TOM CONNELL: Welcome back. Well, states are pushing back against Anthony Albanese’s plan to lower energy prices. The Labor government has New South Wales and Queensland to impose their own price caps on coal. If accepted, the Commonwealth would possibly have to pay billions of dollars in compensation to energy producers. The New South Wales government has allegedly sought constitutional advice on the matter, and Queensland Premier Annastacia Palaszczuk has already rejected a price cap on coal. 

Joining me live is the Industry Minister, Ed Husic, who was chuckling at that story, for whatever reason.

ED HUSIC, MINISTER FOR INDUSTRY AND SCIENCE: “Revolting”. 

TOM CONNELL: “Revolting”? Well, I said “pushed back”. I like to edit on the fly. 

ED HUSIC: I do like the teleprompter. 

TOM CONNELL: So a coal cap? If it comes in it appears compensation would have to be paid by federal or state governments. Does this mean that whatever cap happens is just a tab picked up by the government? And then what’s the point of doing it? 

ED HUSIC: As – I hate to disappoint you, but as I’ve said in other outlets, we’ve got a cabinet process that we’re going through. We’re thinking through various options to respond to a problem that people want us to deal with, which is the expected increase in energy prices over the next year. And in working through that, there’s no point in me, doing public speculation about different scenarios and how we might manage it. 

I’ve been very vocal on the need for us to get prices down from an industry perspective, and I do think that the gas companies could have done more sooner on that. We should not have to be in the spot where we’re doing what we’re doing right now, which is to contemplate – a very strong range of actions to try and reign in prices on behalf of households and businesses. But that’s where we’re at. And so we just need to work a lot of that stuff through. 

TOM CONNELL: So without you revealing what you’re going to do – you’re always free to – 

ED HUSIC: Thank you. 

TOM CONNELL: But without doing that, is it accurate what the states are already claiming – that compensation would have to happen to the company because of existing contracts? So a price cap is going to be a government-funded subsidy essentially? 

ED HUSIC: Look, I think the states and territories are actively thinking about what the impact of escalating energy prices have on the people in their state and territory. So they’re very focused. I’ve said before we’ve got to – having spoken with different state ministers they get that we need to work together, and they also get that if we don’t come up with a solution we will have questions asked from households and businesses about why. So I do think we need to work – you know, work through all that with them. 

I’m not going to engage in a – and we’ve seen enough of that, frankly, with the previous Federal government wanting to pick fights with states and territories. We want to be able to have a process that allows us to work together, and I’m confident that we will be able to work together to find a common solution.

TOM CONNELL: The AER’s going to set its – or has the information to set its next default price today. So has your government made a decision yet on what you’re going to do regarding electricity prices or coal and gas? 

ED HUSIC: Well, the best – if I may say to you, the best way in responding to your question have we made a decision, when we announce that, that’s when we’ve made it. 

TOM CONNELL: Right. So has it been made? 

ED HUSIC: At this point that’s what I’m saying to you. I’m not here to pre-empt anything, and I understand why you have to ask those questions – 

TOM CONNELL: Has there been a cabinet meeting today on this? 

ED HUSIC: No, I don’t believe that I’m in a position to be telling you what cabinet meetings are occurring. 

TOM CONNELL: You said no at the start, but you’re saying – 

ED HUSIC: No, I said, “No, I don’t believe – 

TOM CONNELL: Okay. 

ED HUSIC: So, anyhow – hey, word play, it’s fun. 

TOM CONNELL: No, I’m just clarifying what you said so I’m not misconstruing – 

ED HUSIC: No, no, no – look, we as a group we meet regularly. But, as I said to you, I’d be very careful about necessarily going into what the cabinet’s thinking, why it’s thinking the way it is. Be confident that we are considering this issue deeply. 

TOM CONNELL: You’ve had very strong views on gas in particular, the price it’s at and the price Australians are paying. Given what the states are already talking about in terms of maybe compensation, is it time to look at tax treatment as well? Is that on the table? Isn’t that a better fix than some short-term thing about caps? 

ED HUSIC: I think if I can bring you back to what I said earlier, we’ve looked at a range of different mechanisms and exploring what can be done, in what way and how that has to be managed. I think there is a big issue about the way – and why I’ve spoken quite extensively in the past about reforming the code of conduct. It’s not a code of conduct to improve customer behaviour; it’s a code of conduct to improve the bargaining environment in which those gas contracts between, you know, the big producers and manufacturers are conducted. 

It’s very similar, I might say – there are a lot of similarities between what happened with the news media bargaining code and this sector where you have some very big players that call the shots in the way in which the market operates. And that does need to be dealt with. That’s why we’ve called the ACCC in to investigate and give us options on what can be done. If we improve that bargaining environment I think that’s a really solid way longer term to get a bit of better behaviour happening, and by better behaviour, obviously much more realistic pricing. 

TOM CONNELL: But would it help if Victoria and New South Wales got some gas production going, some more gas production? Are they pulling their weight? 

ED HUSIC: So I hear this comment, Tom, quite a bit about increasing supply. What we are focused on, if I can emphasise, is this is [about] uncontracted supply. I saw an article in the Fin today going off about what some people who are unnamed will think in the South Australian government about what’s going on, and no doubt some of it’s driven by a view on supply. There’s a lot of uncontracted supply at the moment. We’re not talking about dealing with anyone’s contracted export supply. There is – 

TOM CONNELL: You think there’s enough essentially? 

ED HUSIC: Well, no, no, I’m – you know, look, Narrabri, I’ve said I think it’s up to Santos and the New South Wales government to get their act together on that. That’s over from I understand – happy to be corrected if I’m wrong – 1,600 petajoules of supply. You know, we need to get moving on that. And I understand, you know, thankfully there’s been some movement recently in terms of exchange of information between Santos and the New South Wales government. So if that opens up because it’s been tested economically and environmentally then that’s a great source of new supply. You’ve got obviously what’s happening in Beetaloo. It’s there. 

TOM CONNELL: Okay, but – 

ED HUSIC: But can I just end on this point on supply: supply isn’t everything, right? We’ve got a lot of supply. The issue is the price at which that supply is made available. 

TOM CONNELL: Okay. Let’s talk the National Reconstruction Fund as well. It will need to make, depending on the type of arrangement – there are a few different ones – but you spoke about a positive return. Is there going to be a sort of percentage above the cash rate that projects will need to make? Is that the – 

ED HUSIC: If I may say, we introduced legislation and delivered on an election commitment to do this, to set up a National Construction Fund, $15 billion worth. This will be the greatest peacetime investment in industrial and manufacturing capability in living memory, dedicated solely to lifting what we need in some priority areas. It is not grants; it is going to be loans, equity guarantees. And we will expect a rate of return for the taxpayer. And we will work through the rate itself. That will be contained in an investment mandate – 

TOM CONNELL: Yeah, and the reason I ask, with interest rates, the cash rate going up, does it get trickier if you set it as a percentage above the cash rate, which often has been used in the past by governments? 

ED HUSIC: I’m very mindful we need to get the balance right on the rate of return that’s expected. 

TOM CONNELL: Okay. But not – 

ED HUSIC: And we do think it’s a big thing that will give – will supercharge the development of industry capability. And importantly for the people who’ve got great ideas to grow new firms, that they don’t have to go offshore as the only way to get support to build jobs here. 

TOM CONNELL: Okay. Industry and Science Minister Ed Husic, thanks for your time. 

ED HUSIC: Thanks.

ENDS