Interview with Tom Connell, Sky News

Tom Connell
Topics included inflation, National Reconstruction Fund, gas prices and supply.

TOM CONNELL: Welcome back. We'll hear from the Treasurer in a bit more than an hour about the economic outlook. We've been telling you this morning, of course, we know we're getting braced for higher interest rates, inflation could go even higher than 6.1 per cent, and not much the government can do seemingly. One of his cabinet colleagues, Industry Minister Ed Husic is here in the studio with me to, not sort of break all the news, we'll see what you want you tell us, but it's an interesting message isn't it? People are being told tough times are ahead. The government's saying we can't do a lot about it. 

ED HUSIC, MINISTER FOR INDUSTRY AND SCIENCE: I don't think we're saying that. I think we recognise, we want to be honest with people about the challenges we inherited in terms of rising interest rates, the way the inflation is going, stagnant wages, massive public debt. We've got to — you know, we've got to can acknowledge those are there, but we've also got to deal with them, and we're determined to deal with them. And while things will get tougher in the short term, we do see a pathway out, and some of the things that we want to do to address that will ensure that that happens. 

TOM CONNELL: I guess my point is the short-term pain you can't do much about. Rates are going up. 

ED HUSIC: Correct. 

TOM CONNELL: Inflation might have peaked, it might peak soon, but it's going to stay well above wages for a while, months, maybe longer than that. There's not much the government can do about that. 

ED HUSIC: Well you’ve seen central banks across the globe really start to move, like they're raising interest rates for the key mission, which is to not have expectations that inflation will be big and permanent. So, they are tackling — you've seen in the last 24 hours the US Federal Reserve has done the same, I think they've delivered a 0.75 per cent increase in interest rates over there. So, there is that concern, and it is an important economic objective. Having broken the back of inflation in years past, it is really important that that happen. And once we do that, then we also have — we're very determined to see real wages grow. We think that they've been stagnant for too long and we think that ordinary workers should share in the success of the economy through their pay packets. 

TOM CONNELL: We'll see what happens at the summit in September that looks at some of the issues you can actually do something about. 

ED HUSIC: Indeed. 

TOM CONNELL: What about avoiding a recession? Are you confident we won't go into recession? 

ED HUSIC: Well, I think — the way that we're operating, we don't believe that we should go into recession. We think that a number of things that we're doing, particularly investing in the longer-term economic strength of the country through some of the things in my own portfolio, be it through the National Reconstruction Fund, using government procurement and contracts to help strengthen local industry, create jobs and economic opportunity, we think through some of those things that we can build a stronger economy. But obviously, that'll be work that is ongoing and will take some time.

TOM CONNELL: You've inherited a lot of the conditions, but May was the election. A recession is being tipped as a possibility, if it were to happen, next year. Is that enough time for Labor to have said, "Yes, whatever happens here, we own this. We can control this", or would you blame the other mob if it happened? 

ED HUSIC: I don't — look, I think, as I have said, we've tried to be upfront and direct with Australians about the state of the economy as it is at the moment. We've said that we're determined to make sure that we can address and tackle some of those things. We want to put in the investments to build the economy longer term. I don't think it's helpful to be doom and glooming all the way through. We've got a sense — 

TOM CONNELL: I'm not trying to; I'm just asking if you will own — 

ED HUSIC: We've got a sense that we can — 

TOM CONNELL: — next year’s economic conditions? 

ED HUSIC: We've got a sense that we can build a stronger economy, a fairer economy and that we want to invest in those steps right now to make that a reality. 

TOM CONNELL: But would you own whatever economic conditions come along for Australia next year? 

ED HUSIC: I think that people appreciate that a government that has been in place for, what, less than nine weeks can't basically be forced to accept nine years of neglect and economic [indistinct].

TOM CONNELL: I'm not saying whatever's happening today you're responsible for; I'm sort of asking if it is — 

ED HUSIC: There are a few things that have an overhang. We're not saying that, you know, that's going to stay that way forever and a day. We're determined to make sure that we get better economic outcomes; we're going to work on that. But, you know, let's just deal with what we've got right now, rather than trying to make assumptions about: well, if this happens and that happens, will you have this reaction or this response? 

TOM CONNELL: Well regardless of what happens, though, when does the overhang end, I guess? 

ED HUSIC: Let's see. We've got a big job ahead of us and we've already started, hit the ground running and we're going to keep working to make sure — as I said, like, I think we can be a country that makes things, we can improve our economic fortunes. We should invest in that in a range of ways. You've mentioned the Jobs and Skills Summit. That's investing in the human capital and the people side. Having that National Reconstruction Fund is a massive co-investment fund to rebuild industrial and economic capacity for the country. These are big things, and they will play out longer term for the benefit of the country. 

TOM CONNELL: Gas prices are one of the things driving inflation. 

ED HUSIC: Yeah. 

TOM CONNELL: We have this situation in Australia where we have a lot of gas. We export a lot. We don't earn much money on those exports, and we don't have cheap gas prices. Is something broken there? 

ED HUSIC: I think there's a real issue where we've got multinational firms extracting an Australian resource, selling to an international market at prices that are really impacting on local industry and manufacturing, and I speak to a lot of manufacturers who are concerned by this, and I've made my views known to gas companies that we deserve a better deal on an Australian resource and we just can't — I understand that they've got great condition, market conditions, internationally at the moment, and even saying that is, to be frank with you, a bit offensive, because what's driving it is obviously a lot of the instability and the terrible actions that are occurring in the Ukraine, and a lot of other countries trying to get access to gas supply. But, really, for both businesses and households that look at how much gas we've got, we have got to get a better deal. We are working on that. 

TOM CONNELL: Working how, by forcing them or asking them? 

ED HUSIC: Well, I think there's a combination of things. I understand that the gas companies now have taken stock of their uncontracted supply and making that more available and at better prices for local industry. 

TOM CONNELL: They all, sort of, they just keep talking about exploration and open more up and then we'll give you more — Victoria’s decided.

ED HUSIC: I think there's would things at play here. One is there's a lot of supply that's currently available that they should be making available at a better price for manufacturers. And the other thing is longer-term what happens on exploration, we'll wait and see. There is stuff that's already been flagged either in Narrabri or Beetaloo, but there are avenues to supply that are already available. But, again, if you're flogging it off in the international market at these incredible prices, I mean, gas at the moment is about $44 a gigajoule and in 2019 21, it was about seven and a half bucks. Like, that's a big leap. 

TOM CONNELL: And so what hasn't leaped is how much we get left — I should say, is how much we get out of it. The windfall tax on gas according to even the Australian government's previous reports is ill-designed. Without going into the complications of how the uplift tax rate works and so on, it's designed for oil, not gas. Should that be looked at? You could take the revenue and then give relief to business and households. 

ED HUSIC: I think the PM's been pretty clear that we're not looking at tax as a way to resolve this issue. What we are looking at is that in particular renegotiating the heads of agreement between the gas companies and users. That will be an important way forward. That's got to happen, but really the gas companies have got to be a lot more fair dinkum, providing supply at affordable prices. 

TOM CONNELL: So, would they be more fair dinkum, though, if you were willing to look at redesigning what is a tax that isn't working as is should? 

ED HUSIC: I will put it this way — again the PM's — 

TOM CONNELL: It wouldn't be a new tax; it's redesigning it. 

ED HUSIC: The PM's been very clear that tax is not part of the mix of answers that we've put on the table. But, you know, the issue is if nothing changes, sometimes what isn't on the table does seem to creep back on, so, you know, the gas companies can be part of a solution that delivers for everyone. Understand they've got good market conditions, but it can't be at the expense of Australian industry and certainly not at the expense of Australian households. 

TOM CONNELL: So, redesigning that tax, for example, it's not on the table now, but it's not off forever? 

ED HUSIC: It's not on the table. Let's see if we can get some other solutions working. Let's get cracking on those. 

TOM CONNELL: But it's down there — 

ED HUSIC: Have faith — 

TOM CONNELL: — and you could always throw it back on the table. 

ED HUSIC: Have faith, Tommy. Have faith on the floor. 

TOM CONNELL: I'd just like to know where these indications and what they mean. It's sitting here — 

ED HUSIC: I'm all about giving you that faith and security. But it's — let's get through these other solutions first, give them a crack, I reckon. 

TOM CONNELL: Minister, thanks for your time.