Outlook conference: Anthony Albanese drives for energy price relief

Anthony Albanese vows to broker short-term relief from soaring energy costs by consulting heavily with business and governments.

Anthony Albanese did not rule out forcing price regulation on the gas sector but said ‘we are seeking a co-operative arrangement’. Photograph by Arsineh Houspian.

Anthony Albanese has vowed to broker short-term relief from soaring energy prices by consulting heavily with business and governments, but dismissed concerns Labor will shun a meaningful ­reform agenda in its first term.

The Prime Minister said he would negotiate with gas companies and the broader resources sector to help achieve household relief but stressed that while his government would not confront business head on it would not be a meek participant in ­discussions.

Speaking at The Australian-Melbourne Institute Outlook conference on Wednesday, Mr Albanese said his approach with business would be consultative and declined to say whether price controls would be forced on key players in the debate.

But he promised to fix the crisis in the short term and said that, shortly after he secured office, newspapers “were predicting the lights would go out”, an event which had been avoided.

“We are working through with state and territory governments … working through with the private sector as well,” he said. “(We want to) make sure that we have fixed supply and we need to fix price in the short term as well.”

Challenged on whether his government would be a reformist administration, Mr Albanese said the government would not reject reform and would continue to examine ways to do things differently. He said the government had already transformed the domestic and international policy agenda. “We haven’t wasted a day in office; I hope you’ve noticed that,” the Prime Minister said.

Ahead of negotiations on the gas crisis, Mr Albanese said he would not telegraph his intentions with key parties amid rising community angst over the cost of living, much of it driven by soaring power prices. He did not rule out forcing price regulation on the gas sector but said “we are seeking a cooperative arrangement”.

 

“Because clearly manufacturers as well as households are under real pressure. And we’re working through those issues over … days and weeks to produce the right outcome,” he said.

He added there were some “quite extraordinary” profits in the energy sector that were having an impact on households and ­manufacturers.

“My government is one that I want to be characterised by ­engagement and by co-operation wherever possible, but that shouldn’t be perceived as weakness,” the Prime Minister said.

Mr Albanese said a key challenge facing the government was the lack of investment by the previous government in renewables, with a serious lack of broader policy implementation.

“So the combination of factors is having a real impact on people in the long run,” he said.

“I think that the policy prescriptions that were put forward (by Labor) are certainly the right ones,” he said.

Mr Albanese’s comments came as the competition regulator signalled it was considering recommending a potential price cap on operators aimed at providing a short-term solution to the national energy crisis.

The Australian Competition & Consumer Commission said it was preparing to recommend the unprecedented course of action to Jim Chalmers as users reel from soaring prices that have sparked warnings of job losses among gas-reliant manufacturers. “We will be looking at a range of options that include price regulation,” ACCC chair Gina Cass-Gottlieb told the conference.

”There is a high degree of urgency with what we are looking at. We will be considering price and we will look at options. The Treasurer has been very clear in relation to the question of an immediate short-term need.”

Manufacturers are being offered gas contracts of up to $35 a gigajoule – more than triple levels a year ago – as an international crunch filters through to the east coast along with a forecast shortage of local supplies in the market. Labor forecast a 40 per cent jump in gas tariffs over the next two years in last week’s federal budget, adding to a cost-of-living crisis.

Labor has tasked the ACCC with finding a solution to the gas squeeze within weeks, including a focus on easing high prices.

Dr Chalmers said that while he was a “reluctant intervener”, there was now a strong case for action to ease a price hit, in part driven by international factors including Russia’s invasion of Ukraine. “I think we have crossed a threshold where everybody in our cabinet – and I think most people in the Australian community – accept that when this is driven by a war, when the prices are expected to become so extraordinarily high that they risk strangling industries, then we need to do something about it,” Dr Chalmers told the conference.

Energy Minister Chris Bowen said the world was in the grip of the biggest energy shock since the 1970s and action was warranted.

“There will be government intervention,” he told a renewables summit on Wednesday night.

Government intervention may provoke a fight from energy companies nervous the move could undermine multi-decade LNG spending worth more than $70bn and hike sovereign risk for international investors that control the bulk of Queensland’s gas supply.

While producers are running up strong profits from the current price boom, Ms Cass-­Gottlieb said she was aware of the risks involved in any regulatory intervention.

Gas producers rejected the need for intervention. “Intervention in markets will only act as a handbrake on further supply and demonstrably deliver poorer outcomes for Australian consumers and our international friends and allies,” said Australian Production and Petroleum Exploration Association chief executive Samantha McCulloch said.

“We need new investment, not intervention, if we are to get the best outcome for Australians.”