Gas-led recovery poor economic policy due to low job numbers: report

POOR POLICY: The report says investing in gas industry as an economic stimulus was a bad decision.
POOR POLICY: The report says investing in gas industry as an economic stimulus was a bad decision.

TRUSTING the gas industry to lead Australia's economic recovery is poor economic policy, a new report says, as it is one of the least job intensive industries.

Energy Minister Angus Taylor has backed a "gas-fired recovery" and the National Coronavirus Coordination Committee features a number of high-powered gas executives, who are urging more gas as a key to Australia's recovery.

The report, released by The Australia Institute (TAI) and the Australian Conservation Foundation, found despite Australia being the world's largest exporter of liquefied natural gas, the industry only employs 0.2 per cent of all Australian workers.

"In a room of 500 Australian workers, less than one on average would work in gas mining," the report states.

"For every million dollars of sales income, only around 0.4 jobs are created on mining gas. The average for all Australian industries is 3.4 jobs."

The report states investing in any other industry would create more jobs - education (15), health care (12), agriculture (5) and manufacturing (2) all create more jobs per million dollars of sales income.

TAI climate and energy director Richie Merzian said investing in the gas industry as a stimulate plan was a poor economic policy that just didn't add up.

"Spending recovery funds on a capital intensive, jobs poor industry like gas completely defeats the purpose of a recovery program," Mr Merzian said.

"Australian governments continue to prop up the coal and natural gas sectors with fee waivers, fast-tracked projects and direct investments, but our research shows there are far more effective and affordable ways to stimulate the economy and create jobs."

However, Australian Petroleum Production and Exploration Association (APPEA) chief executive Andrew McConville said the report highlighted the industry generated eight times as many dollars as the average Australian industry.

"The average salary of an oil and gas worker is around $150,00 per year, which is almost twice the Australian average," Mr McConville said.

"This highlights that each one of the oil and gas industry's jobs is extremely valuable. These are highly skilled, high paying jobs, with many based in rural and regional towns."

If the government is looking to kill two birds with one stone, by creating jobs and increasing its power output, the report recommended investing in renewable energy projects.

"The data shows renewables are able to employ large numbers of Australians and to ramp up quickly," the report states.

"The vast majority of Australians working in power generation are working in renewables, even though renewables only making up 25 per cent of electricity production."

The number of Australians working in renewable energy is three times larger than the number working in coal and gas power stations as recorded in the 2016 Census (8,065 jobs).

"Renewable energy employed 26,850 Australians in 2018-19, an increase of around a quarter in one year, and by three quarters in Victoria alone," the report states.

"As the cheapest form of new power generation, even with storage, there are clear co-benefits for the electricity market."

Mr Merzian said once capital was sunk into new gas power stations or manufacturing equipment that relied on gas, "we lock our electricity system and manufacturing industries into gas for decades to come".

"Similarly, new gas heaters and hot waters systems in our homes and businesses will last a decade at least," the report states.

"This means that if we build gas infrastructure and install new gas appliances we miss the opportunity to install renewable energy and new efficient electrical appliances."

The report argues a gas-led recovery wouldn't lower gas bills, but instead "lock in decades" of high prices, as most of the cheap gas in Australia is exported.

"Oil and gas companies usually extract gas with lower extraction costs first because it makes commercial sense to do so," the report states.

"As the fields with lower extraction costs deplete, only the higher cost fields remain, and the cost of extraction usually puts a floor under the gas price.

"With the LNG industry currently exporting twice the amount gas used in Australia annually, including gas from low costs fields in Bass Strait that were developed for domestic consumption, Australian consumers are increasingly being left with only high cost gas."

The report also discourages investment in the gas industry due to the lack of tax paid by its companies, along with the amount of emission the industry creates.