Laura Jayes, Host: Well, Canberra’s Parliament is back for one day only and the Government is trying to get and will get through its energy power policy with the assistance of the Greens. But it seems, in the last couple of days, they have made an enemy of the major gas companies. In the middle is you, of course. How much will your power prices come down? Well, joining me live is the Assistant Minister for Trade and Manufacturing, Tim Ayres. Tim, great to see you. 

Tim Ayres, Assistant Minister for Trade and Assistant Minister for Manufacturing: G’day, Laura. 

Jayes: It seems like a little bit of a mess at the moment; still a lot of detail to be worked out. Is that fair? 

Assistant Minister: Well, the package that’s going through the Parliament today is very straightforward. It will apply a price cap on gas, and it also sets up the process that’s going to go on with the states for this package to reduce costs for, or to put downward pressure on prices. That will be worked through with the states over the coming weeks. It’s a very straightforward package today. 

But you’re right, energy policy is complex. There’s a series of different markets here – interactions between markets, I think. I’m really pleased with the work that the Government has done carefully. I reflect on the last three or four months, I think, where you have put questions to me about these issues over the course of the last three or four months. The Government’s been carefully working through all of these issues. No Government could stand by with price rises impacting on households and manufacturers in particular and not take action and in the end, this is a careful and sensible package. 

Jayes: With still a lot of details to be worked out, so there seems to be a bit of a split here. You’re saying, or the Government’s saying that they consulted with the energy companies – not a secret. They’ve talking about price caps for the last couple of months. But, they’re saying, “Okay. Yep, that’s fine. You spoke to us about price caps but there was no talk of this reasonable price mechanism going forward.” Can you explain how that will work? It seems like details on that aspect, which is the arguably most important one because it’s the one that will stay in perpetuity going forward, how will that work and who will set the reasonable price? 

Assistant Minister: Well, the industry’s jumping at shadows here, I think. 

Jayes: Well, this is an industry that’s based on certainty, though, right? They need certainty and it seems it’s very uncertain at the moment. 

Assistant Minister: Well, it’s an industry that is very important. It’s an industry that is extracting Australian resources for the domestic market and largely for export around the world, so, of course, what – there needs to be some perspective here about the impact on the gas producers in particular. These measures are – the Government dealt with supply earlier this year. These measures deal with a price cap that’s temporary and sensible for a very small proportion of the gas producers’ overall production. Some of these companies have been making very significant profits over the course of the last few months off the back of the war in Ukraine. This is not a set of measures that the Government’s embarked upon for any other reason than that we are in extraordinary times. 

There’s two factors driving the set of the issues that are confronting households and manufacturing businesses at the moment. As you point to, Russia’s illegal war of aggression in Ukraine. But the second factor is, of course, a decade of policy inertia, inaction and uncertainty. You’re right that that uncertainty has had an impact on investment decisions and made Australians more reliant upon these prices, more reliant upon particular sources of energy, have not allowed investment to flow either in gas production or more broadly in the renewable sector. The country’s been held back for a decade, and that’s making it harder to deal with the set of issues that are in front of the Government now. 

Jayes: Okay. Well, you raise two issues, though. You say it’s made it harder for investment to be able to flow. Well, the energy companies are saying what has happened in last week, what’s about to happen today and what you’re foreshadowing is actually strangling investment, so how do you answer that? You also said the Government dealt with supply earlier in the year – how? Isn’t that still a large part of the problem? 

Assistant Minister: Well, the Government has dealt with supply in the short term. There are an urgent set of issues that are, today, issues in front of the Australian economy. The price spikes in gas in particular have driven a set of manufacturers on the east coast that employ thousands of people into a very uncertain position, and, so, the Government has to act in the short term in a sensible and careful way. And we’ve balanced that very carefully. There hasn’t been a knee-jerk response. We have taken the last three or four months to work through these issues carefully with industry, with the electricity sector, with the states and territories, and we’ve got a package that has the support of all of the states and territories. It doesn’t have the support of Peter Dutton and the Liberals here in the Parliament, but it’s got the support of the states and territories and, I’d suggest to you, the support of most Australians. The Government could not, and should not, stand by and allow these short-term spikes to have the impact of closing down manufacturing in some of our regional centres and in the outer suburbs. 

Jayes: Okay. Well let’s talk about the impact of those prices, though. 

Assistant Minister: Inaction is not an option. 

Jayes: Yeah, let’s talk about the impact of those prices because manufacturing isn’t talked about enough. Households are the ones that are going to feel this as well. The budget said a 50 per cent – let me give an average – increase in power prices was coming down the barrel. What you’re doing is actually making them not as high as they would have been if you did nothing. 

Assistant Minister: Yes. 

Jayes: But we’re still talking about, perhaps, a $2,000 electricity bill every year for a household and the subsidies might give relief of around $200. I mean all this pain, Tim Ayres, and it doesn’t even seem to be touching the sides. 

Assistant Minister: Well, I think you’re right. I mean, Chris Bowen said very clearly yesterday, and I agree with him, this is about putting downward pressure on prices in a clear and effective way. Households and business will see the evidence of that over the course of next year. There are a series of manufacturers – in my portfolio area, manufacturers who are facing, or were facing, price hikes, particularly for those manufacturers for whom gas is a feedstock, price hikes which would have meant industrial capability in Australia, right at the moment where the Government is driving towards lifting the level of manufacturing in Australia, right at that moment, we would have seen, were it not for this package, I believe, some of these manufacturers close or reduce their scale. So, we’ve acted to deal with that. 

You are right. There will still be significant price issues in the Australian energy market. The only thing that we can do – again, going back to your earlier point – to deal with that in the long term is deal with these questions of supply, indeed, but also getting more low cost renewables and storage into the system. That is the medium and long-term agenda of the Government – a $20 billion fund there, Rewiring the Nation, that will deal with those challenges providing investment certainty for investors in new energy to make sure that those investments flow that haven’t flowed for the last decade. That’s how we’re going to bring power prices in the medium and long-term. This package is all about 2023 and making sure that households and businesses aren’t exposed to unfair prices over the course of that year. 

Jayes: Yep, it seems like there’s a lot more work to do. Tim Ayres, thanks so much for your company and thanks so much for joining AM Agenda this year, and we’ll see you soon. 

Assistant Minister: Thanks, Laura. Merry Christmas and Merry Christmas to your listeners. 

Jayes: Nice one.