FRIDAY, 9 OCTOBER 2020
SUBJECT: Labor’s plan to Rewire the Nation
SPENCE DENNY, HOST: First to Mark Butler, Shadow Minister for Climate Change and Energy. Good morning to you.
MARK BUTLER, SHADOW MINISTER FOR CLIMATE CHANGER AND ENERGY: Good morning, Spence.
DENNY: I guess that’s the initial point here, as consumers in any sort of energy policy we want reliable energy and affordable energy. How does spending $20 billion on bringing more renewables in and updating the grid address that?
BUTLER: First of all we are not spending $20 billion, this will be a loan facility, maybe some equity as well, so that taxpayers get their money back. It is about building a modern energy grid for the 21st century to make sure we are able to unlock those world leading renewable energy resources, which will put downward pressure on power prices. We know we need to build a new electricity system across the country. We know our reliance on coal-fired power that served us so well over recent decades is not really going to last and we are going to have to build a new renewable energy system. We just don’t have the poles and wires connected to those renewable energy regions. The best solar, the best wind energy are all in different places to where we now get our electricity from - the Latrobe Valley in Victoria, the Hunter Valley in New South Wales and traditionally in the Upper Spencer Gulf in South Australia.
It is about building a new energy grid. Everyone accepts where that energy grid needs to go, where the new interconnectors need to go. There is a plan signed off by all governments. Our plan is about making sure, first of all, that it is built. Second of all, and most importantly, it is built at the lowest possible cost. Because at the moment very significant returns and profits are made by the usually private transmission companies that build and operate these things. Those profits end up on the power bills of South Australians, Victorians and New South Wales households and businesses. We want to stop that.
DENNY: We know renewables, obviously there is a lot of enthusiasm for renewables because of injecting less pollution into the air, but we have had issues with reliability?
BUTLER: They are also the cheapest energy resource. The industry accepts that, everyone accepts now that Australia has an enormous opportunity. As we rebuild our energy system for the future we will have some of the cheapest energy in the world. We have the best solar resources on the planet, some of the best wind resources on the planet. We will be one of the cheapest energy countries in the world – the natural place to invest for energy intensive manufacturing like steel - the reinvestment in Whyalla, such an exciting opportunity for our state.
We’ve got to make sure though we not only hook up the actual renewable energy resource, the solar and the wind, but also some of the storage resources like pumped hydro and batteries that make sure that when the sun is not shining, or the wind is not blowing, electricity still flows 24/7 365 days a year for South Australians and all Australian households and businesses. That’s what this plan is about. But I don’t think anyone has any confidence that the Federal Government, which has had 22 different energy policies, is capable of getting this done. We want to get it done and we want to make sure it is done at the lowest possible cost, built by Australian workers, using Australian supplies like steel from Whyalla rather than seeing all of this profit, all of this value go overseas.
DENNY: Part of the initiative or your proposal is to establish a Rewiring the Nation Corporation, which you say would be kept in public hands as a government-owned entity. Logistically, how will that work if you are also looking for a return on the $20 billion investment?
BUTLER: All we would be looking for is for it to cover its costs. It wouldn’t be making any profit for taxpayers it simply would be covering its costs. At the moment these things are built by private operators who have to access private capital which is substantially more expensive than the sort of capital the Commonwealth government is able to access – on average normally about 2 per cent lower at a Commonwealth level. Now 2 per cent when you are talking about a $20 billion investment in the energy grid across Australia is substantial savings. Savings that you will see reflected in lower power bills for Australian households.
Also, when we are at the table with these usually private transmission companies, certainly in South Australia because Rob Lucas privatised our electricity system – it is an overseas owned private company. Sitting down at the table with them we will be able to drive costs down further, not just by our lower borrowing ability but also by driving much more aggressive competitive tendering.
What we will also do is make sure that these things are built by Australian workers. At the moment too often this work is done by workers who are brought in from overseas. We will make sure this is built using Australian supplies so it also drives work in places like the Whyalla steelworks.
DENNY: Mark Butler what modelling has been done to determine how much consumers will potentially save?
BUTLER: We’d obviously finalise that work in government but this plan has been developed over a number of years by the electricity regulators, under the direction of all governments, the Australian government and all state governments including the South Australian government. They have done a lot of work over the last few years. It has been ticked off by industry, by all of the regulators, by all of the states and the Commonwealth government. It is going to get built. The question is how effectively it gets built and how cheaply it gets built. That’s why I think we have good support, very good reception in the hours since this was announced last night because people know the Commonwealth can borrow at substantially lower costs. If we are at the table, given this is largely a privatised system, leveraging our ability to borrow at lower costs that will be reflected in lower power bills for consumers. That shouldn’t be a political thing, everyone should support that.
DENNY: It would be nice to know how much you are going to save though? It is all very well to commit this sort of funds but if the ends the savings are negligible where have we got?
BUTLER: They’re not negligible Spence. We are talking about a $20 billion spend. On average, this jumps around a bit depending on what happens with interest rates, but on average we are talking about a 2 per cent benefit in borrowing costs if you compare the Commonwealth to what these private companies get on the private market. So 2 per cent every year on $20 billion you are talking hundreds of millions of dollars saved on power bills every single year. That’s just on the borrowing costs not on the other savings that we think we would be able to drive by being at the table forcing more aggressive, competitive tendering. This is a very substantial win for consumers – businesses and households.
DENNY: Let’s bring Dan Van Holst Pellekaan into the conversation, SA Minister for Energy and Mining. Dan Van Holst Pellekaan, good morning to you.
DAN VAN HOLST PELLEKAAN, SA LIBERAL ENERGY MINISTER: Good morning Spence and good morning Mark.
DENNY: You would be on the same page wouldn’t you?
VAN HOLST PELLEKAAN: I’m very pleased, I welcome the Federal Opposition falling in line with what our Marshall Liberal Government is doing here in South Australia. We are working incredibly hard with a large range of policies. We know we need more and more renewable energy but we know just wind farms alone were very damaging under the previous government. We need to harness renewable energy, wind, and solar, and small grid scale storage, and some gas with us for a while as well – that will still be very important, very helpful. We have seen our policies turn the cost of electricity around. In the last two years of the previous government the cost of electricity went up $477 for the average house. In the last two years it has gone down $158 for the average house. Linking into what Mark Butler was just saying, we are pushing full steam ahead with the interconnector between South Australia and New South Wales. It was announced yesterday by Electranet that that will save, as assessed by the independent modelling that they had done, an additional $100 saving for South Australia. We know that transmission, improving interconnection around the nation is very important and I’m very pleased that Mark Butler has the same view.
DENNY: Can we extrapolate from that Dan Van Holst Pellekaan that you are backing Federal Labor’s energy policy on this over the Morrison Government’s energy plan?
VAN HOLST PELLEKAAN: No it is actually the other way around. The Federal Opposition is backing Liberal energy policy. We have been saying this in opposition and in government. We said these things in opposition, we said we would deliver them, we’ve been in government for two and a half years and we are delivering them. I welcome Mark Butler and his colleagues seeing the value of what the Marshall Government is doing in South Australia. Now if that puts us on the same page that is okay with me because you know what we are supported by the Federal Liberal government as well. They are also supporting the interconnector between New South Wales and South Australia. I couldn’t be happier to have both Liberal and Labor federally, and of course particularly the Morrison Government, supporting what we are doing here in South Australia. It is working. Prices are going down, renewable energy penetration is going up, reliability is improving. We have not had any false load shedding of electricity supply in South Australia since the last election and there is plenty more positivity to come.
DENNY: Mark Butler back to you just briefly if we can, this is all terribly collegiate isn’t it?
BUTLER: I think the New South Wales/South Australia interconnector is a great example of the benefits you would get from our approach. Transgrid, which would operate the interconnector on the New South Wales side of the border, for example, has applied for a rule change to the regulatory agencies because it is having trouble accessing finance. It wants to be able to bring forward the revenue it earns from building this interconnector so effectively recouping the money quicker from New South Wale consumers because it can’t access finance for this interconnector. If our policy was in place New South Wales consumers would not have to pay higher prices sooner for this interconnector. So I think it would be great if, frankly, Scott Morrison got on board with this. He has been dragging his feet on this plan, a plan that has been endorsed by all of the state governments in the system, developed over some years with the industry, because at the end of the day he is trying to have a bet each way over whether Australia is or isn’t going to transition to renewable energy over the coming years and decades.
DENNY: Mark Butler thank you.