January 08, 2017






SUBJECT/S: Emissions intensity scheme, renewable energy, Sussan Ley, parliamentary entitlements, childcare.

MIRIAM COROWA: Well it’s only the beginning of the year and already 2017 is beginning to impose big challenges for the national power grid which links the Eastern States. The expected closure of the Hazelwood brown coal plant in Victoria is tipped to drive up bills for consumers and there is little sign that power companies are willing to invest in new base load generation to replace it.


NICK HARMSEN: The Shadow Minister for Climate Change and Energy, Mark Butler joins us to discuss this issue on the line from Adelaide. Mark Butler good morning and welcome, you’ve been talking about an emissions intensity scheme (EIS) being needed to ensure new investment in the power sector. For the uninitiated can you just take us through what an EIS actually is?

MARK BUTLER MP, SHADOW MINISTER FOR CLIMATE CHANGE AND ENERGY, MEMBER FOR PORT ADELAIDE: Well essentially it is a very strong signal to investors about a commitment by the national government to see new generation capacity built in Australia that is as clean as possible. It’s not just Labor that has been talking about this. We picked this up from the Energy Markets Commission which came up with the concept in 2015, this is the body that oversees the National Electricity Market and over the course of the last several weeks of last year you saw it recommended by the Chief Scientist by the Climate Change Authority by all State Governments Labor and Liberal alike, the CSIRO, and by the industry itself. So pretty much everyone whose focus and attention is on future energy policy has come up with the idea that this emissions intensity scheme, like I said not a creature of the Labor parties thinking but an idea from the Energy Markets Commission, is the proper centrepiece of a national modernisation plan for electricity. 

Now just before Christmas, Josh Frydenberg the Energy Minister indicated that the Federal Government would be thinking about adopting this and that’s a good thing because there would then be the possibility of finally some bipartisan national energy policy. But after a very strong reaction from the right wing of his own party, Tony Abbott, Cory Bernardi and the like, Malcolm Turnbull inexplicably and very foolishly I think decided to walkway from the emissions intensity scheme. In spite of the fact that the Energy Markets Commission said that a failure to introduce this scheme would cost households $15 billion in increased power bills over the next decade. 

HARMSEN: Well you mention this wasn’t a creation of the Labor party and in fact if we do go back in history to when this was first put forward in 2009 by the economist Danny Price in a report commissioned by the now Prime Minister Malcolm Turnbull and Senator Nick Xenophon. Your colleague Penny Wong described it as, “a mongrel” she said, “it wasn’t a credible alternative, it’s a smug screen and has the distinct taste of magic pudding.” Why should we believe you that it is the way forward now?

BUTLER: Well over the course of 2015 and 2016 I spent several months consulting very deeply with the energy industry, with consumers, with businesses that are big users of energy mostly our manufacturing sector. And we came to the view that the proper thing to do was to adopt a comprehensive plan that looked at building new renewable energy to replace our ageing coal-fleet many of which are operating beyond their design life and an emissions intensity scheme which was  a policy that we thought had the best chance of gaining a consensus between the major parties but also with the electricity industry, the old thermal generators (coal and gas), but also the new renewable industry and the big energy users. 

I think things were looking good until early December last year that finally we might have a bipartisan energy policy, the support of all of the state governments, Labor and Liberal alike, the support of the industry, the support of big energy users, and finally send a strong investment signal to businesses that would allow them to start building the new generation that Australia is going to need over the next couple of decades. 

Because I think it is often lost Nick, in the debate that three quarters of our coal and gas fired generators around the country are already operating beyond their design life. It’s not a matter of choice about replacing them, inevitably they will close over the next decade or decade and a half. Even if there wasn’t this debate about climate change or a renewable energy revolution Australia would now be anyway in the position in its history of having to renew all of those generators that were built mainly in the 1960s and 1970s. But unless the investment community has a strong signal from the national parliament and the national government that preferably is bipartisan, they are simply not going to build. And what we will see as a result is what Danny Price said just before Christmas less energy security, so more blackouts, and increase in power prices for households and businesses. It’s only a couple of weeks into January and we are already seeing that. 

HARMSEN: I suppose the big question is what are you going to replace those ageing coal plants with? You spoke about gas, we've seen big hikes in gas prices at the moment with a number of State Governments putting bans and moratoriums on exploration. Isn’t the reality here that if we are to meet our Paris climate change targets we are going to have to pay more?

BUTLER: Well what we do need to do is build a new generation of generators. A new fleet of generators across the country which is diverse, as clean and modern as possible. Now we would like those to be new renewable energy generators as far as possible but gas is going to have to be a very important part of our mix for a considerable amount of time. We don't think there is any appetite for the investment community to build new coal fired generators. Although, I did notice that the Resources Minister in the Turnbull Government last week said that his preference was for Australia to build new coal fired generators. So I think this is the sort of discussion we need to have with the business community, particularly those parts that are going to fund these new generators but they are not going to do it if they don’t have a very clear signal from their national government. The sort of signal that I thought we were going to get with an emissions intensity scheme.

HARMSEN: We have one state that already has a pretty high gas and renewable energy mix and that is your home state of South Australia. We’ve got the highest wholesale prices in the nation there and statewide blackouts. Is this what is it to come for the rest of the country?

BUTLER: I think it is important to seperate what exactly has happened over the last 12 months Nick. As I think you know there was a statewide blackout that all of the energy market operators and the experts in the field said was clearly the product of a once in a 100-year storm that blew down 23 transmission towers. It wasn’t about the nature of the generation, the Chief Scientist said in a summit in South Australia a week or so after the blackout that this sort of thing would have happened even if there were a much higher reliance on gas and coal fired generators in South Australia. So let’s be clear about what happened in that statewide blackout but it is true that South Australia is at the pointy end of this transition to a modern, 21st century fleet of generators. And South Australia has been very badly let down by the lack of strong, national energy policy. 

First of all, as I said a strong investment signal like a type that Danny Price, the CSIRO, and so man others have talked about getting from an emissions intensity scheme but also we have utter chaos in our gas market because of the LNG operators operating out of Queensland, sending gas off to Korea, China and Japan. We’ve seen a tripling of demand in the Eastern Market for gas and we’re simply not getting enough gas supply into our electricity generators that are keeping prices down. 

So the price spikes you’ve seen over the last 12 months in places like South Australia but elsewhere in the National Electricity Market as well are overwhelmingly the product of very big spikes in the price of gas. We’ve seen nothing over the last three years from the Turnbull and the Abbott Government to really introduce some sort of order into a gas market that is profoundly different after the introduction of those LNG export operations. 


HARMSEN: Mark Butler if I could turn to the issue of parliamentary entitlements, and Sussan Ley’s apartment on the Gold Coast. That issue is yet to fully play out but we've seen a number of these scandals in the last couple of years and even a review of parliamentary entitlements. Is it still too easy for MP’s to take the taxpayer for a ride?

BUTLER: Well it shouldn't be and I think that there are some very serious question for Sussan Ley to answer about what she and her husband were doing that day on the Gold Coast. The answers that we have got, not from the Minister herself but from her office are changing almost on a daily basis.

Originally, we were told she was there to meet with health stakeholders so presumably doctors and nurses groups or a visit to the Gold Coast hospital or something. But after I think we quite reasonably asked for some details about those stakeholder meetings  she changed her story and said instead that she was meeting with individual patients about medicines and that of course would be to personal too divulge to the Australian community so we would have to take her on trust. We’re also expected to take on trust that this story apparently that in between this busy series of meetings the minister was taking a short stroll along the streets of the Gold Coast and stumbled upon an auction and without apparently any sort of finance pre-approval or a building inspection or perhaps even looking through the apartment very closely at all, on an impulse she bought a luxury apartment of $795,000 with her husband. I mean none of this holds water - 

HARMSEN: But Mark Butler isn’t the issue here that there are rules and we’ve seen this issue with political donations this morning as well that there are rules in place that require things to be disclosed and that require ministers and parliamentarians to follow rules, but they’re not enforced?

BUTLER: Well they are and what we saw last year with Stuart Robert, when he mixed up his private and public responsibilities as a Minister in the Turnbull Government he had to go. We’ve seen that in the past particularly in the last few years with the Abbott and Turnbull Government. What we are getting though is stone walling from this Minister. She has gone into hiding, the Prime Minister is not doing anything to present some detail and some evidence to the Australian community that the ministerial standards which are much stronger than the usual standards that apply to public officials, they apply to ministers for very good reason, that there must be a clear delineation between your public life and your private life. There are very serious questions for either the Minister or the Prime Minister to answer very quickly because all of the evidence puts towards a clear conflict of interest and the only conclusion that you can draw really based on the evidence and the usual sort of assumption people would make about the nature of impulse buying is that the Minister and her husband were there with the purpose of buying a luxury apartment. Until she provides some evidence to the contrary the only conclusion I think reasonable people can make is that there was a breach of ministerial standards which means that this Minister has to go.


HARMSEN: Mark Butler briefly if I can ask you on reports in the News Limited papers this morning on childcare costs. A 22 per cent rise over the next four years, a top rate of $223 a day in Sydney in four years time. Is that warranted and what can be done about it?

BUTLER: I think that Kate Ellis has said that from the time the Government, under then Prime Minister Abbott promised to make childcare more affordable, to any possibility of delivery on the Federal Governments policy on childcare, a baby born at the time the promise was originally made will already be in school by the time that the Government actually introduces any changes to the system. We’ve seen utter inertia in this area which is placing real pressure on working families, to find the places they need and to be able to afford childcare if they are lucky enough to find a place. This is the most basic of economic laws, of supply and demand. This Government needs to do more to create more places for childcare in all of the major cities but in regional Australia as well, but also to stop holding childcare policy hostage to their insistence that they would cut family payments to hardworking single income families to pay for new childcare policy. I can’t imagine a clearer case of robbing Peter to pay Paul then that.

HARMSEN: Shadow Minister for Climate Change and Energy Mark Butler thank you very much for your time this morning.

BUTLER: Thanks Nick.