Topics: Government too slow to finding energy crisis relief; Bipartisan trip to the Pacific;

9 December 2022

Laura Jayes: Joining me live now is the Shadow Foreign Affairs Minister, Simon Birmingham. Simon Birmingham, thanks so much for your time. Energy is what we’ve all been talking about for many weeks now. We had the budget warning that our electricity bills and our power bills were going to go up astronomically on the East Coast. Now it looks like there will be a combination of things agreed to at this meeting, including price caps, but also direct subsidies to households broadly. Do you support those moves?

Simon Birmingham: Good morning, LJ. We’ll wait and see what the details are and try to understand then whether there are actually going to be price reductions for Australian households. And it’s for the government to explain if there are, how much, when households will see them, what that will mean for them and what the longer-term implications are. But there are a couple of concerns that we certainly bring to this. The first is timing. The government should have done this months ago. It shouldn’t have been forecasting energy price rises in the budget and doing nothing about it in the budget. It should have had a plan in time for the budget that they handed down. They went to the election promising that energy prices would come down during this first term in government. Instead, they forecast in their first budget dramatic increases but had no plan to deal with it. So timing is the first problem. Then the other problem and concern really is whether the types of interventions they’re going to undertake will, over the long run, just make a difficult situation worse. And by that, I mean, will they actually scare away investors in the future? Meaning that in terms of gas available for the domestic market in the future, we end up with even more shortages, more pressures, because there are already problems with the government cutting programs designed to increase gas supply. There are problems with how long it takes in terms of the approvals process, and there’s uncertainty before the courts around that approvals process for new gas projects now. And now if you create investment uncertainty on top of that, well we can actually see a situation where the government might provide something that they can claim as some sort of short term relief, but it may actually result in more long term pain.

Laura Jayes: Do you really buy this argument of sovereign risk that, you know, these companies, if they can’t make these enormous super profits, which they are, will just, for example, leave coal in the ground?

Simon Birmingham: Well, LJ, again, we have to say the detail of what the government is actually proposing, but they should have, particularly when it comes to the gas companies been able to drive a harder bargain and without necessarily going down the path of direct regulatory intervention in the form of price capping or whatever it is they’re going to come out with today. But it’s for the government ultimately to explain whether households are going to see a reduction in their power bills. If so, how much and by when? They’re the details that Anthony Albanese needs to spell out at the end of his meeting today.

Laura Jayes: We look at WA at this point in time with great envy, I think because they have a different system, they have a gas reservation policy whereby 15% is reserved for the domestic market and that essentially has a price cap on it. Is it, in your view, insurmountable that we can have something like that done on the East Coast and done quickly?

Simon Birmingham: Well, in terms of done quickly, I think there are challenges there because there are clearly international contracts that need to be honoured. But there should be able to be enough work to be able to be done between gas companies, the ACCC and government in terms of creating an environment where companies can and will definitely put more supply into the domestic market in short order to drive down some of those spot prices. That’s the type of work and discussion the government should have been having with the ACCC at the table, making sure the companies were given certainty to do that. The mechanism they’ve used to date means that companies make offers into the market. But what we really needed to see was an outcome where the government negotiated with the companies to definitely put that into the market. But the WA model doesn’t solve all the ills. I notice this week that in WA there is now talk about paying manufacturers, other major users of energy this summer to not use energy during peak times. So again, you’re seeing this disruption to heavy industry, to manufacturing industry, to many big employers in their energy market as well.

Laura Jayes: Do you think, at least politically, that Australians would want to see essentially them getting the benefits of the natural resource that is mined in this country? Gas and coal we get at a reasonable price and overseas they want it at the moment because of the war in Ukraine, but they have to pay a much higher price. Do you think that is the way we’re headed? And I think domestically the Australian public would accept that. Do you think the international community would accept that as well?

Simon Birmingham: The reason I’ve talked about supply and the coalition keeps banging on about supply is because Australia has a wealth of natural gas and of coal reserves. And so we should be able to supply the export market and our domestic market simultaneously. It’s a travesty if this country ends up having to choose to not earn export dollars from the rest of the world just so that we can supply our domestic market. And that’s why the government should reinstate the budget measures that it cut, which were designed by the previous government to help drive supply forward. They should bring forward legal reforms to address the uncertainty around the approval of major new natural gas projects and ensure that those projects, and that uncertainty appears to extend into the offshore wind sector as well. So they should make sure they get certainty for approvals in those projects as soon as possible. And they should be negotiating with the companies and the states to make sure that other regulatory barriers ensure that in the future and that need only be the medium term, we’re actually getting well and truly sufficient supply to keep domestic prices low and to serve as much of the export market as we possibly can.

Laura Jayes: Yeah, indeed. Well, look, the meetings are not till 2:00. I reckon it might be a lengthy one, but we will see what they come up with this afternoon, hopefully. Before I let you go, I want to talk about the Pacific. There is a bipartisan trip to the Pacific plan, which you will be going with. Penny Wong. This feels like quite a big moment, this being bipartisan. What do you hope to change there? And is it as big as it seems?

Simon Birmingham: Well, it is. Australia is always at our strongest when we speak with one voice. And so the opportunity to make sure that we project into Pacific Island nations the absolute certainty that within Australia support for those Pacific nations is bipartisan, it is rock solid and it is something that we are in lockstep in terms of working to continue and to advance. The previous government made big steps in terms of increased representation of Australian diplomatic officials in the Pacific, opening some six new missions across the Pacific, creating the infrastructure financing facility that is now funding a number of different critical pieces of infrastructure across the Pacific. They were big steps forward. The new government is building on that and I recognise it and it’s a demonstration that the trajectory for Australian support of our Pacific family and friends is one of continuity and of continued enhancement shared by both sides of politics.

Laura Jayes: Did your side of politics show the same level of bipartisanship when it came to the Pacific when you were in government?

Simon Birmingham: So this is actually replicating something that Julie Bishop did where she did a bipartisan mission into the Pacific with then shadow minister Penny Wong. And so after this election, with the change of government and taking on the shadow foreign affairs portfolio, I wrote to Penny suggesting that it would be a good thing to repeat that-

Laura Jayes: Julie Bishop, she wasn’t in the Parliament for about what, five years? In the intervening five years. Did that happen in the last term?

Simon Birmingham: Well, it didn’t although for more than half of the last term, international borders were largely closed, and travel, particularly into Pacific Island nations, was restricted for health reasons, too.

Laura Jayes: Yeah, it’s good to point that out. Simon Birmingham, pleasure to talk to you. Thank you.

Simon Birmingham: Thanks, LJ. My pleasure.