Interview with Peter Stefanovic, News24

PETER STEFANOVIC, HOST: Well, back to our top story now, the Tomago Aluminium smelter. It's the latest to receive a big billion-dollar bailout. This one, $2.5 billion. That's the reported figure this morning because of spiraling electricity costs. Joining us live now is the Industry and Innovation Minister, Tim Ayres. Minister, thanks for your time this morning. So, as I mentioned, electricity has become so unaffordable under your government. Is this bailout because of your policies?

SENATOR TIM AYRES, MINISTER FOR INDUSTRY AND INNOVATION AND MINISTER FOR SCIENCE: As Rio Tinto, one of the owners of this facility have made clear, not just privately to me, but publicly to the Australian people, is that coal-fired power is too expensive for this facility and makes it uncompetitive. The decade of disinvestment, under-investment in electricity and un-competitiveness of the electricity system is the problem.

This deal, supported by the NSW and the Albanese Federal Labor Governments, means that we're going to the heart of the competitive issue. It'll bring forward investment in new electricity generation and transmission that will put downward pressure on prices, not just for Tomago Aluminium, and the 1,100 direct employees and 500,000 workers employed as a result of this across the Hunter Valley, but will also drive down prices for industry and for households right across the Eastern Seaboard.

HOST: Well, how sure are you about that? Because South Australia has the most expensive electricity in the country. After they shut down coal, hasn't the rush to renewables destabilised the market?

AYRES: Well, coal is too expensive and the big driver of price hikes in the electricity system has been the ageing coal fleet, its unreliability and its cost. And what we're seeing is the growth of solar and wind batteries, including this massive expansion in household batteries in Australia, backed by gas, making our electricity system more competitive.

Now we've got a job in front of us to build out the electricity system and build a modern electricity system for Australian industry to make sure that in electricity and also in gas, through our gas reservation strategy, that energy competitiveness is a foundation for future industrial competitiveness. So, this investment delivers on the electricity front and it makes Australia's economy stronger too.

HOST: How are you going to power Tomago for the next 10 years then?

AYRES: Well, Tomago will be powered by a new power purchasing agreement supported by this deal that will see new investment in wind and solar backed by storage and backed by gas in the electricity system. That will deliver competitive electricity prices here but bring forward those investments.

It’s supporting new investment in the electricity system and that puts downward pressure on prices for this business supporting five and a half thousand jobs and our end-to-end aluminium industrial capability in Australia which is just so important for our security and our resilience. But it'll drive down prices for households too. This is a good deal for the Hunter, it's a good deal for NSW and it's a good deal for Australia.

HOST: Can you confirm the cost? $2.5 billion, is that right?

AYRES: Yeah, this is a large deal. We're unashamedly a pro-manufacturing government. Anthony Albanese is the most pro-manufacturing Prime Minister Australia has ever seen. Our pro-manufacturing Future Made in Australia package is the biggest pro-industry, pro-blue collar work package in Australian history. It's supporting good jobs in our industrial regions and our outer suburbs for blue collar Australians and engineering and tradespeople and it's about making Australia's economy stronger and more resilient for our future.

It's in the national interest to have heavy industrial capability like aluminium here in Australia. We're one of the only economies in the world that has an end-to-end aluminium capability from our bauxite mining in the north all the way through to advanced manufacturing in defence products and energy products. This is crucial for Australia's security, our weight in the world, our industrial partnerships with our partner economies and it's crucial for blue collar jobs.

HOST: Okay, but I mean the fact remains, the federal governments have got to keep bailing out these heavy industries. What happens when these deals are expired? Are they just band aids to keep going?

AYRES: This deal goes through to 2038-39. This is industrial investment in the Hunter as far as the eye can see. You know these 1,100 blue collar workers here and 500,000 thousand workers and their families who this company sustains across the Hunter Valley. They work hard, they turn up early, they deliver for Australia and they've got a government in the Anthony Albanese Federal Labor Government and a Government in Macquarie Street too with Chris Minns that backs in their effort, support their jobs and supports their economy.

HOST: Will Rio still be charged the safeguard mechanism?

AYRES: All of the companies, the big industrial emitters, the safeguard mechanism means that there is a certain pathway forward for them and it manages this big challenge of moving Australian industry into a competitive future where yes, emissions are lowered and we move to cost competitive power sources and make sure that the industrial processes that they engage in –

HOST: So, they will still be charged the safeguard mechanism. Why not give him a break though?

AYRES: Well, because then there would be a U-turn towards bankruptcy and closure if this company doesn't move its electricity generation to the lowest cost sources. They say it themselves. This is not me saying this. Rio Tinto, one of the owners of this facility has been very clear. Coal is too expensive as a power source for this facility. It would make it uncompetitive and the result of staying on coal would be closure for this facility. That's the alternative plan. That's the Scott Morrison, Malcolm Turnbull, Tony Abbott disinvestment plan would have delivered closure for this facility. The alternative approach is move the company across to more competitive electricity generation and transmission and back their capacity like put our shoulder behind the wheel and support Australian industry. This is Australia's youngest and largest aluminium processor. It's got a strong future because of the steps that the Albanese Government has taken here.

HOST: Thank you so much for your time. Appreciate it.