Interview with Lisa Millar, ABC News Breakfast

Lisa Millar
Passage of new energy legislation, Australian manufacturers, bargaining framework.

LISA MILLAR: Well, as we indicated earlier, the government has managed to get enough support to guarantee the passage of its legislation that it is hoping will keep a cap on prices, electricity and gas prices for Australians. We've got the Industry Minister, Ed Husic, standing by. Minister, good morning, welcome to News Breakfast. 


LISA MILLAR: Do you think that this plan will ensure the survival of the small manufacturers who have been telling us so many times that they just can't handle the costs that they've been facing when it came to energy? 

ED HUSIC: And I've definitely listened to manufacturers. From our outer suburbs to our regions, providing in terms of the entire sector around 900,000 jobs, thinking about that, and taking that message forward, and we've got now an energy policy by the Australian Government that is designed in the nation's economic interest. Protecting families, protecting businesses, protecting jobs. This is what this is all about, getting the balance right, and making sure that for manufacturers who make up - large industrial users make up in particular about half of domestic gas demand - we do need to make sure we get an Australian resource at Australian prices. 

LISA MILLAR: So are you believing that this will ensure the survival of those manufacturers? 

ED HUSIC: When you look at manufacturing self-sufficiency in the OECD, we rank about dead last, and that hasn't happened by accident. It's been neglect over years. it's going to take a while to fix. But for us to do that, and we've got big ambitions as a country, because we do recognise, we should be a nation that makes things, but it is going to take a lot of work. It's going to need skills and the development of people to make sure that they're there for employers with the skills that are required in manufacturing; the capital, that will help ensure that good ideas stay onshore. But importantly, and one of the big reasons I've been so focussed on this, Lisa, for the last few months, is we've got to get those input costs, energy prices down, or we won't get ahead, and particularly when it comes to manufacturing. Manufacturers will say, "yep, we want to do this work here, but we can't do it if we're worried about where gas prices are headed." So we do need to take that bill shock out of the system as it were. 

LISA MILLAR: Yeah, so the $12 a gigajoule cap on gas is still way higher than the historical average. So do you anticipate that the suppliers are going to say, "well, let's just aim for that $12," that it's not going to go lower, and then where does that leave people? That's certainly one of the concerns of manufacturers who have contacted us. 

ED HUSIC: I think there will be some people in manufacturing who would love to see the price lower. I totally get it. But what we've looked at is the prices on average, particularly leading into the conflict in Ukraine, and we do know that in many instances well ahead of that prices were lower. But again, we're trying to get the balance right here, and it is a situation where people were paying extraordinarily higher prices; double, triple in some cases what this cap is, and I think what we really needed to see, Lisa, is stability in the market. One, this is what the price caps are designed to do under our policy; two, reform the bargaining framework, and that will largely come off the back of the mandatory code of conduct, ensuring that the way that the big producers and the users who negotiate contracts to access gas, that they're able to do that in a proper, fairer way that leads to better pricing. 

LISA MILLAR: You haven't held back when you've talked about the gas producers previously, calling them greedy, and then saying they've been behaving like the tech giants in the way they've approached this. The industry says this is setting dangerous precedents, and it's only going to exacerbate supply shortage. So, who do we believe here? 

ED HUSIC: I think you go with your common sense. And the common sense is you've got big gas companies that control the market effectively saying that a reasonable price is a dangerous precedent. And most people out there, your viewers, would be scratching their heads going "What is dangerous about a reasonable price?" We've had a lot of these producers make eye-watering profits. And what we're saying to them is, "Can we just get the balance right here in the national economic interest? You will still make your profit, you will still be able to make your investments," but it's not just about gas company profits, it's about the profits of many other businesses in the economy who can keep their doors open, keep jobs, and that we also protect households in the process. As a government, Lisa, we need to get that balance right. That's what governments are there for - to step in when markets behave in a very dysfunctional way, as we have seen, based off the evidence of the ACCC that has watched this for a while and said, "look, this is getting worse, not better." 

LISA MILLAR: Are you worried at all that you might see a pretty heavy political campaign, a mining industry style campaign against you, that this could be costly for the government politically? 

ED HUSIC: I come back to this point, Lisa, we are doing what's right in the national economic interest. There is give and take to get the balance right, and you've asked me before, some manufacturers will appreciate the cap is in place, and others will say it's too high. Gas producers will say "This is all too low, our pricing's too low, or this cap is setting the price too low, and that this isn't right." We've got to be able to moderate expectations and do what's right, come together as a country to do what is right for the nation's economic interest. The Parliament gets this. Well, the bulk of the Parliament gets this. The only people in Parliament who think that pensioners should prop up the profits of gas companies is the Liberal and National Parties who want to vote against this Bill and want to vote against protecting households, protecting businesses and protecting jobs. It's just extraordinary. 

LISA MILLAR: Ed Husic, thanks for your time this morning, we'll leave it there. 

ED HUSIC: Thank you, Lisa.