Harnessing Australia's comparative energy advantage

Advancing Australia - Harnessing our comparative energy advantage

Australia’s oil and gas sector is embarking on a sequence of major new investments - the largest in the history of the industry. Over the next years, substantial additions to production capacity are set to propel Australia towards becoming the world’s second largest exporter of liquefied natural gas. Of the 14 gas liquefaction plants under construction or firmly committed around the world, eight are in Australia.

Underpinning this expansion is Australia’s position at the cusp of a major shift in the world’s economic weight from west to east. The rapid industrialisation of structurally large Asian economies, predominantly China, has driven world economic growth over recent times and changed the dynamics of key international resource, product and capital markets.

Deloitte Access Economics has undertaken APPEA-commissioned analysis on the economic contribution of Australia’s oil and gas industry. The study examines the industry’s role in Australia’s economic development — both over recent years and looking forward over the medium term. A key focus was to draw out the specific economic implications of industry investment and operations and the commercial linkages with other sectors, essentially as industry activity reverberates through the broader economy.

The study also provides an analysis of ‘bigger picture’ economic issues of relevance to the industry and policymakers. In essence, it sets out those policy settings which will be necessary to fully harness the benefits of the resources boom.

Building prosperity - Harnessing Australia’s comparative energy advantage

This conference paper forms part of the wider APPEA-commissioned analysis being undertaken by Deloitte Access Economics on the economic contribution of Australia’s oil and gas industry. 

It presents various perspectives on the contribution made by the industry in enhancing Australia’s macroeconomic performance and resilience, especially during the global financial crisis. In doing so, it sets out some preliminary estimates of the extent to which the industry has and will continue to elevate national income. The paper also canvasses the most pressing development and policy issues facing the industry, including:

• How the oil and gas industry is supporting productivity performance
• Managing the structural adjustments needed to secure sustainable economic gains arising from ongoing development in Australia’s region
• How the proceeds of the resources boom should be managed over the long term
• Addressing the gaps in skills and the geographic location of Australia’s workforce.

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