NADIA MITSOPOULOS: Well, you’re probably aware that for around 20 years now WA has had a domestic gas reservation scheme, which means the big gas companies have to set aside 15 per cent of whatever they produce for the local market. Well, at the end of last year the federal government said it would bring in a similar scheme at a national level. This will start from July next year. But until now we haven’t had any real detail about how it would affect WA. We now have a draft framework. It was published yesterday. We’ve been having a look at it, and we have some questions. So to talk you through it is the federal Resources Minister, Madeleine King, who is, of course, a proud West Australian, big supporter of the resource industry. Minister, good morning.

MINISTER MADELEINE KING: Good morning, Nadia. How are you going?

NADIA MITSOPOULOS: Yeah, I’m well thank you. Now, will this new scheme apply in WA as well as the east coast?

MINISTER MADELEINE KING: The intention is for it to apply nationally. And there are important reasons for that. Firstly, as a federal government, our laws to be constitutionally valid have to take in the whole country. But there’s no doubt that the issues with the whole federal gas market are principally in the east coast. So what we see in WA is, as you say, a gas reservation scheme introduced some 20 years ago, and I might add at the time it was very controversial and the industry did not like it. What they have come to find – and we all have come to find – is that it has generated some of the social licence and more widespread community support for the industry because people in Western Australia don’t have to worry as much as some people in the east coast about the supply of gas to their business, to their homes or to their industry. So it’s a really important scheme. It’s very different from the current east coast market. And as I’ve said to the Premier and to other players in the industry, and right from the start we’ve been very clear about this, I might add, that the WA scheme will, of course, be taken into account and there’ll be no adverse effects from the federal scheme. But it’s important we have a national scheme to capture everything.

NADIA MITSOPOULOS: Okay. So then under your scheme, 20 per cent has to be set aside for domestic use, but in WA it’s only 15 per cent. So what does that mean for WA? Is it 15 per cent or 20 per cent?

MINISTER MADELEINE KING: Yeah, no, it’s a little bit different. I don’t want to over complicate matters, but it’s the equivalent of 20 per cent of LNG exports. Which actually when you go through a process is the equivalent of 16 per cent of overall production. So that gets us much closer to the 15 per cent in Western Australia. But as we have said and as the discussion paper sets out and we’ve set out, we are building this scheme to take account of the differences across jurisdictions. And it’s about producing a modest oversupply. And, to be honest, a 20 per cent would be too much of a supply for Western Australia as it stands. So we would moderate that for Western Australia. But in future that may be different, and it’s a good thing –

NADIA MITSOPOULOS: What do you mean moderate? Moderate it how?

MINISTER MADELEINE KING: Well, through the export approvals system that we will implement across the country. So every LNG facility around the country – there’s about nine of them – will have to have an export approval to export gas. And to get that export approval they have to show and demonstrate that they are providing gas to the domestic market. So for those producers in Western Australia, they’re subject to a scheme already. So that’s very much simplified. And the quantity they’re providing meets the needs of Western Australia.

NADIA MITSOPOULOS: Okay, so the way you’ve done it – just to be clear – in WA, the 15 per cent is calculated on the total production. The federal scheme is 20 per cent of exports, so that, you were saying, goes to 16 per cent. So it’s pretty – so was that deliberately designed that way to appease WA?

MINISTER MADELEINE KING: No, it was really – it’s really – the whole – the need for a gas reservation is for the need in the east coast. So the reason we are having to do it is because the east coast jurisdictions were not able to come up with it themselves and so there has to be a federal overlay, whereas Western Australia came up with it itself. I’ve got to say, the figure itself is really arrived at because of the needs on the east coast. Obviously they’ve got more people, a lot more consumption in different places, but also a lot more challenges in transport of gas compared to Western Australia. We have that long-term visionary infrastructure of the Dampier to Bunbury pipeline. So that makes a difference, too, in what can be supplied. And all these things will get taken into account as we go through this – you know, what I think and I think is a really positive thing – open consultation with industry and, indeed, the state and territory governments.

NADIA MITSOPOULOS: All right. Now, the WA scheme allows gas companies to meet their obligations over the life of a project but the national scheme will make it an annual requirement. So why do you think an annual obligation is a better system?

MINISTER MADELEINE KING: It is a – given that the reservation scheme is coming in many years after the commencement of those exports, we need to make it kind of work quickly – more quickly than is needed in WA because of the planning that’s been there for 20 years and a lot of the reservation scheme was brought in before some of the really more modern new export projects. So it just reflects the current needs in the east coast to ensure gas supply as well as the fact that they have been exporting for a number of years without any kind of reservation scheme. But I also want to be clear –

NADIA MITSOPOULOS: But then what does that mean for WA companies? Because will this now force companies operating in WA to provide that gas every year? Because at the moment it’s over the life of the project?

MINISTER MADELEINE KING: Yes, absolutely. And we’ll go through –

NADIA MITSOPOULOS: Sorry, sorry, just to be clear – they will have to provide that every year, not the life of the project?

MINISTER MADELEINE KING: So for the export approvals we will go through – actually, for the design of the system in the first place, we’re going to go through this consultation process. We know there are differences in the market and the existing reservation scheme, as you have pointed out, around the life of project versus annually. So these are things we resolve now with industries on the west coast to make sure that this reservation scheme works for Western Australia. We do not want to and we have no intention of adversely affecting the current reservation scheme on the supply of gas to Western Australians and Western Australian businesses.

NADIA MITSOPOULOS: But it would improve –

MINISTER MADELEINE KING: So we will do that work now.

NADIA MITSOPOULOS: But it would improve the supply of gas.

MINISTER MADELEINE KING: Well, it might oversupply the gas. So there’s pros and cons of any scheme – no doubt about it. And that’s what we have to work through now with the industry. And that’s why we’ve put out a discussion paper. There are options available to government. We could say well we think it works and just legislate and do it. I don’t think that’s the right way to go. That’s why we’ve got this discussion paper out, so we can work with industry over a good amount of time to set in an enduring national framework for domestic gas reservations to permit the ongoing export to the region, which has been of such enormous importance for Australia’s prosperity but also for that of the region.

NADIA MITSOPOULOS: Madeleine King is my guest this morning, federal Resources Minister and member for Brand. And I’ve got to say, Minister, from what we’re hearing, the major industrial users of gas here in WA would prefer to the certainty of annual supply.

MINISTER MADELEINE KING: And I’ve no doubt – we will engage with them as well. And I’ve no doubt we’ll get a range of views, but we will work with all sides of this complex coin, I suppose, to come to a final design that that works best in this jurisdiction.

NADIA MITSOPOULOS: But it’s also clear from what you’re saying that it will affect existing projects where the contracts are already in place?

MINISTER MADELEINE KING: Well, it won’t affect the contracts. Obviously an export approval is new thing to do for them that they might not have had to do – that they haven’t had to do before. So that’s the change. But our intention – and the principle of the overall scheme is to not, you know, force any change upon export contracts. We don’t want to do that, and we won’t do that, indeed. So it’s how we manage accommodating the differences of WA – they’re really important differences – indeed, the progressive differences that have allowed for a prosperous economy because of the, you know, acceptance of the use of gas in our economy in with a federal reservation scheme.

NADIA MITSOPOULOS: 17 minutes past 10, Madeleine King, federal Resources Minister, is my guest this morning. I’ll wrap up, just a couple of quick questions.

MINISTER MADELEINE KING: Sure.

NADIA MITSOPOULOS: The domestic gas policy in WA is just a policy and we know that the companies haven't actually been providing 15 per cent of their gas at this point. So what happens? Will yours be legislated to force that? What happens if they don’t supply what you ask?

MINISTER MADELEINE KING: Well, we will legislate it. We need to. And, again, that’s what we’re going through in this design process. And I’ve seen the commentary around, you know, that it promotes more questions, but that’s the idea, is that we bring out all these questions and then find the answers and build the thing, right, make the design. We have contemplated a release valve because an oversupply can be as risky as an undersupply of gas. So, you know, it’s quite a balance we’ve got to find here, but we’re determined to do it and to do it well. Because what we really want is an enduring system, Nadia, so we don’t have to keep coming back and changing this. And what has happened over the years is – and this is more for the east coast – is this ad hoc series of legislation and policies and so forth that just frustrate both government and the LNG producers as well as the domestic gas producers on the east coast. And we want to kind of bring that to an end and have a more coherent, enduring gas market. And we know it’s going to be complex to do, but the ask is simple – that there should be enough gas at an affordable price for Australian consumers and businesses.

NADIA MITSOPOULOS: Madeleine King, on another matter, I mentioned soon your thoughts on the potential for a defence manufacturing hub in Collie, which could involve manufacturing weapons for allied countries. Would the government support something like this?

MINISTER MADELEINE KING: Well, it really is a matter, of course, for Western Australia at this point. And I see it’s at the expression of interest stage at the moment. But what I would say is Western Australia is at the heart of the AUKUS program and Australia’s national defence. And I think the Western Australian government, you know, stepping up and looking into how it can participate more widely in the AUKUS project and our national defence is an entirely positive thing. So I congratulate them on this initiative.

NADIA MITSOPOULOS: And what about Four Corners last night explaining how BHP has been walking back its commitment to renewable energy even those it’s promised to meet net zero by 2050? Not setting a good example, is it?

MINISTER MADELEINE KING: Well, BHP have set those goals and they still, as far as I’m aware, are determined to meet them. I would note that they have an extraordinary investment in copper in the Olympic Dam in South Australia, and we all know that’s essential for the energy transition. You know, the safeguard mechanism is there to bring down emissions. BHP have a number of facilities that are subject to that and they’re meeting their obligations. I think what I find pretty interesting is how one company might seek to use government policy to gain against its competitors when they’ve each made different commercial decisions on how they get to net zero, which is the common goal. So I find that a bit concerning to me, but, you know, that’s, I guess, sometimes mining in WA, I suppose.

NADIA MITSOPOULOS: Some love it and some hate it. On that note, we’ll leave you, Madeleine King.

MINISTER MADELEINE KING: It’s the cornerstone of our prosperity, Nadia. So we should really appreciate it, I think.

NADIA MITSOPOULOS: You’ve been generous with your time; I know that federal parliament is on. Thank you so much for joining us. We do appreciate it.

MINISTER MADELEINE KING: No worries, Nadia. All the best. Go Freo.

NADIA MITSOPOULOS: Go Freo, absolutely, most importantly. Federal Resources Minister, she’s also the member for Brand, Madeleine King there speaking to me from Canberra.