The state of Pennsylvania has sought to poach Australian companies with a promise of “abundant’’ energy, sparking renewed warnings from Australian business leaders that the nation risks losing jobs to offshore rivals unless it tackles its energy problems.
A high-powered delegation from the Pennsylvanian government, headed by Dennis Davin, the state’s Secretary for Community and Economic Development, visited Australia seeking out large and medium Australian businesses and plugging his state’s energy advantages.
The week-long trip early this month, with stops in Sydney, Melbourne and Perth, included an address to the Australian Institute of Energy’s Sydney branch where Mr Davin spruiked energy as the “foundation’’ of Pennsylvania’s economy.
The trip came before US President Donald Trump announced a corporate tax package that is also expected to boost US competitiveness.
The tour came at the end of a year in which the Turnbull government was forced to intervene in the Australian gas market to ensure there were sufficient supplies for local users who face spiralling prices. Large Australian electricity users are also facing tight supply conditions after the closure of the Hazelwood power station earlier this year.
South Australia and Victoria have deployed diesel generators to provide strategic reserves in the event of blackouts and the SA government has commissioned a giant battery to act as a backup. Last week the battery provided 100MW and stabilised the system after the Loy Yang power station tripped. The federal government has proposed a national energy guarantee to provide reliability as well as meeting the nation’s emissions commitments.
The Pennsylvanian delegation has fanned fears that Australian firms are considered “ripe for targeting’’ by offshore rivals with offers of low-cost, reliable power.
Interim chief executive of the Minerals Council of Australia David Byers seized on the visit.
“It’s little wonder that overseas countries are trying to entice Australian manufacturers to relocate by promising low-cost, reliable energy,’’ he said. “Over the past decade Australia has moved from having some of the lowest to some of the highest energy prices in the developed world, and, as Goldman Sachs recently noted, wholesale electricity prices are expected to increase by another 20-30 per cent in the medium term.
“This is hurting the international competitiveness of Australian businesses.”
He said Australia had already dropped from 10th to 21st on the Global Competitiveness Index. “Unless serious efforts are made to reduce Australia’s energy costs, we should expect more global attempts to persuade our businesses to relocate, which will be bad news for economic growth and jobs,” Mr Byers said.
Australian Industry Group chief executive Innes Willox said the trip by Pennsylvanian officials reflected the new realities of the global economy.
“It highlights just how important it is that we have world-leading policy and regulation in areas such as energy so that we can be competitive, encourage domestic investment and continue to provide attractive jobs and nurture manufacturing expertise,’’ he said.
“The clear message to Australian policymakers is that unless affordability and reliability of energy can be improved, we risk losing manufacturing capacity to our international competitors.”
Promotional material for the delegation says Pennsylvania has the largest unconventional (coal-seam gas) and the second-largest overall gas field in the world which is “generating heat, power, downstream manufacturing and electricity’’.
Pennsylvania also boasted of having access to nearly 570,000 skilled manufacturing employees in a location only a day away from 40 per cent of the US population and serviced by six international airports, four major railroads, eight foreign trade zones and three ports. Several Australian companies already have a presence in Pennsylvania, including Amcor, WorleyParsons, Chep and CSL Behring.
In his address to the AIE, Mr Davin played up Pennsylvania’s position as the largest net energy exporter in the US. It is also second in natural gas production and nuclear power generation, third in energy production and fourth in the production of coal.
Promotional material for the AIE appearance said Mr Davin, and deputy secretaries Joe Burke and Sheri Collins were available for confidential meetings with local organisations “seeking to investigate opportunities for collaboration in Pennsylvania’’.
While energy supply appears strong in Pennsylvania, prices appear to be at the high end of current Australian charges.
The average price of electricity per megawatt ranged from $76 to $123 in 2016-17 in Australia while the average commercial electricity rate in Pennsylvania was advertised at about $121.90 a megawatt ($US94.40).