Coalition threat to sink gas reform triggers rare industry backlash

November 16, 2026 — 5:00am

A broad alliance of business chiefs and unions has mounted a last-minute push for the Coalition to pass Labor’s domestic gas-reservation laws, warning that scuttling or delaying the scheme will put hundreds of thousands of industrial jobs at risk and inflate household energy bills.

The Senate is due to vote this week on legislation to compel liquefied natural gas shippers to hold back up 20 per cent of their annual export volumes for the local market from 2028. The Albanese government argues this will head off domestic shortfalls and curb the costs of heating, electricity and manufacturing.

However, the bill faces defeat without major amendments. The Coalition has signalled it would not vote for it in its current form, while the Greens have rejected the legislation, demanding a 25 per cent tax on gas exports instead.

In a major intervention, organisations representing heavy manufacturers, petrochemical firms, aluminium smelters and factory workers have signed a joint letter urging senators to back the bill before federal parliament rises for the year.

Acknowledging that they “rarely speak with one voice”, the signatories warned that failing to pass the legislation immediately would deny industry and consumers desperately needed certainty over future gas supplies.

“Delay is not a neutral outcome,” the letter states. “We ask every senator to put the national interest first and pass this bill.”

The government’s proposed reservation scheme aims to address a long-held grievance: that multinational energy giants are earning billions of dollars a year selling LNG to Asia, while local households and factories have faced tightening domestic gas supplies and soaring prices.

“Delay is not a neutral outcome. We ask every senator to put the national interest first and pass this bill.”

Joint letter backed by business and unions.

Western Australia has long required its LNG exporters to reserve 15 per cent of their production for local use, while Queensland’s export industry was established a decade ago without such rules. The federal scheme would, for the first time, impose reservation rules on the joint ventures that run the three giant LNG export terminals on Queensland’s Curtis Island, operated by Shell, Origin Energy and Santos.

For gas-intensive manufacturing businesses, the reservation would be a long-awaited lifeline. Industry leaders have rallied behind the policy, arguing the domestic gas market is “broken” following a threefold surge in gas prices over the past decade, warning more Australian factories that rely on gas as a feedstock or to fire their kilns and furnaces will be forced to close unless cheaper gas supplies can be secured under long-term contracts.

Without urgent new gas supplies becoming available to help replace rapidly declining domestic gas fields in the Bass Strait, customers in Victoria and NSW could face shortfalls and higher prices by the end of the decade, energy authorities warn.

The joint letter has been backed by Manufacturing Australia – a coalition of 12 of the nation’s biggest manufacturing businesses, such as BlueScope Steel, Dulux Group, Brickworks and Cement Australia – as well as the Australian Industry Group, the Australian Aluminium Council, Chemicals Australia and the Energy Users Association of Australia. Other signatories include the Australian Council of Trade Unions (ACTU), the Australian Manufacturing Workers Union, and the Australian Workers Union.

“On this issue we are united,” they say.

The letter notes that gas-reservation rules had been recommended by governments of all colours for more than a decade. It urges senators not to let negotiations drag on into next year. “The scheme can and should be refined through development of supporting regulations and through periodic review,” it says.

However, the scheme has sparked pushback from oil and gas industry leaders, many of whom remain concerned about the policy’s design and the risk it could depress domestic prices to the point that investment in new gas fields becomes uneconomic, triggering supply and price shocks in the future.

The industry has also raised alarm over the scheme’s “must-sell” obligation, which would require LNG producers to deliver, not just offer, prescribed volumes to local buyers, raising concerns over uncommercial deals being enforced to meet compliance targets.

Opposition resources spokeswoman Susan McDonald said the Coalition was willing to work with Labor on the scheme to “get this right”, but would not back the bill in its current form. She echoed the gas industry’s warnings that forcing a domestic glut would kill off investment needed to secure future supplies.

“Labor’s proposal in its current form will drive away investment, destroy domestic-only producers, discourage new production and ultimately leave Australians with less gas and higher prices,” she said.

Last week, Ryan Stokes, chair of oil and gas firm Beach Energy, whose top shareholder is the Stokes family’s Seven Group Holdings, said the scheme would not deliver more gas into the system, but would “undercut the companies that have always supplied it”.

Manufacturing Australia chief executive Ben Eade rejected that argument, and delivered a blunt warning to the Coalition that it now had to choose whether to support Australia’s 900,000 manufacturing workers, or the interests or the “commercial interests of three small gas producers” – Beach Energy, Amplitude Energy, and Gina Rinehart-backed Senex Energy – who had been the “loudest voices against the scheme”.

Eade said those gas companies were entitled to put their case but were “not entitled to hold a structural national economic reform to ransom”.

“The Coalition can’t say it backs manufacturing and lower energy bills and then block the only gas reservation scheme before this Parliament,” he said.

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Nick Toscano is a business reporter for The Age and Sydney Morning Herald.Connect via X or email.

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