Australia Gas fired up with another $58.6m in budget
Federal government set to build taxpayer-funded gas-fired power plant in Hunter region of NSW
The Federal government is set to build a taxpayer-funded gas-fired power plant in the Hunter region of NSW, in what would be a major intervention in the electricity market. Prime Minister Scott Morrison last year threatened to build the plant, through its company Snowy Hydro Limited, if the electricity sector failed to fill the 1000 megawatt gap left by the closure of the Liddell power station in 2023.Mr Morrison cited modelling from the government's Liddell taskforce which suggested power prices in NSW could rise by 30 per cent if that capacity is not replaced.
Some $58.6 million of taxpayer money will be put towards the federal government's "gas-fired" recovery in next week's budget.
The funding includes $38.7 million for early works to help gas infrastructure projects and $3.5 million to design and implement future investment plans if the private sector does not.
The pre-budget announcement focuses on four main projects, including two gas storage projects at Golden Beach and Iona in Victoria.
The other two projects are the expansion of the South West Victorian pipeline and an import terminal project, which is likely to be the Port Kembla gas terminal.
Big spending likely from improved budget
Treasurer Josh Frydenberg is expected to fuel Australia's economic recovery with further big spending from an improved budget on May 11.Josh Frydenberg recently scolded a senior journalist for mentioning the election in the context of the budget, calling it "cynical".
Prior to the pandemic Energy Minister Angus Taylor urged states to do more in order to boost gas supply.
The government appointed an energy and manufacturing industry-heavy advisory board to recommend ways to help the economy after the coronavirus pandemic.
That panel told the government to expand the gas industry.
"Gas is a critical enabler of Australia's economy and helps to support our manufacturing sector that employs over 900,000 Australians," Mr Taylor said.
"Without action to address supply, industry and households will be faced with higher prices, disruptions in supply and unplanned outages."
Video: PM considering costs of Victoria's proposed quarantine facility (Sky News Australia)
Mr Taylor is also the minister for emissions reductions.
What is the federal budget, and why you should care
If you don't know your forward estimates from your fiscal outlook, here's a guide to what a federal budget is and why it matters to you.Treasurer Josh Frydenberg will deliver the federal budget at 7:30pm AEST on Tuesday, May 11.
The interim gas plan does not mention climate change, decarbonising the economy or emissions reduction targets.
The US government has flagged that it will stop subsidising fossil fuel industries and is urging other countries to do the same.
As part of the pre-budget announcement Mr Taylor has released the interim National Gas Infrastructure Plan, which was developed after four months of consultations.
The final version will be released later this year and will be the government's blueprint for the east coast gas market to 2040.
"Looking beyond the short-term, the Australian government recognises that ongoing resource depletion of major gas fields in the southern basins will continue to place pressure on the east coast gas market," the interim report says.
"With mature gas fields beginning to deplete, larger volumes of gas from other major production areas and more recently developed basins will be required."
The government has already committed $28.3 million to develop five new basins for gas supply including Beetaloo in the NT and North Bowen and Galilee in Queensland.
Beetaloo alone has been given $224 million to help with exploration and new roads for access.
The capital costs of developing the Narrabri gas project in NSW are expected to be as much as $4.8 billion.
Its life is expected to span more than two decades, with costs to include the ongoing drilling of new coal seam gas wells.
The project is in the midst of a legal battle with community groups who do not want it to go ahead for environmental reasons.
Scott Morrison defends $161billion debt as he faces Karl Stefanovic .
The Australian prime minister fired up on Wednesday morning after Labor leader Anthony Albanese accused him of having 'no real plan beyond getting through the next election'.The fine print in the budget allows the government to set aside nearly $10billion for unspecified projects which have already been approved by the federal cabinet.