MICHAEL ROWLAND: The Federal Government is set to unveil new fuel security measures today, ahead of next month's budget. The main aim is to curb prices while also ensuring reliable supplies for consumers, businesses and the airline industry. For more, let's bring in the Energy Minister, Angus Taylor. He joins us now from Sydney. Minister, good morning.

ANGUS TAYLOR: Thanks for having me Michael.

MICHAEL ROWLAND: It's great to have you here. Now, why has it taken the coronavirus crisis for the Government to do something about shoring up this country's fuel supplies?

ANGUS TAYLOR: Well we've been working on this for a long while, from well before the coronavirus emerged because it is a long term issue. We have to make sure that we have the fuel supplies we need as a country for emergency situations. Of course, during coronavirus, we've actually had ample fuel supplies but there are other circumstances where we may not, and this is about making sure we have that supply but also putting downward pressure on prices, making sure we've got a competitive supply sector, local refineries, stocks that are there in the most extenuating circumstances. This is a complete package that's all about ensuring we have those fuel supplies in the worst-possible situations, but also ensuring that we keep downward pressure on prices in those situations.

MICHAEL ROWLAND: Okay. How will it work? You're offering some form of taxpayer subsidy to refineries, for all companies to build up refineries?

ANGUS TAYLOR: There's two different features in this package. The first is more local stockholding, and the Government will contribute $200 million to support building new stock storages here in Australia with a particular focus on diesel, which of course is the fuel we need most in an emergency situation. But secondly, also ensuring there's a payment to refineries that recognises the role they play in fuel security because they of course, they can process our local crude oil and that ensures we have supplies when we really need it. So they're the two key features of the package. And part of that stock holding will mean there's an obligation on companies to hold a minimum level of stocks, and that ensures that those companies are doing the right thing for those worst-possible circumstances.

MICHAEL ROWLAND: Okay. And what's defined as minimal level?

ANGUS TAYLOR: Well, it will depend on the fuel type. It's around 24 days for gasoline and av gas for aeroplanes, and 28 days, a higher level for diesel. As I say, there's a particular focus on diesel because our miners, our truckies, our farmers, our commuters, there's a whole range of people that really rely on diesel in the worst-possible circumstances. Indeed, during the virus, we've seen diesel demand has hung on when other types of fuel have dropped off.

MICHAEL ROWLAND: Okay. So it's 24 days for petrol. Is that enough in a worst-case scenario?

ANGUS TAYLOR: That's in addition to the 35 days of crude oil. And of course, we produce crude oil in Australia and as long as we've got refineries here in Australia, it is enough for the worst-possible scenario. That's why there's such a strong focus on making sure we have refineries in this country that can process our local fuel so that in a situation where we weren't able to import, we would still have access to that necessary level for essential supplies.

MICHAEL ROWLAND: The International Energy Agency, as you know, recommends Australia, as with every other country in the world holds 90 days of fuel reserves. Where does Australia currently stand against that international benchmark?

ANGUS TAYLOR: We're sitting at about 80 days, Michael, and this will give the top-up to get us to the 90, and that's part of the purpose of the exercise. Of course, the primary purpose here is to make sure we're in a situation where in a worst-case scenario we have the supplies, we can put downward pressure on prices, but it's also important to meet our international obligations and we're confident this will get us to meet those international obligations.

MICHAEL ROWLAND: People out there hear ‘keeping prices low’, but as you know, one of the big bugbears for a lot of motorists is the ever fluctuating price of petrol. How can you guarantee, for instance, this subsidy, I think which amounts to 1.15 cents per litre, won't be passed on by the refineries by the big oil companies to us, the motorists?

 

ANGUS TAYLOR: Well Michael, it's a competitive market and this is about making sure it remains competitive, and more competitive. There's times when I know commuters would like it to be more competitive. This is about making sure it is. If we've got local refineries in the marketplace, then we have a more competitive sector. And that's an important point and it's one that's an important part of this package. Not only do those local refineries make sure we can refine our local crude and have that essential supply when we really need it, those local refineries put downward pressure on prices and that's crucial for motorists of course, right across Australia.

MICHAEL ROWLAND: Okay. There won't be a quid pro quo? It is taxpayers' money, it is our money for these refineries, these oil companies, in return, not to slug motorists more than they need to?

ANGUS TAYLOR: Well, of course, we're always on the job there. We've got a tough cop on the beat with the ACCC that's watching this constantly. We keep a very close eye on it, particularly when wholesale prices are coming down as we saw at the beginning of the coronavirus. That was passed through over time. We always want it passed through as quickly as possible. But the ACCC's role will remain very, very important in monitoring exactly what you described.

MICHAEL ROWLAND: Okay. Watch that space. Energy Minister, Angus Taylor, thanks for joining us.

ANGUS TAYLOR: Thanks Michael.