Outgoing independent Senator Rex Patrick rejects there is a gas crisis and blasts ‘total policy failure’ on submarines

Outgoing independent Senator Rex Patrick has denied there is a gas crisis and slammed the government’s scrapping of the multibillion dollar French submarine contract as a “total policy failure”.

With just 20 days left in the job, the South Australian senator took aim at gas companies who were “making a killing” and said the nation had to adopt Western Australia’s gas reservation policy to protect supplies.

“There is no crisis in terms of gas supply,” Mr Patrick told politics podcast Democracy Sausage on Tuesday night.

“Australia makes more gas than you can poke a stick at.

“We’ve got an abundance of it; about two-and-a-half times the domestic need is actually extracted from Australian sources.

“The problem we actually have is that most of that gas is exported; a lot of it is contracted.”

Mr Patrick said gas producers exporting liquefied natural gas had pledged to the government the domestic market would be unaffected.

But to meet overseas contracts, the companies “went to the domestic market and basically sucked up all of the gas”.

Mr Patrick, as a former adviser to former South Australian senator Nick Xenophon, helped negotiate the Australian Domestic Gas Security Mechanism, enabling the government to pull a trigger to control how much went overseas.

But during 2017-19 gas companies kept supply tight, ensuring prices remained high, he said.

“This is a cartel that we’re working to make sure they could extract as much price for the gas that they possibly could,” he said.

In 2019, as senator, the government agreed to revisit the mechanism to include a price aspect and committed to him in writing to introduce a gas reservation policy, which he described as the “proper fix”.

Mr Patrick said Australians were entitled to their gas at fair prices and national interest had to come before any commercial interest.

“The gas companies gave an undertaking when they commenced the gas trains, to the Australian government and public, they would not interfere with the domestic market,” he said.

“They have breached that undertaking and so the Australian Government is open to a remedy.

“They are making a killing here and they are going to stand their ground and try and protect it. But we have to have politicians that stand up to that and stand up for the Australian public and implement this gas reservation policy, as we see has been done in Western Australia.

“That is the only proper outcome from the current crisis.”

Under the West Australian model, 15 per cent of gas extracted must be returned to the domestic market, ensuring the state’s steady supply.

“They pay somewhere between $5 and $6 per gigajoule, whereas on the east coast, we’re seeing people paying $40 per gigajoule, spiking on the spot market up to somewhere between $400 and $800 per gigajoule,” Mr Patrick added.

The outgoing senator also took aim at the government’s ditching of a major defence contract for French submarines at an expected cost to the taxpayer up to $5.5bn, describing it as a “total policy failure”.

The Collins submarines were going to be replaced by another conventional submarine fleet to be built in South Australia by the French Naval group under a $90bn contract.

But the French program was scrapped last year when the Morrison government decided to instead pursue nuclear-powered submarines under the AUKUS partnership with the United Kingdom and United States.

“It’s just unbelievable that we got here and I also find it disturbing that along the way, no one’s been held accountable for the delay that we have in terms of capability to the Royal Australian Navy from a national security perspective, or for the taxpayers’ money that has been spent,” Mr Patrick said.

He said there was nothing to stop Australia from buying an “off the shelf” design and building it here for much cheaper.

“If you didn’t change too much you could build a submarine starting in, I’d say, about 2024 and you’d have it in the water by 2026-27.”