices. As the ABC’s business editor Ian Verrender explains, “despite being the world’s biggest supplier of cheap gas, we are paying twice the price of our Asian customers, at least on the east coast”. Verrender cites no less than ACCC chair Rod Sims, who ripped into the gas industry recently: “I am yet to hear a compelling reason from LNG producers as to why domestic users are paying substantially higher prices than buyers in international markets”. Australian governments should have reserved a certain proportion of east-coast gas production for domestic use – just like WA did – and they still could, except for fears that the oil companies would cry sovereign risk. Instead, the federal government is working on a prospective reservation policy and hoping therefore to ramp up production from new gas basins to boost local supplies, which will take years.

Asked today why he supported fossil-fuel subsidies, Liveris quibbled that the word “subsidy” did not appear in yesterday’s announcements. That’s semantics. Spending $53 million on opening up five new gas basins, or untold amounts on uneconomic gas pipelines or new gas-fired power stations, is a fossil-fuel subsidy – no ifs no buts.

Politically, it’s a loser. The Nationals hate the gas strategy because it’s not pro-coal enough. Greens leader Adam Bandt yesterday pointed out that while renewables are getting cheaper, “gas keeps getting more expensive, so Scott Morrison’s plan to tie Australia to gas is just a plan to throw public money at his mates in the gas industry. This locks Australia’s manufacturing industry into an outdated energy source, while shifting the burden of climate action onto the next generation. If we don’t take action now, they’ll be the ones trying frantically to phase out gas while battling to survive in a rapidly heating world.” Crossbenchers Zali Steggall and Helen Haines both tweeted out statements decrying the plan.  

Only the Opposition seemed to really embrace it, with shadow resources minister Joel Fitzgibbon telling Sky News that Labor was hoping for two gas-fired power plants in the Hunter Valley – one from AGL and one from Snowy Hydro – and that the government’s announcement was “better late than never”. It’s a bad sign. 

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