THURSDAY, 25 OCTOBER 2018
MARK BUTLER: Just this morning we’ve heard the broadest possible base of calls for this Government to start taking serious action on climate change.
We’ve seen this morning an open letter from the nation’s leading health experts, including Nobel Laureate Peter Doherty, Australian of the Year Fiona Stanley, and many others who have called the Government’s response to the IPCC Scientific Report on Climate Change, to use their words “unacceptable.”
We’ve also seen the regular biannual survey of company directors for the first time place climate change, or action on climate change, at the top of the list of challenges that company directors think the Federal Government should be acting on.
We’ve also seen this morning a very broad coalition of business and welfare groups, big user groups, so those businesses who have been suffering through the energy crisis Scott Morrison has presided over as Treasurer and now Prime Minister. The BCA, the AiG, Energy Users, and many others as well as welfare groups and energy suppliers, all calling on this Government to bring emissions reduction policy back into the broader energy policy framework.
Last but not least, we’ve heard Senator Dean Smith add his voice to the list of moderate Liberal MPs, or so-called moderate Liberal MPs, who have over the last several days been calling on their own Government to take climate change seriously; in Dean Smith’s case lest the Coalition lose any more faith among the younger generation of Australians.
The failures of this Government on climate change extend across all sectors of the economy, but the most important thing, the most significant thing Scott Morrison could do today to respond to all of those calls across the economy, across society is to return to the table with Labor on the National Energy Guarantee. All we have seen instead this week is a grab-bag of reheated recommendations from a very good report released by the ACCC several months ago. The central recommendation, the central announcement this week was a default price. Now Labor under Bill Shorten accepted that recommendation first up ten weeks ago. That was followed up by Malcolm Turnbull and Josh Frydenberg a couple of days later. So that has been bipartisan energy policy in this country for at least ten weeks – nothing new at all.
The only new thing in the announcements from Scott Morrison and Angus Taylor this week has been the so-called divestment policy. This has nothing to do with consumers. If it did the ACCC would have recommended it in their report. They considered the question and they clearly rejected it because it has no benefit for consumers at all. I’ll hand over to Chris Bowen to talk a bit more about this aspect of the Government’s policy.
CHRIS BOWEN: Thanks very much Mark. Of course in this last week we’ve seen the 17 or 18th version of the Abbott/Turnbull/Morrison Government’s energy policy. As Mark said part of it is just a reheated announcement of something Labor announced weeks ago. Another part of this grab-bag of thought bubbles is this so-called divestment power.
Now a few things about the divestment power. It has nothing to do with lowering power prices. As Mark said the ACCC considered it and rejected it. A few moments ago we saw the revelation in Senate Estimates that not only did the ACCC not recommend this power, the country’s competition regulator, but the Chairman of the ACCC read about it in the newspaper i.e. he was not consulted by the Treasurer, not consulted by the Prime Minister, the Energy Minister certainly didn’t go near the ACCC. He opened his newspaper in the morning, eating his breakfast, and found that we are going to have divestment power.
Now what’s a divestment power about, it’s a stunt. This is a sop to the climate change deniers who want to be able to force companies to divest coal-fired power stations, like Liddell. The Government brings in energy companies and gives them a very good talking to on a six monthly basis. What this is about is just a sop to the right-wing of the Liberal Party and people who don’t want to believe action is necessary on climate change.
We need, in Australia, more investment in power generation. That is what we need. That’s the solution to this problem. That’s why we need a bipartisan energy policy. As Mark said we are prepared to go back to the table with the Government but instead we see the creation of sovereign risk and investment uncertainty with this floating of a divestment power.
Labor believes in good policy. We’ll always back good policy when we see it from the Government. If the Government comes up with a good idea we will back it but when they come up with a silly idea we will call it out. This is just a silly idea.
Now Australia currently does not have an energy policy. This grab-bag of thought bubbles that we’ve seen over the last week is not an energy policy. We don’t have a climate change policy. The Government won’t even say the word “Paris,” won’t even utter the word, it won’t leave the Prime Minister’s lips. When was the last time he talked about our commitments under the Paris Accord? He talks about Kyoto and Kyoto 2 and other commitments but this rump of climate deniers in the Liberal Party won’t even let him utter the word “Paris”. And, of course, we don’t have a policy that will generate the certainty necessary for investment in renewable energy and other forms of energy which is so vital for getting energy prices down.
So the time for the games is over. The time for the thought bubbles and the policy crisis, lurching from one crisis to another is over. It is time for the adults in the room to sit down and develop a proper energy policy for Australia. It is quite clear the Abbott/Turnbull/Morrison Government is just not up to it. A Shorten Labor Government will have to deliver it but in the meantime, as Mark has said, it is time for the Government to return to the table to offer bipartisanship on proper energy policy. The Labor Party was prepared to do that with the Clean Energy Target, the Emissions Intensity Scheme, the National Energy Guarantee, all of which the Abbott/Turnbull/Morrison Government has tried and failed at every opportunity. This is important for the economy, important for the future of the country. This Government just continually fails.
JOURNALIST: On energy one of the other things Angus Taylor suggested is that using this recommendation to underwrite the investment in new plants, either through a loan or a purchase guarantee, that they’ll have a shortlist of projects early in the New Year which we understand could be as early as January. If any of these projects are contracted before the election would Labor reserve the right to reverse any contracts? I know it is a bit hypothetical but you can see where the Government is going here, would you be locked into any coal-fired power stations if that is what the Government contracts?
BUTLER: Maybe if I can deal with the recommendation and then go to Chris about our policy in relation to contracts. We need to be clear that the announcement from the Government earlier this week does not reflect the ACCC recommendation. The ACCC does not talk about loans. Mr Sims, again, made it very clear in the Senate Estimates hearing this morning that no one raised with him through the development of this recommendation the possibility of new coal-fired power stations when we actually know that is what the Coalition is all on about. When they say ‘fair-dinkum power’ that is code, that is signalling to the right-wing of the Coalition party room that this Government wants to put taxpayers money on the line to build new coal-fired power stations that the industry itself says for very obvious reasons are “uninvestable.”
So this does not reflect the ACCC recommendations. I know they are trying to cloak it in recommendation four, but as to whether or not this Government is able to rush this through, they’ve got expressions of interest running through summer, whether they want to try and conclude contracts is difficult to see. But I might throw to Chris about our policy in relation to that generally.
BOWEN: Thanks. As Mark said this is policy on the run and if the Liberal National Government wants to engage in such poor policy that they are prepared to risk the national interest in doing this quickly, in a haphazard way that is on them. Labor honours contracts, we don’t create sovereign risk. That has been our consistent position across the board when it comes to any matter in the economy. We honour contracts, we don’t create sovereign risk. But I call on the Government to be sensible and not to engage in this sort of cheap stunt.
A Labor Government will deliver energy policy certainty. The Abbott/Turnbull/Morrison Government is just lurching form crisis to crisis – but don’t do so at the expense of good government. To answer your question our position has always been consistent on a range of matters, an incoming Labor Government honours contracts even ones that we thoroughly and completely disagree on.
JOURNALIST: Does that extend to if any of these projects are indemnified against a risk of a carbon price or some other policy?
BOWEN: I think you’re really asking us to get into hypotheticals now Phil.
BUTLER: If I could just add to that, Chris has outlined the principles in relation to contracts but I think people need to take a breath and consider what is involved in indemnifying for example a new coal-fired power station against carbon price risk for a 30 or 40 year period. Just applying the sorts of arrangements that exist in the UK, for example, under a conservative government or are being rolled out in Canada under a conservative government, you are talking about billions and billions of dollars in indemnity for just a single coal-fired power station. So I call on Angus Taylor and the Treasurer to be open with the people about quite what an indemnity would involve for taxpayers to foot.
JOURNALIST: In terms of Labor’s opposition to divestment powers, I mean this is a policy that has worked overseas and has been in place overseas for a long time and the sky hasn’t fallen in. Why is it not right for Australia?
BOWEN: Well with respect we are talking about different things. Some countries have a divestment power as a penalty under competition law – as a penalty if a competition law is breached. Some countries have that, it is not universal but some countries have it. This is very different.
This is very different, this is a sector specific policy which would only apply to energy. I know that some in the National Party want to apply it to banks and supermarkets but the policy before us only applies to energy and it would not be a breach of the law, it would not be a breach of competition law, it would be because a Minister doesn’t like what a company has done. That’s what the divestment power that has been brought forward by the Government is. If a Minister takes a dim view of the way a Chief Executive has spoken or the companies policies, they can just order a divestment of an asset. With respect, that is not reflected in the law of other countries, it is just not.
Now there have been multiple reports into the energy policy of Australia. We’ve had the Energy Security Board, we’ve had the Chief Scientist, the ACCC, I’m sure there are others that I have missed Mark.
BUTLER: Many, many.
BOWEN: Many, many more. Not one of them has recommended this power. Angus Taylor or Josh Frydenberg need to come and front you, and the Australian people and say who recommended it. Did the Energy Security Board recommend it? Did the ACCC recommend it? Did the Chief Scientist recommend it? Has the Treasury recommended it? The Chairman of the ACCC read it in the newspaper. The competition chairperson read it in the newspaper, didn’t even get a curtesy call to let him know that it had been announced let alone consulted if it should be announced. This is a rolling farce of poor government.
JOURNALIST: Would you be open, in response to Nicole’s question, would you be open to anti-trust provisions if they were?
BOWEN: Completely different question Phil. As I said, there are some countries that have divestment powers as part of the suite of penalties that are available in terms of competition law. That is not what is before us here. It is just not.
JOURNALIST: Mr Bowen, Rod Sims has just been appointed another five year term. Do you support that and what should be his focus?
BOWEN: I’m not going to comment particularly on Rod Sims, obviously he is a respected regulator. I have no quarrel with him as such and that is an appointment I have no quarrel with. More broadly, on important government appointments we’ve made points about the Secretary of the Treasury in recent days and the trashing of the bipartisan or the non-partisan conditions of the Treasury. We will continue to make that observation and as we get closer to the election, seriously important economic appointments, it would be appropriate for the Opposition to be consulted.
JOURNALIST: The Finance Department has released new Budget figures this morning and shows that the Budget is about $9 billion up on where it was supposed to be. Does that give you confidence about your spending promises and how that money may be deployed by a Shorten Labor Government?
BOWEN: We stick to our budget rules unlike the Government. The Government changes its budget rules and the Prime Minister says yeah we’ve got rules but we’ll let you know when we are not complying with them. Now of course there is an internationally encouraging economic situation, the world economy is going well, and that is reflected in Australia. But we don’t see think the need for budget responsibility has gone out the window. We do think the need for bigger budget surpluses in the short-term is maintained.
We saw concerns overnight about Australia’s household debt something I have been talking about consistently. Second highest household debt in the developed world, not a record we should be hankering for. We need bigger budget surpluses in the short-term and we need to be hitting one per cent of GDP more quickly than the Government is projecting. Now of course any improvement in the Budget figures is welcome, that lies for both sides. It implies to the Government and to us the Budget has improved regardless of who the incoming Government post-election is. But we will maintain our budget discipline.
JOURNALIST: Mr Butler could I just clarify something, if Labor wins office at the next election to meet the 45 per cent emissions reduction target that you have set. Your preferred mechanism to do that would be the National Energy Guarantee that Mr Turnbull and Mr Frydenberg were working on to meet that target?
BUTLER: Well certainly in the energy sector, the Paris Targets are applied across the economy but the debate has been about the energy sector and our very clear view is that bringing together the different strands of energy policy, reliability and emissions reduction together in the NEG is the best way to do that.
We’ve supported that process, every single business organisation in the country supported it, Scott Morrison himself when Treasurer said he had not encountered a single measure in his ten years in Parliament that had a broader base of support than the NEG. Now we’ve said the Government needs to reconsider its position, reconsider its capitulation to Tony Abbott and others of the hard-right in the Coalition party room and do the right thing in the national interest and come back to the table and develop a bipartisan policy.
The statements from all of the business groups this morning reflect that. I make the point that, around the NEG or around divestment, big business groups that are energy users, not the energy companies, but users of energy that have been suffering through this energy crisis that Scott Morrison has presided over as Treasurer and now as Prime Minister have said two things: come back to the table on the NEG and reconsider this reckless measure around divestment.
BOWEN: Mark and I have a meeting to get to; we can probably take one more question.
JOURNALIST: Can you give us an idea of your emissions reduction target on energy. I know you are going to go to an independent board but there have been speculation it could be around 60 per cent to meet your overall national target. Would you consider something around that level?
BUTLER: We’ve been very clear that the different modelling and the process that I think has been a very orderly and developed process through the Energy Security Board and others has been effectively modelling two targets, the Government’s target of 26-28 per cent and a 45 per cent emissions reduction target in energy. That is what we’re working on.
JOURNALIST: Mr Bowen can I just ask you on negative gearing. So given the current state of the housing market with house prices falling are the negative gearing changes still relevant?
BOWEN: Absolutely, this is a policy that we announced two and a half years ago to improve housing affordability but also to improve the Budget and deal with financial instability and high household debt. Now, in fact, in Sydney and Melbourne in particular some of the heat has come out of the housing market that means our policy can be implemented even more smoothly. Because despite the rhetoric of the Treasurer yesterday our policy is fully grandfathered, a fact he misled the Australian people about yesterday, quite shamefully. Quite shamefully, the Treasurer misled the Australian people in the tradition of Scott Morrison who as you would recall latched onto dodgy modelling about negative gearing, the BIS Schrapel report. Sat on Treasury modelling which said there would be a modest impact on house prices, refused to release it. And now this Treasurer has latched onto modelling, which does not model Labor’s policy.
Now the fact that investors in many instances are leaving the market in an orderly fashion because of macro prudential regulation means that that price impact is already being factored into the market and means that Labor’s reforms can be implemented even more smoothly. They were careful with design, carefully grandfathered for a range of market circumstances. You don’t write policy for what is happening in the market on one particular day. You write it to be fit for purpose for any range of market circumstances because when we implement it it’ll be in place for many years and the market will go up and down and it’ll be different for different parts of the country. Our policy is the right one. We are seeking a mandate for it as we sought at the last election, and if we get that mandate we will implement it.
JAMES CULLEN (BOWEN) 0409 719 879
LUCY CARUSO (BUTLER) 0408 803 428