DAVID SPEERS [HOST]: Catherine King, welcome to the program.   

CATHERINE KING [MINISTER]: Good to be with you David. 

SPEERS: Let me just start with that, do you think Israel should have expected that Iran would close the Strait of Hormuz?

KING: Well, it's not for me to speak for the state of Israel. I think we're dealing with the facts as they are. And the reality is, we have a global fuel crisis because the Strait of Hormuz is closed, and as a country we are grappling with that. We hope very much that the talks in Islamabad over the weekend hold and that they are productive. It's a fragile ceasefire, as you can see from events in the Middle East just overnight. But really, I think the global community, is hoping very much that this, this war ends, then that the ceasefire holds, because the strait has proven to be pretty critical to the global fuel supply, but also to global economies. 

SPEERS: Well, this is the thing, and you're having to deal with it. Motorists are having to deal with it. It's a question of whether the consequences of this war were properly considered. Do you worry they weren’t?

KING: Well again, we're not party to the decision… 

SPEERS: Well you're having to deal with it.

KING: ...to go to war. Yeah, and I think every single country is and every single commuter is having to deal with it around the world. What we are saying really clearly is that we hope diplomacy works. It's a fragile ceasefire. It's our best chance. But even if that is the case, what we have to prepare for as a country here is that even if the strait opens tomorrow, there's a long tail to this. We don't know what damage has been done to infrastructure. We don't know how quickly shipping can resume as normal, or what the consequences of all of that are. So we have to plan, really, to make sure that we understand there's a long tail to this. We've been doing everything we can to shore up fuel supply, deal with issues of distribution, try and soften the blow of the fuel price hikes, which are happening globally. And you know, we're not party to the decisions that were made, but we are having to deal with them.

SPEERS: Just on the negotiations that are going on this weekend and will resume later today. As you say, you're not a party to them. But how do you think motorists would feel, and how would you feel if there's some sort of toll required for ships to pass through the strait?

KING: I think that obviously would be very challenging. And I don't think that's in our contemplation. There's free navigation of the seas, everyone agrees with that, and that would really breach that, and we'd be very concerned about it. It's not something I think Australian commuters would be very happy with, not something the Australian Government would be very happy with and I don't think the global community would either. I think it's really important that we do have free navigation of the seas. That's a principle of international maritime law, and really that should be upheld.

SPEERS: Let's turn to dealing with the consequences of all of this here in Australia, you're launching an ad campaign today. It's urging people to use less fuel, however they can. Does this suggest that you are expecting this crisis to continue for quite some time?

KING: Well, I think what we're saying is, as part of the National Fuel Security plan, there are four levels, and we are at level two at the moment, where our fuel supply is holding. But as I've said, and as the government has said previously, the longer this goes on, the tale of this is serious, and we have to prepare for that. The advertising campaign is really designed to do three things, make people aware of the National Fuel Security Plan, make people aware of the actions that the government has taken to date, but also that every little bit that you can do can also help. So making those decisions around whether, there's public transport available, taking it where you can. Where you can, make sure your tyre pressure is right, taking the load out of your car, that actually helps with fuel economy. And I think it also helps as people are working their way through, dealing with the fuel price hikes as well. So really, that's what it is, but also building that platform to communicate where there are changes, and if we do change levels, what that might look like for people as well. 

SPEERS: The Opposition has already labelled this political propaganda. Do we all really need to spend taxpayers money to tell people to catch the train or check their tyre pressure?

KING: I think that what the government is trying to do is provide as much information to people as possible. There's a lot of anxiety, understandably, and a lot of uncertainty in the community because of what has happened with this global conflict that we are dealing with. And I think people are wanting to have information, and of course, they get that information from a range of sources, whether it's from the media, whether it's from social media. So the government's building a communications platform, really, to try and provide that information to people as quickly as we can, as we deal with what is, as I said, a global fuel crisis. 

SPEERS: I guess the information a lot of households and businesses really want, need to know is, will prices remain elevated for quite some time? How long do you and does the government expect it will be before we see any return to pre-war prices?

KING: Well, it is why, obviously, we cut the fuel excess. And for the transport industry, my space, we took the heavy vehicle road user charge to zero, and we've done that for three months. But I think everybody is experiencing across the world that because of because of constraint in supply, that means that fuel prices have gone up. And particularly, obviously, the diesel price is holding much higher than anyone would like it to be. So again, we think there is going to be a long tail to this. It's why the government obviously has cut the fuel excise, has tried to get more supply into the market, has tried to deal with the issues of distribution. And obviously, as we head into the budget, and we get, you know, more indication of where this is going in the next months to come, whether there's a need for additional measures. We've obviously got the tax cuts coming in on the 1st of July, but whether there's need for additional measures for household and businesses, you know, they're all things that we're contemplating as part of the budget process.

SPEERS: So that's interesting. You are open to further cost of living help and particularly help with transport costs. Might that three month reduction in the fuel excise have to be extended?

KING: Well, again, they're all matters for budget determination. But as I said, there's a lot of anxiety and a lot of uncertainty for people at the moment, and the government is doing everything it can to shore up supply, deal with these issues of distribution, working with states and territories, looking at how we can take some of the sting out of the price hikes that we're experiencing. But because this has a long tail, of course, we have to keep thinking about, what are the next things we need to do as a nation to continue to prepare for what could have a long tail. We're very hopeful in terms of the ceasefire, but we're realistic about that as well. This is a complex geopolitical area that's not an easy area for quick and easy resolution. So we've got to be prepared for that and understanding what that means for businesses, for our farming communities, making sure we continue to transport goods and services and provide services for people in communities far and wide. 

SPEERS: I want to ask you more longer term, what this oil shock means in terms of your thinking about how we do become more resilient to another shock like this in the future. You have no doubt seen the suggestions around drilling for oil, speeding up the transition to electric vehicles and trucks holding bigger fuel storage than 30 odd days. What's your thinking? Does this change your approach and how we become more resilient?

KING: I think what it does is really consolidate what we've been talking about. So, you know, whilst we talk about the need for electrification as part of the energy security, it's also part of our economic security. So I do find it passing strange, Matt Canavan is trying to take us back to the 1990s or 1980s not understanding that the world has moved on. The world's moved on in terms of energy security, and we've got this incredible resource here in this country that lots of other countries don't have. We're a secure, stable democracy. The capacity to generate renewables here in this country and then actually electrify, so whether it's in heavy vehicles, there's terrific businesses we just announced as part of the Investor Front Door in the last couple of days, that there's a great company, New Energy Transport out of western Sydney that's doing terrific work on heavy haulage, electrification. Really turbo charging some of that work. Of course, where there are hard to abate sectors like aviation and some of the heavy haulage, which will take a little bit longer to electrify, low carbon liquid fuels. The fact that we basically grow canola here, then we ship it overseas, turn it into sustainable aviation fuel and then buy it back, is nuts. In our view, we should actually be having that low carbon liquid fuel, renewable diesel, we should be able to generate that here. And I think we've really got to turbo charge those efforts. So we've got a $1.1 billion fund for low carbon liquid fuels, sustainable aviation fuel, bio diesel. Again, we made a couple of announcements about a company called HMAR, which is doing turning some of the waste product out of the forestry sector down in Portland into sustainable aviation fuel to head out to Adelaide airport. It will be based out at the port in Adelaide. So, lots of projects. The ARENA grants program will be open shortly, but we're looking at whether there's projects that are ready and available now, and ready to come on stream. Now, I know there's a lot of interest in the low carbon liquid fuels area, but also a lot of interest in transport, in electrification, so really trying to work to bring that forward. We announced again a couple of weeks ago, some heavy vehicle charging stations, new charging depots, particularly on that east coast distribution but we've just got to really get forward with this, because if this has taught us anything, we cannot rely on the rest of the world for our energy security. We've got to be able to generate it here and then use it here as well. And electrification is a great way of doing that.

SPEERS: Let's talk more about electric vehicles. Clearly, they're becoming more popular as people struggle with filling up the tank. The government already has some incentives in place. People are getting electric vehicles, the fringe benefits tax break for novated leases is the main one. It is far more beneficial to those on the top income tax bracket than those at the bottom. Economist Chris Richardson calls it a very good way to make cars cheaper for rich people. Is this really the best way to incentivise EV take up?

KING: Well, I think the biggest thing we've actually done, which was tried by the opposition at one point, but then also voted against by the opposition, is the fuel efficiency standard… 

SPEERS: The question is about the EV tax break, the fringe benefits tax break. Is this an efficient or fair way to incentivise EV take up?

KING: Well, I think it's worked. It has seen uptake of electric vehicles. We of course do want to try and make sure there is more availability of cheaper electric vehicles for people, and that's what the fuel efficiency standard has done. But also we do need to look at measures for how do we actually help low income earners? How do we actually make sure that there's charging infrastructure in our poorer suburbs. And how do we deal with things like apartment blocks? There’s good technology now that allows that to happen.

SPEERS: I'll just jump in, I appreciate all the other things, but I'm asking you about the fringe benefits tax break. It has been looked at in the lead up to this budget. It's costing more than 10 times what the government first thought it would. Is there any need to keep this going?

KING: Well, we'll leave announcements around the fuel tax benefit for electric vehicles, I'll leave that to the discussions in the budget. But certainly, my view is it has worked to start the electrification of passenger vehicles, but the biggest thing we've done is actually provide more availability of electric vehicles. The fact that people have had that capacity to go and buy electric vehicles at the moment is because we did that. 

SPEERS: Do you still need a tax incentive to buy one or are they now competitive?

KING: I think they're competitive, and they're definitely competitive at the moment with fuel. I don't think, as the prime minister said, anyone's regretting having purchased an electric vehicle right at the moment. But equally, the issues around charging infrastructure and really rolling that out more quickly is important as well. 

SPEERS: It sounds like you're emphasising all the other things, not so much this tax break. It does sound to me like this one might go?

KING: Well, I'll leave that for your speculation, but that's a matter for budget. The other thing it has done is the second hand electric vehicle market. So obviously, when vehicles come off novated leases and then they're available for sale, you've seen a really big increase in people buying those second hand electric vehicles right at the moment. So it actually has done a good job in terms of that availability. So I wouldn't write it off. 

SPEERS: No, all right. Well, look a final one, the electric vehicle drivers, of course, pay no fuel excise. This has been a problem for a while. As more people take up EVs, that's less and less that the government's getting through fuel excise. About 10 months ago, Treasurer Jim Chalmers said the idea of a road user charge, which would include EV drivers, was an idea whose time had come. So when will the government finally introduce a road user charge?

KING: Yeah, so we've been working within my department on the model for what a road user charge might look like. And that's no surprise to anyone. I think that was in the mid year economic financial outlook. So since December, my department's been working on that. Obviously, right at the moment, we're trying to encourage as much electric vehicle uptake as we possibly can. We don't want to disincentivise that at all. So there's a balance to be struck here, both obviously, with the fringe benefit tax and potential of road user charging, but we're making our way through that and we'll have more to say about that when we have a model.

SPEERS: When can we expect something to happen on this?

KING: Well again, we're working our way through that at the moment. There's two things here. The first is that we want to try and not disincentivise electric vehicle uptake, and particularly right at the moment when we're seeing such a surge in that, so it may not be the time for it right now. The second is, it's obviously going to have to be legislated through the parliament, and I'm not clear that there's a pathway for it through the parliament at this stage. We'll wait and see. 

SPEERS: So that's interesting. You don't think either the coalition or the Greens would vote for this, so why bother? By the sounds of it. Look, New South Wales and WA are saying, if you don't, they will. July next year, they'll introduce their own road user charge. Will that create messiness, though? Do you need to move before then?

KING: Well, I think that's a matter for states and territories. I think there's already been a high court challenge to the capacity for states to raise those sorts of charges and so that will be a matter for those states. I think if there is such a scheme, it does need to be national. But as I said, we've got a balance to strike here. We want more electric vehicles. We don't want to disincentivise those, but we've also got to make sure whatever we do introduce doesn't disincentivise the uptake, so we've got a bit more work to do on it, is basically what I'd say.

SPEERS: Transport Minister Catherine King, thanks so much for joining us this morning. 

KING: Really good to be with you. David. Thank you.