BARRIE CASSIDY:  Labor says, as we saw in that package earlier, that your new Renewable Energy Target is a 40 per cent cut on your legislated target.  That’s a reasonable observation isn’t it?

INDUSTRY MINISTER: Well it’s not, and we need to stick to the facts in this debate, and that’s exactly what I intend to argue. When the target was set, when the Coalition agreed to 20 per cent, the expected production of electricity was 300,000 gigawatt hours. Therefore 20 per cent of that was 60,000 gigawatt hours.  You deducted off what already existed in terms of pre-existing hydro electricity and you got your 45,000 gigawatt hour number. You then took away a prediction that 4,000 of that would come from rooftop solar and you got 41,000 gigawatt hours.

Move forward to 2014, the overall prediction of electricity consumption has fallen by 15 per cent to 255,000 gigawatt hours.  And on that basis, the amount of electricity we need to produce in terms of renewables is 51,000 gigawatt hours – no change, still 20 per cent. We’re still committed to 20 per cent.  You deduct out the 15,000 gigawatt hours of pre-existing hydro, as we did in 2009, and you make an adjustment because of the massive change in the number of rooftop solar.  Rooftop solar’s not going to come out at 4,000 gigawatt hours, it’s already six and a half. It’s going to come out somewhere north of 10, some say north of 13,000 gigawatt hours.

So in reality, nothing has changed.  The 20 per cent is still 20 per cent.  But it is a 20 per cent target Barrie, it’s not a 25, 27 per cent target.  It is a 20 per cent target.  We haven’t cut anything by 40 per cent.  The overall consumption of electricity has fallen by 15 per cent, and therefore the target must fall by 15 per cent.  That’s entirely logical, but the amount of renewable energy produced in Australia in 2020 will still be 20 per cent of the amount of electricity consumed.

BARRIE CASSIDY:  Ok, so you’re saying that you can look industry in the eye and say that ‘you knew all along that if there was a decline in power use the target would be different’?

INDUSTRY MINISTER: Well Barrie, the Labor Party asked us for two-yearly reviews when I did that negotiation in 2009.  If you’re having two-yearly reviews obviously you’re ensuring that the integrity and the overall settings of the scheme are working.  Now 2014 – two reviews later – there is a recalibration because all the economists got it wrong.  Twice as much, perhaps three times as much, rooftop solar is going to be installed and we’ve seen a dramatic drop in the overall consumption of electricity by about 15 per cent.

So we do have to recalibrate the target in terms of gigawatt hours.  But it remains at 20 per cent. Nothing’s changed in terms of our commitment.  We haven’t walked away, as you suggested, from our target.  Our target was, still is and will be 20 per cent.

BARRIE CASSIDY:  But if industry made decisions based on the [41,000] figure, have you sympathy for them now that anything less and they might be in trouble?

INDUSTRY MINISTER: Well I don’t actually buy that argument.  Let’s talk about the reality.  The reality is that over the last 14 years there’s been about 13,000 gigawatt hours of large-scale renewable energy installed.  Under our proposal, there will be another 13,000 gigawatt hours of renewable energy installed in the large-scale.  That’s a doubling of what is currently in place.  So in terms of the proposals that are out there at the moment to build wind farms, they will be more than accommodated in that target.  And in terms of the overall target, it remains where everyone agreed to – 20 per cent.

This is not news to the industry – I said to the Clean Energy Council, which all the major wind players were there, three years ago, you  can’t expect Australia to accept a 27 per cent renewable target.  20 per cent was the deal, 20 per cent is where we are.

BARRIE CASSIDY:  Why then, if they should have known it was coming, why did one wind turbine manufacturer put off a hundred people just this week?

INDUSTRY MINISTER: Well he did say Barrie, in yesterday’s paper that that wasn’t associated with my announcement and I don’t want to go into the ins and outs of his business, but he did also say that he was facing extraordinary competition from wind towers coming in direct from China.  So, always a complex issue but the basic fact remains if he participated in an industry that installed 13,000 gigawatt hours over the last 14 years, he could still have an opportunity to participate in an industry that’ll install just as much, if not more again.  And so there’s plenty of opportunity in terms of large-scale renewable energy under the 20 per cent target that we’ve adopted.

BARRIE CASSIDY:  Well John Hewson is a former Liberal leader and he says you’ve gone a long way to killing off the industry.  He said billions of new wind projects are sitting there but waiting for the Government to honour its election commitment.

INDUSTRY MINISTER: Well our election commitment was 20 per cent and we’ve honoured it.  And as I say, there’s 13,000 gigawatt hours of production to be built – let’s get on with it.  There’s more than enough there for every proposal that’s got to a final financing stage, so the reality is, I’m not sure that John’s looked closely at this, the reality is we’re talking about building as much wind and other large-scale renewables in the next six years as we’ve built in the last 14.

BARRIE CASSIDY:  And while you’re trying to negotiate with Labor, John Hewson is telling Bill Shorten to hang tough on this, to stay the course.  That can’t be helpful.

INDUSTRY MINISTER: That sort of advice is only going to hurt the renewable energy sector.  What we want to get out of this negotiation is certainty. We’ve said that once the negotiation is concluded that we’ll end the biennial reviews, the reviews every two years.  We’ll say to the industry – here’s your target, go forward to 2020.  If the overall consumption of electricity rises above that target, then we’ll adjust the target up.  But we won’t adjust it down.  So if the industry wants certainty, and everyone likes certainty in life, even me – I’d like to be certain I’d be the Industry Minister in five years’ time – if the industry wants certainty the way to get it is to negotiate an outcome.  And  we are totally committed to our 20 per cent target.

BARRIE CASSIDY:  Can you negotiate in good faith and with confidence with Labor?  Is there enough trust between the two parties?

INDUSTRY MINISTER: Yeah look I think there is.  I’ve obviously got a very strong record of doing that, I negotiated the RET with Penny Wong when I was in Opposition, I’ve had a number of negotiations including behind the scenes with Martin Ferguson when he was the Minister.  Without sounding presumptuous, I think the Labor Party probably trust me.  I certainly take that trust of them.  I have known Gary Gray a long time, Mark Butler and Chris Bowen are decent guys.  I’m happy to sit down round a table.  It’s now almost a week since we did that and there’s been no leaks, there’s been no sledging. I think it’s going along ok.

BARRIE CASSIDY:  And what is the deal there?  That you can go out this morning and publicly argue your case but the deal is there’ll be no leaks behind the scenes.

INDUSTRY MINISTER: I’m not arguing my case Barrie, I’m defending the fact that what I said before we went into the negotiations was that the Coalition is committed to 20 per cent, and we are.  That’s all I’m saying.  I’m not doing the ins and outs, I’m not going into the details about energy intensive trade exposed industries.  Yes, as I said in my statement pre the negotiations we want to exempt those industries to protect the jobs of those workers in those industries.  But in terms of the actual detail of the negotiations, all I’ve said this morning is that we are committed to a 20 per cent target, and I’ve explained to your listeners who are getting all sorts of numbers – 40 per cent,  60 per cent – that the actual fall in the overall consumption is 15 per cent, and consequently the overall fall in gigawatt hours is 15 per cent.  But the target is still 20 per cent.

BARRIE CASSIDY:  But does that imply, the fact that you’ve gone into negotiations implies you might meet Labor halfway on the target, it also means that you’ll want Labor to come on board in terms of exempting industries beyond aluminium?

INDUSTRY MINISTER: Well now we are getting into the negotiation and I think you know my position.  I am prepared to have an open and straightforward negotiation, I am.  That’s why I asked for a negotiation.  But I’ve stated our position clearly as a starting point, I’ve said that the Coalition is committed to 20 per cent – and we are.  Now the negotiations will take place.  If we can get them sorted we’ll provide the certainty to industry that the industry’s asking for and needs, and we can get on and build as much renewable energy in the next six years as we have in the last 14.

BARRIE CASSIDY:  Well what about the Greens’ position now, where they were talking about allowing the passage of your Direct Action Plan in return for retaining the initial energy target.  Is that now off the table?

INDUSTRY MINISTER: Well two things – firstly I’m not aware of that negotiation, I saw the reports like you probably did, but I’m not aware of the detail of the discussion.  And secondly, what is the Greens’ target?  I always thought the Greens’ target was 20 per cent. That’s what we’re targeting.  We can’t help the fact that because of a whole range of factors energy consumption in Australia has fallen.  But the reality is, the Coalition is tied to, and tightly tied to, a 20 per cent target.

BARRIE CASSIDY:  And just finally, you say that usage is down, but so too is the price of power.  Greg Hunt told us about that in no uncertain terms this week, and yet you look at the polls and it seems that very few people believe it.

INDUSTRY MINISTER: I know it’s difficult, and people often see the headline number on their bill, and energy consumption in most households continues to rise, only moderately, but continues to rise unless they’ve fitted a photovoltaic unit to their house.  So it is difficult for people to see.  But the facts are there – the price of electricity has fallen.  The good news Barrie, is particularly in NSW it’s likely to fall again as they bring under control the spiralling upward cost of distribution to the household of electricity, and in fact real electricity prices in NSW should fall again next year.

[Ends]

Media contact: Minister Macfarlane's Office 02 6277 7070