Jim Chalmers:
We’ve seen some really encouraging developments in the Middle East this week, but there’s still a lot of uncertainty about how this will play out and the economic consequences of the war in the Middle East will still be felt for some time yet. We need to see this ceasefire stick, and we need to see the Strait of Hormuz properly open. There’s a lot of uncertainty about both of those things, and clearly the economic recovery can’t begin until the war properly ends.
So like the rest of the world, the Australian economy, the Australian people, are hostage to developments in the Middle East. We need to see a proper end to this war. The end of this war can’t come soon enough. There’s still a lot of uncertainty. There’s still a lot of volatility, and we still expect the economic consequences to be felt for a little while yet. Australians didn’t choose the consequences of the beginning or the end of this war, but they’re being asked to pay a very hefty price for it, and that’s really the government’s focus.
It’s why we’re working around the clock to help with the cost of living with our fuel excise cuts. It’s why the Prime Minister is engaging with his international counterparts, including his Singaporean counterpart, Lawrence Wong. Singapore refines, I think, about a quarter of Australia’s fuel, and so his engagements over the course of the next 24 hours or so are really important.
It’s why ministers like Catherine King, myself, and other ministers in the Cabinet are engaging with industry and supporting investment to make sure that we get through this difficult period and also that we set ourselves up to recover from the extreme uncertainty that we are going through right now.
The government’s focus is fuel security, supply chain resilience and also putting together a budget in the face of this really quite serious economic volatility coming at us from around the world which will be with us for a little while yet.
I’m pleased to be in Melbourne. Today, I’ll have the opportunity to engage with CEOs from the refining, supermarket, logistics and building supplies sectors. Tomorrow, with CEOs from banking and mining. This is all about our collective efforts, and here I pay tribute to Catherine King and our other colleagues for working around the clock to make sure that we’re staying across these issues and acting where we responsibly can to get Australians and the Australian economy through what is a really difficult period.
Now, the announcement that we’re making today should be seen in that light as well. I’m really pleased to be here with David, one of the co‑founders of HAMR Energy, one of the 4 successful initial pilot projects for the Investor Front Door. The Investor Front Door is all about streamlining and fast tracking and supporting important investments and big projects in our economy where there’s a national interest benefit, like, obviously, when it comes to low carbon liquid fuels.
So the 4 projects that we are announcing today as the first pilots for the Investor Front Door. They are about biofuels, electric heavy vehicles, critical minerals, and hydrogen – 4 really important projects.
When it comes to the investment that HAMR Energy is seeking to make, this is all about more fuel, more jobs, especially in the regions, and lower emissions but also making our economy more resilient and making our supply chains more reliable. We recognise that fuel security, and cleaner and cheaper energy, and sovereign capacity – these are not just important issues in the environment or in the economy, but these are national security issues as well and that’s how we approach them.
And so these projects are all about important investments. The Investor Front Door is all about fast tracking and streamlining and cutting red tape to get this investment flowing where it has a very substantial national benefit for our economy and for our people, and in this case, for our regions and for 2 great states in Victoria and South Australia. So this is really important.
Obviously, as we go about making sure that we have secure sources of fuel as we go about making sure that our supply chains are more reliable and our economy is more resilient, we’re also working through the big decisions which will make up the Budget that we hand down in the second week of May.
Now, obviously, we’ve spent a big chunk of the week working through our options. It’s only the second week of April. These big decisions aren’t announced until the second week of May. We’ve got a long way to go, frankly, when it comes to landing and locking in some of the bigger decisions that we have to make for this Budget. But the government’s focus, and the Budget’s focus, is on resilience and reform, not resilience or reform. We choose both, rather than choosing one or the other.
The Budget will balance the pressures here and now with our obligations in intergenerational terms, and that’s how we’re approaching this Budget. Obviously, attracting and supporting and absorbing more private sector investment is absolutely essential to all of our economic objectives, and that’s why today’s announcements about the Investor Front Door are so important, and why we appreciate David and his colleagues for participating and being one of the 4 pilot projects that we’re really pleased to announce here at Melbourne Airport today.
Let’s hear from Catherine, then David, then happy to take some questions.
Catherine King:
Thanks, Treasurer. Well, welcome everyone to the fabulous Melbourne Airport. As the Treasurer says, every portfolio minister, and particularly my portfolio in Transport, we’ve been focused on ensuring supply and doing everything we can. The Prime Minister’s visit to Singapore is very important in that regard, as was his discussion with Premier Li in the last 2 days as well, an important source of jet fuel for this country.
But we’ve also been focused on distribution. Making sure we get that distribution out to the regions, as well as trying to give cost‑of‑living relief with the cuts to fuel excise and the road‑user charge to zero as well. But also, what we’ve got to do as part of this is really focus on the resilience of our supply chains, resilience of our energy needs, and we’ve been doing that as a government for a long time now.
I’m really delighted that 2 of the projects that the Treasurer has announced today are in the transport space. Here with HAMR Energy, what we’re seeing is that low carbon liquid fuel pathway using the biomass that comes out of the Portland forestry industry, that is often used in a range of different ways but not really adding value always to the supply chain, being able to be turned into low carbon liquid fuels for our jets, for our marine industry and for our heavy vehicle industry as well. A really important announcement.
It is great to see David, as the co‑founder, an investment that’s come out of an idea of a visit down to Portland and a tour around the area, that’s come out of an idea and actually seeing that come to fruition. You’ll see about 80 jobs in Portland, several hundred jobs over in South Australia, just out of this one project alone. But what it actually does is build resilience into our transport system and provide that opportunity.
The other project I’m really excited about having met with them just last week is New Energy Transport, out of Western Sydney. Providing that electrification of trucks, actually getting those heavy vehicles, proof of concept that you can actually get a long‑distance with heavy‑vehicle electrification. They’ve got great partnerships with some of these strategic supply chains, and really demonstrating what you can do with that project.
Transport, really, both from an emissions point of view but also from an energy and an economic security point of view, is critical to the future of this country. So I’m delighted that 2 of these projects really are in the transport space, and may we see more of them.
I’m going to hand over to David and then we’ll take some questions.
David Stribley:
Thank you ministers. Thank you, Treasurer Chalmers, and thank you Minister King. In particular, I want to thank the Treasury team and the Investor Front Door team for their support. This is a really exciting initiative that the government’s put in place today. The ability for companies like HAMR and our projects to have a dedicated point of contact within government to work through regulatory processes, to work through other aspects of government, it’s really important. What that provides us is a much cleaner pathway through those processes and the ability for us to accelerate these projects, which we are obviously passionate about in terms of developing fuel security here in Australia.
Our project is split to 2 parts. One is in Portland, and it will leverage the regional strengths within there around forestry biomass. We’ll convert that residual forestry biomass into green methanol, and that methanol is really unique in that it can be used to decarbonise multiple aspects of our economy, from plastic manufacturing, to aviation fuel, through to shipping fuel. That facility will look to employ at least 80 full time jobs, but also create resilience in that economy by providing a source for residual forestry biomass.
Our second project, the methanol‑to‑jet plant, located in Adelaide, will produce upwards of 140 million litres of jet fuel. That’s enough jet fuel to decarbonise 4.5 million trips between Melbourne and Adelaide. And again, that just underpins creating more resilience within our fuel systems and our energy systems.
I’d also like to highlight this is just the start. Programs like the Investor Front Door create that starting framework, but Australia has all the unique characteristics to be a world player in this new energy space. So, again, I’d really like to thank the ministers for the opportunity today and look forward to working with the government. Thank you.
Journalist:
Treasurer, the Strait of Hormuz appears to be closed [inaudible]. What information do you have as to whether it might reopen?
Chalmers:
We’re monitoring developments in the Strait of Hormuz very closely, as is every country around the world. We saw some welcome developments yesterday with the announcement of the ceasefire, but we need the ceasefire to stick, and we need the Strait of Hormuz to be open in order for the recovery to begin.
We are cautious about these developments. We’re not complacent about these developments because we know, first of all, we need to see the Strait reopened, we need to see the ceasefire stick, and we also know that the consequences of what we’re dealing with in the Middle East will hang around for a while yet. We’ll need to do a proper assessment, for example, on the damage done to oil and gas infrastructure in the Middle East. Obviously, there’ll be a range of developments around the safe passage of ships through the Strait, the rebuilding of capacity, the rebuilding of refining stocks. All of these things are the crucial considerations now.
And so, we welcome the developments yesterday, they were really encouraging, but we’re not getting carried away with it because we know this thing has a long way to play out yet.
Journalist:
The Foreign Minister suggested to Sky News this morning that the US is unpredictable. Do you have a view?
Chalmers:
Well, obviously, what we’ve seen because of decisions taken in DC that has introduced an element of unpredictability, uncertainty and volatility in the global economy. As I said earlier, Australians didn’t choose the circumstances of this war. These decisions were taken in the first instance by the Americans, but Australians are paying a hefty price for that. And that’s our focus, to do what we can across a whole range of areas to shield where we can Australians from the worst the world can throw at us.
But obviously, these were decisions taken around the table of the Situation Room in Washington DC, but Australians are assembled around their kitchen tables working out how to pay for it. So, from an economic point of view, from a cost‑of‑living point of view, the proper end of this war can’t come soon enough.
We’ve seen some good developments on this front. We need to see all parties follow through with a proper ceasefire. We need to see that strait reopened so that the recovery can begin.
Journalist:
Treasurer, just on cost of living and this announcement today, biofuels are criticised for being more expensive. The worry for Australians at the moment is the rising cost of fuel. So how do you reconcile those 2 things if the biofuels aren’t necessarily the answer to lower cost of fuel?
Chalmers:
Well, a couple of important things about that. I’m a big believer, as is Catherine, in the potential of low‑carbon liquid fuels. We see it as an important part of the solution, having more diverse sources of fuel, cleaner and cheaper energy over time, and that’s why this investment that David and his colleagues and others are making, why it’s so welcome and why we encourage it.
If we’ve learned anything from the last month and a bit, it’s that cleaner and cheaper fuels, sovereign capacity, refining, manufacturing – these things are more important than ever in the context of this extreme pressure that we’ve seen on our global supply chains. And so that’s why we’re big believers.
When it comes to the cost of living more broadly, we’re acting in the near term cutting the excise 32 cents a litre, plus all of the other terrific work that Catherine’s been doing in the transport sector. That’s been about providing immediate relief while we encourage and support the investment in some of these options that we have in the medium and the longer term. And the better that we get at manufacturing these kinds of fuels, the more likely that the cost will come down over time.
Now, when it comes to the price of fuel, obviously we understand that this is the key way that Australians are paying the price for this war. We’ve been encouraged by some of the pass‑through we’ve seen in petrol. Obviously, petrol prices and diesel prices are diverging. They rely on 2 very different benchmarks.
But if you think about the Melbourne price yesterday, I think we saw Melbourne petrol prices about $2.25, that’s 34 cents below what they were on the last day of March, and our excise relief is playing a role there, a welcome role. But when you look at the diesel market it’s more like $3.19, I think from memory, only down about 5 cents since the end of March, and that’s because these are 2 different benchmarks and 2 different markets.
So, we’re acting where we can to take some of the sting out of these higher petrol prices, at the same time as we work very hard to encourage and support the kind of investment that we’re announcing today.
Journalist:
What do you say to critics more broadly who are saying that the government’s push towards renewables on a broad basis has undermined fuel security, increasing costs and impacting supply chains for consumers and businesses?
Chalmers:
They fail to understand that cleaner and cheaper energy and sovereign capacity are not just environmental or economic issues, as important as those things are, but also national security issues. I find it bizarre, frankly, that in the context of what we’ve seen in the last month and a half, that anyone would conclude from that that we should continue to have all of our eggs in one basket.
We need cleaner and cheaper energy, more diverse sources and more reliable and robust supply chains, and that’s what our efforts are all about. Recognising that our energy comes from a number of sources, encouraging that investment where we can, relying heavily on traditional sources of fuel at the same time as we build new, cleaner, cheaper sovereign capacity.
So, I think one of the conclusions of this war in the Middle East is that we need more, not less, when it comes to sovereign capacity, cleaner and cheaper energy, and more reliable, more resilient, more robust supply chains.
Journalist:
Will the government be adjusting its renewable strategy to safeguard oil?
Chalmers:
We’ve made it clear for some time that our energy policy has a role for a whole range of different sources. If you think about the work that we do, encouraging more gas into the system, for example, some of those traditional sources of fuel at the same time as we build more renewable capacity.
I think it’s just common sense, even before the war, but especially during and after the war, that we build more sovereign capacity where we can do that in a responsible way. From my point of view, the best way to do that is to encourage the kind of private investment that David and others are making in low carbon liquid fuels, and others are making in other sources of fuel. It’s just common sense, I think, and we need to learn the lessons from this war, and one of the lessons that we need to learn is that more cleaner and cheaper locally sourced fuel is a good thing, not a bad thing.
Journalist:
There is growing support for a tax on windfall profits made by gas exports. Should those companies that are profiting from the war face higher taxes?
Chalmers:
Obviously I’m aware that there are a range of views about windfall taxes and other ways that we tax resources in our economy. There’s a very wide spectrum of views, and obviously we take those views seriously. There are a whole range of factors that any responsible government would weigh up when responding to and thinking about some of those suggestions and proposals that good people have put on the table, not just in the context of this war but before that. No doubt, there’ll be more of these kinds of suggestions afterwards as well.
We’re very focused on making sure that supply is reliable. We’re very focused on our international obligations. We’re very focused on making sure that we get a fair return for resources in Australia. And that’s why we’ve already reformed the PRRT, for example, to make sure that we’re getting more revenue sooner than we would if I had left those arrangements untouched. And so, we listen respectfully to those sorts of ideas and suggestions, we weigh up a whole range of considerations, but we’ve already taken important steps in this regard.
Journalist:
But what do you think? Should they face higher taxes?
Chalmers:
What I’m trying to say is that we have already taken some important steps in this regard. It shows that the government is serious about getting a fair return for Australians from the resources that we have. That’s what motivated the changes to the PRRT, to make sure that offshore gas companies were paying more tax sooner. That’s already flowing in our Budget. Beyond that, we haven’t changed our policy or taken any decisions contrary to the status quo that we implemented a couple of budgets ago.
Journalist:
Do you think it would harm our relationship with key trading partners like Japan?
Chalmers:
Well, as I made clear in the first answer to your question, obviously we weigh up our international relationships and our obligations. We say privately and publicly to our international partners that we take very, very seriously our supply obligations and our contractual obligations to our friends in the world.
And one of the reasons why Prime Minister Albanese is engaging with a wonderful friend of Australia, Lawrence Wong of Singapore, is because we are a big supplier of LNG to Singapore. Singapore is a really important refiner of our liquid fuels. This is a relationship of very substantial mutual economic benefit, and long may that situation continue.