PATRICIA KARVELAS: It’s been more than a week since the government flagged regulatory intervention to bring down power prices, but there’s been little detail about what the Prime Minister will ultimately decide. The Shadow Treasurer Angus Taylor says increased gas supply is critical to lowering energy bills and warned the Albanese Government is damaging working with the industry to get more energy flowing into the market by lashing out at the gas companies. 

Ed Husic is the Minister for Industry and Science and our guest. Minister, welcome. 

ED HUSIC, MINISTER FOR INDUSTRY AND SCIENCE: Good morning. How are you? 

PATRICIA KARVELAS: I’m great. Your government raised the prospect of regulatory intervention to bring down energy prices, so what’s your timeline? Will you have something in place by the start of next year? 

ED HUSIC: I think we’re very focused on delivering a sort of suite of reforms that we think will help bring that downward pressure on prices. It’s really important not just for households but clearly – and the reason I’m so active in this debate is because manufacturers who are dependent especially on gas need to see those lower input costs. And they also need to see a better situation in terms of all behaviour out of these gas companies, because I’m already picking up evidence that the contract offers post the Heads of Agreement that we’ve signed are just as high if not higher than what was the case before the Heads of Agreement. 

So, the reality is we do need to come up with those reforms, and we’re going to work through that and deliver stuff that works. 

PATRICIA KARVELAS: I have to pick you up on that. Okay, so the Heads of Agreement was signed I think several weeks ago now with the gas companies. You’re saying that since that was signed prices are higher? 

ED HUSIC: Well there is evidence that in some contracts that what’s being offered was higher than what was received pre Heads of Agreement. And that says to me, and it’s typical - I think this is reflective of this fact, that the market the way it stands at the moment that the LNG exporters and their associates, as the ACCC has identified, they’ve got influence of close to 90 per cent of the proven and probable reserves in this country. So, their view is they can keep doing what they’ve been doing even though the country, everyone, has been saying to them, “You’ve got to see sense. You’ve got to do better. There are implications and consequences of what you’re doing,” and they’re still not doing it. 

PATRICIA KARVELAS: Okay. So that was meant to be an agreement about supply and dealing with the supply issues. Does it show that they’re not serious about, you know, delivering in this context? What does it demonstrate to you that even after signing that agreement with the government that prices are higher in some cases? 

ED HUSIC: Well, from my perspective, people can make of what I’ve said, they can draw their conclusions. But to my mind it is saying that they are not taking this issue seriously, they are not picking up the signals, they are completely tone deaf to the view that’s being expressed publicly, right? That’s one. 

Two, the Opposition calls us to work with the gas companies. You know, they brought in an ADGSM which frankly is not fit for purpose, but they brought that in when they realised that the gas companies were treating them in the same way. And the mob had nine years, 22 failed policies couldn’t land one, are now telling us to work with the gas companies that they found exhibited the same behaviour. And that’s why we’ve got to a point where we now are forced to consider a wide range of interventions to get a better deal because these companies are just not doing the right thing. And it’s been, as indicated by the ACCC – again, I come back to the stuff that they put out in the last few weeks – cases where the LNG exporters, are offering gas to the domestic market at prices they couldn’t reasonably expect on the international market. 

So the Heads of Agreement was important in two key areas that I’ve previously mentioned when we’ve chatted about this - ensuring that we have the additional supply, the 157 petajoules to meet the 56 petajoules that were predicted as a shortfall by the ACCC. And the other thing that the Heads of Agreement did that was really important was ensure that that type of behaviour I referenced a few moments ago – offering gas locally at prices they wouldn’t even get on the international market – that we would clamp down on that. And now we’ve got to go the next step in terms of further consideration about what we do to drive down input costs. 

PATRICIA KARVELAS: It’s been reported that intervention will likely take the form of a mandatory code of conduct and a domestic price cap. Do you believe that’s the best option? 

ED HUSIC: Let me put it to you like this: we’ve flagged looking at the code of conduct and what can be done, and we’ve got the ACCC looking at the shape of that. And that code of conduct, just for your listeners, is to help better guide the way in which these contracts get negotiated because some of the behaviour we’ve seen out of gas companies – take or leave mentality – are not offering a serious and better offer based on, contract talks. That type of thing needs to be addressed. 

So, it is important that we look at that. But in terms of the other areas – coming back to my earlier point in the conversation, Patricia – I will want to work through that internally. And I know there’s a big hunger and particularly an interest from people that say, “Well, what’s it look like?” But this is stuff that does need to be worked through to get right. And we need to be able to do that in a considered way. 

PATRICIA KARVELAS: The Productivity Commission Chairman, Michael Brennan, says government interventions to lower prices are dangerous in the long term because they create market distortions. Would government intervention be temporary? 

ED HUSIC: Again, we’ll look at how we shape that up. But my preference is we get the bargaining framework, the way in which the suppliers and the buyers, the way they negotiate those contracts, to improve that. And I’m talking largely from the gas side obviously. Improving the way that those contracts are negotiated. Because I do agree that it is better if you can get a situation where they can negotiate in a much fairer, better way. That is the best way, or the best frame longer term. 

PATRICIA KARVELAS: Isn’t it just time that we look at oil and gas taxes? We’re getting little from taxes from petroleum and gas. Is that something that the government should be looking at now? 

ED HUSIC: I think that if you look at what the Treasurer has said over the last few days, he’s examining those type of options. And again, that will be in the mix of things that he thinks through. I think the bigger focus long term is the price mechanism and again, I notice the free advice from Angus Taylor yesterday saying, “Well, the answer to all this” – and I think you referenced this earlier – “The answer to all this is more supply.” And the issue is, one, it will take ages to get that supply into the system, Patricia, by the time you get all that worked up. And two, what would we have? I mean, the Coalition are demonstrating themselves to be a tool of the gas companies here arguing the line that they want – more supply – so what? They can then do what I said earlier, which is get that volume, offer it locally at prices way more than what they would offer in the international market just to put local buyers off so they can flog that off into an export market at a price that satisfies the greed that we’re seeing. 

This is not a shortage of supply problem; this is a glut of greed problem that has to be basically short circuited and common sense prevail. 

PATRICIA KARVELAS: Okay, let’s go with your glut of greed line. Extreme profits, should they be taxed during periods of high prices? 

ED HUSIC: Again, we’ll work through the options – but how does that provide a sustainable long-term answer? The pricing mechanism is the one that I reckon needs to be seriously examined and see how we can work that up. Because you can tax by all means – and I’m sure there’s a hardy number of people out there that think this is – you know, this is one possible response. But, again, the big thing that I’m focused on as an Industry Minister, particularly for manufacturers, is just to lower the gas prices. 

PATRICIA KARVELAS: Former ACCC boss Rod Simms is calling for changes to the Petroleum Resource Rent Tax. US President Joe Biden is threatening to impose a windfall tax on oil producers. The UK have already had one. If the architects of free market capitalism can do this, I wonder why there is a reluctance from the government to go there. 

ED HUSIC: Well, I'm just going to leave the tax question to the person who controls the levers on that, which is the Treasurer. And the Treasurer has flagged that on PRRT that those are issues that are being considered. So, I'll just leave that to him. 

PATRICIA KARVELAS: Is it reasonable for Victoria and New South Wales to be calling for a domestic gas reserve? 

ED HUSIC: I noticed some of those comments recently. And the issue is if reserves have been opened up it’s very hard to retrofit the reserve. The second thing is with the great work that Madeleine did as the Resources Minister in terms of the Heads of Agreement and getting that commitment to offer more supply means that we’ve got in effect a reservation right there. You know, the 157 petajoules that’s been put, we have met, we’ve exceeded the shortfall that the ACCC was concerned about in its most recent report. And so, we’ve got that there. 

So now the issue is – I’ll come back to it and sorry to sound like a broken record on your program – comes back to price. Supply is one thing; price is another. And that’s what we’ve got to sort out. And if the gas producers and those LNG exporters aren’t taking all the signals that they’re getting from across the country that they need to take a different approach in terms of the way that they negotiate these contracts then we need to look at what can be done to reform that to improve price. 

PATRICIA KARVELAS: And is there any evidence they’ve got the message yet? 

ED HUSIC: Well, as I said to you earlier, I think the evidence I’ve received so far from some manufacturers where they’re getting prices that are the same or higher for contract is suggesting to me that they’re not. And you’ve got people like the head of Santos going out saying that any move on this would be Argentinian. I mean, this is the mentality that you’re dealing with in some of the senior leadership of these firms. If they cannot get – I come back to that point – they cannot get that the country is hopping mad about this, they are completely tone deaf. 

PATRICIA KARVELAS: Are you anticipating job losses among gas-reliant manufacturers? 

ED HUSIC: This is precisely my concern. Since I’ve been talking this up, you know, you and I, I think, the first opportunity we had to talk about this was in June, and that’s exactly what my concern was that it would put pressure, huge pressure, on manufacturers. As we’ve said privately and I’ll say publicly, we have been elected on a mandate to revitalise manufacturing. Countries that have been able to lower those input costs for manufacturers have seen that type of revival occur, and we’re at a point in time where countries are actively reconsidering dealing with their supply chain issues, with trying to boost self-sufficiency in key areas. And what the gas companies are doing is basically a threat to that. And that’s why I’m so activated on this point. 

And as I’ve said elsewhere, I’m happy to be scratched off their Christmas card list. Just give us lower prices. That’s what we need for the nation. 

PATRICIA KARVELAS: Okay, so there is a sense of urgency. You mentioned you raised it first in June. So how quickly do you need to deliver that to save these jobs that you say could be at risk? 

ED HUSIC: Well, we do – I think we’re all focused on the issue and working together. The hope had been that the Heads of Agreement would see behavioural change, and we are focused now on making sure that we deal with that and provide those downward – that downward pressure on prices in a significant way. 

PATRICIA KARVELAS: So, are we talking within weeks? 

ED HUSIC: Coming back to what I said earlier, we’re going to work through that stuff. We’re obviously very focused on delivering something in the short term. But I’m not here – we haven’t anywhere made an announcement that by this date we shall. We’re just focused on making sure we work through, one, the range of options that are available; two, implementing them effectively; and three, obviously doing that as quickly as we can. But I don’t think a knee-jerk rush is the way to go. 

PATRICIA KARVELAS: Thank you so much for joining us this morning, Minister. 

ED HUSIC: My great pleasure. Thank you. 

PATRICIA KARVELAS: Ed Husic, the Minister for Industry and Science. You’re listening to ABC RN Breakfast.

ENDS