Reservation policy a government band-aid for problem government created  

The gas reservation policy announced on December 23 by Energy Minister Chris Bowen is a classic example of government trying to fix a problem it created, gas expert Grahame Campbell says. 

As he points out in his recent Centre for Independent Studies research paper, Politics of Pressure: how government intervention left us short of gas, it is government itself that has restricted the gas supply in the first place, with significant fallout for industry and domestic consumers.  

“The best solution is instead solid supply-side incentives — streamline approvals, reduce regulatory barriers, and ensure stable long-term rules that encourage investment in domestic supply capacity,” Campbell says. 

“Australia’s natural gas sector has been shaped in recent years as much by politics as by geology or markets. Government intervention — in the form of moratoria, protracted approvals, price controls, and mixed signals on new developments — has created a tightrope energy situation.  

“The evidence is clear: underinvestment in gas supply has driven up prices (hurting households and industry), reduced our buffer of reserves, and left the east coast facing foreseeable shortfalls.”  

Campbell says that investors in gas (or any energy infrastructure) require long-term certainty given the large upfront costs.  

“Frequent or ad hoc rule changes — for example, retrospective caps on prices or unexpected tax hikes — heighten perceived sovereign risk and can deter the very investments in supply or new technology that would benefit Australia.  

“Governments should strive to set policies through consultative processes and stick to them barring truly extreme circumstances.   

“Any government action should be grounded in a clear rationale — whether it’s protecting consumers, safeguarding the environment, or ensuring long-term supply — and be evidence-based. This sounds obvious, but clarity of purpose can prevent policies from being pulled in contradictory directions.  

“What the gas industry needs is a clear long term policy going forward that allows them to plan and develop new gas which requires significant capital investment.” 

Grahame Campbell is a gas infrastructure expert and the author of several Centre for Independent Studies papers on infrastructure problems. 

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