NEIL BREEN: Our special guest on the line right now is the Federal Energy Minister Angus Taylor. And what's happened is the Australian Competition and Consumer Commission has released its Gas Inquiry interim report. I'll give you a precis. Gas prices have continued to fall, which is good. The COVID-19 pandemic has had little impact overall on East Coast gas production - that's good, because we need gas, and we don't want to pay more for it when there's not a lot of gas. Supply has been confirmed to meet forecast domestic and export demand in 2020. But there's a sting in the tail of this report. The ACCC has got concerns about the widening divergence between domestic price offers and what we're selling it overseas for. In other words, in other words, LNG is being sold overseas for cheaper than we're paying for it at home. And the Minister's on the line. Good morning, Minister.

ANGUS TAYLOR: Good morning, Neil.

NEIL BREEN: Why do we pay more for gas at home when we're producing it than we're prepared to sell it for overseas?

ANGUS TAYLOR: Well, we shouldn't be, and that's exactly the point of the ACCC report. Look, there's some very clear messages in this report. Number one is that we are seeing a significant reduction in spot prices for gas - that’s the short term price. We haven't seen that flow all the way through to contract, longer term prices, which is particularly important for manufacturers, but also important for households. So, we are seeing some softening in the contract market, but not enough. And the ACCC has made this point. Look, we see this in markets quite often, where the wholesale price comes down - we see it in the petrol market from time to time - and the retail price doesn't follow straight away, but it needs to follow. And we, certainly, are very acutely aware of this issue, as is the ACCC. We're working towards a Heads of Agreement that it has to be revised with the gas suppliers by the end of the year, and this is something we'll be looking at very, very closely.

NEIL BREEN: How can you pull the gas suppliers into line though? Like, what tactics can the Government use to say: ‘hey, you have to do this’?

ANGUS TAYLOR: Well, there's a couple of pieces to this, number one is international markets have moved dramatically in the last couple of years, pre-COVID it was already happening, and that's putting some discipline on the gas producers anyway. But on top of that, as I say, we have a Heads of Agreement which was signed a number of years ago in a very different market environment with the gas producers. That is due to expire by the end of the year. The ACCC has recommended that we extend it and have a look back at making sure it's delivering the sort of reduction in prices that needs to occur domestically, and we'll certainly be looking at that very closely in the coming months.

NEIL BREEN: Do you think that Aussies living in a house in, I don't know, Greenslopes or Kawana, are they getting ripped off compared to someone overseas who's getting gas that we've sold to overseas?

ANGUS TAYLOR: Well, they're not necessarily getting it cheaper overseas because of the transport costs. But clearly, the prices in Australia should be lower to reflect what we're seeing in our export market, there's no doubt about that. And that's something, as I say, we'll be looking at very closely. Look, gas is unbelievably important, it's important because it supplies electricity, it's important because it's crucial to industry, and to jobs, to manufacturing. And it's very flexible. So all that solar on people's roofs, gas is the backup for when the sun goes down, when your solar cells aren't working anymore. So, it's enormously important. It needs to be affordable, needs to be reliable and the ACCC has made sensible recommendations about ensuring we get that pass through. We're going to be looking at that closely and talking closely with the gas producers over the coming months.

NEIL BREEN: I'm talking to the Federal Energy Minister Angus Taylor. I know you've got to go Minister, because you've got other bookings this morning. But just quickly, there was some good news in there. COVID-19 didn't affect production so we're not going to have a short supply, which means that prices are down for Australians.

ANGUS TAYLOR: Well, there's quite a bit of good news. Firstly, the spot prices being lower has meant that electricity wholesale prices are coming down. And that's, again, we're starting to see that in prices - we need to see more. We've put legislation in the Parliament to make sure that passes through in the near future. So, that's good news. And of course on the supply side, as you rightly say, we're seeing record levels of supply from Queensland - that's good for our exports - but it also provides extra gas to the domestic market and we want to see that pass through at a reasonable price.

NEIL BREEN: Okay. The Federal Energy Minister Angus Taylor. I'll let you go to appear on Sky, right?

ANGUS TAYLOR: Thanks Neil.

Media contact:

Minister Taylor's office: 02 6277 7120