The Australian Parliament has voted in favour of the Energy Price Relief plan which sets a price cap on natural gas for one year and providing A$1.5 billion in relief for households and small businesses.

The government won support from the Greens Party to pass the legislation after agreeing to provide funding in its next budget to help low-income households switch from gas to electricity.

The Australian Petroleum Production & Exploration Association (APPEA) says the legislation should be a warning to businesses across the economy that the Government would step in and regulate without notice.

APPEA said these measures would also smash investor confidence and undermine Australia’s reputation as a secure and stable investment destination.

APPEA Chief Executive Samantha McCulloch said the industry had worked with the Government to guarantee supply into the east coast domestic gas market, including through a Heads of Agreement backed by a voluntary Code of Conduct.

These mechanisms, agreed in September, were already underpinning long-term supply contracts at competitive prices. They should have been given a chance to work to bring on new supply and reduce prices in a sustainable way, rather than reaching for heavy-handed approaches that unravel two decades of gas market reform.

“We share the Government’s objective of ensuring that energy prices remain affordable and support targeted relief to households and business. Sustained high domestic energy prices are in no one’s long-term interest,” Ms McCulloch said.

“But this intervention in the market will have the opposite effect of that intended. Price caps and ongoing regulation of prices will undermine the case for investment in new supply and ultimately lead to higher prices and greater problems down the track.”

The upstream oil and gas sector employs 80,000 Australians and has invested more than $400 billion in projects. A further $27 billion has been committed in the past 18 months.