The federal government has told manufacturers it doesn't want the energy shocks from Russia's invasion of Ukraine to gut Australian industry, as it lays the foundation for a market intervention to bring down prices.
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Treasurer Jim Chalmers used a closed-door Ai group event in Canberra on Monday to set out the case for a temporary, "meaningful", "sensible" and "responsible" intervention into the energy market before Christmas.
Dr Chalmers assured the gathering of about 75 manufacturing and business leaders that the government wouldn't just stand back as surging gas prices resulting from Russia's invasion of Ukraine pushed them to the brink.
He said Labor was not "enthusiastic interveners" into the market, but the "extraordinary times" meant it was necessary to consider steps it wouldn't otherwise countenance.
"We know that high energy prices brought about by the war in Ukraine, and by a decade where we haven't had the investment in energy that we've needed to see, we know that this has the capacity to strangle local industries, and our local employers, and we care about that deeply," he told the event.
"We don't want to see our industries hollowed out by a war on the other side of the world, plain and simple.
"We don't want to see the hollowing out of our industrial base as a consequence of high energy prices brought about by Russian aggression.
"That's our starting point."
Dr Chalmers has previously expressed fears some manufacturers could be forced to shut because of the soaring energy prices.
The government has been mulling an energy market intervention since last month's budget, which revealed forecasts of a 56 per cent rise in electricity prices and 44 per cent hike in gas prices across this year and next.
It has refused to rule out options, leaving the door open to a gas price cap and even a new temporary tax on coal and gas.
While the government continues to leave all options on the table, Dr Chalmers on Monday reiterated that its clear preference was to intervene through regulation rather than new taxes.
The introduction of new resources tax would trigger a furious backlash from the mining sector.
"We want to find a way if we can, to make a meaningful difference in this market, without messing with our international obligations, and our preference is on the regulatory side rather than on the tax side. And so that gives you a bit of a sense of where we're up to, and where we're headed and why," Dr Chalmers said.
"The 'why' is simple - we don't want to see our industries hollowed out. The 'how' is ideally a regulatory change rather than a tax change."
