SALLY SARA: Well, the Federal Government has released the draft framework for its Gas Reservation Scheme, which will require gas exporters to supply the equivalent of 20 per cent of their export volumes to the domestic market. Exporters will be required to meet this obligation from the start of the scheme in July next year, but the government says existing contracts will be respected. Madeleine King is the Federal Minister for Resources and Northern Australia and joins me in our Parliament House studio. Minister, welcome back to Breakfast.

MINISTER MADELEINE KING: Good morning, Sally. It's a delight to be with you this morning.

SALLY SARA: Before we get to the scheme, the final default market offer shows electricity prices for small businesses and households are expected to fall over the next 12 months. In some cases, a drop of up to 21 per cent for small businesses. Are lower prices here to stay?

MINISTER MADELEINE KING: Well, that's certainly the objective of this government, Sally. We've been working very hard. Minister Bowen has been working very hard and his whole team to make sure that energy prices do come down. And that's the result of determined policy work over the last four years of being in government. And it's a good sign for the future.

SALLY SARA: Why have they come down?

MINISTER MADELEINE KING: Well, they've come down through investment in cheaper sources of power in terms of renewables, also ensuring that the grid is well backed up through other sources like gas, but also others. Batteries, of course, would be very important to the whole national energy market. So, all of that combined works to bring these prices down.

SALLY SARA: Given global events and global uncertainty at the moment, is this really a time for a bit of a sigh of relief or should consumers brace for a spike, for unpredictability?

MINISTER MADELEINE KING: Well, it is a difficult time, there's no doubt about it, with energy right around the world. But this government has introduced stability into that market through the changes we've made in the domestic energy side of things, but also through the Gas Code of Conduct as well a couple of years ago. So, all of these things work together to drive down those prices, to shield domestic users from those international price spikes. But as everyone has seen through the conflict in the Middle East, we are - we do feel those ripple effects sometimes. Right now we're feeling it more in the price of liquid fuels, but we have cut the excise on those fuels. So, that's been an important part of keeping prices moderated. But the challenges remain. There's a lot of hard work to do, but I think it's the stability in the system that is benefiting consumers.

SALLY SARA: Let's talk about gas. The Australian Energy Producers group says the draft Gas Reservation Framework has deepened industry concerns, including that it, quote "threatens existing export contracts." Will the scheme have any effect on existing export contracts?

MINISTER MADELEINE KING: Well, the discussion paper released yesterday is intended to promote discussion. That's exactly its purpose because this is a government that will consult with industry and the users of gas to make sure we get this, what is an extraordinary reform really. And this is the only government that's been willing to make it. We want to make it work, be enduring for the long term. So, we're open to the discussions. We've been very clear about this. As for long-term contracts, there is no need for them to be affected. We don't intend to endanger any of our export contracts, which are really very important for our regional neighbours, but also for us, for regional prosperity and therefore peace. So, we do place a premium on that long-term trust as an energy security partner.

SALLY SARA: The CEO of the Australian Energy Producers Group says that it imposes complex and opaque compliance obligations. Is there a need for more clarity there?

MINISTER MADELEINE KING: Well, I mean this is the point. The discussion paper is about more consultation. I mean the government has two choices, it has many choices, I suppose. But at this moment we could have brought in legislation that just reflects what we think, how we think it should operate and I imagine the CEO and others from the AEP and the gas industry would have objected to that wildly. So, what we have chosen to do is have a discussion paper and an open discussion for consultation. Yet they also object to that. So, I really don't know where what they hope is the middle ground. I think open consultation and development of this policy involving gas producers is the best way to go. If they disagree with that, that's a matter for them.

SALLY SARA: Do you have an estimate yet on how much it could bring down energy prices?

MINISTER MADELEINE KING: Well, we’re introducing the policy so that there's a modest oversupply and in the - part of the principle is to make gas exporters sell into the market and that's what drives down the prices. It makes it a buyer's market. We are hoping to make the most affordable gas prices we can. Gas prices change depending on where gas is extracted from. So, for the domestic only industry, their advantage is that their gas is closer to consumption and transport costs are lower than say from the LNG exporters in North Queensland a long way away.

SALLY SARA. So, do you have a number or a range?

MINISTER MADELEINE KING: I don't have a number. We are aiming for affordable gas and plenty of it.

SALLY SARA: Yesterday we had Tony Wood on the program Energy and Climate Change Senior Fellow at the Grattan Institute. He says a gas reservation scheme may bring down prices but in the long term, it could be at the cost of producers who are not exporters. If they're squeezed out of the market, what would this do to energy prices?

MINISTER MADELEINE KING: Well, that's not what we're contemplating. And as I mentioned before, the advantage for domestic only producers is often their location and proximity to the consumers of gas. And I note in Western Australia, where there is already and has been for some time a domestic gas reservation scheme, which I will be clear, will be taken into account in the design of the federal scheme, there are domestic gas producers that still flourish in that market. So, we think there is definitely a way to work through all these concerns. But really, and I'm disappointed by the AEP's attitude in relation to this, but it's not unexpected to be fair. That's why we're going to consult to get it right. We know it won't be perfect, we know it will be complex. But government has to do it and has to step up and make an enduring gas market scheme rather than the ad hoc reaction to crises over about a decade. And I think that's in the best interest. Well, I know it's in the best interest of our country.

SALLY SARA: I wanted to ask you about BHP and the revelations on last night's Four Corners program. The allegations that the company quietly shelved billions of dollars of green projects while promising it was committed to cutting emissions. Are you concerned by those revelations?

MINISTER MADELEINE KING: BHP is committed to cutting emission. They will make their commercial decisions, as do others. BHP and other miners are subject to the Safeguard Mechanism. I think they have about six facilities that are subject to that mechanism and how they choose to reach net zero and they have made that commitment clear. It really is a matter for BHP.

SALLY SARA. So, nothing, no concerns there from a government perspective?

MINISTER MADELEINE KING: No, because they're doing their job. I find what I find concerning is that how we have companies wanting to use government policy to create an advantage over their competitors. Now, I think competition is a really good thing in any market and the same goes for iron ore. But to see campaigns waged, you know, throughout the media is, I think, a bit off when companies should perhaps look in their own backyard and monitor their own behaviour.

SALLY SARA: Madeleine King, Minister for Resources and Northern Australia, thank you very much for coming in this morning.

MINISTER MADELEINE KING: Thanks heaps, Sally.