S1: From the newsrooms of the Sydney Morning Herald and The Age.
S1: This is inside politics. I'm Jacqueline Maley, it's Friday, April 11th.
S1: No one fell off a stage this week, but we
S1: did see the two party leaders face off for their
S1: first debate. Plus, the coalition released modelling of its gas policy.
S1: With energy prices so crucial for this election, we're going
S1: to take a closer look at the coalition's gas plan.
S1: Is it credible or is it just a cover up
S1: for a nuclear policy that may never come off? Joining
S1: us today, we have chief political correspondent David Crowe, as usual,
S1: and as a special first time guest on the pod,
S1: we have business reporter Nick Toscano who's going to explain
S1: to us the intricacies of gas supply. Welcome, gentlemen.
S2: Thanks, jacki.
S3: G'day, jacki.
S1: Nick, thank you so much for joining us. I want
S1: to go to you first, because gas supply is a
S1: little bit of a complex policy area. Energy authorities have
S1: been warning for quite a while now that we're going
S1: to run out of gas on the East coast. And
S1: yet Australia exports plenty of gas to other countries. So
S1: what is going on exactly?
S2: Yeah. Well, for better or worse, jacki, we're we're fairly
S2: hooked on gas here in Australia. And we we have
S2: been for quite a long time. It's pumped from under
S2: the seabed directly into the homes of millions of people
S2: across the East Coast. We use it to power our
S2: heaters and we use it in our stovetops for, for
S2: cooking and and our hot water units. We've actually had
S2: so much of it. It's been such a cheap and
S2: abundant source of of energy and fuel for, for decades
S2: that we've actually even translated into a giant export industry
S2: in the past ten years. There's been massive terminals crop
S2: up in in Queensland, which super chilled gas down to
S2: a liquid loaded onto ships and sent it to Asia,
S2: raking in billions of dollars a year in export revenue.
S2: So I guess it's quite understandable that the fact that
S2: we're facing a threat now of an actual gas shortage
S2: domestically has a lot of people scratching their heads wondering,
S2: how did we get into this ridiculous situation? And the
S2: advice from the energy market operator is that it's happening
S2: and it's happening fast. We could be headed for a
S2: gas shortage in as little as 3 or 4 years
S2: in the south east. So I guess when we think
S2: about what's to blame here, obviously the focus turns to
S2: the LNG shippers in Queensland. We we export far more
S2: gas than we use domestically. I think we export about 70%
S2: of the gas produced in Australia. And of course, if
S2: we kept more of that supply here at home, then
S2: it would go some way to alleviating the the imbalance
S2: that we're seeing in supply and demand at the moment.
S2: If they were forced to hold back more, or if
S2: they if they just did. But that doesn't necessarily go
S2: the whole way to explaining the situation we're in at
S2: the moment. The second bit comes down to the fact
S2: that Australia is just a really big country, and there
S2: is sort of a lopsidedness to our fossil fuel endowment now, um,
S2: the biggest sources of gas that have traditionally supplied our
S2: homes and businesses in eastern Australia largely came out of
S2: the Bass Strait between Victoria and New South Wales. They
S2: at one point supplied two thirds of all the gas
S2: we used for cooking, heating power and the like. Those
S2: fields have now entered a period of rapid natural decline,
S2: and there are basically no new supplies coming online that
S2: are capable of replacing them at the scale we need.
S2: And at the same time, the biggest gas fields we
S2: have left are up in Queensland. But but there's only
S2: one pipeline linking those Queensland gas fields down south into Victoria.
S2: And in winter, when gas demand is at its highest
S2: because of the need to run gas in heaters, that
S2: pipeline is already often full, so gas can't get to
S2: where it's needed at peak times. Then, when we look
S2: at the West Coast energy producers like Woodside over there,
S2: there's no pipeline connecting Western Australia's gas fields into Victoria
S2: or New South Wales either. So it's a bit of
S2: a complicated one. Yes, we're we're exporting gas overseas at
S2: a time when supplies are running short here. But even
S2: if we weren't, we'd still be in a position where
S2: we're in a relatively tight spot because our old fields
S2: are running out, and there's just no way of getting
S2: the extra gas to where we need it.
S1: So we're not hearing any of that in the political debate,
S1: which is interesting. David, can you tell us gas supply
S1: was in the news a lot this week because Peter
S1: Dutton has got a plan for it. What what exactly
S1: is the coalition's policy on this?
S3: It's to reserve more of the Australian Gas so that
S3: it stays here rather than being put on ships and
S3: sold offshore. And that's a kind of message that is
S3: popular with quite a few people. It's even got support
S3: on the left of the political spectrum, not just the right. Um,
S3: it addresses something that's been, I think, missed over 15
S3: years in Australian policy because I guess the pivotal decision,
S3: as Nick mentioned, was the opening up of new gas
S3: export terminals in Queensland off Gladstone. Those three terminals take
S3: domestic gas and ship it to Asia. And when they
S3: were built, The Labour government at the time, and I
S3: think the coalition government, just immediately prior did not reserve
S3: the gas for the domestic market, did not say, look,
S3: we'll build these terminals, but we'll keep 20% or 30%
S3: for the domestic market. And that was a huge mistake.
S3: We're paying for that mistake now.
S4: There is a lot of gas that's exported that we
S4: could turn back into the domestic market. We can reduce.
S4: As the independent analysis has shown, the cost of gas
S4: by about 15%, and that means we can bring down
S4: the cost of electricity. We can bring down the cost of.
S3: Peter Dutton talks about reserving gas, but of course he
S3: also talks about changing the spot market contracts for those exporters,
S3: which raises the question about sovereign risk for those companies
S3: that have invested heavily. He also talks about having an
S3: immediate or very, very early impact on electricity prices for
S3: households and gas prices for households, something like a 7%
S3: cut in household prices for gas and a 3% cut
S3: in household prices for electricity. But I think there's a
S3: huge leap of faith involved in thinking that he can
S3: get that immediate impact by intervening in the market so heavily.
S3: It's a complicated business, and I don't think he has
S3: proven that point.
S5: The only gas policy that the coalition have is the
S5: gas lighting of the Australian public. He disagrees with all
S5: of the experts.
S1: Yeah. Well, this week Peter Dutton released economic modelling by
S1: Frontier Economics on how the coalition gas policy would affect prices.
S1: I note that people pointed out that the modelling had
S1: a two year time frame imposed on it, but the
S1: coalition itself is sort of unable to say or unwilling
S1: to say how quickly the gas reservation scheme would be
S1: up and running, basically. Nick, what did the modelling say
S1: about electricity prices?
S2: The modelling looked at the impact of what happens if
S2: we reserve all this extra gas, cause a flood of
S2: gas and oversupply in the East coast market. What will
S2: that do to to prices for both gas but also
S2: for electricity. The modelling suggested that forcing an oversupply of
S2: the size that Dutton is proposing could cut the wholesale
S2: price of gas down to $10 a gigajoule. That might
S2: not mean much to listeners, but it's about a 1,015%
S2: reduction from from today's prices. In terms of how that
S2: translates to the bills that you and I pay, it's
S2: a little bit more complicated. The wholesale gas price is
S2: what's what's paid by gas retailers who en sell it
S2: to us, and large manufacturers who who by the by
S2: the fuel directly. The modelling suggests that the impact on
S2: household gas bills. So for using your stove or your
S2: heater could reduce by 7% as as David mentioned. That's
S2: not a heap. That's um at translate for for a
S2: median gas bill in New South Wales, that's about $60
S2: a year. And in terms of the impact on electricity bills,
S2: the flow on there is because gas fired power generators
S2: supply about 10% of the energy that we use in
S2: the from the power grid. They estimate that the savings
S2: there could be about 3% a year, which is also
S2: not not a huge amount. That also translates to about
S2: $60 a year, about a dollar a week for a
S2: median bill pay. So we're not talking about massive savings, but, um,
S2: you know, uh, for, for for you and I perhaps,
S2: but Peter Dutton has been keen to sort of point
S2: out that the savings that frontier has modeled perhaps could
S2: also go beyond what you and I pay directly in our,
S2: in our bills. You know, he points out that a 15%
S2: reduction in the wholesale cost of gas could flow through
S2: to other areas of the economy, you know, like the
S2: cost for food processors, who who stock our grocery stores,
S2: or the manufacturers of building products that have materials that
S2: go into our homes. Um, but I guess the question
S2: of whether or not consumers will actually notice the difference
S2: of a slight reduction in gas prices, which is just
S2: one input in, you know, a cost inflationary environment. I
S2: guess that remains to be seen.
S1: Yeah. David, I mean, the gas policy that we're talking
S1: about might be a bit of a distraction because it's
S1: actually supposed to be just sort of the curtain raiser
S1: or the stopgap measure for the coalition's grander policy of
S1: nuclear energy, which is supposed to be the big fix.
S1: The proposal by the coalition to build seven nuclear reactors
S1: around the country using taxpayer money. And Dutton says that
S1: will eventually lead to a 44% reduction in power bills.
S1: Is this gas plan credible as a lead in to nuclear,
S1: or is it a way of distracting voters from the
S1: fact that nuclear is very expensive? It's taxpayer funded, and
S1: most experts say that even if you could make it work,
S1: it won't work until the 2040s.
S3: There is a political dimension here where clearly Peter Dutton
S3: and the coalition don't want to talk too much about nuclear.
S3: They've found that that's not a big winner in some
S3: of the key seats they want to get. At the
S3: same time, though, I think Nick and our colleague Mike
S3: Foley have been reporting for a long time now on
S3: the warnings about a gas shortage. Those warnings come from
S3: the RUC. They come from the energy market operator. They're
S3: in regular, annual or quarterly updates on the outlook. And
S3: so there is this question to be confronted. Do we
S3: need more gas or do we need to switch even
S3: faster to other sources of energy and reduce our reliance
S3: on gas, or do we need both? So in that
S3: shortage environment, there's a clear message from Peter Dutton. When
S3: you rise above the complexities and the awkward questions about
S3: his policy, he clearly wants to open up new gas fields.
S3: He wants the Beetaloo basin opened up in the Northern
S3: Territory so that gas is sent down to the East coast. Now,
S3: that requires a huge investment in the Beetaloo basin. It
S3: also requires a big investment in pipelines to make it happen.
S3: But he's pro gas. He's also pro gas. When you
S3: think about other gas fields. There's the big Narrabri gas
S3: field in northern New South Wales. It's been a dormant well,
S3: not a dormant project, but a project waiting to move
S3: for years. Um, the thing about a gas reservation plan
S3: is that Santos, which is trying to open up the
S3: Narrabri gas field, has always said that it would feed
S3: it into the local market. So it was always going
S3: to be reserved for the local market on the East Coast.
S3: But it can't get those final environmental approvals. I think,
S3: at the state stage at this point. And so it's
S3: it's stuck. Peter Dutton is pro gas. I mean that
S3: that is the big picture contrast. And it is actually
S3: an important point when you think about the warnings from
S3: the regulators about what we need.
S1: Sure. What I find interesting about this election, and, you know,
S1: it is so focused on energy and cost of living
S1: is top of mind for voters, with good reason. But
S1: there's no no talk at all about emissions and carbon
S1: emissions and how a gas policy and as you say,
S1: opening up new sources of fossil fuels. Unlocking them would
S1: affect our emissions agreements. Our commitments?
S3: Yes, it's secondary here. I mean, Peter Dutton's policy is
S3: open up more gas fields off the coast of Western Australia.
S3: I mean, he's backing in Woodside, which has got one
S3: of those big gas fields. That's his stance. Anthony Albanese
S3: also says we need more gas. Gas is part of
S3: the transition to renewables, because those gas fired power stations
S3: are very good at kicking in quickly. If there's any
S3: shortage of wind and solar in the grid. And in fact,
S3: the regulators say we are going to need more gas
S3: fired power stations. And again, Nick and Mike Foley have
S3: written that.
S5: So we want renewables backed by gas, backed by batteries
S5: backed by hydro.
S3: So, you know, it's not like there is a future
S3: where we don't use gas in the coming decades. It's
S3: just a matter of emphasis where Peter Dutton is positioning
S3: himself very strongly as the progress candidate here.
S1: Yeah. Nick, thank you for joining us. We'll let you
S1: go because we're going to talk about polling now. That
S1: was fascinating. And we might have you back on again
S1: if we need this stuff unpicked because it is diabolically
S1: complex but also incredibly important.
S2: Thanks, Jackie. Thanks, David.
S6: Cheers, Nick.
S1: So, David, I just want to segue now to do
S1: a sort of general vibe check with you, because a
S1: lot of the polling seems to be suggesting that Albanese
S1: and Labor are gaining traction with voters, and that Dutton
S1: and the coalition are losing traction. Dutton obviously had a
S1: pretty poor first week of the campaign, but what is
S1: your general vibe about who's going well and who's not,
S1: or who's winning, if we can say that.
S3: I found it really interesting, uh, this week, uh, to
S3: see the polling showing labor doing better. And it's one
S3: of those things where you get a vibe in an
S3: election campaign, but then you see data which tends to
S3: confirm the vibe. And of course, we're all aware of
S3: this really. It's the fact that the government started the
S3: campaign in a strong way. We've seen Anthony Albanese being
S3: very clear, very on message, no stuff ups in the
S3: way that we saw in the 2022 campaign. And in fact,
S3: it's been really interesting that there have been so many
S3: mixed messages and awkward moments on the coalition side of
S3: the campaign. And of course, the big standout is that
S3: Peter Dutton had to dump his approach to working from
S3: home and admit that they made a mistake and then
S3: do this incredibly big backflip circling in the air in
S3: full view. You know, they they didn't try to hide
S3: the backflip. They had to make everybody aware of this backflip.
S3: Now the polling came out before that. But of course
S3: there'll be more polling. And we'll be talking about this
S3: next week as well because it'll be such a running
S3: thing in this campaign. But we are seeing this. We
S3: are seeing a switch back to labor among key demographics
S3: among men, among people aged from 35 to 54 in particular.
S3: And I found it very interesting to see that young
S3: men in that 18 to 34 age group are also
S3: switching back to labor. But of course, we had labor
S3: in a very sorry state at the beginning of this year.
S3: So in a sense, there's a bit of a correction
S3: going where as the election gets close, as people think
S3: more clearly about what they really want to do, where
S3: they want to cast their vote, they move a bit
S3: back to the government.
S1: I mean, politicians always tell us, of course, that they
S1: don't listen to the polls. And it's not, you know,
S1: the only poll that counts is the poll on Election day.
S1: But how important is that ineffable sort of sense of
S1: momentum to a campaign when you're sitting inside the campaign
S1: and the polls are confirming what everybody really is saying
S1: in the media that you're not going so well?
S3: Yeah, I think journalists often use that word momentum, and
S3: that's because it's a real thing. And so we use
S3: that word to describe a reality in campaigns. But just
S3: to sort of move away from getting stuck on one word,
S3: it's really about the sense that the government's working in
S3: a very coherent way at the moment, with Anthony Albanese
S3: and the ministers around him, all on a fairly disciplined
S3: message and all after putting a whole bunch of things
S3: on the agenda, the Medicare spending, the urgent care clinics, um,
S3: policy after policy, then the tax cuts in the budget.
S3: Clear messages and really no stuff ups, some occasional moments
S3: in the daily campaign where, you know, things come out
S3: awkwardly on the coalition side. Um, I think that they've
S3: been slower with their policy response, and I think that
S3: they're now being caught out for not having put some
S3: of their policy ideas on the table earlier, like we're
S3: talking about their gas plan and we've got questions about
S3: how it works. Well, why wasn't it on the table
S3: two months ago with modelling with some more concrete, um,
S3: examples of what they were going to do so that
S3: everybody could evaluate it and they had more time to
S3: sell it. I actually asked this question of Angus Taylor
S3: when he spoke at the National Press Club. I said,
S3: John Howard always used to say, you cannot fatten the
S3: pig on market day. And I think that is what
S3: the coalition has been doing in this campaign, coming out
S3: a bit too late with their policies when, let's face it,
S3: they've got about a week to go. Well, they've got
S3: a week less than a week to go to Easter.
S3: And then on the Tuesday after Easter, early voting begins.
S3: They're running out of time to to get their message
S3: to voters.
S1: Yeah. And to settle it into people's minds, particularly when
S1: you're talking about gas, which which, as we've just discussed,
S1: is quite a complicated area. Casting forward next week is
S1: very make or break for a number of reasons. Can
S1: you tell us why? David.
S3: Well, we've got a leaders debate for a start. And
S3: that's Wednesday night at the ABC studio in Parramatta. So
S3: it's got a Western Sydney kind of theme. But you know,
S3: it's important for voters around the country because I'm not
S3: seeing signs that there's going to be any other leaders debate.
S3: We've got Easter, we've got Anzac Day weekend. There won't
S3: be other opportunities for a big debate like this. So
S3: that ABC debate becomes really important.
S1: And is it safe to say that more people will
S1: watch that, given it's on the broadcast, public broadcast of
S1: free to air, as opposed to the last debate this week,
S1: which was Sky and sort of locked down, unless you're
S1: a subscriber.
S3: I thought the Sky news leaders debate the other night was, uh,
S3: was not going to budge a voter one way.
S1: Or the other. Yeah, that was my.
S3: I called it a draw. You know, I know there
S3: are different views about who won. And the studio audience
S3: said that the Prime Minister won. Fair enough. But I
S3: think it was generally a draw. No knockout blows. But also,
S3: let's face it, not that many viewers, really, not that
S3: many viewers. So it would not have sunk in to
S3: many voters. The most important outcome of that debate was
S3: the headline across the media the next day about the
S3: fact that Albanese won it because the studio audience said
S3: that he won it. That was more important to the
S3: campaign than anything that actually said on the night.
S1: Yeah. So next week we've got the ABC debate, I
S1: think on Wednesday night, which we can assume more people
S1: will watch than than did the last one. Well, we've
S1: got Easter when a lot of people will switch off.
S1: And also early voting starts. Right.
S3: Yeah. And I think that adds an intensity to the
S3: campaign next week. When you think about the fact that
S3: they've all got to have their plans on the table.
S3: I mean, the idea of releasing a policy, say, in
S3: the last week of an election campaign, I think that's
S3: a highly risky thing to do. We saw Scott Morrison
S3: do it in 2022 because he came out with the
S3: superannuation for housing.
S1: I forgot about.
S3: That. In his campaign launch, one week before polling day
S3: and early voting was already underway. And I don't think
S3: that that, uh, well, I clearly didn't save him, and
S3: it was controversial. I don't expect to see last minute
S3: big policy manifestos during those two weeks of early voting.
S3: You've got to have your message out by the time
S3: people start their early voting. And I've written in the past,
S3: despite all the complaints from political insiders about early voting,
S3: Australians like it. They want to keep it. They'd have
S3: two weeks of early voting and they'd have three if
S3: they really had their say. So that's the way the
S3: electorate wants to cast their votes, and the political leaders
S3: have got to work with that.
S1: Well, some of us are very organised and very busy
S1: and we need to go early and some of us
S1: like the to go to the local primary school and
S1: get a sausage on the day.
S3: Yeah. That's right. I mean, I tend to vote early
S3: just to get it out of the way because I'm
S3: busy on on Election day. But I do enjoy the, uh,
S3: the color and movement of the, uh, the local school.
S1: Yes, it's about the spectacle. And also, um, you know, buying, um,
S1: sausages from impoverished local schools. Um, we, um, cannot wait
S1: to see you again next week. Thank you. That was
S1: an interesting chat, as ever. And, um, we will see
S1: you again soon. David.
S6: Cheers, Jackie.
S1: Today's episode was produced by Julia Katzel with technical assistance
S1: from Josh towers. Our executive producer is Tami Mills, and
S1: Tom McKendrick is our head of audio. To listen to
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S1: Age or smh.com.au. Subscribe. I'm Jacqueline Maley, thank you for listening.