Joe Hockey says it is time for governments to get out of the way of energy producers to allow industry to drive Australian productivity and help keep the nation wealthy.
Speaking at the Australian Energy Producers conference in Brisbane, the former Treasurer and Ambassador to the United States said the country is drowning in regulation.
“The cry of energy producers in Australia should be certainty. Give us certainty and stability and we can do the job. We can give Australians cheaper energy. We can give people of the world greater opportunity to consume our product. We can make Australia richer.”
In his current role as principal of the consultancy group, Bondi Partners, Hockey has a ringside seat on the brutal global geopolitics now shaping energy policy. He is crystal clear about the stakes for Australia.
“We are a major global exporter of energy. And we’ve got to keep facilitating that. It’s not just in our interest to export energy. It is in the interest of our region, the fastest growing region in the world. And if we do not continue to supply energy to our region and to the rest of the world, at our capacity, then it comes back on us in the form of global conflict. So we have a duty to continue to grow the oil and gas industry in Australia, to grow it for global consumption.”
Yet, while we have plenty of energy, Australian industry and consumers are being crushed by domestic failures. Hockey lays the blame squarely on both major parties.
“For a single parent in a one-bedroom apartment in Sydney and facing a 10 percent increase in their electricity bills, there’s just something wrong about it, and it’s unfair. And so we need to get domestic policy right. It’s self-reflection on politics in Australia when we’re talking about energy shortages, particularly in New South Wales and Victoria, particularly over the next couple of years. That is a complete policy failure.”
Meanwhile, the rest of the world, and above all the United States, is on the move. President Donald Trump wants an energy dominant America.
“The starting point is every business that has exposure to a global market must have an understanding of what’s happening in Washington, D.C. I think there is such a strong link now between government and capital markets that you can’t be divorced from what’s happening in the United States. Because, as we see with volatility in capital markets or even volatility in the share market, so much of it comes down to geopolitical decisions and decisions made in Washington. I don’t think that’s going to change. I think we are going to continue to go through a very volatile period.”
Trump’s view of power is simple and transactional. He is not bound by process, nor by the usual constraints of diplomacy or institutional tradition. Outcomes are what matter. He enjoys being a disruptor.
“Whatever the end is, he’ll justify the means.”
He sees global and domestic politics as inseparable, and at the heart of both is energy and what Americans pay for it.
“When Donald Trump talks about increasing energy supply in the United States, he’s focused on meeting demand. The massive demand associated with Artificial Intelligence infrastructure, which represents the most significant challenge to the world in our lifetimes, is the growth, the rapid growth of AI and what that’s going to mean for ourselves and our children.”
Australia should beware of going out on a limb. While we chase ever more ambitious emissions targets, the rest of the world is pivoting hard toward cheap, abundant energy.
“Front of mind is affordability of life for everyday citizens. Cost of living is the number one issue. Wherever I go, it is the number one issue.”
And the cost of government is now unsustainable. Feckless Western governments have been spending too much, are running out of money, and are resorting to bad policy to plug the gaps by taxing more and regulating more, rather than doing the hard work of driving productivity and growth.
“We need to get back to some basic principles that if you have less regulation, if you have less onerous taxes and less tax, then you are more likely to grow your economy and, importantly, be able to meet the needs of everyday citizens on a more regular basis.”
Do not expect Trump to follow this advice. Hockey says the great big bill the President is driving will send US government spending soaring and push the deficit higher in the years ahead.
“He doesn’t care about that deficit. Let’s be honest about it. He hasn’t throughout his career. He is focused on creating wealth, on generating wealth, rather than focusing on how to get there. And that’s so much a story of Donald Trump, which people do not understand. Focus on his outcomes rather than his process.”
But the margins for error are narrow.
I think it’s entirely feasible that the United States does go into recession, which can have a material impact right around the world.”
Hockey sees the world as an increasingly dangerous place. And centre stage is the fraught relationship between Trump and China’s President Xi Jinping. On that front, Hockey is more optimistic.
“Well, they both need each other. That’s the point. And they both know that they need each other. They’re also fully aware that their economies are intertwined. You cannot decouple China from the United States. In fact, in the last readout of data, China increased exports to the United States. And I think it will resolve itself, you know, the tariff issue between the US and China will resolve itself.”
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