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Speaker 1: My name is Lily Maddon and I'm a proud Arunda

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Speaker 1: Bungelung Calcottin woman from Gadigl Country. The Daily oz acknowledges

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Speaker 1: that this podcast is recorded on the lands of the

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Speaker 1: Gadighl people and pays respect to all Aboriginal and Torres

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Speaker 1: Strait Island and nations. We pay our respects to the

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Speaker 1: first peoples of these countries, both past and present.

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Speaker 2: Good morning and welcome to the Daily os It's Friday,

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Speaker 2: the sixteenth of December. I'm Sam, i'mara. The Government's Energy

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Speaker 2: Bill has passed in parliaments, introducing limits to wholesale gas

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Speaker 2: and coal prices and direct bill relief for some people

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Speaker 2: and businesses.

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Speaker 1: We need to act now to make sure we do

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Speaker 1: secure our energy future.

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Speaker 3: It's a good day for bringing down power bills and

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Speaker 3: it's a bad day to be a greedy gas corporation.

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Speaker 2: But not everyone is happy with this plan.

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Speaker 3: Oh you've got a Prime Minister who has his economic

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Speaker 3: al plates on and it's Australian families who were going

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Speaker 3: to pay the price for that.

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Speaker 4: The dismantling of the gas market that will have a

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Speaker 4: chilling effect on the investment needed to bring on that

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Speaker 4: new supply.

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Speaker 2: This sounds like a job for TDA journalist Tom Crowley,

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Speaker 2: who will be joining us on the deep dive to

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Speaker 2: explain how this bill will affect you and when. But first, Aara,

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Speaker 2: what are the headlines this morning?

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Speaker 5: The unemployment rate remained at three point four percent in November.

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Speaker 5: That's according to the Australian Bureau of Statistics. The latest

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Speaker 5: data also found that seasonally adjusted under employment, so people

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Speaker 5: who didn't work as much as they wanted to, fell

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Speaker 5: to five point eight percent.

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Speaker 2: Cryptocurrency Exchange Finance Australia has been fined over two million

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Speaker 2: dollars for breaches in spam emails sent between October of

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Speaker 2: twenty twenty one and May of this year. The Australian

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Speaker 2: Communications and Media Authority found that binance sent over five

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Speaker 2: point seven million commercial emails that didn't contain an option

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Speaker 2: to unsubscribe or made it difficult to opt out.

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Speaker 5: Opposition Leader Peter Dutton has paid respect to the victims

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Speaker 5: of the rural Queensland shootout during an emotional condolence motion

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Speaker 5: in Parliament. Dutton, who is a former Queensland policeman, said

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Speaker 5: the complete disregard for those killed in the attack is

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Speaker 5: what's hit Australian's the hardest. Two police officers and a

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Speaker 5: local resident were killed on Monday.

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Speaker 2: And today's Good News New Zealand Prime Minister Jacinda Ardern

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Speaker 2: and the political opponent she described earlier in the week

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Speaker 2: as an arrogant prick have joined forces to raise money

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Speaker 2: for charity. A hot mic in Parliament caught Ardurn's comments

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Speaker 2: about David Seymour. Now the hands had paper recording the comments,

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Speaker 2: signed by the pair will be auctioned for the Prostate

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Speaker 2: Cancer Foundation. That's amazing. What a story. The government's power

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Speaker 2: legislation has passed after Prime minist Anth and the Albernizi

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Speaker 2: recalled Parliament to vote on the bill yesterday. The bill

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Speaker 2: limits wholesale gas prices and provides direct bill relief for

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Speaker 2: some people and businesses. Tom, thanks for coming on this

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Speaker 2: morning to explain what all of this means. It's my pleasure. Sam.

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Speaker 6: I always get a little bit of a pit at

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Speaker 6: the bottom of my stomach when I have to explain

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Speaker 6: power prices. But I think we're going to get through

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Speaker 6: this together.

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Speaker 2: Let's do it.

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Speaker 4: So.

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Speaker 2: This new legislation sets out to address rising energy prices,

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Speaker 2: and that's something we've all seen over the last twelve months,

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Speaker 2: but most of us have actually had to pay more

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Speaker 2: for our energy. And before when you've been on the pod,

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Speaker 2: we've talked about the role of Ukraine, and I think

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Speaker 2: that's a good place to start.

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Speaker 6: Yes, a war in Ukraine on the other side of

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Speaker 6: the world that Australia is not fighting in somehow affects

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Speaker 6: my power bill in yours, Sam. It's not necessarily the

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Speaker 6: most obvious thing in the world. But the simple answer

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Speaker 6: is the war in Ukraine which involves Russia, basically just

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Speaker 6: means there's a lot less gas on the world market.

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Speaker 6: There's a lot less gas to go around, which makes

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Speaker 6: the gas that is there more expensive.

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Speaker 2: And is that because Russia are producing less gas or

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Speaker 2: they're not giving it to us.

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Speaker 6: Not giving it to the rest of the world. That's right,

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Speaker 6: and that can affect gas prices all over the world,

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Speaker 6: even in a little old Australia. So you imagine being

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Speaker 6: an Australian gas producer and you can make this great,

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Speaker 6: big price all the way over there because people are

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Speaker 6: desperate for Russia's gas, Well, why would you sell it

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Speaker 6: here for anything less? And so essentially what happens because

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Speaker 6: gas is such an important commodity that people use all

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Speaker 6: around the world, the whole world ends up paying roughly

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Speaker 6: the same price for it, and that includes Australia's. Australia

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Speaker 6: pays that high price for its gas and also for coal.

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Speaker 6: Coal is a bit of a substitute for gas when

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Speaker 6: it comes to power, and so coal has become a

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Speaker 6: bit more expensive around the world for the same reason.

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Speaker 6: We have these price spikes in gas and coal that

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Speaker 6: affect us here in Australia where gas and coal are

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Speaker 6: an important part of our power system. So in Australia,

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Speaker 6: I guess our energy is in a bit of transition.

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Speaker 6: We need a bit of coal and gas at the moment,

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Speaker 6: and we have a bit of renewable power. Certainly, the

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Speaker 6: direction that we're heading in that governments are heading in

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Speaker 6: is more and more renewables. And I suppose talking about

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Speaker 6: coal and gas playing a smaller and smaller role over time,

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Speaker 6: but right now they are still really important to us

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Speaker 6: getting the power that turns the lights on. And so

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Speaker 6: when they're really expensive, that is something that affects you

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Speaker 6: and me, and it is something that creates a bit

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Speaker 6: of a crisis for the government to grapple with.

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Speaker 2: And the government's actually extended the sitting year in Canberra

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Speaker 2: to get these laws over the line. What's the plan here?

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Speaker 6: So I could give you a ten second answer and

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Speaker 6: we could just end the podcast here, Sam, gas and

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Speaker 6: coal prices are high, and so governments are going to

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Speaker 6: limit gas and coal prices.

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Speaker 2: Thanks for joining us on that note. Come on, keep going.

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Speaker 6: Of course, the details get a little bit more complicated,

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Speaker 6: So I'll start with gas. It's a temporary price limit

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Speaker 6: on gas prices in what we call the wholesale market.

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Speaker 2: Explain that to me.

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Speaker 6: So, the wholesale market is where the generators, the gas drillers,

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Speaker 6: the coal plants sell to energy retailers. So you and

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Speaker 6: I will have a contract with an energy retailer who

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Speaker 6: gives us our electrics. The wholesale market is where that

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Speaker 6: retailer buys it. So that's where the government's focus is.

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Speaker 6: And the limit that they're going to put in place

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Speaker 6: for the next year is twelve dollars a gigajewel. Now

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Speaker 6: gigajewel is about a fortnight of usage for a normal household.

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Speaker 6: Just to give you some context, and back in the

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Speaker 6: good old days of twenty twenty twenty twenty one, before

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Speaker 6: this war in Ukraine, we were looking at about six

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Speaker 6: dollars a giga jewel, but right now it's up around thirty.

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Speaker 6: So that cap of twelve it's still quite high by

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Speaker 6: historical standards. It certainly still leads some room for gas

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Speaker 6: producers to make a bit of a profit, but it's

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Speaker 6: quite a bit lower than these kind of crazy wartime

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Speaker 6: spikes that we've seen. So that's set to last year,

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Speaker 6: and then beyond that, the government is introducing a provision

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Speaker 6: to require quote unquote reasonable prices to be set beyond

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Speaker 6: a year if they're still too high. So there's some

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Speaker 6: detail to work out exactly what that will look like,

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Speaker 6: but there's some ongoing control on the price until we

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Speaker 6: get out of this kind of war situation.

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Speaker 2: So that's a limit placed on the whole, not the

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Speaker 2: people who bill me for my electricity of twelve dollars

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Speaker 2: a giga jewel.

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Speaker 6: That's right, Sam, you're passing the test.

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Speaker 2: Thank you. I'm killing it. I'm feeling very powerful. Tell

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Speaker 2: me about coal prices.

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Speaker 6: Yeah, So there's a similar limit in place on coal prices.

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Speaker 6: This one is the federal government working with the states

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Speaker 6: to implement it, and the limit the price is one

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Speaker 6: hundred and twenty five dollars per ton. So if we

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Speaker 6: go back to before the war, the kind of normal

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Speaker 6: price for a ton of coal was under one hundred dollars.

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Speaker 6: Now we're looking at prices up around at above four

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Speaker 6: hundred dollars. So again you've got this crazy spike that

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Speaker 6: we're experiencing at the moment, and the cap that's being

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Speaker 6: set is still slightly higher than what used to be normal,

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Speaker 6: and the government is keen to talk about how they've

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Speaker 6: said it at a level that will still allow the

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Speaker 6: producers to make some profit, but certainly to bring it

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Speaker 6: way back from that peak that we're experiencing at the

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Speaker 6: moment because of the.

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Speaker 2: War, some pretty major changes to the energy landscape. What's

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Speaker 2: been the reaction to this, Well.

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Speaker 6: Sam I'll start with the gas industry, who it's fair

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Speaker 6: to say I'm not overly enthused ssiastic about the idea

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Speaker 6: of having these prices cut. Samantha McCulloch is the chief

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Speaker 6: executive of the Australian Petroleum Production and Exploration Association that's

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Speaker 6: basically the gas lobby, among other things. She was on

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Speaker 6: ABC Radio National saying that these reforms are not the

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Speaker 6: answer to rising energy prices.

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Speaker 4: They are far reaching and represent a dismantling of the

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Speaker 4: gas market that will have a chilling effect on the

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Speaker 4: investment needed to bring on that new supply. So ultimately

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Speaker 4: it's going to make the situation worse for those Australian

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Speaker 4: households and Australian manufacturers.

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Speaker 6: Meanwhile, Peter Dutton called the approach a train wreck. This

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Speaker 6: was him speaking in Parliament yesterday and making some similar

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Speaker 6: points in a way to the gas lobby.

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Speaker 3: Do you know that power prices under this government will

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Speaker 3: continue to go up and up?

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Speaker 2: You know, mister speaker, that the.

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Speaker 3: Uncertainty that they are creating in the marketplace will mean

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Speaker 3: a reduction in investment.

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Speaker 6: And so the key word here is supply. And I

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Speaker 6: guess the simple idea that if you're going to put

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Speaker 6: limits on the price, well maybe sellers will decide to

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Speaker 6: supply less. Now in the short term, gas producers already

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Speaker 6: have an agreement to supply a certain amount domestically. They

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Speaker 6: signed up to do that a few months ago. But

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Speaker 6: particularly what Peter Dutton is focusing on is whether the

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Speaker 6: government intervening here is sending a bad signal that is

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Speaker 6: going to mean that the gas industry is reluctant to

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Speaker 6: supply as much to Australia in future. But this is

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Speaker 6: where I think it gets a little bit tricky because

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Speaker 6: you hear Peter Dutton. They're talking, and what the opposition's

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Speaker 6: position is is that the government should just be negotiating

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Speaker 6: with sellers, asking them, really trying to get them to

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Speaker 6: agree to sell more without putting these hard limits. And

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Speaker 6: where the debate has really focused on here is does

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Speaker 6: this wartime situation create a justification for a government to

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Speaker 6: do something that it wouldn't normally do, put a hard

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Speaker 6: limit on a price and basically force the sellers to

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Speaker 6: sell below that price. Or should the government, even an

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Speaker 6: emergency situation like this, say no, no, no, we don't intervene

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Speaker 6: in prices like that, we don't want to deter supply,

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Speaker 6: will try and negotiate. That's kind of where the debate

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Speaker 6: has fallen between the opposition and the gas industry. The Greens,

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Speaker 6: on the other hand, have taken quite a different position.

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Speaker 6: They've been keen to focus on how we can use

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Speaker 6: this as an opportunity to encourage people to use less gas. Obviously,

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Speaker 6: that's something that the Greens talk a lot about politically,

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Speaker 6: moving beyond colon Gas, and in exchange for their support

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Speaker 6: for these changes, they negotiated some funding that'll come through

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Speaker 6: next year to help low income earners and renters to

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Speaker 6: move away from gas appliances towards electric appliances. This was

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Speaker 6: Adam Bant announcing their support for the bill.

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Speaker 3: With those additions, our package will help unlock hundreds, if

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Speaker 3: not thousands of dollars in savings for the people who

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Speaker 3: need it most. And that means more money in people's

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Speaker 3: pockets to deal with the cost of living crisis.

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Speaker 6: And so with the Green support as well as the

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Speaker 6: support from the Jackie Lambey Network and from Independent David Pocock,

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Speaker 6: that was enough to get this through both houses of

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Speaker 6: Parliament without needing the opposition, and it passed yesterday.

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Speaker 2: Okay, so it's now law. There is now a price

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Speaker 2: cap on gas and coal. What will it mean for

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Speaker 2: me and you? And I'm particularly interested here in how

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Speaker 2: quickly will we see these changes.

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Speaker 6: It's a tricky question. So I come back to this

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Speaker 6: thing that I mentioned earlier about the wholesale market, that

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Speaker 6: these limits, these price limits are focused on the wholesale

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Speaker 6: market where the generators sell to the retailers. The question

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Speaker 6: of how it flows from the retailer to you and me.

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Speaker 6: SAM is a little bit more complicated. Basically, government regulators

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Speaker 6: are responsible for setting the kind of minimum price that

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Speaker 6: retailer must offer customers, and they update this every now

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Speaker 6: and then. The next update, the government says is coming

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Speaker 6: in February, and so in February we should see the

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Speaker 6: effect of what's happening in the wholesale market starting to

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Speaker 6: flow through to what the retailers offer to the customers. Now,

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Speaker 6: it's not necessarily going to be automatic. It depends on

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Speaker 6: the contract. You might have to check your contract, and

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Speaker 6: it's also unfortunately not to be the bearer of bad news.

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Speaker 6: But what the government's telling us to expect is that

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Speaker 6: this may actually not mean a cut in our power bills. Sadly,

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Speaker 6: it doesn't seem like we can expect our power bills

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Speaker 6: to go back to where they were in twenty twenty

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Speaker 6: or twenty twenty one. It may actually just be that

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Speaker 6: they go up a little less than they would have,

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Speaker 6: which doesn't sound quite as exciting as a powerbill cut,

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Speaker 6: But I guess that just goes to show you how

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Speaker 6: significant the price pressures that we're facing at the moment are.

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Speaker 6: Having said that there is some additional support that governments

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Speaker 6: are offering to I guess kind of low income people

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Speaker 6: in small businesses. So it's people who get government payments

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Speaker 6: and small businesses. Governments will step in and actually directly

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Speaker 6: pay some of their bill for them, and that's expected

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Speaker 6: to flow through in March, so some of those people

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Speaker 6: will get an additional benefit. Everyone in theory should be

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Speaker 6: able to get some benefit, depending on whether they update

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Speaker 6: with their retailers. But as I say, I mean, the

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Speaker 6: price pressures aren't going away. It's a very big problem,

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Speaker 6: and even with these measures, I think it's fair to

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Speaker 6: it's going to be with us for some time.

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Speaker 2: Looking forward to having you back. Hopefully still with the

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Speaker 2: lights on here at TDA, but you know there's nothing

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Speaker 2: wrong with candles. Thanks so much for joining us on

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Speaker 2: the daily OS for this Friday. If you learn something

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Speaker 2: from today's episode, don't forget to hit subscribe, so there's

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Speaker 2: a TDA episode waiting for you every weekday morning. We'll

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Speaker 2: be back again on Monday. Until then, have a wonderful weekend.