TUESDAY, 15 SEPTEMBER 2020
FRAN KELLY, HOST: The Morrison Government is literally hitting the gas as it plots an economic recovery for Australian manufacturing smashed by the COVID pandemic. Gas is the centre piece of a new energy policy which will see the Commonwealth open up supplies to feed a new national distribution hub, to be located in Queensland. The Government says it will build a new 1000MW gas plant in the Hunter Valley, that is of course unless the private sector steps up with its own investment by April next year. The Prime Minister says the biggest shakeup of the gas market in decades will deliver cheap and reliable energy that will drive jobs and business growth. But with gas not that much cheaper than coal in terms of emissions the plan is not guaranteed bipartisan support from Labor, which already has its own divisions over this particular fossil fuel. Mark Butler is Labor’s climate change and energy spokesperson. Mark Butler welcome back to Breakfast.
MARK BUTLER, SHADOW MINISTER FOR CLIMATE CHANGE AND ENERGY: Morning Fran.
KELLY: The Federal Government, we now know, is backing cheap gas to turbocharge the economy out of recession. As the Prime Minister will put it today “gas is the critical enabler of Australia’s economy.” Is gas the key to saving jobs and rebuilding manufacturing in this country at this time?
BUTLER: Gas is obviously important for manufacturing and it is important for the many households who will be heating their households this morning and perhaps using gas stovetops to cook. But the idea of cheap gas is something that we have been complaining about for several years now.
We have been calling for drastic action on the gas market for five years and we have got nothing from this Government. When we called for export controls to help bring down the price of gas, as we saw so much of our gas shipped overseas and sold for cheaper prices overseas than what you could buy it for here, we were called economic vandals by Malcolm Turnbull and then by Scott Morrison. We’ve been calling for drastic action in the gas market to help Australian manufacturers, underpin the tens of thousands of jobs that exist here, but we have heard nothing from the Government.
KELLY: Can I take it from that that you approve this plan then?
BUTLER: Well there is not much in this plan. It is heavy on spin and it is light as a feather on substance. It is hard to see where you get a single job from this announcement in the time frame that we need, in the deepest recession in almost a century. Unless of course you are employed writing plans, or reviews, or voluntary industry-led codes of conduct, there is a few jobs there – but there is not much else to help us in a recovery pathway out of the deepest recession in almost a century.
KELLY: Hang on how can you say that? The Commonwealth plan provides for five new gas fields to be opened, new pipelines to be built, new interconnectors, the Queensland trading hub and potentially a government built and owned gas-fired power station which would be up and running in a couple of years.
BUTLER: Let’s go through that.
There is a plan for new basins that would be years and years away. Basins that are nowhere near connected to the gas network.
There is a review of prices. We have been calling for drastic action since 2015 but there is a review of prices to manufacturers.
They talk about establishing an Australian gas hub at Wallumbilla – Wallumbilla is already a gas hub which the energy regulator only said in recent weeks is becoming more and more liquid every month. It is simply a renaming of an existing gas hub.
KELLY: No, it is not simply a renaming is it?
BUTLER: It is! It’s a gas hub now. It has been a gas hub now Fran.
KELLY: Yes, but a small gas hub. We are now talking about bringing in lots and lots of different new pipelines and interconnectors through that gas hub from these gas fields when they get opened.
BUTLER: Well they are going to write a plan for that. There are pipelines connecting Gladstone to Wallumbilla, Wallumbilla to Moomba – this is a gas hub, it is Australia’s gas hub.
KELLY: Yeah so it is turbocharging it. It’s a plan to beef it up.
BUTLER: There is a plan to beef it up maybe some years down the track. And in a development that I’m sure has the big gas industry executives shaking in their boots, the announcement also talks about a “voluntary industry-led code of conduct” to give gas customers a fair shake. Principally we are talking about our big manufacturers there who have seen gas prices triple over the past five years. I think we’ve learnt over recent years that reliance on the goodwill of the gas companies will not deliver any price relief. We have been talking about drastic action, export controls based on prices, for five years. All we get today is a voluntary industry-led code of conduct perhaps.
KELLY: Okay so your criticism of this plan is that it is not ambitious enough and it is not quick enough. Is that it?
BUTLER: They have sat on their hands for five years. They have sat on their hands while manufacturers have closed over recent years because of the gas price tripling. They have continued to reject calls from us and from manufactuers for drastic action to bring down gas prices. There is nothing in this, there are plans and there are reviews that might lead to something years down the track. There is nothing that will give any comfort, I don’t think, to Australian manufacturers who have seen gas prices triple.
KELLY: So, what should the Government do, whether it is gas or other technology, to get the dispatchable power capacity that we need to have in the market for when Liddell is closed down. That is going to take 1000MW out of the supply, of dispatchable power, it needs to be replaced or we could run into problems do you accept that?
BUTLER: The chutzpah of the Government in this is breathtaking. Industry has said, until they are blue in the face, that we need an energy policy with an investment framework. That is the problem with investment in the energy sector. Not just in New South Wales but across the country. That is why investment, according to the Reserve Bank, investment decisions collapsed by 50 per cent last year – well before COVID. They have dropped by 50 per cent again so far this year.
We wrote to Scott Morrison 10 weeks ago offering bipartisanship around an investment framework and have heard nothing.
In relation to the Liddell closure, which was announced five years ago, if there is any slowness or reluctance in investment in that region it is because Angus Taylor and Scott Morrison, and before that Malcolm Turnbull, have tried every trick in the book to keep that 50-year-old coal-fired power station open. They threatened to buy it compulsorily-
KELLY: Because they are worried about the exit of the dispatchable power -
BUTLER: AGL announced, when they announced the closure in 2015, a portfolio of investment plans to replace that power.
KELLY: Well part of it?
BUTLER: The Government has continued to run interference in that. The thing that is completely absent from this announcement today is the role that renewable energy is going to play. Renewable energy that is going to be firmed up by new battery technology, pumped hydro and perhaps also gas peaking. A tender by Snowy Hydro confirmed a couple of years ago this is the cheapest new energy in the system, and it is continuing to drop in price every single year. New gas power is the most expensive way to build new energy, so why doesn’t Scott Morrison tell us what his plans are for new renewable energy, firmed up by batteries? I accept that it has got to be dispatchable. It has to be available 24/7. The technology is there, it is the cheapest, it is the cleanest way to build new energy and it is completely lacking from today’s announcement.
KELLY: The Minister Angus Taylor was on AM this morning; he was talking about emissions and the implications of that for an expansion of gas. He says it is completely consistent with bringing down our emissions. He says a record level of investment in renewable energy needs to be backed up by either Snowy Hydro and gas and that is what this is part of, dispatchable generation. Backing up what he called the record levels of investment in renewable energy.
BUTLER: He is just not telling the truth. What we are seeing is a very high number of installations. They are connections of new renewable energy projects to the grid this year. That is a lagging indicator that reflects investment decisions made two-three years ago. What the Reserve Bank reported is that investment decisions collapsed by 50 per cent last year and we know they have collapsed by a further 50 per cent this year. You will see in the timeframe when we need new jobs, over the next 12-24 months, you will see the number of new projects actually connected to the grid from renewable energy fall off a cliff. That is the problem. We’ve got projects that already have planning approvals, they are not years down the track, we have projects that already have planning approvals set in in the renewable energy industry that if allowed to go, if unleashed within an investment framework, would deliver 50,000 new jobs and there is nothing in this announcement about them.
KELLY: Can I ask about Labor’s policy. There are climate tensions within Labor exacerbated since the last election loss. There have been calls led by Joel Fitzgibbon and some others to abandon Labor’s 2030 or 2035 target. The draft Labor policy platform appears to be leaked this morning and it has no mention of those climate change targets you took to the last election – a 45 per cent reduction by 2030. Is that still Labor’s emissions reduction target?
BUTLER: We have said that we are reviewing our 2030 targets. Anthony Albanese and I have been very clear about that because they were based on a report that is already five or six years old now and, by the time of the next election, will be very old and we will be halfway through the 15 year implementation timeframe that that report from the Climate Change Authority envisaged. We have said very clearly that our position on medium term targets would be made very clear before the next election. It would be a position that is aligned with our net zero emissions by 2050 commitment and informed by the best available scientific and economic advice. That is all set out in the draft platform.
KELLY: Will Labor go to the next election without any specific medium-term target for abating emissions?
BUTLER: Anthony Albanese and I have said that our position on medium term targets will be clear well before the next election.
KELLY: Will they include a medium-term target?
BUTLER: That is what I’ve said, our position on medium term targets will be made clear well before the next election. It will be a position aligned with our mid-century commitment to net zero emissions, which is matched by every state government, by the Business Council, the Australian Industry Group, most recently in the last fortnight the National Farmers Federation – pretty much everyone except the Federal Government. We know from the CSIRO that net zero emissions by 2050 will lead to better economic growth, more jobs and higher wages. It is a very important investment signal that the Government needs to match.
KELLY: Okay Mark Butler thank you very much for joining us.
BUTLER: Thanks Fran.