Interview with Patricia Karvelas, ABC RN Breakfast
PATRICIA KARVELAS: Russia is wielding its power, not just on the battlefield, but with it its vast energy resources. Its decision to cut Europe off from its gas stocks has millions fearing they won’t be able to afford to heat their homes in winter. Now, here in Australia, gas is in abundance but that hasn’t stopped your bills going up and companies reliant on gas being forced to pay exorbitant prices. Now, the Government has struck a deal with gas companies to keep more of our energy at home. That was announced yesterday afternoon. Ed Husic is the Minister for Industry and Science and our guest this morning. Ed Husic, welcome.
ED HUSIC: Good morning.
PATRICIA KARVELAS: For months you’ve been telling gas producers to supply affordable energy to Australian companies, particularly industry. This deal won’t bring down the cost to what it was before the war in Ukraine. Do you think that’s good enough?
ED HUSIC: I think what the heads of agreement does is put in place two important – or there two important features with it. One, the additional supply is really important. The ACCC flagged that there would be a shortfall. If that did continue or if that did come about, you would see what that would do to prices and it wouldn’t be pretty. So, providing the additional supply is really important there. And the other thing is, two, there is a protection in place to ensure the prices don’t go above export prices, because no one thinks that we should be paying more than that. And now, the next part of this job is to ensure that prices come down for manufacturers and for households.
PATRICIA KARVELAS: Manufacturers wanted access to lower priced gas through this deal, but that hasn’t specifically happened. The price trigger isn’t there; why not?
ED HUSIC: Because I think this work needs to continue. The biggest priority was to ensure that we had supply and that we addressed the concerns raised by the recent ACCC report. So, that’s happened, and we’ve got over 150 petajoules of additional supply in there. But, really, now, it does come back to the focus on price, and the focus on price is going to be critical not just for ensuring that households can have access to gas at prices that they’re accustomed to, but we’ve got a big job. We’ve been elected with a clear focus on revitalising manufacturing, and there is a national interest in doing that, not just in terms of the jobs it creates and the way it helps firms. There’s also a geopolitical interest in it as well where post pandemic and where we’re at right now, we’re trying to ensure that we boost local sufficiency, self sufficiency, that we can address supply chain shortages and that we can ensure that we’re not dependent on just one or two markets for all our products. And so, the gas producers have got a very important role to play in meeting that national interest and that’s certainly what I expressed to them privately and what I’m expressing publicly through your show right now.
PATRICIA KARVELAS: So, on that language you’ve used – “work has begun” – so you’re saying that this is the beginning of the work, this deal? What more can we expect?
ED HUSIC: Well, absolutely. I think there’s also work to look at the Code of Conduct and what can be done to strengthen that to give more power in terms of the way in which, or to improve the way in which contracts are negotiated. We do and we can not only improve on supply, which has happened as a result of this agreement, but price is a big thing. And what we’re looking at is the uncontracted gas that exists, so we honour the contracts that are there already. There is about 20 per cent of supply that’s uncontracted – and that supply coming back into domestic markets should be priced in a way that ensures that the costs of production are covered, a reasonable rate of return is ensured, but we also have prices flowing back for business and for households in a way that are not as exorbitant as what we’ve seen on the world stage.
PATRICIA KARVELAS: You spoke tough to the gas companies and you told the papers “I will back local manufacturers over multinational greed every day of the week.”
ED HUSIC: Mm mm.
PATRICIA KARVELAS: But aren’t you still allowing essentially multinational gas companies to continue making enormous profits while domestic manufacturers struggle to keep going to pay the bills? Yes, they’ll have more supply guaranteed in the country, but the prices they’re going to be paying are still incredibly difficult to maintain their business case.
ED HUSIC: And that’s certainly the point that I’ve been putting to gas companies as well, and I just think that they have got to recognise that the pricing that they do does have an impact. And my big concern is that you’ve got one sector of the economy, in terms of what’s happening with the work of the gas producers, putting impact on another, in terms of manufacturing. And as I said, those gas companies, as everyone’s aware, we took a very strong position on revitalising manufacturing. We put a number of things in place that we want to do to help that and not the least of which being the National Reconstruction Fund that we’re working to introduce which will focus on a range of different industry sectors and boost manufacturing capability. So, we’ve got that as well. But the gas producers have got to recognise that they have a role to play in meeting the national interest and not working against it.
PATRICIA KARVELAS: Is there any evidence that they’ve got that now?
ED HUSIC: That they’ve got that message?
PATRICIA KARVELAS: Yeah.
ED HUSIC: Well, I think this is a work in progress. I think the work that we’re doing on manufacturing and building that capability has a long-term interest to the nation and we just can’t have that pressure being exerted through prices the way that they’ve gone, and there is room to move. If you look at, for example, the amount of gas that’s used for the purpose of energy generation, – roughly 390 petajoules – manufacturers use about 400, just a shade over 400 petajoules, and households a shade under 200, and we export 4,300 petajoules. So, there is room there to supply and there is definitely room there to supply at prices for an Australian resource that meet the needs of Australian manufacturers and households.
PATRICIA KARVELAS: Yesterday, your colleague Madeleine King, the Resources Minister, said Australia will always be a trusted and reliable trading partner and a safe place to invest. So, is it more important that overseas investors aren’t spooked even if it means companies here have to struggle?
ED HUSIC: I’m absolutely firmly of the view that when you enter into contracts, you honour them, and I think that’s across the board. So I think that is an important proposition to observe, and certainly anything that’s contracted, that happens. I mean, it is a bit irritating that some overseas contracts, given the time at which they were signed, will offer contract prices that are lower than what contract prices will be struck at the moment, so that is an irritant and it has to be dealt with. But, certainly, those contracts have been struck. They’ve got to be honoured. We’ve got a great reputation. That does help our economy and it helps also in terms of the business environment here and it makes us an attractive place to work with.
PATRICIA KARVELAS: Energy expert Tony Wood from the Grattan Institute said he doesn’t think gas will ever get back to that $10 a gigajoule and that could lead to some manufacturers closing. Given you’re the Industry Minister, is there still the risk now that manufacturers will close?
ED HUSIC: Well, I’m very concerned about that. A lot of us are concerned about the prospect of that type of pressure being exerted. You know, it’s a bold word, or a bold move to use the term “never” because it was only a couple of years ago that, particularly in terms of some spot prices, that it was below $6, and so I’d be very careful about making such firm predictions. Things do change and I think it is important that we continue to focus on lowering the input costs for business and particularly manufacturers and also ease the pressure on households as well.
PATRICIA KARVELAS: Just to the story that’s in your portfolio as Minister for Science, the ABC has a story about allegations of bullying, homophobia and sexual harassment for Australians sent to work in Antarctica. They were detailed in a report for the Australian Antarctic Division. Is that something that you will investigate?
ED HUSIC: It absolutely is concerning. Look, the Minister for the Environment, Tanya Plibersek, has released a summary of the Nash report that looked into those issues, the culture and behaviour at the Australian Antarctic Division. And from what I’m advised, Professor Nash spoke to staff who’d experienced that harassment, and it’s shocking. It’s upsetting and shocking to see what’s been detailed in the report – just not on in any workplace – and certainly action will be taken.
PATRICIA KARVELAS: Now, it’s totally not in your portfolio but you’re a Cabinet Minister and today National Cabinet is meeting – –
ED HUSIC: [Laughs.]
PATRICIA KARVELAS: I have to ask. I have to ask because it’s such – –
ED HUSIC: I like the link, link, link.
PATRICIA KARVELAS: Yeah, well, I did declare it wasn’t in your portfolio, but you are a Cabinet Minister and this discussion about not having any isolation period at all for COVID 19 is being discussed.
ED HUSIC: Mm mm.
PATRICIA KARVELAS: You’re also the Minister for Science and there is a link there, too, because the science says that this virus will spread a lot more if you end isolation periods. Are you comfortable with us getting to what Dominic Perrottet says is a period where people should just make their own judgements, personal responsibility should be prime, and that’s it?
ED HUSIC: Well, I respect interviewer skill. That was very impressive, stitching all that together, but if you don’t mind, I might leave National Cabinet to the Prime Minister and the Health Minister will be in a position to respond to your very good points, so I might, if you don’t mind give my leave.
PATRICIA KARVELAS: But science – science is important, right?
ED HUSIC: In all seriousness, all these factors get taken into account in the National Cabinet process and, to be frank with you, it’s not really my place given that the Prime Minister represents the Australian Government within that and I think we’ll just let that run its course.
PATRICIA KARVELAS: Okay, fair enough. Minister, thanks for joining us this morning.
ED HUSIC: Thank you.
PATRICIA KARVELAS: Ed Husic is the Minister for Industry and Science, as I mentioned.