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Interview with Chris Kenny 2GB

31 December 2018

Subject: Energy


CHRIS KENNY: Now, when you look back on 2018 one of the dominant issues of course has been climate and energy. Not only have all of us been worrying about our electricity prices, but in political terms this policy area certainly helped lead to the demise of Prime Minister Malcolm Turnbull; it certainly was a key factor in the way the Government changed prime ministers. But when we look forward to an election year in 2019, it's going to continue to be a dominant issue, a very important issue and joining me on the line now is the federal Energy Minister Angus Taylor. Thanks for joining us, Angus.

ANGUS TAYLOR: It's a pleasure, Chris.

CHRIS KENNY: Tell me about this portfolio. As I've alluded to there, it's been fraught with difficulty for your party in government, but you must be licking your lips, too, at highlighting the difference between the Government's policy and Labor's in the lead up to the election.

ANGUS TAYLOR: Well, that's right, Chris. There's a huge difference because Labor is pursuing this 45 per cent emissions reduction target with a view to getting the country to carbon neutral not long afterwards. And that is, the way they're implementing it, going to be a wrecking ball through the economy: whether you look at manufacturing it'll mean shutting down the aluminium industry, steel industry will be severely impacted; agriculture, we're going to have to stop flatulence in cows - or at least reduce the number; it'll have impacts on land clearing and farmers' ability to manage their own land. And of course electricity prices, and of course that's absolutely core for the Coalition. We're doing everything we can to bring down electricity prices and the one thing you know about a 45 per cent emissions reduction target is it'll raise them.

CHRIS KENNY: That's the problem here, isn't it, because everybody's upset about their energy prices. There's not much you can do, though, to bring them down sharply quickly. You'll tell me you're doing a lot of things that hopefully will eventually take some of the upward pressure off electricity prices, but you're left just saying that no matter how bad you think things are now, under Labor they will be worse.

ANGUS TAYLOR: Well, that's not quite right, Chris. I mean, from January 1, from tomorrow, those on standing offers - and that's a significant portion of individuals and particularly small businesses - will see reductions across most states. Those reductions are up to 15 per cent, typically around 10 per cent, and that's the sort of down payment we want on falling electricity prices [inaudible].

CHRIS KENNY: This is that move that you brought in just in the last month or so where standing offers will have to be lower and you've got most of the major retailers have agreed...

ANGUS TAYLOR: All of them.

CHRIS KENNY: All of them? Have agreed to do this now. So, that's a 10 per cent drop across the board, effectively.

ANGUS TAYLOR: Correct. Some are up to 15 per cent, in Victoria and elsewhere, but they're very significant reductions for customers on standing offers, and that's particularly small businesses, Chris. You know, a large portion of small businesses are still on standing offers and they'll see reductions. We're also seeing reductions coming through in the wholesale market, which will flow through to the broader market as well and we've just seen the numbers coming out on those in the last few weeks. So, this is good news. It's not happening overnight but it is good news, and of course we're absolutely determined to get more supply in the market. This is the key to longer term prices: more dispatchable, on demand supply - that's got to be gas, coal or hydro - and we know if you hold more supply in the market and get more supply coming into the market, you can get prices down. So no, we are very confident that we will see continuing drops in prices now, but with a 45 per cent emissions reduction target - effectively a big carbon tax - Labor has no choice but to see electricity prices going up under their regime.

CHRIS KENNY: There has been a lot of extra supply go into the market in recent years, but it's all gone into wind turbines, or mainly wind turbines, so it's not dispatchable. How are you going to get investment in gas or coal fired electricity? Electricity that is there whenever we need it?

ANGUS TAYLOR: We'll underwrite it. We've taken a big step here and said we are prepared to underwrite new generation into the market, and of course we've also said that energy companies that try to withdraw supply from the market anti-competitively to drive up prices, we will take action against them and we've introduced legislation into the Parliament to stop them from doing that.

CHRIS KENNY: How's that going to affect Liddell? Liddell is the key here, the big coal fired generator in the Hunter Valley of New South Wales, scheduled to close in 2022, I think it is.

ANGUS TAYLOR: That's right.

CHRIS KENNY: So, does this effectively mean you're going to force Liddell to stay open or end up taking it over?

ANGUS TAYLOR: Well, one of two things has got to happen. Either Liddell is replaced with dispatchable power that's on demand, or it stays open. One of the two. But there's no way we'll countenance that supply being withdrawn from the market the way Hazelwood did, and the price hikes that followed, Chris, which were absolutely horrendous for the market. They raised prices in the wholesale market by 30, 40 per cent and it's only now we're starting to see those prices coming back to where they should be. So, we're not going to put up with that again. We're introducing legislation in the Parliament to make sure it doesn't happen. And of course, we've said we'll underwrite new baseload power into the system to keep prices down. It's not a step we love to take, but it's a step we have to take, and that's where we've been left. And you're right, Chris: if all the power coming into the system is intermittent - it's only there when the sun shines or the wind blows - you've got a problem when the sun doesn't shine and the wind doesn't blow, and that's why we're underwriting new investment into the system.

CHRIS KENNY: Well, Angus Taylor, then, there's two big questions for the coming year - and really, we can shorten the year to about maybe the 12th or mid-May, anyway; that is when the federal election will be held, because let's not worry about the second half of the year for now. Can you tell us, then, can you guarantee the listeners that between now and May they will see their electricity prices go down? And secondly, that there will be announcements about new investments in dispatchable power generation?

ANGUS TAYLOR: Yeah, so look, the answer is yes on both counts, subject to the fact that everyone's bill is different - I'm not going to guarantee every individual bill - but overall we are seeing reductions in the market. We talked about standing offers; we're seeing market offers also coming down in most regions. And in terms of new investment in the market, we said we want a shortlist of projects by the early part of this year. We've gone out for requests- we've asked people to bring forward projects and we're expecting to see a first set of those projects by the end of January, Chris, so we're not mucking around with this. And of course we'll quickly work on the best of those projects to get them to a point where they can be invested in as soon as possible. Projects don't happen overnight - you can't make a new generator appear from nowhere in six months, but you can have projects that are on the table, that are investible, and that are ready to go with the right government in power.

CHRIS KENNY: That is good news. It's going to be a major issue, of course, in the new year, in this election year. Good luck with that, Angus Taylor. I hope you enjoy the rest of your New Year's Eve tonight. Do you want to share a New Year's resolution with us?

ANGUS TAYLOR: Lower power prices, Chris.

CHRIS KENNY: That's a pretty good one.

ANGUS TAYLOR: And of course the Coalition government to prevent what will be a disastrous outcome for Australia, for our energy sector, for agriculture, for manufacturing, for all those sectors that have driven this country for over 200 years now, our economy. We can't afford to see Bill Shorten in power.

CHRIS KENNY: Thanks very much for joining us.

ANGUS TAYLOR: Good on you. Thanks, Chris.

CHRIS KENNY: Angus Taylor there, the Energy Minister. Let us know whether you're expecting lower power prices this coming year, whether you think this is a crucial election issue, whether you believe the Government, trust the Government to deliver this. And what do you think of Labor's promises to effectively double our emissions reductions targets and definitely more than double our renewable energy target?