Interview with Laura Jayes, Sky News AM Agenda
LAURA JAYES: Welcome back. You’re watching AM Agenda. Woodside Energy and Shell have suspended talks with buyers to supply new gas into Australia’s east coast market. The energy giant blames the Albanese Government’s intervention into the market and warns the move could lead to a shortage and gas rationing. Joining me live is the Industry Minister, Ed Husic. Ed, thanks so much for your time. What do you make of these warnings?
ED HUSIC, MINISTER FOR INDUSTRY AND SCIENCE: Hi, Laura. Well, Shell’s no worse than Facebook was. You recall when we had a government that had to intervene to correct a market imbalance in the last Parliament. Facebook picked up their bat and ball and walked off the field. Shell are doing exactly the same time thing and failing to learn that, as with Facebook, the country thinks that that type of behaviour’s not on, that governments have got a role to act in the national economic interests – exactly what we’re doing right now – and these big companies need to understand that we are acting in the national economic interests.
LAURA JAYES: Is this just a game of chicken then, and do you think they need us more than we need them?
ED HUSIC: I think this is the dumbest game of chicken that they’ve played. I mean, for months we’ve signalled this is a serious issue. For months we’ve signalled that we cannot have a situation where households have to make a choice about whether or not they heat their homes or businesses shut their doors because they can’t get access to affordable gas, for instance. We’ve said for months that needs to be tackled. We’ve said for months the type of things that we had been looking at. We had talked to them privately and we also flagged publicly what’s going on. When they didn’t move, we had to act and that’s what happened here, Laura.
I mean what we’ve got here is a situation where multinational gas companies are squealing about the fact that the nation needs to confront these companies’ obsession with Putin profits and we have, as a government, made a decision that we need to ensure that households and businesses can get affordable access to an Australian resource.
LAURA JAYES: You have a couple of options. None of them were great. It is a really difficult space, but with price caps, it’s proving pretty messy at the moment. A lot of detail to be worked out. Why don’t you just go with a super profits tax and make that temporary?
ED HUSIC: The issue we’ve got, Laura, is to try and move the needle on prices, and having a situation where you just tax your way out of this doesn’t seem to lend itself to a credible long term solution. What we are trying to do is two things: we want to stabilise the market as it is at the moment, and by introducing caps that have been welcomed by manufacturers we can get a bit of that stability in place. And while we’ve got that time, reform the market and principally do that through a mandatory code of conduct. That code of conduct is about ensuring that some of the behaviour we’ve seen in the market, that the ACCC has reported on previously, that gets dealt with, and we’ll now consult with industry and others about how to improve the way that the market functions.
LAURA JAYES: But how long is this going to take because there seems to be a fair bit of consternation within the industry and probably not unpredictable, I might say? There’s a lot of confusion about the reasonable price mechanism – how it’s set in perpetuity, how that takes into account a capital investment. Are you acutely aware of all these issues?
ED HUSIC: I guess I’d say a number of things in response to that, Laura. Our intention is that by putting in the cap that we have that breathing space, so that’s step one. And then we’ll work with people about how to reform the market. The reasonable price provisions, which by the way, what is unreasonable about expecting companies that are making huge wartime profits from saying to them, “you can make a reasonable profit while still charging a reasonable price.” There is nothing unreasonable in the minds of the Australian public about getting the balance right there and, so, we do want to do that. But a lot of these companies are saying, “no one’s spoken to us. No one’ talking.” It’s just wrong.
And the other thing I’d make the point is: this debate has been going on for six months. We have flagged they need to take this seriously and, as always, Laura, they propose nothing and oppose everything. These gas companies propose nothing, oppose everything.
LAURA JAYES: Well, they proposed a super profits tax.
ED HUSIC: Yes, I’m sure. Today I heard the chief of Woodside suggest that reservation had worked out quite well when industry fought that tooth and nail when that was first proposed years ago, and then when it’s put to them about reserving gas now, they say, “Ah, well, it’s a bit more complex than that.” I can see it –
LAURA JAYES: Just on that, then –
ED HUSIC: They don’t want to the propose anything –
LAURA JAYES: Is it complex?
ED HUSIC: Anything that they’re putting forward, they put at the last minute.
LAURA JAYES: Is it complex? Should you do it?
ED HUSIC: The complexity is this.
LAURA JAYES: And when will you do it?
ED HUSIC: The complexity is this: if you’ve opened up a new gas field and you’ve made an investment decision about how that will work out, and then after you’ve signed the contracts the Government comes in and says, “we’re just going to reserve that,” that’s difficult. So let’s be quite direct and upfront about that. But where it’s identified that there’s a possibility of extracting gas in a particular area and that the reserves have been identified and that you can step in – similar to what former WA Premier, Alan Carpenter did back in Western Australia back in the day, when he put that proposition to companies like Exxon, and they said they’d walk away from the deal and then came straight back to it – I mean, that is the type of behaviour we have to deal with industry when we’re trying to stand up in the national interest.
I just want to make the point again: it's important companies make a profit. It means that they’ll have secure work for people and they’re contributing to the community. That’s undoubtable. But it’s not just about gas company profits, Laura. It’s about the profits of the broader business community. It’s about the ability of the Australian community and the households that access gas being able to get an Australian resource at an affordable and Australian price.
LAURA JAYES: Yeah, that’s right. Just quickly, from what my understanding is, there’s a 12 month time limit on capping coal. Is that the same for gas and do you agree that they both need to be capped for anything to work?
ED HUSIC: We’re trying to make sure that whatever solution we have doesn’t distort so that if you do something just on one side, you’ll have behaviours happen on the other. So, we’ve tried to work through those issues, Laura, and we think we’ve got the balance right. And again our preference - and to be completely frank with you and the viewers - our preference would have been that the gas companies read the room, pick up that the expectations of the community are that we get balance in terms of what’s happening here and that they act accordingly. Now, they haven’t acted. We’ve had to. We’ve done it in the national economic interest to ensure that businesses and households can get access to Australian resource at Australian prices.
LAURA JAYES: Okay. When it comes down to it, what’s going to matter is those prices, so do you concede that the electricity bills that we’re going to get quarterly, they’re not going to come down significantly, they’re just not going to go up as predicted. Is that about right?
ED HUSIC: I think there are a lot of people – we think, on average, we can avoid a bill shock of around $230 for an average family’s energy bill or electricity bill, and we are trying to soften the impact. There is a recognition absolutely, as colleagues and myself have said, that what’s happening in Ukraine with the conflict that’s going on has driven up prices, and we understand that, but you’ve also seen profits go through the roof for a lot of these companies and we’ve got to be able to get some balance. So yes, there has been and we had Treasury predict where electricity and gas prices would go in the next 12 months, and those figures released just on the eve of the budget. We’ve had to act responsibly to get the balance right and to do so in a way that ensures that companies can still make profit – a lot of them, not just some of them – and that households can get that access and affordable access at that.
LAURA JAYES: Okay. Well, you’re back in Parliament tomorrow. You’re in sunny Sydney – kind of cloudy sunny Sydney today. Ed Husic, welcome back to AM Agenda. It’s good to have you.
ED HUSIC: It’s been a mix. Thank you. Great to be here!