6 August 2019
KIERAN GILBERT: Mr Taylor, thanks so much for your time. Before we start, I want to play you a comment made by the Victorian Premier Daniel Andrews.
DANIEL ANDREWS: Yeah, I'm not waking up every morning waiting to see what Angus Taylor's said. He's got an opinion on everything, and is a particularly combative person. I think he needs to perhaps see the benefit in working together. That's always a much better approach. The conversation I had with the Prime Minister on Wednesday was not of the same tone that Minister Taylor seems to take every day on every issue. He'd be much better to acknowledge that just as he was elected last year, our government was re-elected as well.
[End of excerpt]
KIERAN GILBERT: So, the Victorian Premier says you're being belligerent. He works well with the Prime Minister, but not with you. Are you willing to change your approach and be more cooperative with him and other premiers?
ANGUS TAYLOR: Well, I'm always happy to work with collaborative states, and I do all the time, Kieran. But let's look at the facts here; what we've got in Victoria is a gas price which is more than triple of what it was a few years ago, more than double what we're seeing in Western Australia, and they're paying about 33 per cent, or a third of the cost of their gas transporting it down from Queensland. Meanwhile, the Victorian Government insists on keeping a moratorium on onshore exploration and development of gas. This is a disastrous situation for Victoria, and the crucial thing is that the Victorian Government confront the problem and deal with it, and that's a very reasonable thing to be saying. I know the Prime Minister shares that view, we need to see a solution to this problem. It's crucial in a number of ways, Kieran. First of all, it's absolutely crucial for consumers and industry that rely on that affordable gas in Victoria which has traditionally been very cheap and come from Bass Strait, but is now running down. But secondly, it's crucial, because we need more gas generation in the electricity mix in Victoria - huge surge, record investment in solar and wind that needs to be backed up, and gas generation along with hydro is the obvious way to do that. So, these are problems that need to be solved, and I'm always happy to work with state governments who want to work with us in a collaborative way, who see the same problem that we see, and I'm certainly doing that with my colleagues in other states.
KIERAN GILBERT: But you'd say that as much to the Berejiklian Government, would you? Particularly about the Narrabri Reserve?
ANGUS TAYLOR: We have a very collaborative relationship with New South Wales Government. We're working with them closely now on some of the energy challenges there. They haven't got a moratorium on onshore gas as Victoria has, they're not forcing record levels of solar and wind into the system without backup. So, it's a very different situation in New South Wales. We do want to work with state governments in a collaborative way, we're working with the Tasmanian Government on Battery of the Nation and Marinus Link. We do work very closely with collaborative states, but at the end of the day, we've got a serious problem in Victoria. We will see the lights go off again this summer, if circumstances aren't right. We need to address the problem, we want to work with state governments to do that, but it's got to be a state government that sees that there is a problem in the first place, Kieran.
KIERAN GILBERT: On your announcements today with Matt Canavan - the safety mechanism, this trigger - currently it is to ensure supply, but Rex Patrick, when we spoke to him earlier, says the gas companies are doing just enough to ensure supply, but not enough to bring prices down. Will you be open to using that trigger with price as the criteria, as opposed to supply?
ANGUS TAYLOR: Matt Canavan is the Minister who administers that trigger, and of course, the legislative framework, it's set up around volume, but at the end of the day, the real problem here, Kieran, is making sure there's enough supply available to meet the domestic market, and meet the needs of those households, small businesses, and industry, that use that gas in, on the east coast of the Australia.
KIERAN GILBERT: But not just meet the needs, are you going to use this trigger to bring the price down, basically, to use price as the criteria here?
ANGUS TAYLOR: The reality of the gas market is if there's more than enough supply, it will get the right outcome on price. That's the way it works. Now, of course we want more affordable gas. That ultimately is the goal - you've got to have affordable gas for industry, households, and small businesses, and that means you've got to enough supply in the market. That's why we're reviewing the ADGSM and how it works, it's why we're looking at a longer term reservation policy for future developments, and it's why we're pursuing a number of initiatives to increase the transparency and supply in the market. But none of this will work at the end of the day if we've got state governments blocking development of new sources of gas, Kieran. That is absolutely essential to success here and it's why I've made the comments about Victoria, and I certainly hope the Premier hears those comments. I look forward to working with the Victorian Government if they are really genuinely prepared to solve the problem.
KIERAN GILBERT: Well, he's definitely heard them, we know that for sure, but in terms of the other, some of the other elements, the domestic gas reservation, for example, when Labor announced a similar idea a couple of years ago, or their commitment to one, Josh Frydenberg, your predecessor in this particular role, said it's a double edged sword because while it might, in the short term, increase supplies, it could reduce incentive to explore and extract in the medium to longer term. Is that still a concern of the Government, that it's a double edged sword?
ANGUS TAYLOR: We don't want to reduce the incentives to invest and explore, and develop new gas resources, that's absolutely essential. We've got to keep that investment going. The one thing you know about these gas wells, is that as soon as you start producing they tend to be running down. So you’ve got to keep the investment flow going, and getting the balance right is absolutely essential to this. But Kieran, equally, we have to have enough supply for the domestic market, and that is absolutely essential. That will continue to be part of our conversations with the gas producers. We've got to make sure that there's a fair deal on energy - not just electricity but also gas - for those hard working small businesses, households and industry that employs so many Australians, particularly in regional areas.
KIERAN GILBERT: But the Government at the time when Labor raised this idea spoke about sovereign risk and other related issues. Are you relaxed now with this as an approach if you can put in appropriate safeguards? What's the Government's thinking on this now? How come there's been this conversion, of sorts?
ANGUS TAYLOR: Look, at the end of the day you've got to have the balance right on this. Labor can say all of this but it was Julia Gillard who opened the gas trains up in Curtis Island, massive gas export facility without enough supply domestic production to be able to meet those export contracts. So you know, Labor don't speak with a great track record on this. The key though, Kieran, is to make sure we've got enough domestic supply and continued investment. Now, I think that is achievable. We're not talking about retrospectively imposing a reservation policy on investments that have been made in the past. That's not what we're talking about here. This is about looking forward to make sure that there is an appropriate balance between domestic needs and of course that huge export opportunity, which we've been capturing and which creates a huge number of jobs, particularly in regional areas. You know, I was only up in Toowoomba and the area around Toowoomba a couple of weeks ago and you just see the extraordinary growth in jobs and economic development in that area, and it's been fantastic for regional Queensland.
KIERAN GILBERT: And what are the real impacts that you want to see in this term on prices, on gas prices, from the decisions announced, or at least the reviews announced today?
ANGUS TAYLOR: Last time we intervened in the market, we put in place the domestic gas security mechanism, and we saw a reduction in prices, a quite significant reduction in wholesale prices as a result of that intervention. Now, we want to continue to put downward pressure on those prices. This package that we've announced today and the various parts of it are all designed to do that whilst maintaining continued growth and investment. I think that is achievable. We'll consult closely with industry over the next little while. We have a good track record over the last 18 months to two years on the interventions we've already made, and we'll continue going down that path.
KIERAN GILBERT: The Government's apparently talking to the Trump Administration about accessing oil from America's fuel reserve. Can you explain why that's needed right now and how will it work?
ANGUS TAYLOR: Well Kieran, we've had a commitment since the early 1970s through the treaty we entered, just around the time of the first oil shock in the early 1970s, whereby we, alongside other countries, like-minded countries, are committed to keeping a minimum level of stocks in oil both inside Australia and some of it is also outside so that, jointly, if there's disruption in oil markets we can deal with that disruption. We saw a huge disruption back in the early '70s which brought this treaty into place in the first place, and then the '80s again, we saw the second oil shock. So, that's put us in a position where we have a treaty. Now, at times we have fallen behind on that, and that's why taking a share in these strategic oil reserves makes sense. The United States has less need for them than they did because they're extracting a lot more oil alongside their gas with the technology changes we've seen in gas and oil extraction onshore in the US in recent years, and that means there's an opportunity for us to work with them to use that strategic oil reserve. Now, we're in discussions with the Americans on this issue. It is part of our broader, strong strategic relationship with the United States and it will ensure that if there is disruption in oil markets, then jointly we're in a position to deal with it.
KIERAN GILBERT: Do you see this as a long term solution or do we really have to fend for ourselves in this sense and sure-up our own fuel security?
ANGUS TAYLOR: It's both. I mean, the answer is, has always been that we work with other countries on this issue, but we also make sure we do our bit. We do want to see some modernisation of the way oil stocks are accounted for, under this mechanism in particular, we want to make sure that on ocean oil - and we have a lot of oil coming to Australia because we obviously bring it across the sea to get to Australia - we want that properly accounted for. We're confident that this can be part of the solution to make sure we meet our international obligations and we are in a position to deal with disruptions that might emerge in the oil supply chain, whether they are economic or strategic in future years.
KIERAN GILBERT: Angus Taylor, we appreciate your time. Thanks very much. Talk to you soon.