Farmers should profit from gas reserves: State of the Nation 2014

Farmers should earn profits from gas reserves Federal Industry Minister, Ian Macfarlane has told CEDA's State of the Nation conference in Canberra.

Mr Macfarlane said if industry and state governments offered a share of gas royalties to farmers, they might be able to access more reserves and solve supply issues.

"Part of the issue is to incentivise those people who are inconvenienced by it," he said.

"It may take the state governments to trade off some of the royalties that they take and give them to the farmers, and that may be the next wave in getting this gas out of the ground." 

Federal Agriculture Minister, Barnaby Joyce also addressed the CEDA forum. He said he is surprised by the tension between farmers and the gas industry over supply.

"If we started acting like commercial people and started to do commercial deals and working out the proper incentives then we might get a lot further a lot quicker," he said.

On the topic of agriculture and trade, Mr Joyce said a free trade agreement with Japan can only be good for business given Japan is already a good trading partner.

"Our role is to be friends with everybody and make as much money as we can," he said. 

Shell Australia Country Chair, Andrew Smith said the gas industry's problem in Australia is not the amount of liquid natural gas reserves, it's the cost of getting it out of the ground.

"Our problem is not one of where's the gas, our problem is one of how expensive it is to get out of the ground," he said.

Mr Smith also said Australian workplace practices need to be overhauled and are driving up the cost of projects.

"When an oil industry worker is paid approximately 130 per cent of the American Gulf Coast benchmark, we need to refocus on maximising effective hours at work," he said.