Interview with Patricia Karvelas, ABC Radio National Breakfast

Patricia Karvelas
ACCC Gas Inquiry interim report, Australian Domestic Gas Security Mechanism, energy supplies, David Mundy retirement.

PATRICIA KARVELAS: Gas producers have held emergency talks as the federal government threatens to impose export controls in the face of a looming east coast shortage next year. The ACCC says producers are taking more gas from the market to sell overseas at higher prices and the result could be a 10 per cent shortfall in supply by 2023. Publicly gas producers have accused the ACCC of demonising them, but reports this morning suggest the three largest east coast suppliers are preparing a plan to address the government’s concerns. The person they have to address that to is Madeleine King, the Minister for Resources. She joins us from our Parliament House studio this morning. Minister, welcome.

MADELEINE KING: Good morning, Patricia. And before we go to the issues of the day, the very most important issue of my day is just acknowledging David Mundy’s retirement from the Fremantle Football Club. I’m a firm fan and have watched many games David’s played, so I want to pay tribute to him and recognise his exceptional efforts at footy.

PATRICIA KARVELAS: Absolutely, yeah. A really long and very successful run. All right, let’s get to what you’re going to do here.


PATRICIA KARVELAS: You said you don’t want to have to trigger the Australian domestic gas security mechanism. So what do producers need to do to persuade you that there will be enough gas for domestic users?

MADELEINE KING: I do want to be clear – the triggering of the mechanism is absolutely on the table.We’re getting it back on the table to be honest because it was – the former government failed to renew that mechanism. So we’re making sure it is available as one of the levers of government in relation to domestic gas supply. But I am heartened to hear the response of the gas companies involved. And, to be honest, we’ve been in contact very regularly over the past few months, ever since we came into government, about potential issues in the industry, and the ACCC report is obviously the – I guess the catalyst for action from many parts of the system. And I’m really, as I said, heartened that the gas industry itself is looking towards bringing us a solution. And I’d be very happy to look at that when they do so.

PATRICIA KARVELAS: What criteria will you use to determine whether to trigger the first stage of the mechanism?

MADELEINE KING: Well, the mechanism as it exists now, the mechanism created in 2017, which we are reviewing, that current mechanism is based on a supply shortage. And the ACCC report is the evidence that I guess triggers the trigger, so to speak. So, you know, it is about supply in the first instance, in this instance, and the 56 petajoule or 14 cargo equivalent supply shortfall is what we’ll be taking into account as we consider whether to issue the notice of intent to use that mechanism.

PATRICIA KARVELAS: The industry has accused the ACCC of demonising them. They’ve said publicly there won’t be a shortfall. What are they saying to you?

MADELEINE KING: Well, they haven’t said that directly to me, and I guess everyone is entitled to their views. My view is that the ACCC is a highly respected institution. It does a great deal of work in competition law and other things of great concern for the Australian public. So I don’t think it helps to accuse them of demonising an industry. But, nonetheless, people are entitled to their views. I will, as I said before, work with the gas industry to come up with solutions. I do think it is a more constructive approach to take to work together rather than to intervene more in the market. There’s been a lot of intervention already, and that has been sensible and thoughtful and has worked to the benefit of the Australian consumer. This is another mechanism that is on the table. We can use it. I would rather find a solution.

PATRICIA KARVELAS: But, you know, threats, threats, threats, and yet this is an industry that has demonstrated it is stuck in this prism. Don’t you need to actually show real action rather than just threats?

MADELEINE KING: Well, I think we are showing real action. We’ve extended the mechanism by 10 years, and if you read the submissions that I have seen, you’ll know that not everyone supported that extension for that period of time. But we are making sure it’s available to this government and future governments well into the future. So these things have happened. We are also, as I said, extending it so that it is actually available. So I was pretty clear yesterday that I’m preparing to issue the notice of intent to use this mechanism. So that's the action available to us. Renegotiating the Heads of Agreement is also an important piece of work that is commencing right now, and I know – or I’ve read reports, rather, that the companies involved are actively working on what they think would be most helpful to resolve the situation. So action is being taken, Patricia. And we are very much focused on making sure there’s adequate supply and it’s available at an accessible – an accessible means and accessible price to domestic consumers.

PATRICIA KARVELAS: You’ve said gas producers are facing a decline in their social licence. So that decline, some people would say it’s actually gone, that social licence is gone. Many commentators very concerned about that. What consequences will they face for a decline in this social licence?

MADELEINE KING: Well, I mean, they have a decline, but I would not say it’s gone. I mean, the gas industry employs thousands of people around the country. And new gas projects and the shutdowns of these extraordinary facilities also employ many extra hundreds of people at a time in the areas where they are situated. So there are many people working in this industry on the plants themselves but also in the major cities and regional towns around this country that are very supportive of the gas industry because it provides for their livelihoods. So I don’t think we should dismiss them or their good work. The social licence in the wider public, it can be an issue. And I guess the consequence for them is, you know, they have to put up with the public opinion and what they see in the press.

PATRICIA KARVELAS: If they’re making profits, though, Minister, I don’t know if they care that much about public opinion?

MADELEINE KING: Well, I think everyone cares about public opinion, Patricia. I do –

PATRICIA KARVELAS: Well, you might because you have to face the electorate. They don’t.

MADELEINE KING: But they also have a workforce, and people – you know, and this is what we see across the resources industry where there are many reasons why the resources industry have – are leaning hard into all achieving net zero emissions by 2050. Because they know people want to work for good companies trying to achieve good things in this world. So, you know, that’s part of their issue as well. They want to have good reputations because they want people – good people, the best people, the most skilled people in the country to work for them. So, you know, everyone’s got an interest in being liked, so to speak.

PATRICIA KARVELAS: You’ve avoided criticising New South Wales and Victoria for their restrictions on gas exploration. Don’t gas producers have a point that those restrictions have reduced the available supply on the east coast?

MADELEINE KING: Well, it is a matter of fact – and I’m not passing any judgement – that if you don’t explore and you are unwilling to look for gas or use gas, then you will have less gas available to you. It’s just a matter of fact. And New South Wales and Victoria have chosen that path.

PATRICIA KARVELAS: Should they revisit that path?

MADELEINE KING: That is up to them.

PATRICIA KARVELAS: But in your view as the federal Resources Minister do you think they should revisit?

MADELEINE KING: I’m really not going to get into an argument with states that have chosen paths. Like, they’re very forward leaning into moving to renewables, but it will be a question for them. And they have to face their constituencies and, you know, I’m sure the people of New South Wales understand that, you know, 80 per cent of their power generation is from black coal and Victoria 65 or 75 per cent on any given day is from brown coal. So they’ve got a big challenge in both those states to move through a pathway to renewables. But they’re taking it on, and I applaud them for that. What they’ve been missing is a national framework around clean energy, which we will put in place with Minister Bowen to make sure that they can attract the investment into those renewable projects as soon as possible.

PATRICIA KARVELAS: Are you still considering a domestic reserve policy?

MADELEINE KING: What we’ll do is work with states. If they – I would note that Queensland has instigated a domestic policy for future reserve exploitation, and if Victoria or New South Wales were to move toward further gas extraction we would work with them to see that they also implemented some kind of reasonable domestic gas reservation policy. A national gas reservation policy has constitutional issues associated with it. And to be frank, reverse engineering one now to apply to the whole export industry on the east coast is an extraordinary task and –

PATRICIA KARVELAS: It might be extraordinary, but some argue also necessary. Have you ruled it out?

MADELEINE KING: As I’ve said before, everything is on the table. I just think that is an extraordinary complication when we can have an industry-led solution that, you know, we’ll have a lever of government sitting on top of it to make sure that is enacted so that people have the domestic gas supply they require.

PATRICIA KARVELAS: If this can’t be resolved and there is a shortage next year, will the federal government ultimately be to blame if you haven’t gone stronger now?

MADELEINE KING: Well, it’s hard to see how a federal government can be blamed for long-term contracts that go overseas to international investments that were set up many years ago.

PATRICIA KARVELAS: But this is your window, right?

MADELEINE KING: Absolutely. Absolutely. And we will work to make sure that trigger is available to have the uncontracted gas – and the trigger works to stop contracted gas going overseas. It’s a very serious matter to introduce export controls, especially in relation to international investors. And it gets referred to in the press sometime as international clients, but these are – they’re not just ordinary clients with deep pockets; they’re international companies that are supported by their governments to secure energy for those countries’ future, such as Japan and Malaysia. So we have to respect the billions of dollars of international investment that has gone into these facilities as well as making sure we have adequate domestic gas supply.

PATRICIA KARVELAS: Minister, thank you for your time.

MADELEINE KING: Thanks very much, Patricia. Good to chat.