Television Interview, Sky Politics Now

SUBJECTS: Fuel Energy Security Plan; Conflict in the Middle East

TOM CONNELL, HOST: All right. Let's return to the Government's plan on fuel announced today.  Joining me live is Assistant Defence Minister Peter Khalil. I was going to start with Donald Trump. Let's start on fuel, I said I would. Is this propping up demand? 

PETER KHALIL, ASSISTANT MINISTER FOR DEFENCE: Look, I think there's certainly, there's been a doubling of demand, and we've talked about this, that the supply is there, the supply is actually greater than it has been for a long time, but obviously with people, you know, the demand has gone up. My mum called me to complain last week, and she said she was lining up at the service station and the guy in front of her not only ‑ he filled up his tank and then he filled up five jerry cans, and she's like, "Why is he doing that?" I said, "Well, mum, it's a bit selfish". People should just fill up their tanks, fill up what they need. What we're trying to do obviously is to meet this issue around the doubling of demand and doing it in a coherent strategic way and doing it with some methodical planning through the National Cabinet. Some good decisions there, there's the cutting of the fuel excise, which will drop prices by about 26 cents a litre, the removal of ‑ going to the heavy vehicle user charge going down to zero for three months as well, which will also reduce the price of diesel by a significant amount. And these are kind of relief measures that are important to get through this difficult period, and we're also passing legislation today, Tom, to amend the Export Finance Australia Act which will allow them to negotiate and do a number of things including entering into contracts and underwriting contracts and insurance [indistinct] to actually get spot prices. 

CONNELL: Yeah, the cost is so high, and they're worried about on selling it, it's underwritten basically. 

KHALIL: So what they'll be able to do, given their expertise, is to enter contracts, insurance, indemnity, give guarantees, make loans, anything possible to make sure that we get the supply to Australia off the international market. 

CONNELL: But to simplify that for simple people like me…

KHALIL: Oh, you're not simple.

CONNELL: …an importer is worried about in some element the cost they're paying upfront or how they'll be able to manage it, that's where that ‑‑ 

KHALIL: If it's commercially out of their reach, that's when the EFIC can step in and get that difference and meet that gap to ensure that we get the supply to Australia. So they're all really important elements.

CONNELL: We've got these points and it all looks great. When do we know when fuel rationing would start? Because you've got ‑ if you're going to step out all these possible elements, the last one is sort of reserving critical ‑ fuel for critical uses, so is that rationing and when does that come up? 

KHALIL: Well…

CONNELL: There it is, point four…

KHALIL: Yeah, you're looking at my notes. Can I look at your questions? 

CONNELL: Yeah, you can. 

KHALIL: Is that allowed? 

CONNELL: Have a look.

KHALIL: Okay. Thank you. No, I think the important point for the public to know is that there are 39 days of petrol fuel available in reserve, I think 31 or 32 for diesel and jet fuel about 31 or 32 as well. So there's a significant amount of strategic reserve in Australia. As we've said all along, the supply is there, but when you have these big percentages of increase in demand, obviously we have to deal with that issue, and also the distribution of that fuel, because the spot market is where you get the regional centres get a lot of that, so we're trying to address that as well. 

CONNELL: So when we see though the number of days of fuel, frankly to the average Australian it's meaningless.

KHALIL: Well… 

CONNELL: So put some meaning on it, at what point would we need rationing or something along those lines, when they get down to what, 20 days, 15 days? 

KHALIL: We don't know, we know there's a war on, we know it has an impact on the global economy, it has an impact on Australia as well, we're part of the global economy. What we don't know is when this will end. Obviously it's having an impact on the movement of crude oil out of the Straits of Hormuz. There is some movement of that, there's movement out of the Red Sea as well, Saudi Arabia's done a couple of work‑arounds across into the Red Sea, but the Houthis are threatening that on the Red Sea traffic as well. We don't know when this will end. What we do know though, is, however, you know, for example, the 81 cargo ships that were coming in in March, six initially got cancelled, we replaced those six through the work that we did on the international markets. We added another three on top of that. So we're keeping the supply up there where it should be. 

CONNELL: If it comes down, there must have been war games on when we'd start rationing. 

KHALIL: Well, the Government is constantly reviewing all of the steps, so that National Fuel Plan that the Prime Minister announced about prepare and plan, you know, keep Australia moving, that's where we're at now, making sure we get those international supplies. 

CONNELL: Right now, when do we hit Level four, at what point of the…

KHALIL: I can't tell you that, I don't have a crystal ball. If I did, I'd be winning the footy tipping, I'd be winning everything. 

CONNELL: Would someone know, or you don't know?  

KHALIL: Well, no one knows. What we do know is this: you plan for these things, you put contingencies in place, you do the work, the substantive work necessary to be ready for any contingency.

CONNELL: But there's still work to go on to know at what point our reserves would need to needing to ration…

KHALIL: Well, at the moment, as I said, we're at Stage two of the National Fuel Plan where we're keeping Australia moving, we're making sure that we're keeping the supply coming in. 

CONNELL: Okay. 

KHALIL: It's dependent upon a lot of variables, including how long this war goes in the Middle East. 

CONNELL: Will we accept, or do we have oversight on any Russian‑produced oil? 

KHALIL: I'm not sure of that.  As far as accepting Russian fuel, we've got sanctions against Russia, so I understand that there's been some movement of Russian fuel through third parties, and so on, and we're keeping an eye on all of that, to maintain our commitment to sanctions against Russia. 

CONNELL: But if it comes to between running out or having Russian fuel, what choice will we take? 

KHALIL: Well, you're making a very simplistic either or scenario there. What we do know is that there are fuel supplies that we are working towards ensuring that we get into Australia on the international market by doing things like having EFIC be able to do those negotiations, that's a very good step to ensure those supplies come into Australia, whether it's crude and the refined product as well. Our refineries are producing more; we've removed some of the sulphur standards so that they can produce 100 million more litres of petrol and diesel a month. So we're taking the actions necessary. It's not just as simplistic as either/or and just one issue. We're making sure that there's a full court spread on making sure we get access. 

CONNELL: The Prime Minister wants clarity on the exact plan for this war from Donald Trump. Wouldn't we want that on day one? 

KHALIL: Well, I think the Prime Minister's right in saying, if you're quoting him, it is good to know what your objectives are, what the US objectives are in the war. Like, what I understand, Tom, that I can speak to, is that there is obviously the nuclear capability that Iran has, which is an existential threat to the region, there's the ballistic missile program, there's their sponsorship of terrorist groups, whether it's Hezbollah or Hamas or any of these other groups across the region, and terrorist attacks in our own country which they have been responsible for, and there's also the oil, and the way that they've been able to actually hold hostage the oil going through the Straits of Hormuz. All of this is about the instability that they can create in the global economy. So those objectives are ones that have been spoken about by the Administration in different ways, but I think the PM's right in asking for clarity, absolutely. 

TOM CONNELL: Better leave it there. Peter Khalil, always appreciate your time.

ENDS