Senate Finance and Public Administration Legislation Committee, , 9:11:15 to 9:20:51
Discussion on the financial arrangements and volumes of diesel and jet fuel secured through government underwriting to ensure supply during market shocks.
Topics: Energy storage, Infrastructure
Speakers: Dr Steven Kennedy, Anthea Harris, Senator Steph Hodgins-May, Senator Karen Grogan, Unknown Speaker, Interjection, Ms Anthea Harris
>> Senator,
>> yes. Oh, yes.
>> Chair, do do you still require me for the matters that you require you asked me to come forward for? Um because I I have got some matters I do need to get to. But
>> yes, Dr. Kennedy. Um, obviously we're trying to balance the needs of everyone in here. Um, we had an agreement for an hour. Um, it's been requested to extend that time until the dinner break, which is at 6:30. Of course, at which point it would be our intention to release you at >> If if that's okay.
>> That's you sounded like a Monty Python skit there for a moment.
>> Thank you.
>> Okay. Um, so continuing my questions, can you tell me the total amount the government has spent on fuel security measures since 28th February 2026, including the fuel excise reductions and heavy vehicle road user charge reductions?
>> I don't have that. Sorry, Senator, I don't have that exact um total figure. I might have to take that one on notice for um for that.
>> Thank you. And how much of the fuel excise relief went to diesel rather than
have that number to hand. Um, but we can provide that number. Um, and actually that may be a number that um would actually be best directed to um Treasury. So, >> that'll be a budget implication.
>> And so, perhaps you can't answer how the cost compares to the original budget government announced 2.9 billion for relief through to June and an additional approximately 400 million for the >> is that something you can answer? How the cost
>> for the final um costings? Uh Senator, I'd direct you to um the Department of
Treasury Department of Treasury. And can you um answer how um how much has been spent on longerterm solutions like electrification that reduce our exposure to imported diesels?
>> Uh Senator, I've got um some figures here which I will um very heavily give you um but for further detail on these things. Uh I suggest you um direct those questions to DQ who has policy carriage on those particular items. But let me just find some things that I do have for Okay. Um
maybe just while you're looking for those um recognizing that Dr. Kenny will be leaving shortly, Dr. Kitty, can I ask you to talk about what diesel imports mean for persistent inflation um and the terms of trade? Is that something you can reflect on today? [snorts] >> Making most of your time with us. Um,
look, I can um um certainly a good question to um send us to uh Secretary Wilkinson, Treasury, but given my previous experience um uh in in broad terms, depending on the nature of an energy shock, sometimes the terms of trade can rise in Australia if the if it's a broad demand um uh for energy because obviously we remain a a uh a very significant thermal coal and gas exporter. Um, and if those things are part of the same energy shock, then we can actually well, Australia benefits in the sense that we benefit from the terms of trade. um if it's if it's particularly narrowly focused on the uh that fuel itself and we're not getting a broader if you like energy price increase then um or other things given as they say it would be a negative for the terms of trade. So it would reduce national income and abroad. So it very much depends on the nature of the shock and how it spreads. Most energy shocks spread pretty quickly because people are substituting alternative energy sources. So you tend if there's one source of energy that is experiencing an acute shortage, it tends to quickly flow into others. And in fact, while we haven't seen it in Australia, um, gas prices have risen in other parts of the world as a result, for example, of the issues in the Middle East. So I mean, sadly, in economics, it's a lot like this. It depends. But um uh and so I guess in summary, a narrow shock just on a on that liquid fuel not affecting other forms of energy, I would say would be a negative for the terms of trade. The more usual circumstances is it broadly raises energy prices and as a as a broader energy producer, Australia would would could benefit. Um hope I hope that
>> Thank you. I appreciate that. Um, sorry. Did you find the information you were retrieving?
>> I found some information, Minister, but Senator, but we might have to um take that on notice to get some more detailed information from you. But again, policy [clears throat] um responsibility sits with Duk and I'm sure they would be able to give you more detail. But um there are some things that um that are relevant here. So, as I'd already mentioned, the $ 1.1 billion cleaner fuels program that's administered by the infrastructure department. Um, also relevant is the $5 billion net zero fund in the National Z Reconstruction Fund, addition $2 billion for the Clean Energy Finance Corporation. Um, $85 billion for um for frameworks and tools to help households and businesses understand their energy performance. Um so there's there's a range of kind of um policies and commitments there um that will be broader in many cases than um simply diesel but um but that will be relevant for um a decarbonization effort.
>> Thank you. And just can you let me know if these questions are appropriate for you or elsewhere um around underwriting diesel imports?
Um we can answer some um uh Senator but um for detailed um information I would direct you to the Treasury which has um policy carriage and responsibility for oversight of export finance Australia. Oh sorry um DEFAT which has um policy responsibility for um export finance Australia.
>> Thank you. Um, for example, can you provide a breakdown of the financial arrangements entered into with Viva Energy, Ahole, Path Fuels, IOR, and any other companies that have subsequently received support and you
um notice, Senator. Um but I would note that the um they are commercially incompetence there the arrangements that have been put in place um the arrangements with the EFA um did play an important part uh in Australia's um strategy for making sure that we had enough fuel to um be able to to get through that crisis being able to make sure um that uh that that we did um have at all times which we have managed to do throughout out this pro um to throughout this crisis to make sure that there was um enough supply on hand um to be able to meet all of our needs.
>> What what we find Senator is in those types of shocks the private markets really struggle to price the risk like price the risk of um what's going to happen frankly in the next few days um let alone the weeks and months ahead. I guess it has tended to be my advice to government to think about ways where it's appropriate for the government to take on some of that risk because the the the the market can become dysfunctional and uh was that it was that type of circumstance that underpinned the EFA um um inter intervention um because we you know we um uh wanted to ensure supply given as we spoke about earlier we have very significant industries in this country particularly dependent on diesel. The focus was on diesel um also aviation fuel as well um and also ura frankly. So there there was a focus on all those >> less so petrol but much more so diesel.
>> And do you know how many additional liters of diesel has been secured under these agreements and at what cost? I
in terms of cost um Senator would need to take that on notice and uh and again that might be better directed um
>> those numbers should be readily available to you through DEFAT who have responsibility for the EFA. So you and are you calling does EFA appear? um >> have to check. No. Um, so they I would address those questions directly to that agency who as um, Senator Pott and I were talking about earlier should be in a position to answer questions about any program they're administering
>> very quickly. Very quickly um, what's the maximum can you answer whether what the maximum potential financial liability to the common to the Commonwealth is as a result of underwriting fuel import agreements to date? Is that something similarly that I should take to DEFAT or Yeah.
>> Yes, Senator.
>> Okay.
>> I did have the number though in terms of amounts um just not the cost but amount. >> So of around 780 million L of diesel uh and 155 million L of jet fuel.
>> 58 million of jet fuel.
>> No 155 million liters.
>> 155. Sorry I didn't hear that. >> Thank you very much. Great. Senator