State's future sits at the crossroads on energy

We must replace the mixed messages, competing agendas and inconsistent policy surrounding 
gas in Victoria with a pragmatic, clear and commonsense strategy to secure our energy future. 
Out with the rhetoric and ideology and in with the solutions!

The State’s Economic Growth Statement, released late last year, offered some confidence that 
the Government will take the required action to address the situation. It is a great document and 
among other key areas, the Statement acknowledged that gas supplies are dwindling and a 
focus on gas exploration, storage and infrastructure is needed.

However, immediately after the Statement’s release, the State Government put out its Building 
Electrification Plan to force households and new businesses off gas. This simplistic and 
ideologically driven plan would spell disaster for Victoria’s economy and must be dumped.
The gas industry contributes $22 billion to the Victorian economy and employs over 42,000
Victorians annually. If State Government policy forces the closure of this industry, what is the 
plan to replace it?

Late last year, the Victorian Government approved its first and only application for new gas 
production in Victoria in a decade. We welcome this. And we need much more of it. There are 
many experts who say there are gas reserves in Victoria both onshore and offshore, so if there 
is, let’s encourage the private sector to find it, as the benefits for Victoria are significant.

While it’s clear that electrification will likely have long term advantages, it’s the Victorian 
Chamber’s view that the decision of which energy source to use (natural gas or electricity) 
should be left to the user, as they will make the economic decision at their time of choosing. 
Governments that have been slow to act to avoid a crisis should not railroad us into particular 
areas.

The Government’s ambition and responsibility should centre on finding alternate sources of gas 
to enable a smooth transition at a time that makes sense for each business and resident.
To electrify a home retrospectively will be significant in cost to cover labour, upgrades of wiring, 
upgrades of switchboards and upgrades of home appliances. It’s not unreasonable for this to 
cost around $35,000.

Adding to the issue is the shortage of available skilled and qualified tradespeople to complete 
the tasks. 

If the State’s proposal goes ahead as planned, the cost of gas for remaining users will increase. 
It’s a function of economics that if there are less users, the cost of maintaining infrastructure to 
supply the gas can only be amortised across a lower user base and the cost per user will 
increase.

And even if electrification was even possible, let's not forget that our electricity network needs
an upgrade as we move away from coal power to renewables. As an aside, we are still awaiting a 
roadmap on that transition. Without natural gas, transition to net zero won't be possible.
That the State’s proposal is to ban sections of the population from using natural gas is 
something the Government should rethink.

The State’s role is to provide solutions and we urge the Government to focus on finding practical 
and viable ways to generate natural gas supplies for all Victorians.

There are five options the State must act on to secure our energy future:

1. Allow the private sector to find new sources of gas supply, both on shore and offshore.
2. Immediately and urgently support the private sector to secure gas supplies from the Northern 
Territory and Queensland, using the existing pipeline infrastructure.
3. Accelerate an LNG plant. If the above can't be achieved.
4. The business community implores the State Government to provide a clear energy roadmap, 
for both gas and electricity, that will encourage investment. It must include both renewable gas 
and electricity.
5. Reverse the ideology that demonises gas. Every industry is watching and deciding if it is safe 
to invest in Victoria.

Net Zero is a worthwhile ambition but without an energy roadmap, it is unclear how the 
Victorian Government plans to navigate that without increasing costs for all of us.
The current haphazard approach to energy public policy risks our reputation and business 
viability. Victoria must stay lockstep in its energy transition with New South Wales, Queensland 
and the Federal Government. Any deviation will have dire consequences for Victorians and 
Victorian business.

Industry will only invest if there is policy certainty. Business will make decisions on where they 
will establish operations and without policy certainty, or increased gas prices, or both, business 
will leave Victoria for other states.

Given our current financial predicament, we need to maximise every opportunity. Our history 
shows that reliable and affordable gas and electricity underpinned our growth sectors, 
particularly manufacturing, and provided employment and prosperity. And it will again, but as 
we sit at the crossroads, we need to act to ensure our energy source is secure, reliable and 
affordable.

This op-ed was originally published in the Herald Sun on Thursday 13 March 2025