Can Albo fix our 'messy' gas market?

ABC Listen.

Podcasts, radio, news, music, and more.

It always starts small.

There's something here.

This is not right.

Then that small, innocuous thing starts to snowball.

We know they blow them up.

And quickly gathers pace.

At that point, I have no choice.

And before you know it, it's out of control.

And no one can contain it anymore.

Beef.

When small feuds take on a life of their own.

A new series by background briefing, available now on the ABC Listen app.

The Prime Minister has been on a media blitz over the last 24 hours, pushing and spruking his key cost-of-living measures that come into force today because, yeah, it's July the 1st.

It is the start of the new financial year.

What a time to be alive.

It's not all positive news with energy bills on the rise and the ACCC warning of an East Coast gas shortfall.

As the government launches a review into the rules governing the gas industry, there's increasing speculation that a gas reservation scheme could be on the table.

So could it reduce gas prices at home?

Welcome to Politics Now.

Hi, I'm Patricia Carvellis.

And I'm Mel Clark, ABC Radio National Breakfast Political Correspondent.

Now, Mel, I'm hoping you've got some good news for me because I'm in a state of life where my partner says to me, turn off the gas heater.

Let's just put on an extra jumper and various other really irritating things because gas prices are so high.

Look, PK, look, you used to live in Canberra.

You should know better than to stay to me in Canberra now while you're in Melbourne and complain about your gas bill because do you know how hard my gas heater is working right now?

I can imagine.

Yes, balmy Melbourne.

I mean, come on, come on.

All right.

We're both high gas users at this point.

We are high gas users, but it is true.

And being told to put an extra jumper on.

Anyway, this isn't relationship therapy for me.

Look, warnings yesterday that Australia's East Coast gas supply is running dangerously low.

The government says it's now reviewing all the rules,

including gas exports.

That's all there.

This was meant to happen, this review, but why is everyone getting excited, Mel?

Oh, look, there's lots to unpack here.

Let's start with the review and then go to the shortfall.

So, yes, there were meant to be some reviews because

basically the way the gas market on the East Coast is regulated is a complete hodgepodge of different mechanisms.

And there are three main ones, and two of them were due for review, one of them this year and one next year.

So, it has been an opportune time for the government to say, well, let's do a review of how we manage the gas market on the East Coast, given these are coming up.

But it's also very due because it is a mess.

What we've had over a number of years and through a number of governments is a policy created after a big concern about supply or a big concern about prices and it's been quite ad hoc and we've ended up with this mess of a system.

So it's logical given these statutory reviews had to take place to go, well, let's not look at the individual pieces, let's look at the system as a whole.

So I think that's a good thing.

We can come to reservation in a minute, but I do want to talk about this shortfall because

there's shortfalls and then there's shortfalls, right?

So yeah, yeah.

How serious is the shortfall?

Because that's the question.

Just to give it context.

It feels to me that AEMO, every year we get warnings about gas shortages.

They're not all equal gas shortages.

Are we in a particular crisis period?

No, but we could get to one is the answer.

So, the shortfall that the latest headlines have been about from the latest ACCC report that talk about potential shortfalls this year and next year, they're shortfalls in what might be made available to the market.

But that doesn't mean you're not going to have any gas to run your hot water service.

What that means is some of these mechanisms that we're reviewing might need to be used this year and next year to make sure that there is enough gas in the system.

That doesn't mean we're going to run out though.

But give it a couple more years and then we might get to the point where we are running out of gas because you know, the gas fields in Victoria are slowly emptying.

The ones in Queensland either are all exported or the amount that they thought would be available domestically hasn't produced quite as much as it thought it did.

And there's limits to how much you can physically send down to New South Wales and Victoria because of pipeline capacity.

So, don't worry about running out of gas for your heater this winter.

But if we don't do anything in the next couple of years, then we might run into a situation where we're really worried about supply.

And that issue, what you've just talked about, deals with the actual supply of the stuff full stop.

We're not even really

having a substantive conversation at the moment, it feels to me, about prices, though.

I mean, prices, the government put up the white flag in many ways.

I reckon at the last election, when asked about gas and other energy prices, after committing themselves to a price reduction

in their first campaign that made them then government, they've really pulled back on all of that.

Now, this review is not about prices, it's about supply, but there are links between prices and how much supply you have, right?

Like that's just economics 101.

Yeah, so at the moment we have, you know, one of the mechanisms the government has at its disposal is to be able to put a cap on wholesale prices, and that's one way of bringing them down.

We had the coalition at the last election

offer up its own version of a reservation policy, which was more of an export tariff, but was basically to tax it so that it was more expensive to send it offshore than to offer it up to the domestic market.

So there's a few different views about well how can we deal with the price supply issue?

Do we try and get more supply online and just allow more gas fields to be developed and that does it?

Or do we look at the sheer volume of gas we're already producing but sending offshore, sort of creating an artificial shortage?

Do we try and make sure some of that stays in Australia so the price comes down anyway?

And I think that's where this review is looking towards.

Because if you look look at the detail of the consultation paper that's been released as part of this review, it's explicitly asking for what are alternatives to the current way we have of regulating the gas market.

And that's the big, wide open door for people to make the case for a reservation.

Yeah, so that's where they are able to do that.

Now, just to give people some context, there was a lot of speculation that Labor was looking to do this even before the last election.

And then Peter Dutton laid the groundwork for a reservation measure by essentially announcing one in everything but name.

It wasn't quite called that, but it was ultimately going to have the same consequence.

Now, the gas industry, it's a very powerful industry.

It has a lot of commercial interest in protecting its profits and protecting the regime as it is.

but they also can see the writing on the wall.

And through this process, they are partners with the government in trying to rewrite rules.

They weren't happy with the way that Peter Dutton articulated the change, right?

Because they felt like

that it was basically, you know,

going to condemn them to sovereign risk potentially.

It was pretty serious.

They were not happy.

But,

you know, if it's good for us, is it going to be good for the gas companies and are they going to sign up to it?

That's the big question.

Well, I think this is the really interesting one because the message has been sent from the federal government for a while now.

You know, it was earlier this year, Madeleine King, the resources minister, was giving a speech to energy producers and reminding them that they needed to keep their social licence in mind, that Australians...

when they see high gas bills when it's the middle of winter like it is right now and they're paying a fortune to heat their homes they are going to wonder about this bountiful resource we have that we're sending offshore and that gas companies and gas producers should be keeping that in mind and I think that was a very big signal right at the start of the year to the companies that they might expect that something like this happens.

I think politically, the fact that the coalition had put their proposition on the table during the election campaign that the industry really didn't like definitely softened the ground for labor and is making it easier now for them to start to nudge toward this space, which I think realistically they've probably wanted to do for a long time.

I mean it was I think when Bill Shorten was leading the party, they were talking about a national interest test on new gas field developments.

So it's certainly not new ground for Labor, but the ground they're working on is definitely softened thanks to Peter Dutton.

And you can see that the politics here is

pretty delicious potentially.

I don't think that you'll find many people putting their hands up and crying for gas companies.

There's a sort of big nationalism vibe on it too.

Your own resources.

It is popular in the community.

Under Peter Dutton, his version of the Liberal Party was quite hostile to some parts of big business, you know, in a weird kind of way.

Under this version, under Susan Lee, they want to get a bit more pro-business and soften their social policies to make them more moderate.

So it'd be interesting to see how...

the coalition manages all of this too, because they haven't been enthusiastically spruking the policy that they announced at the election.

They've kind of really gone a bit

cold on a lot of the policies they announced.

I think they have.

I think they've left themselves in a very open position right now.

So the formal comments we've had from Dan Tian, who's now the new energy and climate action spokesperson, he is saying, look, we need to focus on getting more supply, open new gas fields, fast-track approvals, and hasn't weighed in directly on the idea of a reservation yet.

So I think they are leaving themselves room to move.

But I think there's an extra layer of challenge here for Labor, because as much as there is, I think it's fair to say, very popular support for the idea of making sure that big corporations are paying their fair share of tax or royalties on Australian resources, there is also an expectation from much of Labor's support base that they're not doing anything to facilitate new gas developments.

Now, they've long made it clear they see a role for gas into the future.

Madeleine King in particular with the future gas strategy made it clear that they see a role for gas out to, you know, off to twenty seventy, but there is still a very strong part of Labor's support base that doesn't want to see moves that encourage new gas development.

And the idea of building up towards a reservation policy is explicitly, will explicitly be about new gas developments because it's not going to be retrospectively, if it happens, won't be retrospectively applied because Chris Bowens made that clear.

So there is going to be an electoral negative for Labor where they're seen to be facilitating new gas developments at a time of a climate crisis.

Now, Mel, while our power bills are going to be going up from today, as that's that's a certainty, the end of the financial year has also brought some

positive stories for the government to go out and sell.

And that's why we've seen the Prime Minister everywhere.

He's been on a bit of a media blitz, and I think that's probably a good thing for a Prime Minister.

I think

so.

We want them out there.

But what's the key message?

Because he's been very on message.

I interviewed him one afternoon briefing.

I found him to be incredibly disciplined, almost sort of laser-like campaign-style level of discipline in wanting to stick to these messages about, you know, all of the relief people are getting from July the 1st.

In some ways, I found it frustrating as a listener, PK, when you were doing that interview because you were trying to get him to be a bit more expansive and he wasn't playing

on that.

He wasn't.

And sometimes they won't.

And when they don't, you just kind of keep trying.

And then, you know, you can't force people, can you?

No, absolutely not.

And he was focused on this message around a lot of the benefits that will flow through to people because of the new financial year.

And some of those is spruking initiatives that the government took either in the last parliament or leading into the election.

And some of them are really significant.

There's changes to paid parental leave that are important here.

There's extra support for students doing practical placements, for example.

These are new and changing circumstances.

that I think we can let the government have a bit of public service announcement about, let people know that the changes are coming into force.

But I do have to say, there's also been a lot of sprucking of things that would happen automatically, either by indexation or by functions of government that I think the government also wants a little bit of credit for.

So, and I think the minimum wage is a really good example of this, right?

Because the Fair Work Commission sets minimum and award wages.

And yes, the government makes representations to the Fair Work Commission about what it thinks.

But ultimately, it's not the government's decision that's led to this increase.

It's the Fair Work Commission's decision.

So I think they're also looking to get a bit of extra credit.

Do you think that's a fair assessment?

No, I think it's not unfair, but to be

extra fair to the government, if I can call it that, if we can do a fairness sort of competition.

We've got a fairness auction going on here.

The Prime Minister made the point that

you haven't seen the Coalition write a submission to the Fair Work Commission requesting or making the case for an increase into the minimum wage.

And I think that's right.

Yes.

So,

and in that sense, have they been strong advocates for this outcome?

Well, they have.

And so while they're not, you know, responsible for the independent decision, and nor should they be, that's the way our system works at arm's length.

They are right to kind of be pumping up their own tires, that as a government, they take

as much responsibility as they can in pushing the point that people who don't earn very much should earn more.

And, you know, it depends what your view is on the way the economy should work.

But for those who are sympathetic to the idea that people who don't earn very much should earn more would go, okay, well, that was a job well done.

So I get why he's spruking that one.

There are other ones which are just indexation moves, which I think, oh, come on, let's get a grip.

But paid parental leave is another one, which is their policy.

That is very much been their agenda.

They set up the paid parental leave scheme initially.

I know I was one of the earliest recipients of it when I had my kids all those years ago.

Like that they are right to be proud of the paid parental leave scheme and the transformative role it has for, I think, parents.

It was a long time spruking that.

So, and now they've extended it.

I think it's all reasonable that you'd want to go out and be selling that message.

The thing, though, for the Prime Minister is, and I'm sure some of our listeners to this podcast think, well, your part of the problem, and I think they're right, partly, not entirely, is that every time he tries to talk about all the good things that he's doing, and there are some good things that he's doing, he's dogged now with questions about when is he going to meet with Donald Trump?

When is the meeting?

When is it going to be?

When is it?

When is it?

It is, it is, I get it.

It's brain numbing to hear it.

And I can see yesterday I really got the sense when I asked, because I did, because I am curious, and it does matter.

And we're staying in AUKUS.

We want to do AUKUS.

So it does matter if they're reviewing it when we have the meeting.

and it does matter how we deal with all these things.

So it does actually matter.

But I did feel a sense of fatigue from the Prime Minister, if I can analyse him.

I think that's a fair analysis.

Here we go again, these questions.

And he made the point, which again, I think is a decent point, that it's more about the outcome of the meeting than the meeting itself.

Well, yeah, I agree.

But you also need to get the meeting to get the outcome.

So now we're talking in circles and riddles.

He needs a meeting.

He knows that.

He said that.

He changed the goalposts a little, though, I thought, in that interview, Mel,

talking about how another opportunity would be the quad meeting in India that was coming up now that doesn't have have I missed something doesn't have a final date does it no it doesn't we're expecting it sometime in September but we definitely do not have a date locked down for it no but again that's some time off September is a while away but it is now becoming a distraction for the government.

Like it's just, he's annoyed, but journos are going to keep asking because journos are going to be be journos.

And it's sort of.

It's a reasonable question to keep asking as frustrating as it is for him.

And I understand that.

But also, this is the closest ally that Australia has,

our most important security ally, without a doubt.

And it is very unusual to have had a new president.

in office since January and it's July now and we haven't been able to have a meeting.

It is unusual And I think if you point to the contrast of Anthony Albanese's very warm relationship with Joe Biden, and he was made a point many a time during the Biden presidency to talk about their close relationship and highlight as that as something that was important and good for the nation, it's now a little bit more uncomfortable because there isn't that personal element of a relationship because they haven't been able to have a meeting to even try and develop one to this stage.

Now, I think there's a fair bit of,

I think there's a bit of acceptance in the public that look there's a lot going on in the world right now and Australia's trade wishes might not be the highest thing on the agenda of the US president but until

as the Prime Minister was making the point, I mean we do have the lowest tariffs in the world.

Like the 10% is the bargain basement tariff.

It is really low.

So to negotiate a lower one I think

you know, would be great, but are we kidding ourselves?

I mean, this is an administration that believes fundamentally in the economics of tariffs.

I wonder why they haven't managed our expectations around some of it.

I think the PM wants to make the political point about tariffs.

You know, they should be zero.

Yeah, sure, like lots of things should be.

You know, there should be no child poverty, but you can't make that happen straight away sometimes.

So you have to live in reality.

What did I call it yesterday?

Radical realisms.

I'm going to use that every podcast, but it's just you've got to sort of, you're not going to get a 0% tariff.

Can someone just admit that we're not?

But also, that's not the only thing on the agenda, right?

So as you mentioned,

AUKUS is pretty high on the agenda too.

And that is something that I think part of the reason there's so much concern about it is because we actually haven't heard Donald Trump really discuss AUKUS

with his own mouth to any degree to this point.

And we are a fair way into the first year of this term of presidency for him.

So I think that in itself creates a degree of uncertainty that the idea that if there was a meeting and afterwards they could both speak with effusive praise for this pact, it might give a bit of reassurance to the defence communities, both here and in the US, that there is a longer-term commitment.

And I'm sure that will come with the formalities of a meeting once it happens.

Look, a point that actually Andrew Hastie, the shadow Home Affairs Minister, but he was in the defence portfolio, he was filling in for Macallia Cash recently in the Foreign Affairs portfolio.

He's been making the point, and he's a big believer in AUKUS, in the US alliance, but that we need to be a lot more honest about the fact that the U.S.'s increasing military footprint in Australia, which is a fact which we've signed up to, AUKUS signs us up to it even more.

We are going to help their submarines, not even the ones that we acquire, but their ones, you know, basically dock in WA.

Like this is a

very deep military

alliance

that is possibly going to make us more vulnerable if there was to be conflict with China over Taiwan and other things.

Now, when asked about that, the Prime Minister talked up the alliance, but doesn't want to substantively deal with the way that footprint growing and growing puts us in that position.

But I do think there is a positive to us having that conversation and being honest with the public.

And I don't think that's happening.

And I didn't think he engaged with that at all in that interview.

And I think that's that's something that we should be engaging in.

Aaron Powell, I think you're absolutely right.

And I think we've seen a similar position on the slightly different issue in recent days from Richard Miles as the Defence Minister when asked to be a bit more transparent about what exactly does Australia's close interlinkages with the US military mean in circumstances like where there's airstrikes on Iran.

Can we be clear about what Australia is and isn't involved in, where our resources do or don't support US military efforts?

And there's a great deal of reluctance from the federal government to engage, even at a principle level.

You know, I know in earlier days of the AUKUS argument, speaking to some American congressmen who were in Australia as part of discussions about it, and I was speaking to one of them, and he had remarked about how he felt everyone in Australia kind of danced around what the threat is that we're trying to counter compared to the US, where there's a lot of talk of, well, China is the threat.

They're the ones throwing their weight around increasingly aggressive behaviour in the Pacific and in the South China Sea.

This is what we need to be able to address.

Whereas in Australia, we don't really want to tackle that risk head on.

So a lot of the language doesn't really help explain to people who might only be paying passing attention to this whole debate what actually it is we're trying to do.

I just want to note two things before we say goodbye on this podcast.

Two pretty serious things.

There is obviously a huge weather event going on in New South Wales.

So we'll keep an eye on that because we saw what happened.

There was a delay even to the election last time.

We saw a big weather event in Queensland.

The Prime Minister really leans into them and is very active when you see them.

So I'd be interested to see that.

And then just something to note, which I'll be focusing on an afternoon briefing, which is hard to talk about but needs to be talked about because it's extremely serious.

A childcare worker, Joshua Brown, is facing more than 70 child sexual abuse charges involving eight children between five months and two years old who were in his care.

There's going to be a review into the working with children test.

But the reason I'm mentioning it, because, you know, you would think, oh, that's a crime story.

This is not for this podcast.

Well, I'll tell you why I'm mentioning it.

Our wonderful colleague, who I think is incredibly gifted, Adele Ferguson and persistent, did a big investigation into,

you know, not this case, very clear, but into the kind of things that have gone wrong in childcare centres, the lack of regulation.

Then the federal government has announced some regulatory changes.

Adele has been arguing that they're not good enough.

I wonder.

And in fact, I believe that this should restart that conversation.

Mel, you've watched this closely too.

There has to be a bigger conversation about the way that these centres run because for the public to lose confidence in a system would be diabolical as well.

You're absolutely right PK and if there were ever an issue in which we need full national attention and leadership, distressing stories like this are exactly what we need to see leadership on at this point PK and it's a pretty awful note to wrap on but I think if we are looking at priorities for government and what they're doing as we head into the new financial year then I think action in this space is something that undoubtedly needs to be at the top.

Yeah, I mean, you know, this is the stuff when there's a story like this.

People are not kind of staying up all night thinking necessarily about the future spending on defence, but they are thinking, if they are working-age parents, about their kids and leaving them in safe places.

And so I think it's the sort of place that the government really needs to step up.

That's a good strong message, PK.

Thank you.

And thank you for having me on politics now today.

I'm glad we could really laser focus on these important issues.

Yeah, it's quite a bit to talk about.

Well, tomorrow I'm going to be joined by Brett Worthington.

And if you have a question for us, you can send it to the partyroom at abc.net.au.

Fran and I will answer your questions on Thursday.

Catch you then.