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Australia Federal government paying millions in consulting fees for advice on subsidising gas industry, documents show

22:43  08 march  2021
22:43  08 march  2021 Source:   msn.com

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a close up of a factory: The gas industry only employs 0.2 per cent of the Australian workforce. (ABC News: Kellie Lazzaro) © Provided by ABC Business The gas industry only employs 0.2 per cent of the Australian workforce. (ABC News: Kellie Lazzaro)

The federal government is spending millions of dollars on consultants to advise on how to subsidise the multi-billion-dollar gas industry, despite it employing just 0.2 per cent of the Australian workforce, according to tender documents and ABC sources.

The move has been criticised by the Australia Institute, which said the gas industry was "a tiny employer".

Tender documents show the federal government had allocated more than $9 million to pay private advisers from the Boston Consulting Group (BCG).

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In four tenders since September last year, the Department of Industry, Science, Energy and Resources (DISER) engaged the BCG to advise on "gas modelling", "business delivery" and "infrastructure".

Officially, the federal department and the office of Energy Minister Angus Taylor are refusing to say what the consultancy fees are for, citing commercially sensitive information.

A request to see the specific terms of the contracts with BCG was denied, despite the AusTender website listing them as "not confidential".

However, sources have confirmed to ABC News that BCG has been engaged to design the National Gas Infrastructure Plan (NGIP), which is a policy to subsidise gas infrastructure.

Public consultations on the design of the NGIP closed last month after contracts to design the plan had been awarded to BCG.

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One of the contracts with BCG, worth more than $2.5 million, was awarded without an open tender, with the tender notice citing it was "due to an absence of competition for technical reasons".

'Gas industry is a tiny employer'

Australia Institute spokesman Mark Ogge said the government should not be spending taxpayer money on private consultants to design subsidies for multinational gas companies.

"The tender documents show that the government is spending millions of dollars of taxpayers' money trying to figure out how to subsidise multi-billion-dollar gas companies," Mr Ogge said.

"Really this kind of work needs to be done by the Australian Energy Market Operator, because they've done similar for the electricity system and they actually operate the gas network in Australia."

The NGIP is part of the federal government's touted Gas Fired Recovery from the COVID-19 pandemic.

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"The best way to create jobs is actually to support industries that employ a lot of people, and those industries include things like education and health and manufacturing," he said.

"The gas industry is a tiny employer in Australia."

He said the gas industry had what was called "low labour intensity", which meant it did not employ many people.

"For every million dollars of output, the gas industry employs about 0.2 people, whereas for every million dollars of output in education or health, you employ upwards of 10 people," Mr Ogge said.

"If you're going to put taxpayers' money into something in order to create jobs, to recover from the COVID recession, supporting pretty much any other industry would be a better bet."

Mr Ogge said subsidies for gas exporters would not see Australian consumers paying less for power.

"The real solutions are to shift to renewable energy and actually get Australian customers off gas [or] reduce Australians' dependence on gas," he said.

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The Australian Pipelines and Gas Association conceded the industry only employed about 20,000 to 30,000 people in gas extraction.

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"The gas industry is a relatively small employer, but that doesn't mean it's an industry with relatively small or low value," CEO Steve Davies said.

He said there were many reasons to support the gas industry — other than jobs.

"The energy that it produces and powers Australian manufacturers, industry, power stations, heats our homes, is a feed stock for fertilisers, chemicals — other essential products of our society — that's the value that the gas industry provides," he said.

He said the Gas Fired Recovery was an undertaking to drive down gas prices.

"[And] increase gas production so that there is more cheaper gas available for Australian industry," he said.

"The government is not looking to spend money to produce jobs directly."

Australian Petroleum Production and Exploration Association CEO Andrew McConville said natural gas was crucial to economic recovery and a significant contributor to the community.

"It delivers affordable and reliable energy to our homes, hospitals, manufacturers, mines, transport sector and more," he said.

BCG declined to answer questions about the contracts and referred ABC News to DISER.

Neither the department nor the office of the Minister, Mr Taylor, would be drawn on details of the work, citing "commercial sensitivities".

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