Interview with Michael Brissenden, ABC AM
19 May 2015
Subject: Renewable Energy Target, iron ore inquiry, 2015 Budget.
Presenter: For more on that story we’re joined now by the Industry Minister Ian Macfarlane. Mr Macfarlane, welcome to the programme.
Minister Macfarlane: Morning, Michael.
Michael Brissenden: Do you concede that the last 12 months of political gridlock has had a cost to the industry?
Minister Macfarlane: Well, what I’ve seen is an outcome which will give the industry an enormous challenge. It is a very ambitious target and if you talk to people in the industry and I met yesterday with Matthew Warren in the roundtable where Kane Thornton was attending. Matthew’s view is that it is almost impossible to build this many wind towers in the time that they have available. Remember, they have to build as much wind generation in the next five years as has been built in the last 15. Now, I’m a bit more optimistic than that but look, it’s a challenge and they need to get into it. There’s plenty of opportunity. There’s more than $30 billion in subsidies going to come to the industry from electricity consumers. I think it’s a pretty good outcome.
Michael Brissenden: But what was the political fight all about, particularly the last few months of it? Because you’ve come back to the table with the compromise you were still against only weeks ago.
Minister Macfarlane: I’ve got what I needed and that is a mechanism where the Government will get accurate information about whether or not the RET is on target and whether or not the prices aren’t going to default and therefore cost electricity consumers a very significant amount of money. So, we’ve got that safety mechanism. We originally asked for it through the reviews that the Labor Party put in place. I’d suggested an alternative to the Prime Minister in terms of having the Clean Energy Regulator report to both the Government and the Parliament regularly. That’s happened. With those safeguards in place for consumers, then it's open slather for the industry to get out there and build this 33,000 gigawatt hours of generation.
Michael Brissenden: Ok well, let me take another tack then, because last month you said 32,000 was the top limit that we can move to and still be confident that the renewable energy scheme is sustainable, if we go higher there's a risk the scheme will default. Does that risk not exist anymore?
Minister Macfarlane: Well that risk certainly does exist and that was the whole point, having the regulator keep a good watch on what was happening in terms of the scheme. So, we have our concerns about the ability of the industry to build in five years what has taken 15 to build already. So as I say, we want to be sure that the price doesn't go to default and that on that price consumers would face a very significant increase in the costs of renewable energy. So we've got the checks and balances in place. The challenge is there for the industry, we hope they achieve it, but everyone needs to get very busy, because the best wind sites are gone, the alternative technologies aren't competitive at this stage and there's going to be a lot of pressure on the wind industry to not only build the towers but get the off-take agreements in an oversupplied electricity market.
Michael Brissenden: Industry largely seems to be pretty happy, but not everyone is happy. I see the Chief Executive for the Solar Council describes the deal as an act of political bastardry and he's pushing Labor to commit to a policy of 50 per cent renewables by 2030. Is that something you could agree to as well?
Minister Macfarlane: Well look we've got to be realistic, let's achieve this target first, it's a target that'll be amongst the highest in the world. It's higher than the original target of 20 per cent. It's now 23.5 per cent. It's still 45,000 gigawatt hours. Mainly because the solar industry, which is not affected in any way by this - so household, rooftops, solar, will continue unabated. Because household solar is performing the best in the world, here in Australia, in fact it’s daylight second and Hawaii third, and we've seen a massive uptake of solar and we believe that will continue to happen, but large scale is still struggling to compete.
Michael Brissenden: Now Labor says that the 33,000 gigawatt hours figure is a floor, is that how you see it as well?
Minister Macfarlane: Well I see it as a target and that's what it is and we'll be delighted if the industry gets there.
Michael Brissenden: But is there a possibility that you would agree to it going higher?
Minister Macfarlane: Well…
Michael Brissenden: Some time in the future?
Minister Macfarlane: Well let's achieve one thing at a time. Everyone accepts this is a significant challenge to get to 33,000 gigawatt hours. Let's achieve that first, and let's see where we are in 2018, which will be when we really know where we sit with this whole scheme.
Michael Brissenden: And is that when you'll start thinking about post-2020 policy or will you start before then?
Minister Macfarlane: Well we're starting to think about post-2020 policy now and as you know the Government is preparing to put in a significant submission in Paris at the end of the year in terms of curbing global emissions. And of course renewable energy is very much a part of that. But it is a mix of technologies, it's a mix of policies, but we're working on it as we speak.
Michael Brissenden: Okay. Can we just turn quickly to the possibility of an iron ore inquiry. You reportedly share the concerns about pushing ahead with such an inquiry. Now you would have noted Don Argus from BHP this morning warning that we'd be a laughing stock internationally if we interfered in any way in the iron ore market. He's right, isn't he?
Minister Macfarlane: Well let's be clear - no decision has been made to have an inquiry and no-one in the Government wants to regulate the iron ore market. There have been claims and counter claims and that's what the ACCC is there for. They can look at those claims and we'll continue to monitor the situation.
Michael Brissenden: What would be the point of an inquiry then if you don't want to interfere in the market?
Minister Macfarlane: Well as I just said no decision has been made to have an inquiry.
Michael Brissenden: But the discussion's going on isn't it?
Minister Macfarlane: Well no decision has been made to have an inquiry.
Michael Brissenden: Well what would be the end game of an inquiry if you did decide to do one?
Minister Macfarlane: Well I'm sorry Michael but no decision has been made to have an inquiry. We've said that we will continue to monitor the situation, but no decision has been made to have an inquiry.
Michael Brissenden: But the Prime Minister seems to be in favour of one, at least at this point?
Minister Macfarlane: Well I've spoken pretty regularly with the Prime Minister in the last two days and I can tell you no decision has been made to have an inquiry.
Michael Brissenden: Okay. And to the polls quickly, there's been plenty of talk in the last couple of months about an early election, which camp are you in - the early camp or the stay the course?
Minister Macfarlane: Well I'm in the camp of delivering a really good budget and that's what this is, it's a very, very good budget for small business. And being out there on the ground, there is a lot of excitement amongst small business that they've got a deduction which they can use not only to boost their business, but also make it more viable. And along with the families package, that's what we're focusing on at the moment, getting out there and making sure that people understand what a very strong budget this is to grow the economy and also address the deficit.
Michael Brissenden: And do you think you could use that enthusiasm to your political advantage?
Minister Macfarlane: Well look I'm always about selling what we have in front of us and one step at a time Michael. There's always a smorgasbord of issues, but I like to deal with what's in front of me right now. What's in front of me right now is a great budget which is getting a very good reception from the community.
Michael Brissenden: Okay, Ian Macfarlane, thank you very much for joining us.
Minister Macfarlane: Thanks, Michael.