Interview with Patricia Karvelas, ABC RN Breakfast
PATRICIA KARVELAS: Even as gas producers insist there is no looming 2023 shortfall, Australian businesses are facing closure in ever higher numbers because of rising prices. Wholesale gas prices in the east coast market have risen 246 per cent in the last 12 months at a time when the ACCC says producers have been selling more supply overseas to take advantage of higher prices.
Now, the government is threatening to impose export controls, but that’s cold comfort for businesses that are struggling right now. Ed Husic is the Minister for Industry and Science and our guest this morning. Minister, welcome to the program.
ED HUSIC, MINISTER FOR INDUSTRY AND SCIENCE: Kalimera, ti kaneis.
PATRICIA KARVELAS: Beautifully done.
ED HUSIC: Do you like it?
PATRICIA KARVELAS: Yes, I like it.
ED HUSIC: If you grow up with Cypriot Greeks, you’ve got to pick something up.
PATRICIA KARVELAS: Kalimera to you, too, and all of our listeners who have that background will be very happy about this.
How can the government force gas producers to stop behaving like this?
ED HUSIC: A number of things: one is I think we have to put into sharp focus what is going on right now and how what we are experiencing just doesn’t line up with what a lot of people would imagine to be the case, which is that we are a country with a lot of reserves in gas where we think that it should be available for the use of – use by businesses and households, and to use that experience to shape a variety of responses as has been outlined in the ACCC report that came out this week.
And that’s the other element, too – having the ACCC look at what’s going on and come to the conclusion, extraordinarily, that we look to potentially have a shortfall in gas supply next year, which is just nuts when you think about the fact that we have so much of this resource, and it should be made available and it’s not. So, strengthening the trigger, changing and renegotiating the heads of agreement and putting sharp focus on the behaviour of gas producers is really important.
PATRICIA KARVELAS: The Minister for Resources says she’s prepared to trigger the Australian domestic security mechanism. Would that help manufacturers at all?
ED HUSIC: I think it wouldn’t on two counts – one is also around what happens on price. You know, we get a lot of talk, Patricia, that, you know, if we just put more supply into the local market that will solve everything. Well, if it’s still tethered and it’s still influenced by the international pricing of the gas producers, that is going to cause a problem. You’ve seen in just a few years – I mean, you mentioned it at the start in terms of the leap in price – but on average spot prices from just a few years ago being a shade under $8 and then going up to 44, that is a big hike.
And what I’ve certainly welcomed from the ACCC this week is effectively looking at this situation that we’ve got at the moment that’s simply untenable in terms of the way that we’ve got multinational companies extracting an Australian resource selling to international customers at a price that is hurting Australian industry and jobs. I mean, what the ACCC has done to the gas producers is try to shake them out of this pricing blood lust or frenzy that they’re in at the moment and get them to get real.
PATRICIA KARVELAS: Okay. Get real. And so, the threat happens? We’re going to perhaps, maybe pull the trigger? Although ultimately the preference appears to be by your government not to pull the trigger. Aren’t we in an ever – a never-ending cycle where they kind of behave themselves briefly and then it happens over and over again because that blood lust you refer to is unstoppable for companies like this that ultimately just want to make money?
ED HUSIC: I think that’s a really good point. And the gas producers can shape the outcome that will be workable for them and Australian industry, and they can avoid a situation where we do this. But I do think we’re getting to a point where we are going to have to take hard action in activating the trigger and reforming it in a way that allows us to activate it on the basis of price if they don’t come to the table quite frankly.
And I think we can’t have a situation where we just continually, you know, feel like we have to go hard on these issues without any backup. I think we will get to that point if the gas producers don’t see sense.
In one way, Patricia, I do understand why some of the pricing has been the way it’s been at one level, because of the fact that they’ve had these market conditions in a way that they haven’t experienced for a while. But, you know, there is always a moment to pause for thought and consideration. And the other weird thing is when people have been going through shortages through a cold winter and these companies clearly are to blame and are responsible for this pricing situation, you know, what strikes me as odd is that in a few months’ time they’ll no doubt be dusting off the PR campaigns to show that they are a part of the community and that they make themselves look warm and fuzzy and that they’re all into corporate social responsibility.
Really, they get measured when the times are tough – what did you do for Australia when the times were tough, when the resource that rightly Australians expect is theirs and should be available in large quantity to meet the needs of households and businesses?
PATRICIA KARVELAS: So, have they lost their social licence, and what should happen?
ED HUSIC: I’ve been concerned about that. I have been concerned that they’ve ignored their social licence and I think that that is a – you know, would be a poor reflection on them. And if we had to activate a legislative response to deal with this situation, then it will show you how far they’ve slipped.
PATRICIA KARVELAS: But you’re saying that it looks like you will have to because we’re in this constant ongoing cycle where they continue to behave this way even after brief periods of, you know, behavioural management?
ED HUSIC: Yeah. Well, I am concerned that that’s the situation we’re getting to. But I haven’t lost entire hope. Again, it is up to those companies to see sense. And, as I said a few moments ago, at the sake of repetition, the ACCC report has given them a moment of clarity. So, I think instead of – I don’t think they necessarily answered that report very well. I noticed in the Financial Review yesterday they all mounted a – or sort of formed a pushback against the ACCC.
The ACCC is a very conservative body. It does consider these things. It doesn’t rush to judgement. But if it notices that there’s concentration in the market, that there’s not been a following to the spirit of the heads of agreement and that there is going to be a shortfall based on what they have been able to determine and measure from all the resources that they have, that is a serious thing that really should prompt the – those gas firms to think again.
PATRICIA KARVELAS: Are you convinced that we need a price trigger? Because even if this issue of supply is resolved, it doesn’t deal with the fundamental issue of price.
ED HUSIC: Look from my personal perspective yes, because I think that these conditions are going to last for a while. They’re largely being shaped by international events, notably Russia’s, you know, improper and illegal invasion of the Ukraine. And that’s obviously seen some other behaviour occur, for example, what they’re doing in cutting off gas supply to Europe as well and the way that the Russians have progressively done that. So, I think there will be a demand for our gas, and particularly as the northern hemisphere heads towards its winter, which is hard to conceive or think about now given the weather conditions that they’ve had to endure. But they will think ahead. They will have to get access to supply, and they will get prices that – or they will shape prices in a way that I think it will continue for quite some time looking at current conditions. And we do need to be prepared for that as a country – as Australia, I mean.
PATRICIA KARVELAS: There are media reports that at least one ASX listed company is facing closure because they can’t afford their gas bills. How widespread is this?
ED HUSIC: I’ve had a lot of anecdotal, you know, sort of examples provided about what’s happened. And I have to express – you know, a lot of people feel a deep gratitude for a lot of manufacturers who’ve worn these costs hoping that there’d be some moderation. And they’ve done so to hold on to jobs and to also ensure that they can keep production going at the levels that they’ve got at the moment. They have done a mighty service for regional communities and outer suburban areas, these manufacturers that have done the right thing.
But, you know, they also have to account to their own owners and shareholders and also have to ensure that they can run viably. So, I have had manufacturers say in different parts of the country that they are under enormous pressure and that they are getting to a point where they have to in a concrete way consider what they do on jobs. And if we get to that point, that will be – that will be, quite frankly, an outrageous situation given how much of this Australian resource we have and that it's not a lack of the resource, it’s not an issue of supply, it’s not a cost of extracting that supply; it is the way that the market’s behaving. And it’s something that I think we can and should force a change in.
PATRICIA KARVELAS: Do you believe Australia needs to open up new gas fields in the Northern Territory and Queensland?
ED HUSIC: So, look, my view is that, you know, where we’ve got supply at the moment and the way – if it can meet existing need, that’s great. If we do have – and we obviously had a situation where we do need to reform the market and there will be some need for gas into the immediate future – then if those propositions are, like, either environmentally/economically viable, then they will go through.
But let me say this: I know there’s a lot of talk around gas and what might happen and the fact that we need to reduce the amount of use of gas at the moment. A lot of industry, Patricia, that I talk with are thinking about the future. They are thinking about what they need in terms of an energy source. But bear in mind, too, there are sectors of industry that need this as a feedstock in their proximity process – notably in plastics and chemicals. So, some of the technologies that are available, for example, hydrogen, they do hold a prospect of being able to meet the energy needs of manufacturers. But there’s still going to be some need for gas supply as a feedstock. And so, we do have to, you know, take that into account.
But the other thing, too, that I note is that a lot of the manufacturers, the investors and the people that own them are thinking a lot about what they can do to decarbonise, and there is an expectation that industry will shift. So, I’m confident that the impact of both – you know, investor expectation along with the development of technology – will change the profile of gas use down the track.
PATRICIA KARVELAS: The Opposition Leader Peter Dutton wants to restart a debate in Australia around nuclear power. Is that a debate we should be having?
ED HUSIC: It’s a debate that they weren’t prepared to have when they were in government. It was a debate that they couldn’t give any detail to inform the public about what exactly they wanted to do. And now that they’re no care, no responsibility in opposition, they want to be able to lean towards one of the most expensive forms of power that will take too long to come online. I mean, I just think it defies logic to do this, and it’s done more to satisfy elements of their party room as opposed to being a genuine, serious, fair dinkum approach to meeting future energy needs.
PATRICIA KARVELAS: And they won’t be voting for your 43 per cent reduction in emissions, but they have said that they will be doing more to reduce – to basically have a more ambitious target by the next election. Does that sort of seek to neutralise the issue?
ED HUSIC: I think in their part they just – I mean, it demonstrates that in that party room they haven’t really been able to cotton on to the shift that’s happened in the public, the expectation particularly from their own voters, that they think that there could be a better way forward on addressing climate change, reducing additions – emissions, I should say, through the process and getting real on a target to guide that. Because those targets are important as a signal-setter to industry and also others that think deeply in the science and research community about how to commercialise technology in a way that assists that effort.
And I think if that is the case, then, you know, really, what we’re seeing from the Coalition on emissions targets is a nudge, you know – it’s a nudge of the target rather than a fair dinkum move to, one, respond to what public expectation is and, two, have something that’s legitimate and sustainable on the table from them.
PATRICIA KARVELAS: Just finally before I let you go, Minister, there is now very much a debate around the referendum to change the constitution to entrench an Indigenous Voice to Parliament in the constitution. Former Prime Minister Tony Abbott has written a pretty extraordinary op ed. He says the Voice to Parliament drips with entrenching separatism, is an atonement for dispossession and criticises the growing reference to First Nations as if the 700 clans – this is a direct quote, listeners – “as if the 700 clans of pre-settlement Australia resembled modern states”. That’s clearly some of the lines we will hear in a potential no campaign. Your government’s pushing ahead with this. What do you make of these arguments?
ED HUSIC: Okay, so I’d respond in a number of ways. One is we are genuine in our desire as a government to work with – across communities. This is a chance for us to move as one on this issue about establishing a Voice in the Parliament for Aboriginal and Torres Strait Islanders whose voice has been ignored by governments for over 120 years. And we haven’t really done a great job. So, for those – that current crop of Coalition politicians that exist in the federal parliament, we do want to have that spirit of working together.
But let me say this: if Tony Abbott’s view on the voice is what that current crop of Coalition MPs is gravitating towards it tells me two things. One is that the hard right is calling the shots. That’s the part of the Liberal Party that fights hard, lies easy. And two, that the Coalition hasn’t learned anything from their loss. And by that, I mean in particular that they expect that Australian politics is not going to be a rolling brawl but, rather, that people will work together for the common good.
And I just want to emphasise this: you know, the Prime Minister said on the weekend – he was very clear – you know, he said that the voice is not about a third chamber. It’s not about a rolling veto. It is not about a blank cheque. And Tony Abbott read that – presumably – and ignored it. And he’s putting forward these points in a way that – well, you know, it just goes to show you how far the semi-mighty have fallen further, because in Tony Abbott’s case I think one of the few things that people would have granted him is a few points on the fact that he would have engaged in this issue and genuinely tried to work with First Nations people, and it seems like that was just an act rather than substance.
PATRICIA KARVELAS: Just one question, though. He’s using an argument – and I’ve heard it already sort of from others – that it will divide Australians on the basis of race. I’ve had Coalition MPs say to me privately should there be a Greek body, for instance – I’m Greek-Australian, or in your case. What do you say to that, because you represent multicultural communities, and that line might be used in some of those communities?
ED HUSIC: I – well, that is a potent warning, what you’ve just indicated. I’d be very concerned about that. But I also represent, if I may say, one of the largest urban based First Nations communities in the country. And I don’t think it’s – I think it is highly respectful to indicate that the oldest continuous civilisation on the planet that exists on our continent, that it does have a voice within the Parliament on matters affecting Aboriginal and Torres Strait Islanders. Again, it’s not about a veto. It’s not about giving a blank cheque. It is about extending, one, respect and acknowledgement that our First Nations people – the people that here first for some period of time – do have the right to have that say. And I think that is important.
In terms of the way in which the Parliament reflects the changing face of the country, I think we’re seeing more and more of that. This is one of the most diverse Parliaments that exists. We can still go more and reflect the Australian community better, but there are clearly some moves. We should celebrate those moves, and those voices do get represented in the Parliament. But Aboriginal and Torres Strait Islanders, I think this is an important measure to extend that respect and show that we’ve moved as one as a country.
PATRICIA KARVELAS: Thank you so much for joining us this morning, Minister.
ED HUSIC: Thanks, Patricia.