Resources minister uses a steak analogy to argue against domestic gas reservation policy, saying rationing doesn’t work in other markets

This article is more than 3 years old

This article is more than 3 years old

The resources minister, Matt Canavan, says adopting a national policy where a proportion of natural gas would be reserved for domestic use would not deliver “a very good outcome” because rationing doesn’t work in other markets.



Canavan, a Queensland National, used a steak analogy on Monday to make his point. He said Australian beef producers currently exported a significant quantity of steak, and that practice didn’t create a domestic shortage of prime cuts in butchers and supermarkets.

“We don’t make sure we have enough scotch fillet in the supermarket by telling farmers they can’t sell their beef or cattle to overseas markets,” the resources minister told Sky News on Monday.

“We let them sell to a wide range of markets which gives them confidence to invest which gives them a good return when they can get a good price – and we have plenty of steak.”

A shortage of gas in eastern Australia, and surging prices, has reignited public debate about whether a portion of gas supply should be quarantined for domestic use. Currently in Western Australia, 15% of the gas produced by each liquefied natural gas project must be kept for domestic purposes.

Canavan’s comments on Sky News follow a call last week from the Victorian Nationals MP Andrew Broad, for serious consideration about whether 15% of gas supply should be reserved for Australian manufacturing rather than exported.

Nationals MP calls for 'real discussion' on reserving natural gas for Australian use Read more

Broad, who is chairman of federal parliament’s environment and energy committee, told Guardian Australia last week a national domestic gas reservation policy was worthy of serious consideration “to ensure we are best using those resources to lift Australians’ wealth”.

The WA premier, Colin Barnett, has also pushed for the WA policy to apply at the federal level.

But Canavan said on Monday a domestic gas reservation policy wouldn’t deliver the desired outcome. “The basic idea is you keep more of your resources here to boost domestic supplies and lower the price potentially – but that doesn’t work in any other market.”

Using his beef analogy, Canavan said the price of steak had “gone up a bit in the last few years because the world price of beef’s gone up – but there’s no shortage of cuts of steak in your local shops even though we export the vast majority of it overseas”.

“That should be no different with gas, because we have plenty of gas resources here in this country,” he said.

“Yes we are exporting a lot of it now but that actually should help increase gas investment and gas supply because it gives confidence to gas investors that they can get a return on their investments.”

Canavan was also asked about his previous support for subsidising a “clean” coal baseload power plant from the government’s $5bn Northern Australia Infrastructure Fund.

At the beginning of last month, the minister said the government had already been approached by an interested party eyeing off development in the Galilee Basin, the site of the controversial Adani coalmine.

'Clean' coal power plants: Matt Canavan hints at government subsidy Read more

But on Monday Canavan said the Northern Australia Infrastructure Fund had not yet been presented with a new coal power plant proposal from a commercial player. He maintained he had spoken to “a number” of interested parties, but no one had come forward with a worked-up proposal.

Canavan said the government would consider any proposal that would “stack up”.

“We know from studies that have been done that a coal-fired power plant in the Galilee Basin does conceptually make some sense, but clearly we will need more details before any decision is made,” he said.

“We should just be open to it.”

Officials from the Clean Energy Finance Corporation told a Senate estimates hearing last week they had been approached by proponents of a new $1.2bn coal-fired power station with carbon capture and storage technology.

The ABC subsequently revealed that the interested party was Clive Palmer’s Waratah Coal company, which was intent on seeking government assistance to develop a “clean coal” plant in the Galilee Basin.

Last week, the deputy prime minister and Nationals leader, Barnaby Joyce, declared he wasn’t interested in helping the Palmer proposal.

Canavan, the minister responsible for administering the $5bn Northern Australia Infrastructure Fund, was considerably more circumspect. He said he wasn’t aware of the specifics of the Palmer proposal, and he didn’t intend to prejudge.

The outgoing CEFC chief executive, Oliver Yates, has said new coal-fired power plants are not financeable in Australia unless the government agreed to indemnify the project against the future risk of a carbon price being introduced and against the cost of delays in the project prompted by likely community protest action.