PATRICIA KARVELAS: The Albanese Government has detailed its long‑awaited gas reservation plan today which says from July next year LNG exporters will be required to supply 20 per cent of their total exports into the domestic market. Now some gas producers have expressed concern it will crowd out smaller domestic producers or flood the market, a charge the Energy Minister, Chris Bowen, has denied. 

[Excerpt]

CHRIS BOWEN: It's a modest over supply, which we have carefully calibrated, we've consulted right across the board. We think those yearly, twice‑yearly warnings of gas shortages in one of the biggest gas producing countries in the world are a problem. We want to see them go away. This policy makes that go away. That's a good thing, not a bad thing. 

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PATRICIA KARVELAS: To unpack the policy I spoke to the Resources Minister, Madeleine King, a short time ago. Minister, you say this brings more domestic gas to the East Coast. How much gas, by what year and what's the dollar impact on household bills? 

MINISTER MADELEINE KING: Thanks, Patricia. Well, the domestic supply obligation we announced today as part of the Gas Reservation Scheme will commence on 1 July 2027. But in the meantime and starting today we'll commence detailed discussions in consultations with the industry, so we work out precisely how that operates. And from that we will develop those timelines. But they cannot be established right now. We have set the starting date from which we expect ‑ well, and we'll require indeed for LNG exporters to reserve that 20 per cent proportion of production for domestic users. And on the price question, because this Government is focused on ensuring that Australian consumers, whether they be households or businesses or manufacturing industries, they will be in the box seat in terms of a buyer's market, because LNG exporters will have to sell into that market as opposed to right now where they offer, simply offer. But they offer in good faith, and I wouldn't want to criticise that at all, that's just how the market has been operating over many years. But into the future, from 1 July, 2027, it will be a requirement to get an export approval, to get an approval to export LNG, to provide that percentage of gas into the domestic market. And that should not be underestimated what a significant change that is for the gas market, and I've no doubt not everyone will be happy with this approach, but it is an important change. And more importantly, it sets the gas market up for the long‑term and it sets Australian gas users up for the long‑term as well. 

PATRICIA KARVELAS: So Minister, will you release modelling on what the impacts on the prices consumers and manufacturers pay will be? 

MINISTER MADELEINE KING: Patricia, we have more work to do in developing the final structure of this policy, a really important announcement today on that rate, that 20 per cent of LNG export rates, enables us to work further into this process. As I have said, the really significant obligation this places on our export industry, LNG export industry, will make it a buyer's market and that is what puts the downward pressure on prices. 

PATRICIA KARVELAS: And do you expect that downward pressure to be significant? 

MINISTER MADELEINE KING: I do. I expect it to be significant. The Government knows people are under pressure on gas prices. And what we have seen over a number of years is a collection of policies that we have reformed and brought a lot of stability into the market, and indeed right now shielded consumers from some of the high international prices. But what we want to do, and what indeed we've been asked to do by the gas industry themselves, is to introduce long‑term policy settings so that there is more stability in the market, so there's more certainty for investment, investment in gas industry itself, but also in industrial manufacturing. These are two really important parts of our economy. So this is a long‑term policy, it's going to be a difficult and challenging policy for some, but for the Australian Government we believe we have hit the right balance in making sure the exporters are required to provide domestic gas for domestic uses into the Australian market starting from 1 July next year. 

PATRICIA KARVELAS: Some are concerned that the over supply will lead to a reduction in the incentive to develop new fields. What's your response to that? 

MINISTER MADELEINE KING: Well, I've no doubt there will be many concerns, and I might add we've been consulting with industry for a number of months now on this mechanism and this proposal, and we'll continue to do so as we develop the legislation that is required. We will work with them to address those concerns. With any significant change such as this there is always going to be issues that come up, and I expect we will work them through. 

PATRICIA KARVELAS: And when you say work them through, does that mean you are prepared, Minister, to make changes to this proposal, when you note people's concerns, is it you signalling that there's a big negotiation to happen now? 

MINISTER MADELEINE KING: No, there is no negotiation, there is consultation on the detail of the scheme itself. So the 20 per cent of LNG exports we have decided as a government to have as the rate that will be required from the domestic Gas Reservation Policy. And I would note that in Western Australia, and many people refer to this, that state introduced a Gas Reservation Policy, I think it was about in 2008, and they still have domestic only producers supplying into that market. The important work that will happen from today and following today's announcement is the detail around implementation. So there are some constraints in the system, and we've seen this from time to time when there has been gas supply issues in the past. And some of that is around the infrastructure, so of course we have to deal with that. Some of it is around access to new gas fields, say, that are still in the process of being developed say in the Northern Territory. So our objective in this is to make sure that Australian gas consumers, whether they be ordinary households, particularly in Victoria and ACT, which uses a lot of gas to heat their homes, but also right around the country, in businesses and industrial manufacturing, have access to enough affordable gas to keep them going and to keep them going really very well. 

PATRICIA KARVELAS: Minister, shortfalls are going to get bigger and bigger, so surely the 20 per cent figure of overall production won't continue to be fit for those changing conditions. How about if it's more than 20 per cent we need? 

MINISTER MADELEINE KING: The 20 per cent figure, we believe, based on the extensive work our departments have been doing, will address that supply and cause perhaps a modest over supply, which again is an important part of driving down prices. There's the supply and demand equation that everyone talks about a lot, having that supply does bring down price and that's what this percentage is aimed to do. 

PATRICIA KARVELAS: But 20 per cent forever? I mean the trajectory is going to shift on this, isn't it? How do you know that's the right rate for the future, when there are bigger shortfalls? 

MINISTER MADELEINE KING: The Government has done a lot of work on this, and we've done a lot of consultation already, and there is more to do. The figure we have arrived at, 20 per cent of LNG exports, we believe is the right figure that will see us through the predicted shortfalls, and in fact beyond that into the long‑term. What we know of course is in parts of the country and different parts of the consumption equation, gas use is declining, and that's appropriate. In other parts of the economy gas use is different, more intensive, and I think from other parts of my portfolio, such as processing of critical minerals, but also processing in advanced manufacturing. So it will be different. We believe this figure does the trick, so to speak. It will be really important and significant, and it's an obligation that's not to be underestimated on how significant it is to the LNG industry. 

PATRICIA KARVELAS: Minister, 2024 Future Gas Strategy basically talked about it aligning with net zero and that gas emissions must sharply decline, that's all in the policy there. What is your estimate with opening up new fields and these changes in terms of the impact it will have on our emissions? 

MINISTER MADELEINE KING: Well, emissions are governed through the Safeguard Mechanism which we reformed on coming to government, and any facility that goes over those thresholds has to, you know, make adjustments and take the appropriate action under the Safeguard Mechanism. So that is the way that we lower the emissions of the gas industry. The Future Gas Strategy did really purposefully set up ‑ explain more to the Australian people how gas is part of our net zero transition. It is there really significantly to back up renewables when that is required, and also importantly for securing the net zero transition for the whole region, and that is our neighbours in South East and North Asia. 

PATRICIA KARVELAS: Yeah, but the actual advice on this, will you release it publicly? 

MINISTER MADELEINE KING: We have done a body of work, we've got more to do, and we're going to pursue that and make sure we get the final design of the scheme correct and right, and make sure that it delivers Australian gas at affordable prices for Australian consumers. 

PATRICIA KARVELAS: When will you legislate this? 

MINISTER MADELEINE KING: Well, we want it to be in place by 1 July 2027, so we'll work back from there and make sure it goes through with appropriate timing. 

PATRICIA KARVELAS: The Prime Minister says Australians deserve a fair return, but he has ruled out a gas tax. Now Ed Husic says a 25 per cent export tax on uncontracted gas is exactly the Labor thing to do. Why can gas companies be required to reserve gas for Australians but not be required to pay Australians more for the gas that they export? 

MINISTER MADELEINE KING: Australian gas companies pay tax, they pay a significant amount of tax, they pay royalties if they're onshore, indeed as they are in Queensland or in some parts of the southern States, and even onshore, of course, in Western Australia. 

The PRRT is a profit‑driven tax which has to acknowledge, and indeed I acknowledge, that there has been literally hundreds of billions of dollars of foreign investment into this country to build the LNG supplies that we have. Without that investment we would not have domestic gas available such as we do into the domestic gas market. So it's really important to acknowledge that contribution. Australia is a small market in terms of these facilities. We could not consume the amount of gas that would be required to support that level of investment, once again, in the tens of billions of dollars for any one facility. And I reiterate again that the petroleum resource rent tax is a profit‑based tax and it's quite a high profit‑based tax once the system has taken account of those investments. And I would also add over the past four or, it might even be close to five decades, this is an industry which has employed thousands upon thousands of Australians right around the country. It is part of our national prosperity story, and these companies do pay tax and have invested billions of dollars in our economy. 

PATRICIA KARVELAS: Thank you so much for joining us, Minister. 

MINISTER MADELEINE KING: Thanks Patricia.