Interview with Kenny Heatley, Sky News

Kenny Heatley
Gas prices

KENNY HEATLEY: Well, joining me live in the studio is Assistant Trade and Manufacturing Minister Tim Ayres. Thank you so much for your time, Senator. So, let’s talk about the gas contracts in the manufacturing sector. Last year they were offered below $10. Now they’ve been offered contracts $35 a year later – a 350 per cent increase on what they were paying. How can we expect the manufacturing sector to absorb those costs?

ASSISTANT MINISTER TIM AYRES: Well, certainly for those firms who are in the process of contracting now there are very steep price rises indeed. And that’s putting the pressure on the viability of some east coast manufacturers. So, as you’d understand, some people have got contracts that go for a few more years. But the pressure is on in manufacturing and in terms of viability of these enterprises, and there are jobs on the line.

KENNY HEATLEY: Absolutely, because industry lobby groups are saying that it’s going to lead to job losses and plant closures. So – and I should mention as well, $35 per gigajoule is what they’ve been offered at the moment. This is a warning that’s coming from the manufacturing sector.

ASSISTANT MINISTER AYRES: That’s right. So, there are two big pressures on in gas – one in term of supply and one in terms of price. The good work that Madeleine King the Energy Minister did over the last few months has essentially resolved that supply crisis. That means that there is plenty of supply for east coast manufacturers and households to, you know, make sure they can meet their gas needs.

The crisis now is in price. Escalating world price of gas because of Russia’s illegal invasion of Ukraine has meant that these gas producers have been offering over-the-top prices, are price gouging from east coast manufacturers, and the government is looking very closely at all of the options to deal with this.

KENNY HEATLEY: Right. So, the Prime Minister is saying that he’s going to negotiate in good faith with gas suppliers to try and do something, to bring down prices. And you say they’re getting a lot of big profits at the moment. What can the Prime Minister offer these gas companies to negotiate to bring prices down?

ASSISTANT MINISTER AYRES: Well, the Prime Minister is sending a very clear message to the gas sector, to the gas producers – we will work with you to reduce prices. The ministers who have been dealing with this, Minister Bowen, Minister King and Ed Husic have been sending a very clear message for some months now. It’s up to the gas industry itself to deal with prices and to bring prices down. But we are also making it very clear that we are working through – the government is working through a series of options that will deal with price. So, the best option is the gas industry does the right thing, plays for the national team and acts in the national interest.

KENNY HEATLEY: But they’re not so far.

ASSISTANT MINISTER AYRES: That’s right. I haven’t seen any sign since the gas supply issue was resolved of the gas producers acting in the national interest and dealing with price.

KENNY HEATLEY: So, what makes you think that we can negotiate in good faith?

ASSISTANT MINISTER AYRES: Well, what I think we’re saying is we will talk to the gas industry. The door is open. We will engage directly with them. But as Jim Chalmers said yesterday and Minister Bowen and others have indicated over the last few weeks, we are working through carefully and deliberately a series of options that will deliver on price. So, we’re prepared to work with the gas industry to solve the problem. But we’re also prepared to act in the national interest if the gas industry doesn’t do what the national interest requires.

And, you know, these firms talk a lot about their social licence. You don’t get a social licence if you’re acting in a way that’s contrary to the interests of particularly these east coast manufacturers. These are big businesses, viable businesses. They employ a lot of Australians. Their supply chains matter for our economy. And it’s in our national interest to build manufacturing, not see it being put under increasing pressure.

KENNY HEATLEY: Well, I think many would agree with you, but the Australian Competition and Consumer Commission, they’re now recommending price regulation and intervention in the market. But the gas suppliers are saying, “If you do that, we’re going to restrict supply even more.” Do we take those threats seriously?

ASSISTANT MINISTER AYRES: Well, we’ve got agreement about supply. Very interested in what the ACCC and Rod Simms are saying about these questions. They are being engaged with the government, working through those kinds of mechanisms. All of the options are on the table. We are not going to be rushed into a set of decisions here because they all have economic consequences. But we’re absolutely focused on delivering an outcome on price, delivering an outcome that delivers certainty and security and a reasonable gas price.

Some of these businesses are not like a household where gas is used as a, you know, source of energy; they are also using gas directly in their processes. They are big gas users, so they’re not just using it for electricity; they’re using it as a feedstock for their industrial processes. The price of gas does determine their future viability. They are big investments that are critical for our manufacturing base, and we’re working very closely, very carefully, very deliberately to try and make sure that we deliver the best outcome for the sector and, by the way, for household, too.

HEATLEY: Absolutely. Senator Tim Ayres, thanks so much for joining us.