Press Conference with the Deputy Prime Minister and the Minister for Energy and the Environment

Transcript
27 Sep 2017
Prime Minister, Deputy Prime Minister, Minister for Energy and the Environment
Gas supply; AGL
E&OE

PRIME MINISTER: Today, we’ve secured more gas for Australian families, for Australian businesses, securing Australian jobs.

The Deputy Prime Minister and the Energy Minister and the Treasurer and I have just concluded meetings with the three largest gas companies in Australia, the three largest gas exporters from the east coast of Australia. That’s Origin, Santos and Shell. And they have given us a guarantee that they will offer to the domestic market the gas that was identified as the expected demand shortfall, by AEMO, in 2018.

They’ve indicated or stated that they will provide a similar guarantee over two years - that’s their intention and will respond further in more detail on 2019 when we meet again next week.

They’ve stated that they will offer first - as a first priority - domestic customers any uncontracted gas in the future as a priority.

They have also given a commitment to provide regular reporting to the ACCC on sales, offers by them to sell gas and bids to buy gas from customers that they have declined. This is a very, very important step.

One of the big problems in the gas industry, as the ACCC's report identified on Monday, is that it has been very opaque. There has been very, very little transparency. We are going to bring that to an end by putting the ACCC on the case. They of course have the ability to investigate with compulsory powers, and they have been able to get behind what is going on in the gas sector and therefore identify the way in which the market is not working.

In terms of any additional gas requirements, and as you know, AEMO identified additional gas requirements up to 107 petajoules of gas in 2018 on top of the expected shortfall amount - so identified 54 petajoules as an expected shortfall and then up to 107 depending on what happens with the weather and a big thermal generator breaking down and so forth - they have given us a commitment that they will continue discussing that with AEMO but very importantly, so as to ensure that if the gas is needed, it will be provided, both in 2018 and 2019.

We are going to meet again on Tuesday. The aim is to reach agreement on a heads of agreement to ensure we have an effective gas market on the east coast, where customers can acquire gas on standard commercial terms from several vendors, several sellers, for a term of years at prices that reflect global prices. 

Now, just on prices, obviously they vary with the global price but I want to make one very clear and obvious point - whatever the price of gas is in Queensland because Queensland is where most of the gas is now being produced on the east coast, it is going to be more expensive in Melbourne because of the cost of getting it there. The failure of Victoria and New South Wales to unlock their onshore gas resources means that more gas will have to be shipped south at greater expense and it will mean that Victorians and residents of New South Wales will be paying more.

An extra $2 a gigajoule, which is around the cost of shipping gas from Queensland, is about 11 per cent on the gas bill of a typical household in Melbourne. 

The failure of the states of Victoria and New South Wales to get their gas resources, onshore gas resources developed means residents of New South Wales and Victoria and businesses in those states are going to continue to pay more for gas than they otherwise would.

But this is very good progress today. There is more work to be done. But we have secured that guarantee from these three big gas companies, three big gas exporters that the shortfall, the expected shortfall identified by AEMO and the ACCC in 2018, they will provide the gas to meet that.

So it’s a very good outcome and I want to thank my colleagues and of course the Treasurer and the companies that were represented today at the meeting, for their hard work and cooperation.

There is obviously more work to be done as we finalise the detail of these arrangements.

THE HON. BARNABY JOYCE MP, DEPUTY PRIME MINISTER: Thank you very much, gentleman and ladies, ladies and gentlemen. What I would say at the start is this is another typical example of where the Labor Party is incredibly good at dropping plates and then looking at the pieces on the ground and saying to the Coalition, to the Prime Minister, to Josh, to Scott Morrison and myself: "Now we want to see how you can fix it up".

Yet another example of incredibly bad planning by the Labor Party which we are now resolved to making sure that we keep gas basically affordable and reliable.

By so doing, securing the jobs of the blue-collar workers, the manufacturing workers and also the residential users because this is vitally important for our economy, vitally important for the standard of living, vitally important for blue-collar jobs, manufacturing jobs which once upon a time, the Labor Party used to represent.

What we have also seen here is, as the Prime Minister has clearly spelled out, that if you want to have more affordable gas in Victoria, then Victoria has a responsibility to those manufacturing workers, to those homes to get access to the resource that resides under their feet, under their feet in Victoria but somehow, they’ve got this sort of religious belief that they can't use their gas, but they can use Queensland's gas.

Now, we’ve had a very constructive meeting. The same deal with New South Wales in the Pilliga, they should be getting access to that resource and getting it in so they can secure the jobs of Western Sydney and regional towns in New South Wales.

We have had a very constructive meeting. We have another meeting coming up on Tuesday.

I will address one thing, because I know you will bring it up about the so-called ‘trigger’. I will use this analogy that I see policemen every day and they have a car, they have a siren, they have flashing lights and they have a holster on their hip - we don't expect them to use it every day, we expect them to use it if required, when needed.

We are driving an agenda. We are making things happen. We have seen gas come onto the market. We have seen prices are coming down. We are showing that as a Government, we are effective in dealing with the issues that’s before us. We have movement, we are getting further movement and further meetings will happen on Tuesday. This goes to show what a competent government looks like.

If you want to know what a disaster looks like, it looks like South Australia with electricity, it looks like the Victorian Labor Party in Hazelwood and it looks like what the Labor Party did when they set up Gladstone without taking into account the requirements of the Australian economy.

Thank you.

PRIME MINISTER: Thanks Barnaby. Josh, did you want to add to that?

THE HON. JOSH FRYDENBERG MP, MINISTER FOR ENERGY AND THE ENVIRONMENT: Thank you Prime Minister, thank you Deputy Prime Minister.

There is no point Australia becoming the world's largest LNG exporter if our local community goes short. That is why today's meetings and the commitments that have been secured are so important for Australian workers and Australian families.

The commitments from the companies today do not let the states and the territories off the hook.

New South Wales imports more than 95 per cent of its gas.

Virtually all the gas that is produced in Victoria comes from offshore Commonwealth waters given the Andrews Government mindless moratoriums and bans on onshore conventional and unconventional gas extraction.

And we know that the Northern Territory is sitting on 200 years’ worth of gas resources.

Gas is critical to Australian businesses, it is critical to Australian families, that is why today's meeting was so important.

JOURNALIST: Prime Minister did you have to offer anything? Does the government play any part in this in the decision from the gas companies?

PRIME MINISTER: Well, they have given these commitments to the government today and we have just finished the meeting a little while ago.

Clearly, as Barnaby said, the Commonwealth has very considerable powers to control exports. We have made it very clear that we are prepared to exercise those powers in circumstances where there is going to be a shortfall of gas.

Our objective is to ensure there is not a shortfall of gas. That is the whole objective.

Now, we have been given the undertakings today and we have got further work to do. We want to see this incorporated into an agreement. It is very important to provide the maximum assurance for Australian families and businesses and jobs with the supply of gas.

The gas market has not been working effectively, as the ACCC described in its report that you would have seen on Monday.

The companies that were represented at the meeting today have indicated, very strongly, that they want the market to work effectively. Their customers, these are the three biggest gas exporters from the east coast, their customers are obviously big commercial and industrial concerns, retailers like AGL and of course the energy sector, the electricity generation sector, so it is important that they are going to be providing transparent offers so we will know what prices are being offered, we will know what bids they are receiving, we will know what bids they are accepting and what sales they are making and what bids they are knocking back.

So we are going to shine a light on what has been a very opaque industry and that sunlight will ensure more gas at better prices for Australians.

JOURNALIST: Prime Minister, could you elaborate a bit on the price rises expected of 11 per cent for households and businesses, in particular if New South Wales has been importing most of its gas anyway from Queensland, why would prices suddenly jump?

PRIME MINISTER: I will ask Josh to expand on that but I was making the point about Victoria and the impact of an additional $2 a gigajoule.

MINISTER FOR ENERGY AND THE ENVIRONMENT: The ACCC makes it very clear in its report that $2 a gigajoule is worth 11 per cent to a household, residential gas bill in Victoria and about 5 per cent to a household gas bill in New South Wales because they use less gas in the households in New South Wales compared to Victoria.

The Prime Minister's point is very important because if we get gas developed in the south of our country, in New South Wales, in Victoria, then you will not have that transport cost.

And the ACCC have indicated that to ship or to pipeline gas from Wallumbilla in Queensland to Sydney is about $2 a gigajoule. To Victoria it is about $2.24 a gigajoule and it is just over $1.60 from Wallumbilla to South Australia. So, the clear preference is to get gas produced in the areas in which it is needed for the families and for the businesses in those states. That is why today's commitments don't let the states off the hook if they are really wanting to get lower gas prices for their constituents.

PRIME MINISTER: To add to that, I just say that what we are solving for today is a near-term shortfall in gas, a gas crisis.

And we’ve had a very constructive meeting. We will have another one and possibly others. The goal is to ensure there is not a shortfall of gas next year and indeed in 2019. That is the goal.

But longer term, as everyone acknowledges - the ACCC, the industry - it is plain, it is very obvious, longer term we need to produce more gas and the gas that is most economic for Victorians is obviously gas in Victoria because you don't have to haul it as far to get it to the customer. And the same observation in New South Wales.

The failure to develop the onshore gas resources, the gas that is literally under our feet is costing households and businesses dearly.

JOURNALIST: Prime Minister, AGL plans to build a $250 million LNG import hub at Crib Point in Victoria. Isn't this evidence of market and political failure that Australia's abundance of gas hasn't guaranteed supply or low prices?

PRIME MINISTER: Well it certainly, their proposal is an absolutely shocking indictment on the Labor Government in Victoria. Victoria has got plenty of gas. There is plenty of gas in Victoria, onshore gas in Victoria. The only obstacle to getting it out is the Labor Government and the idea that Victorians are going to have to pay the cost of shipping gas from the Middle East or from Louisiana or from north-west Australia , because they’ve got a government that is not prepared to access the gas resources in Victoria, is extraordinary.

I think you’re right, it’s a shocking indictment of Daniel Andrews and his government and he seems to be an enthusiast for it. He wants Victorians to pay more for gas.

JOURNALIST: Prime Minister on the question on New South Wales. Hopes are pinned on say Narrabri providing up to 50 per cent of the state’s supply but that project seems to be bogged down in 23,000 submissions in the devaluing of the resource, or uncertainty about whether Santos wants to proceed with that, and various hurdles of the environment and other approvals that need to be met which could take some years. Are you intending to, if you like, lean on or influence the New South Wales Government to get a move on?

PRIME MINISTER: Were certainly encouraging them to get a move on with it, absolutely.

JOURNALIST: How do you do that?

PRIME MINISTER: By encouraging them and urging them to do so and I think public opinion will play a role.

I understand most of those submissions did not come from anywhere near the district, by the way.

So the bottom line is that there is a cost, a price to be paid by families and businesses and in jobs in terms of excessively expensive energy if you don't develop your energy resources.

The Narrabri project is one that should go ahead. It should have gone ahead long ago. The same is true with opportunities in Victoria.

JOURNALIST: Prime Minister AGL has also today committed 100 per cent to closing Liddell and going for cleaner power. It says the plant can’t be sold, it’s just too expensive. What do you say to that?

PRIME MINISTER: Well that’s not actually quite what was said.

The Chairman of AGL - I understand - said that the request that we have made to the company to consider selling Liddell will be considered by the board and they are going to consider that, as we have requested.

I’ve seen brief details of an alternative strategy by AGL which involves some additional coal-fired generation at Bayswater, some gas, some solar, a battery = now whether that will meet the requirements for ensuring a reliable baseload power remains to be seen.

We will certainly look at it and of course, most importantly, the Australian Energy Market Operator will look at it.

DEPUTY PRIME MINISTER: If I could add something on that. This always sounds odd you know, the argument of, "I’ve got this car and I just don't think I can fix it. There is nothing I can do with it."

And then you say, to the person: "Well good, do you want to sell it to us?"

And they say: "No, no I want to drive it off a cliff."

It just doesn't stack up.

JOURNALIST: Mr Joyce, you spoke about a trigger and not wanting to use it. Does this agreement from the companies permanently save them from –

DEPUTY PRIME MINISTER: No, no, I never said - I used the analogy of the holster that a policeman has. We were certainly prepared to use it.

JOURNALIST: But could you be in this situation next year for instance?

DEPUTY PRIME MINISTER: In fact, it’s actually being used in a form right now. It is bringing more gas onto the market. The prices are going down. Things are actually moving. We’re actually dealing with the problem that was left to us by the Australian Labor Party because of their incompetence of being unable to foresee the problems that would exist if Australia exported all its gas and had none for use of its own.

At the same time, the Labor Party again is hard at work - I mean it takes a real, a certain type of person to completely botch an electricity market - but the Labor Party can do it, they are up to it. They’ve done it in South Australia and now we see it in Victoria, where they’ve said we’re not going to use the gas under our feet, but we’re going to blame everybody else for not giving us gas from somewhere else.

Even with all these difficulties in front of us, we are still trying to assist the Labor Party in trying to provide the base line, the food-stock of blue-collar jobs in Victoria. We still believe in blue-collar workers, we really do. The Labor Party, they have visions for other places.

PRIME MINISTER: Can I just repeat, just reinforcing what Barnaby's just said - the object of the gas security mechanism which is just using the Commonwealth's power to regulate exports, to restrict exports - the object is to prevent a shortfall in gas supply on the east coast occurring next year.

If we are satisfied that a shortfall will not occur and AEMO and the ACCC are satisfied a shortfall will not occur then we don't need to use the mechanism. It’s a very important part of the toolkit that we have to protect Australian jobs and ensure that we have affordable and reliable supplies of energy.

JOURNALIST: Was it the trigger, to put it plainly, that brought the gas companies to the line here today? Secondly, will you consider having discussions with Ms Hanson's Party, given that they are considering a block to drilling in central Queensland?

PRIME MINISTER: Just dealing with the gas companies, you’ll have to talk to them about that but we’ve always been very up-front about our commitment.

It is not part of, it is not something that we relish doing - restricting exports - we want to see more exports. Okay? But Australians have to come first. That’s the bottom line.

Australian jobs, Australian families, Australian businesses have to come first.

So if there is no other way to prevent a shortfall occurring, then we would restrict exports but if we’re able to achieve commitments that will ensure there is not a shortfall of gas and that the market functions well and people can buy the amount of gas that they need at prices that reflect global prices, well, then we don't need to restrict exports.

As far as the views of other parties are concerned, our position is very clear. We need more gas in Australia. We need more gas particularly in eastern Australia. We will certainly make that case to all players in the political universe.

Thank you all very much.