Leon Delaney:
Let’s check in with our local federal government representative, the Member for Fenner and Assistant Minister for Competition, Productivity and Charities and Treasury, Dr Andrew Leigh, good afternoon.
Andrew Leigh:
Good afternoon Leon, great to be with you.
Delaney:
Is the Prime Minister poorly advised?
Leigh:
Not in the least. He’s made the decision today to halve the fuel excise on diesel and petrol for 3 months and also to cut the heavy vehicle road user charges to zero for 3 months. And that’s on top the significant range of things that we’ve announced beforehand. The Fuel Supply Task Force Coordinator. Releasing a fifth of Australia’s petrol reserves. Making sure the ACCC is on the job on fuel monitoring and issuing spot fines against any fuel supplier that does the wrong thing.
Delaney:
Well, people have been calling for this reduction in the fuel excise now for more than a week. Why has it taken so long for the Prime Minister and the government to see common sense?
Leigh:
Well, the Prime Minister met today with premiers and chief ministers and this is a decision that flowed out of National Cabinet. This is substantial cost‑of‑living relief. So, if you’ve got a 65 litre tank, it takes down the cost by about $19. We take advice based on what comes to us. Engaging with experts, engaging with the community. And what we’ve been doing over the last few weeks is successively announcing decisions in order to keep that supply flowing. While Australia has more fuel in the country than we did before the crisis hit, the challenge we have is that there is a significant spike in demand. We don’t have a supply problem. We have a challenge around, in certain cases, fuel stations running out of fuel. Because there’s an increase in demand.
Delaney:
Yeah, because some people have seen the need to stock up, fill as many jerrycans as they can, because they’re concerned about the supply potentially being interrupted further down the track if the conflict in Iran continues beyond another 3 or 4 weeks. That’s inevitable, isn’t it?
Leigh:
No I don’t think it is. We’re working with Export Finance Australia to make sure that we’re getting more cargoes coming to Australia. So that’s legislation that is going to be before the parliament very soon. We’ve made it easier for Australia’s refineries to get government funding if they run at a loss. And the Prime Minister is engaging with international partners, particularly Singapore, to make sure we’ve got supply flowing. That of course goes both ways. A range of countries have been reaching out to us to make sure their gas supplies are secure, and they are. We have that interplay, particularly in the Asia Pacific region, where a lot of oil flows through to us and a lot of gas flows north from Australia. And so making sure we’ve got those strong international relationships is important.
Delaney:
Well, hopefully those agreements with places like Singapore actually help to guarantee our ongoing fuel supply. But also read that there’s some concern about the supply of jet fuel in aviation, with China and South Korea being big suppliers, potentially considering restricting the export of that fuel and that could be disruptive for Australian aviation?
Leigh:
Well we’ve got significant reserves of jet fuel and Qantas has said that it’s not concerned about this at this stage. They have not cancelled any flights as a result of the pressure that’s on. Needless to say, they’ve flowed through to prices. I mean there’s nowhere around the world where fuel prices aren’t going up. This is a big global shock as a result of the US‑Israeli decision to bomb Iran. We have urged those parties to bring the conflict to an end. The principal objective at the outset was to reduce Iran’s chances of getting a nuclear weapon. That having been achieved, we believe it’s time to go to the peace table and to settle on a ceasefire and so the global economy can get back to normal.
Delaney:
Well, I’m not entirely convinced that was the actual objective. I think it was a kind of wish fulfillment exercise for Benjamin Netanyahu and Donald Trump went along with it for his own reasons. And it seems that for all the talk of negotiation and reaching peace and, ‘Oh, it’ll only be 48 hours, I’m sorry, it’ll only be 4 weeks’. Well actually, every week that goes by this conflict is getting bigger, not smaller.
Leigh:
It’s having a significant effect on the world economy. You can see that indeed in the United States, where fuel prices are spiking just as they are here in Australia. Australia as a trading nation is going to be impacted by any conflict that affects the world economy. It’s of course, also having an impact on those Middle Eastern countries closely located with the conflict. There’s 24,000 Australians in the UAE, which is why we’ve sent over protective assets to look after those Australians and others in that country. I think it would be in the interest of the region to see peace return because we want those countries in the region to have the broad economic base around tourism, around sport, around being global hubs. And all of that is being placed under pressure as a result of this ongoing conflict.
Delaney:
Well, absolutely it is. And it’s, you know, it’s a no brainer to say that you know peace is in the best interests of everybody. It’s, you know, stating the bleeding obvious. And yet for some reason there are those in the world who are intent on breaking that peace. But there’s not much you and I can actually do about it from this distance. And I thought Andrew Hastie’s comments over the weekend were absolutely spot on. This is something Donald Trump has done, brought upon the rest of us without consulting us, without giving us any kind of choice at all. Nevertheless, let’s come back to the things we can deal with. The price of petrol, the decision to cut the excise in half will no doubt be welcomed. My question is, what’s the anticipated impact on inflation? Because if the price we actually pay is lower than it otherwise would have been, this will help to slow down inflation, won’t it?
Leigh:
Yes, that’s right. It takes out some of the inflationary pressure and certainly that’s one of the benefits of this decision that the Prime Minister has announced today. This will just be temporary, we’re just looking at it for a 3 month period. There’s, as you say, not perfect certainty as to the path out of this conflict. But the hope is that there is a peace deal which is settled and the world economy in 3 months time is beginning to return to normal. We do see a lot of bounce back in these markets after past crises, and given that there is those networks of supply in place, I’m confident that that bounce back will happen. But we need cease fire to take effect first.
Delaney:
The other issue, of course, is that the government has now set itself up to disappoint voters after the 3 months expires and the price of petrol suddenly and abruptly goes back up again. If the conflict is still running at that time, that’ll just mean we’re back to where we are now. Or would the government consider extending that 3 months if the conflict has not been resolved?
Leigh:
Look, I think that’s a question for 3 months’ time. Right now we’re focused on the decisions that need to be made. The wide range of things we’ve done through empowering the ACCC, changing the diesel standards, releasing more fuel reserves, the National Cabinet meetings, the higher penalties for price gouging – all of that is designed to protect motorists and ensure that people are somewhat insulated from this very significant hit we’re seeing from the conflict overseas.
Delaney:
It’s the biggest shock to the economy we’ve seen since COVID and it’s the biggest oil crisis since the 70s. This is not an insignificant event?
Leigh:
It’s not indeed and the Treasurer has referenced in a recent speech the modelling that’s been done by Treasury with the barrel price at $100 or $120. Then you see inflation going into the high 4s or the low 5s. We’ve been very clear that that’s conservative modelling and that there is certainly a risk of inflation flowing through as a result of the conflict overseas.
Delaney:
Yes.
Leigh:
You’re seeing that around the world. As you know Leon, you’re seeing these inflationary pressures placed on every economy in the world.
Delaney:
We’re all living through extremely uncertain times and it may well get worse before it gets better. Not deliberately being pessimistic here, but we need to be realistic. Before we run out of time altogether, you did write an interesting opinion piece for The New Daily about artificial intelligence. And to summarise it in a few words, you’re suggesting that even in the age of artificial intelligence, there still might be something that human beings can offer that makes them valuable as employees in the economy. What is it we need to do to keep our jobs?
Leigh:
Well, I think there’s going to be a higher premium placed on judgement – the ability of people to choose between outcomes coming from the models. In the past, having information in your head, having a whole lot of facts in your head, earned a strong labour market return. Increasingly, in a world in which those AI models have access to the world’s best information and can distill it faster than any human being, it’s going to be judgement rather than routine cognitive skills. So that means that people will need to be adaptable critical thinkers. That is going to be an advantage if people are getting broadly focused education. So I think that’s going to be going to be useful. There’s a lot of uncertainty about the impact that AI has on the labour market. But the very best story Leon, is where it takes away the least interesting parts of our jobs and allows us to focus on the most interesting parts.
Delaney:
So in other words, the most valuable skill we can have is the ability to sort the wheat from the chaff. But the unfortunate reality is that business owners and operators don’t look at that. They just look at the bottom line and think, ‘No, AI can do it cheaper, I don’t need you anymore’. We’re headed for a disaster?
Leigh:
Well let me give you the most optimistic story. A decade ago, one of the AI pioneers, Geoffrey Hinton, said we should stop training radiologists. Hinton said radiology is just going to go away as an occupation. Brilliant bloke, but he was dead wrong about that one. We’re employing more radiologists than ever before around the world, and they’re being paid better than ever before. That’s because they’re doing more scans and they’re working with AI, which is helping them identify the odd patches on scans and using their judgement skills in order to command a higher return than ever before. That won’t be the story of every occupation, but if we can see more occupations go the way of radiology, that’s better for workers.
Delaney:
Andrew, thanks very much for your time today.
Leigh:
Thank you Leon.
Delaney:
Dr Andrew Leigh, the federal Member for Fenner, and of course, the Assistant Minister for Productivity, Competition, Charities and Treasury.