MICHAEL ROWLAND: Global gas prices may be falling but the competition watchdog is warning those price reductions are not being passed on locally and that is hurting manufacturers who of course are struggling to stay afloat during the pandemic. The ACCC report is out today and we're joined now by the Energy Minister, Angus Taylor, to talk about it. Minister, good morning.

ANGUS TAYLOR: Thanks for having me, Michael.

MICHAEL ROWLAND: It's great to have gas prices falling but, based on this report are gas producer’s dudding Australians by not lowering prices as far as they should?

ANGUS TAYLOR: Well, we are seeing spot prices falling quite dramatically in Australia as they are around the world. Our local short term prices are reflecting that and that's flowing through to wholesale electricity prices which is great news. It means there's good deals on the market for businesses and for households. But we do want to see these lower spot prices, short term prices, being passed through into contracts - particularly for manufacturers. Our manufacturing sector relies on being competitive internationally, having an affordable, reliable supply of energy, and that means we need to see pass-through. And the ACCC makes the point there has been some pass-through, but we need to see more. We're working towards a Heads of Agreement with the gas suppliers by the end of the year. The first round of this several years back saw a significant reduction in contract prices. We want to see those contract prices reflecting international prices in the coming months and years.

MICHAEL ROWLAND: Other than saying you'd like to see it happen, how can you make it happen? How can you force those producers to pass on those lower prices?

ANGUS TAYLOR: We saw significant reductions through the establishment of the Heads of Agreement originally. We want to see the same thing happening this time around. It is due to expire by the end of the year. We'll be working with the gas suppliers and customers over the coming months. I've had discussions with all parts of the industry in recent weeks as it's become apparent that we are seeing these lower spot prices, but they need to be translated to contract prices.

MICHAEL ROWLAND: Okay.

ANGUS TAYLOR: The ACCC, of course, will be watching this very closely, and we'll be working closely with the ACCC and stakeholders to get a good outcome for Australian manufacturers.

MICHAEL ROWLAND: In this report as well the ACCC highlights what is a problem that's been known for some time - that is potential gas shortages by 2024. How worried should we be about that?

ANGUS TAYLOR: Well, it's primarily in the southern states. We're seeing record production in Queensland, but in Victoria and New South Wales we have seen real challenges to production as Bass Strait's supply starts to diminish. So, we want to see more supply coming in the southern states, that's why we want to see the New South Wales Government and Victorian Governments encouraging more supply into the market. The New South Wales Government's been working its way through approvals for Narrabri development. It is good to see the Victorian Government raising its moratorium for conventional onshore gas. We want to see more gas coming out in the southern states, and that's crucial to ensure that we have an affordable supply of energy and feedstock for our manufacturers in those states - as well as for households where, of course, gas plays a hugely important role in energy bills.

MICHAEL ROWLAND: Just more broadly on the energy front, the quarterly report of the Australian Energy Regulator came out on Friday. It pointed out that while coal is still dominant there has been a record increase in demand for solar and wind, and at the same time a fall in demand for coal. Do you expect to see that continuing, and is the market increasingly speaking in favour of renewable energy?

ANGUS TAYLOR: We're seeing record levels of investment in renewables. We saw $9 billion of investment last year - 6,000 megawatts in a market of only about 50,000 - so that's extraordinary. By world standards there's almost no country even close to that sort of outcome. It does mean we need to have backup and storage. That's why we're investing in Snowy 2.0. It's why we need to see an appropriate level of affordable gas in the market to get the balance right. It's all about balance. Coal is going to be with us for many years yet but it's about getting the balance right. Renewables are an increasing part of that balance. And that's a good thing. We're seeing reductions in emissions at a rapid pace in our electricity grid, the National Electricity Market - it's good news for emissions. And, with extra supply coming on, as long as we keep that dispatchable supply alongside it, it's good news for affordability and reliability as well.

MICHAEL ROWLAND: Okay. A couple of broader economic issues. While I have you, Angus Taylor, the Wesfarmers boss - a company that is one of the country's largest, it's in retailing and other sectors - is calling for widespread tax reform including changes to the GST in the October budget. Is that something the Government should be looking at?

ANGUS TAYLOR: Well, we're already putting in place widespread tax reform. I mean, we've increased the accelerated depreciation allowances to a broader set of businesses and extended the life of those allowances. We're of course seeing reductions in company tax rates for small-to-medium-sized business. Look, lower taxes are absolutely central to our beliefs, our policies, and our reforms. We'll continue to drive that important tax agenda, which is all about lower taxes and making sure businesses and households, individuals are in a position to invest, to save, to grow jobs. That is absolutely how we will get the economy back on its feet post-COVID.

MICHAEL ROWLAND: Okay, what about change to the GST? What about changes to the GST the business is calling for?

ANGUS TAYLOR: Well, I'm not going to speculate on what's in the budget. What I would say is we are a Government of lower taxes, not higher taxes and we'll continue to hold to that.

MICHAEL ROWLAND: Okay. So, what, you're not ruling out changes to the GST based on that?

ANGUS TAYLOR: What I'm saying, we're not into raising taxes. We're into reducing taxes. And that has been our focus, and you can see that and the proof is in the pudding through the tax reductions and tax reforms we're driving through right now.

MICHAEL ROWLAND: Okay. Now the Reserve Bank Governor, Philip Lowe, on Friday speaking about the Superannuation Guarantee which is legislated to go up to 12 per cent, says that, yes, there's a trade-off here between increasing the super guarantee that could come at the cost of stagnant, if not lower wages. Do you support the legislated increase to 12 per cent?

ANGUS TAYLOR: Yeah, well, look, that's our policy and we're sticking with it. I mean, look, at the end of the day superannuation is important to this country. We've had to make some allowances to give people access to cash in the last little while. It's been extenuating circumstances, but we'll continue to support the super industry as we have. It plays an important role in our country. Saving is crucial to getting the right level of investment and we want to see investment and job creation as we come out of COVID. That investment in job creation from the private sector is absolutely essential to ensuring we have a strong economy in the coming years in tough circumstances.

MICHAEL ROWLAND: Okay. We've covered a bit of ground. Angus Taylor, thank you so much for joining us on News Breakfast.

ANGUS TAYLOR: Thanks for having me.