Press conference, Sydney

Senator The Hon Matt Canavan

Minister for Resources and Northern Australia


6 August 2019


MATT CANAVAN: It is great to be here joining my friend and colleague Angus Taylor. Today, we announce important policies and measures that help continue to provide affordable access to gas to all Australians, both to help with cost of living and to, importantly, protect jobs across our economy. We have made mistakes in the past around the development of gas resource in this nation. In particular, seven years ago, when the former Labor government approved massive new gas developments in Queensland, no one at the time looked at how those developments would impact the domestic gas market. Now since that time, for a number of reasons, gas prices have increased. And two years ago when this situation emerged very, very clearly in the domestic Australian market, the Australian Government took significant action to help bring price relief to Australian consumers and businesses.

Two years ago, for the first time, we established an export control framework for gas. We've progressed reforms in broader gas markers around transparency and pipelines, and our actions since then have helped prices in domestic gas markets fall by around a quarter, and offers in a contractual market to large energy users fall by half. It is clear that the Government's action in the last few years have helped matters, and the ACCC and AEMO have confirmed that outcome. However, we are very mindful to make sure that we do not repeat the mistakes of the past. Today, we're announcing further reforms that build on what we've already done and help ensure that we do not face similar problems in the future.

Today, we are announcing that we'll bring forward the review of our gas export control framework, the Australian Domestic Security Gas Mechanism, to this year. It will be a relatively quick review into the framework to make sure that it's fit for purpose for the next couple of years of its legislative life. We will also, importantly, begin consultation and discussion about the potential establishment of a national gas reservation scheme in Eastern Australia. This is a very important development to make sure that Australian gas is, in the future, available for Australian users to produce Australian jobs, to help Australian households pay Australian energy bills. We're very lucky to be blessed with significant natural resources in this country. We must make sure that those natural resources are developed for our national interest.

In having these discussions now on what a system like this might look like, it's important that we lay out a few criteria for those discussions.

Number one, we'll be working close with state and territory governments and importantly, we want to see them remove unnecessary restrictions on gas developments if we are to establish such a scheme here in eastern Australia. There is no point in us establishing a reservation scheme if there's no production here in eastern Australia and we need to remove these nonsensical bans on gas development to deliver relief on gas prices to businesses and households in Australia.

Number two, any such scheme would, of course, only apply to future gas developments. We're not seeking to unwind things that have occurred in the past. We're making sure this is all about the future today - making sure that we do not make the same mistakes in the future, and protect Australians going forward.

Number three, we will seek to ensure that anything that we do here in eastern Australia does not interfere with a scheme that is seemingly working well in Western Australia, where a reservation scheme already exists in a jurisdiction that's attracted billions of dollars of investment in gas while delivering some of the most affordable gas prices in the world. I've already spoken to the West Australian Minister and assured him on that point. What we're doing here is potentially seeking to imitate the Western Australian scheme and imitation, of course, is the best form of flattery.

I'm going to ask Angus to speak about a couple of the other measures.

ANGUS TAYLOR: Thanks, Matt. It's great to be here with Matt, talking about an issue that really matters to Australians, which is a fair deal on energy, and of course, that matters for all Australian households, small businesses, and of course industry that provides so many of those important jobs, particularly in regional areas and outer suburban areas right across Australia. We're very focused on electricity prices. But of course, gas and a fair deal on gas is equally important, not just for ultimate users but also because gas generation is now a crucial part of our electricity mix, and it will be increasingly important as we see the record levels of solar and wind coming into the system.

Now, I want to highlight two additional initiatives to those that Matt has talked about a moment ago. The first is, we'll be conducting a review of pipeline regulation and the reforms that have been put through our pipeline system in recent years. There's been major changes in the way we're regulating our pipeline. We'll be assessing how those are going and what additional moves need to be made to make sure we've got a well-regulated and as competitive as possible pipeline system in Australia. This is a very important part of our gas supply. We use pipelines to move most of our gas from the gas fields to ultimate customers across Australia.

Secondly, we'll be bringing forward the ACCC, we'll be extending the ACCC's role, which they're playing right now in monitoring and publishing important data on the gas market to make sure that we really understand what is going on, and in particular, how customers can get the best possible deals, the most affordable deals, which ultimately they can pass through to their end users. These are two important reforms.

Now, all of this only works effectively if we have the supply we need, and central to this is the need for state and territory governments to help to ensure there is more supply coming into the market as fast as possible. The worst offender on this has been the Victorian Government, which has an outright ban on development of gas onshore in Victoria. This is a state that's forcing record levels of solar and wind into the system, is getting rid of its coal-fired power stations and has banned gas. That's an unsustainable situation. Victoria needs to loosen up its moratorium on gas, and get more gas into the system and ensure that Victorians and all Australians have a fair deal on energy.

JOURNALIST: The Centre Alliance has been arguing for this policy for some time. How much of this move is making good on their support of the income tax reforms?

MATT CANAVAN: Look, I was involved in constructive discussions with Senator Rex Patrick, in particular, in the last few months. He had very sensible positions on these issues, but as is clear from the action the Government has taken in the last couple of years, this is something we've been focused on for some time. It's something we've been working on - the policies we're announcing today - for a number of months. We have seen over the past eight months or so around the world a significant fall in global gas prices. That has changed the market situation that we're operating in and so we have already been thinking about what we need to do next here in the environment where while our prices have stayed down from where they were two years ago, prices now in north Asia and in Europe and have been for a long time in America, are much lower. That's why we're taking these steps today. As Senator Patrick said, last month, he provided his support to the Government's tax measures and the merits of those measures. And I hope that he can support these measures too on the merits of these announcements.

JOURNALIST:  Also, there's been criticism from some of the big energy companies and providers in recent times through reporting seasons that they face very uncertain energy policy for some time. Do you think that's a fair critique - that that's been dragging the sector as such?

ANGUS TAYLOR: No, absolutely not. I mean, we're seeing record levels of investment in our energy sector right now. The focus now has to be on getting the balance right. We need more investment in upstream gas to get supply coming into the market. That requires not just the gas companies or the energy companies to play a role but also state and territory governments, as I've already said. We need to make sure there's balance in the investment going into electricity generation - huge amounts, record amounts, highest in the world on solar and wind - that needs to be balanced with appropriate investments in gas and coal generation. So, it's about balance. The investment's happening. We need to see the right investment, and most of all, what we're talking about today, is we need to see continued investment in the growth of supply to meet domestic needs for gas. They are crucial needs for jobs, and for cost of living for households and businesses.

JOURNALIST: Are you confident of a positive reception from the business community?

MATT CANAVAN: I have spoken to many in the industry in the past few months about the situation. I have spoken last night and today about the measures we're announcing today. Obviously, there will be different views across the sector depending on whether you're a gas user or a gas producer, but I do think that most across Australia understand the priority that we need to develop Australian resources for Australian use first. We have a proud record of exporting our resources, our energy, our other natural resources to the world, and we are a proud and stable partner with other countries, but, of course, the exploitation of our resources should also come at benefit to the Australian economy as well. We've seen many in the gas industry, I think, recognise that over the last few years and I'm looking forward to work cooperatively with our very proud and strong gas industry to ensure we deliver both the aims of jobs and opportunity directly in Australia and helping support the energy needs of our export markets, particularly in the Asian region.

JOURNALIST: One more on energy. I just wanted to ask: if we're looking at outside of Australia how this will be received, do you think that this is a message Australia wants to send to China, to India, who are really cracking down on their emissions and really going in the opposite way, perhaps in the way the Victorian Government, as you suggested, is not sustainable?

ANGUS TAYLOR: Well, let me make a comment about emissions: the best way to quickly reduce emissions is with gas. That's why China, Japan, Korea, are buying record levels of gas from Australia, and we want to see more supply of gas into the domestic market, and we want to see more gas generation of electricity in Australia. I mean, the United States has been reducing its emissions at a rapid rate and that's been about gas. So look, gas is crucial in this and that's why we are so focused now on making sure there's a fair deal for gas, not just for ultimate end users in households and small businesses, but also for intermediate providers like electricity generators.

MATT CANAVAN: Can I also put in a plug here too, that when I travel through the Asian region there is an enormous demand for our high quality resources. The energy needs of Asia are so massive, so huge, that they will overcome the domestic resources that exist in the Asian region or in the north Asian region. They will have to look elsewhere like Australia for their resources. They're going to find those somewhere in the world and it's best for the world if they come to those areas which have got the highest quality resources, which we are lucky enough to have here in Australia. On top of the emission reduction benefits that our resources can deliver to Asian countries, there's also the very important air quality benefits that our resources deliver. There's a big problem with air pollution in many Asian countries, but the increasing use of our high quality gas and coal for electrification can help cut those emissions, which often come from the unregulated use of fuels in households and small businesses.

JOURNALIST: Minister Taylor, was there any discussions about nuclear power during Cabinet today at all?

ANGUS TAYLOR: I don't discuss what happens in Cabinet. We have a moratorium on nuclear and there's no plan to change that moratorium.

JOURNALIST: And your thoughts on it - is there something that can be discussed, do you think, like nuclear power?

ANGUS TAYLOR: I've referred an inquiry to investigate the role it could play over the long term in Australia.

JOURNALIST: One more question on a different topic, if I may: did the Government come any closer to a decision following the request from Mr Esper and Mr Pompeo over the weekend about passage through the Strait of Hormuz?

MATT CANAVAN: Look, I'll leave those matters for the Minister for Defence and the Prime Minister to deal with. They've already responded in some degree through the press, and if there's any further announcements I'm sure they'll make them.

Minister for Energy and Emissions Reduction