Interview with Elysse Morgan, ABC TV Business
ELYSSE MORGAN: Well, now the government’s got their IR legislation all but done, this week the focus is manufacturing with Science and Industry Minister Ed Husic introducing the government’s election promise of a $15 billion National Reconstruction Fund. It’s essentially a repeat of the Clean Energy Finance Corporation, where the government creates a fund which will then co-invest to boost higher-end manufacturing. But the minister is also having to deal with the ongoing gas crisis and haggling over the solution.
Minister, just before we get to the National Reconstruction Fund, a lot of manufacturing, of course, hinges on energy prices, particularly gas. Is cabinet seriously considering a price cap on gas and coal?
ED HUSIC, MINISTER FOR INDUSTRY AND SCIENCE: First, it’s very good to speak with you, Elysse, particularly on something as big as this in the minds of a lot of people in industry. If you don’t mind, given that cabinet is considering a wide range of options to deal with what we regard as a very serious national issue, I probably am not at liberty to be able to explore in the way that you would be hoping all those options. But we are looking at a range of things that we believe will lower energy prices.
ELYSSE MORGAN: So, it is something that the cabinet actively considering – a price cap on gas?
ED HUSIC: We are considering a number of options. Some of the things that we have said publicly, Elysse, including reforming the bargaining environment, and that is something that we said, at the point of the budget that around code of conduct that would form a foundation stone, as it were, of improving the bargaining relationship. Frankly, when you’ve got 90 per cent of 2P reserves controlled by three – effectively three suppliers, as the ACCC has indicated, you do need to have a situation where customers get a much better deal. Competition hasn’t, I don’t think, been as effective in a free market and we do need to deal with that.
ELYSSE MORGAN: So, do you acknowledge that a price cap will encourage demand, but it will disincentivise increased supply, therefore, only prolonging this issue and prolonging the need for government intervention? It doesn’t actually solve the issue at the heart, does it?
ED HUSIC: I don’t think supply is a problem here. I mean, we had 157 petajoules secured under the heads of agreement, the commitment from the suppliers was that they would offer that to the market, that that would overcome what the ACCC was concerned about a few months ago of a shortfall of 56 petajoules. I’m just – let me just get – before you jump in – so the supply was there from uncontracted gas. Supply is not a problem here; it’s the pricing of that supply that is an issue. If you want to talk about –
ELYSSE MORGAN: How would a price cap actually apply? At what point would you apply it in the cycle? Would it be, you know, at the Wallumbilla hub, which is the big hub for the east coast? Would it be from the ground? Would it be as it reaches the customer so, therefore, the price cap would include the cost of transport which sits at around $2.50 a gigajoule? Like, where are you thinking it would actually be applied in the process?
ED HUSIC: Elysse, you’re inviting me to speculate on something that would suggest where the cabinet is going, and I’m just not at liberty to say that. But I will say –
ELYSSE MORGAN: Well, obviously if you’re discussing it, surely you’ve discussed – even if it’s on or off the table, surely you’ve discussed the actual process of how and where it would be applied?
ED HUSIC: Elysse, I’ve got a lot more rein to talk about reforms to the code of conduct and market frameworks because we did flag that going into cabinet.
ELYSSE MORGAN: The National Construction Fund, it’s nominally $15 billion, but how much money will actually be, you know, available each year?
ED HUSIC: Well, so a number of things I might add – we’ve obviously flagged that we’ll stump up some of the $15 billion initially and then it will be staggered out over a period of time, which I think makes good financial sense. It will also, as I said, with the opportunity to work with other investors, provide added financial strength as well.
ELYSSE MORGAN: What do you think is going to be the return on investment to taxpayers? It’s around four and a half per cent from the Clean Energy Finance Corporation. Will it be something similar for this?
ED HUSIC: Good question, and that’s something that we’ll work through in the consultation process and will be embedded in the investment mandate. That is not being set at this point because we do want to consult particularly with investment – with the investment and finance community around the shape of what that rate should be set at.
ELYSSE MORGAN: Because this fund – is this fund going to be slightly more speculative than, say, the Clean Energy Finance Corporation because it will be investing in say, quantum computing, hydrogen, in medical research, which particularly in medical, something can go for 10 years and it turns out it doesn’t work.
ED HUSIC: Yeah, and that is a challenge, too. And we accept that with these type of funds that are used elsewhere that, sometimes things will work and sometimes they won’t. We do want to assure people the expectation is that the taxpayer does get a return on the investments made. But there’s also an understanding as well in the broader community that we want to ensure that when businesses with good ideas that have plans to grow and to be also putting on more people and providing secure work and that we’re attending to priority areas where we think across medical, defence, low emissions technology, resources and agriculture, for instance, that that’s important for the longer term good of the economy and the community as a whole. I think people do want to see governments using taxpayer dollars in a way that will deliver not only in terms of the return on investment but lead to better economic outcomes.
ELYSSE MORGAN: Minister Husic, thank you so much for your time today.
ED HUSIC: Good on you, Elysse. Good talking with you. Thank you.