Doorstop with Matt Howell, CEO of Tomago Aluminium


ANGUS TAYLOR: I'm delighted to be here at Tomago Aluminium Smelter, near Newcastle with Matt Howell, the CEO of Tomago Aluminium. This facility, this business, like so many around Australia, depends for its existence, for its success, for its competitiveness on affordable, reliable power. I've been hearing this morning about how crucial it is that we continue to see downward pressure on electricity prices that's necessary to keep businesses like this sustainable and employing so many people here in Australia. This facility employs directly 1100 people, and 1800 people’s jobs are supported across the region. It is absolutely essential to continue to drive down the price of electricity in this country - we drive supply up and we get the access we need to affordable, reliable electricity to keep Australian businesses - large and small - and Australian families, in the place with the prices they deserve.

Matt might want to say a few words about this.

MATT HOWELL – CEO, TOMAGO ALUMINIUM: Thanks very much, Minister, and we appreciate the Minister coming down to see what life on the ground for the largest energy user in the country is really like. Here, our success depends on getting affordable and reliable electricity that is on 24/7 - 7 days a week, 24 hours a day. It is a fact the energy system is transitioning - we are seeing more wind and solar coming into mix, but the fact is the wind doesn't always blow and the sun doesn't always shine, and when we need that energy, it has to come firmed. We hear quite frequently that batteries are a solution – the largest battery in Australia would run this smelter for less than 8 minutes. So, that is clearly not a solution. [Inaudible] hope for continued transition in investments in baseload thermal production to keep this large world scale smelter and the 1800 jobs that it supports viable in the years to come.

ANGUS TAYLOR: Thanks Matt. Thank you for that. Now, let me make a couple of comments about Labor's policy announcement this morning. First, it seems to me, when it comes to batteries, that Labor has not learnt the lessons of the pink batts fiasco. Labor is going from pink batts to pink batteries. If all of Bill's batteries were installed, it would keep this smelter, this business going for less than 15 minutes. We need a supply of reliable, affordable electricity - a supply of secure electricity that can keep the lights on, that can keep businesses like this ticking over, facilities like this ticking over. With that in mind we want to see a pipeline of affordable, reliable supply for new projects in place, a shortlist of projects by early next year. We are working closely with businesses like this to ensure that we have those projects and that they will drive down the price of electricity for large customers like this one, as well as small businesses and hardworking families across Australia.

I also want to make a comment about Labor's targets - they've recommitted today, to a 45 per cent emissions reduction target and 50 per cent renewable energy target. At the end of the day, the targets will drive the outcomes. If Labor is committed to those targets, they need to explain which businesses are going out of business in Australia. Many of our most successful businesses are energy intensive. They rely on the affordable, reliable power which those targets will now allow to continue. They need to explain which cows, which cattle, how many cattle are going to go. They need to explain which aluminium smelters and refineries are going to shut. They need to explain which fertiliser factories, which cement factories are going to shut. The truth is that these targets, these reckless targets will be a wrecking ball through the economy. We won't stand for it. We are determined to bring supply of 24/7 reliable, dispatchable power into the system as quickly as possible, with a shortlist of projects from early next year.

Our broader strategy is already paying dividends. We've seen AGL come forward with 10 per cent price reductions for standing offer customers from 1 January this year, both in New South Wales and Victoria.

JOURNALIST: What specific impact will this policy have on workers in manufacturing and agriculture?

ANGUS TAYLOR: Well, this is a very good question, because if you have a 45 per cent emissions reduction target and 50 per cent renewable energy target, then you have to take out businesses, factories, trucks, cattle in order to meet those targets - and Labor hasn't come clean with the full impact of what they're doing. We've seen the Climate Change Authority, a number of years back, estimate that this kind of target would require a carbon tax five times the size of Labor's past carbon tax. This is ‘Carbon Tax 2.0’, necessary in order to drive the reduction in activity, to drive businesses out of business in order to get those emissions reductions. Labor have harder questions to answer - they haven't answered those in their policy. These reckless targets will be a wrecking ball through the economy.

JOURNALIST: You say the modelling would be a wrecking ball - what independent experts have said this?

ANGUS TAYLOR: Well, it's just straight maths. If you want to half the emissions in the electricity grid -if you want to have 50 per cent renewable energy targets, you want to have 45 per cent emission reduction targets, you've got to take out activity that emits. The activity that emits is agriculture, it is industry, it is transport, and it is smelters like this one. This is the biggest electricity user in Australia, and with targets like that, it is hard to see how businesses like this will stay open.

JOURNALIST: Labor is adopting the Turnbull government's national energy policy – how do you guys criticise that when it is policy of your making?

ANGUS TAYLOR: They're not. Their target is a 45 per cent emissions reduction target and a 50 per cent renewable energy target. We have never adopted those targets and we would never adopt those targets. They are reckless and they'll be a wrecking ball through the economy.

JOURNALIST: This policy, the NEG was designed by the current Treasurer and defended by the current Prime Minister. How can you-

ANGUS TAYLOR: That's not Labor's policy. Labor's policy is the 45 per cent emissions reduction target and 50 per cent renewable energy target with a few batteries. This [inaudible]. The truth is these are reckless policies and Labor will need to explain to every farmer, every truck driver, to every worker who works here at Tomago, to every worker who works in every other energy intensive business in Australia, how they are going to cut their jobs? Well, we saw a press release come from Mark Butler today saying they're not going to keep these jobs – that they’re going to try to re-train them. Well, people who work in these businesses want to keep their jobs. Farmers want to keep their jobs; they want to keep their cattle. Truck drivers want to keep their jobs. Labor needs to explain how it's going to reach those targets without putting a wrecking ball through the economy, and the answer is they can't.

JOURNALIST: [Inaudible] will cut prices by up to 60% - if he's wrong, what independent experts dispute it?

ANGUS TAYLOR: Well, the numbers are really simple. Bill Shorten has said they'll pay $2,000 when a consumer pays $8,000. So, the consumer's still paying the lion's share of the cost. The broader issue here is we have a big challenge in our electricity market, in the National Electricity Market in the coming years. The challenge is with the enormous amount of intermittency coming into the mix and unprecedented investment in wind and solar, keeping the lights on and that requires retaining our reliable and affordable baseload dispatchable power in the system. That's why early next year, we will have a shortlist of projects which will be some combination of coal, gas and hydro to keep the lights on and to keep prices down.

JOURNALIST: [Inaudible]?

ANGUS TAYLOR: We have an enormous amount of renewable energy coming into the system right now - 10 gigawatts of new capacity in the next three years. We'll go from 17.5 terawatt hours to 44.5 terawatt hours in the next three years. So, our challenge is not that - our challenge is how we keep the lights on and we keep prices down. That's why we committed to a shortlist of projects that are dispatchable, that are 24/7, where the power is delivered when customers need to turn the lights on. Power that can be delivered to businesses, smelters like this one where 1,800 people depend on this business continuing, this business thriving for their jobs.

JOURNALIST: So that's basically coal-fired power?

ANGUS TAYLOR: I've said what sources of power. I’ve said by early next year we will have a pipeline, a shortlist of projects that will include gas, coal, hydro - dispatachable power. We need dispatchable 24/7 power in large quantities to keep the lights on to keep the factories like this one, to keep smelters like this one in business. That's absolutely crucial and we are determined to do it.

JOURNALIST: Can we harness some of this wind?


ANGUS TAYLOR: Well, we have 10 gigawatts of renewable wind and solar coming into the system. Our challenge now is to make sure we have enough of that baseload dispatchable power, 24/7 power in the system to keep the lights on, keep factories going, and to make sure that the great people who live at and work in business like this one can continue to work in businesses like this one.