17 Jan 2023

Doorstop Interview: APPEA Chief Executive Samantha McCulloch doorstop at Parliament House, Canberra

Doorstop, Parliament House, Canberra

Reporter: What are your thoughts about this (ACCC) guidance just coming out now?

Samantha McCulloch: The fact is that the price caps came into effect before Christmas, and we’ve been waiting now for almost a month to get the detail on the implementation and the practical issues around the implementation of the price caps. The ACCC guidance is certainly welcome. We’ve only received it in the last hour an hour or so – we will be working through the detail of that to determine if it actually provides the clarity that’s needed for the industry to be able to move forward.

Reporter: Generally, do you think there is a way that these price caps can work?

McCulloch: We need the detail around the price caps. The industry wants to comply, we want to continue to supply gas under the new regime, what we need is the detail of what the new rules of the game are and that’s what we’ve been seeking from the ACCC. We had been raising our concerns and questions with the ACCC and the Treasury last year, and we welcome now getting this guidance and we’ll be working through the detail of that.

Reporter: What would you ask from the Government, I mean I know there’s been concerns about supply shortages, and we’re already seeing some of these issues now with what’s going on with some of these contracts, what sort of change is needed in this policy do you think?

McCulloch: We’re seeing a fundamental dismantling of the gas market in Australia with the reforms that were introduced last year. One aspect of that is the price cap (and) we’re still working through the detail of how the price cap will be implemented. But the ongoing uncertainty around permanent regulation of gas prices in Australia under a mandatory code of conduct is making it very difficult for the industry to secure investment in new supply, and actually it’s that investment in new supply that will be the key to providing relief for Australian consumers and industry and bringing prices down.

Reporter: Are suppliers just going to look at this mess and think we’d rather just invest overseas, is that a risk?

McCulloch: There is a real risk, and this is a risk not just for the gas industry in Australia. What the government has done is sent a signal to all industries that it can intervene without consultation, without notice, and regulate prices in what were functioning markets. This should be a concern, and it is a concern, not just for the Australian gas industry, but for all industries, and what we’ve done is sent a signal to international investors that Australia is no longer a safe and stable destination for investment.

Reporter: The gas retailers are saying this is making life harder for them, particularly the reporting yesterday around contracts being put on hold, are you worried that you could permanently damage your commercial relationship with the gas retailers?

McCulloch: The gas price regime applies only to the wholesale markets. The industry has strong customer relationships, and we want to seek to maintain those relationships of course. The industry wants to meet its obligations to existing and new customers, but we also want to ensure we’re complying with the new regime, and we’ve been waiting for the detail of that regime. Let’s be clear also that failure to comply attracts a $50 million penalty for the gas producers and yet we haven’t had the detail of what compliance looks like – that’s what we’ve been seeking from the Government, the ACCC, and we welcome their response. It’s now a month down the track, but we welcome the government providing this guidance today.