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Energy policy paralysis an investment killer: Andrew Liveris

Energy policy paralysis an investment killer: Andrew Liveris

By Phillip Coorey

Top US-based executive Andrew Liveris has told America's corporate bosses and Australian political leaders that paralysis over energy policy was a key deterrent to foreign investment in Australia.

During a private session last weekend in Washington, DC, involving leading US chief executives, visiting state and territory leaders and Prime Minister Malcolm Turnbull, the US-based Dow Dupont executive chairman called for the states and major parties in Australia to unify behind the Coalition's proposed National Energy Guarantee.

He also browbeat NSW, Victoria and the Northern Territory over their moratoriums on onshore gas development, calling the bans "voodooism" and not science.

Mr Liveris, who acts as an informal manufacturing adviser to US President Donald Trump, told the round-table meeting in Washington that his company, Dow, wanted to invest in Australia "but needs a restoration of a competitive and reliable energy market".

To this end, he said Dow supported the NEG and called on the federal and state governments "to get on and adopt it".

"It is the best method for ending uncertainty and encouraging investment," he said, according to a version of his comments provided to The Australian Financial Review.

He suggested that the leaders of the respective states ask US state governors, who also were in Washington over the weekend and who have onshore gas in their states, "to tell them why banning gas exploration, gas development and fracking is voodooism not science and is costing jobs, growth and industry".

The same terminology will be used by federal Resources Minister Matt Canavan at a gas conference in Sydney on Wednesday as warns the east coast market will become even tighter if new supplies aren't developed in the next decade.

Senator Canavan will call for state and territory governments to end their "voodoo science" on gas, illustrated through unscientific bans, and say Australia's "free run" in north Asian LNG markets is about to come to an end amid increasing competition from the US.

The Australian Competition and Consumer Commission is expected to deliver a similar message at the conference.

The NEG, conceived by the Turnbull government late last year, is regarded as the last opportunity for bipartisanship on national energy policy, which has split the major parties for almost a decade.

It would mandate both reliability standards and emissions reductions targets for energy retailers.

Retailers would decide themselves what mix of energy to use to both cut emissions and meet reliability standards under which they must be able to provide a set percentage of reliable, or dispatchable power. This would support gas, coal and renewable energy that has back-up or battery storage.

Federal Labor has not dismissed the policy outright, but has indicated it would push for a higher emissions reductions target.

All the states and territories except South Australia are prepared to negotiate. The government believes SA will come to the table after its state election on March 17.

Federal Energy Minister Josh Frydenberg told the Coalition party room meeting on Tuesday the plan remained to have the states and territories sign up at a special Council of Australian Governments meeting in April and to secure the passage of legislation before the end of the year.

Mr Liveris' warning over energy policy paralysis is shared by others in business and puts energy with the company tax rate as what business regards as key hurdles to investment.

But Labor leader Bill Shorten told his caucus on Tuesday that he was unswayed by arguments from CEOs who were in Washington and saw firsthand the sugar hit created by the Trump corporate tax cuts.

"Mr Turnbull has had a giddy time in America, catching up with President Trump. He seems to be quite taken by Trump-onomics," he said.

"He met Mr Trump and then he was so excited about corporate tax cuts he said: We must go down the American path, we must follow President Trump's lead.

"Whilst there are many things to admire about the US ... we do not want an American-style wages system in this country."

Meanwhile, the government will release its own numbers on Wednesday, saying Labor's policies will increase the personal tax burden over the next 10 years by $164 billion.

"On average, Labor's $164 billion in higher taxes over the medium term means that every Australian man, woman, and child will pay the equivalent of more than $6000 in higher taxes," the analysis says.

The analysis includes only tax hikes so far announced by Labor. These are increasing the top marginal tax rate to 49.5 per cent, curbing negative gearing, increasing capital gains tax for investors by 50 per cent, increasing taxes on trusts and limiting deductions for managing tax affairs.

Financial Review

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