6 September 2018
KIERAN GILBERT: Now to my interview earlier this morning with the Energy Minister Angus Taylor. We discussed a range of issues but began with the fundamental question around the National Energy Guarantee - or the NEG as it's been called, that acronym - is it dead, is the government moving on from it? Here was my interview with Angus Taylor.
Energy Minister Angus Taylor, thanks so much for your time. Can I start with some clarification; is the NEG - the National Energy Guarantee - dead, as we once knew it?
ANGUS TAYLOR: Well, what I can say, Kieran, is that we are absolutely focused on price, price and price, while we keep the lights on. That's the focus. And we're doing that in three different ways; one is we've got to stop the big rip offs from the big energy companies, we have to back investment in new generation and keeping the generation we've got in the market. And we'll be providing customers with a safety net, a default price offer, which will be a reasonable fair price. And that will come in from [indistinct]…
KIERAN GILBERT: [Interrupts] So, is the NEG dead though?
ANGUS TAYLOR: Well, that's the policy we're focused on. Now, the reliability guarantee, the focus on reliability, absolutely will remain. And we're confident we'll reach the emissions target anyway. The ESB's done modelling that tells us we'll be within cooee in the early 2020s. So, I think we can achieve all the outcomes we're seeking to achieve there. But most importantly we have to have this unrelenting unambiguous focus on getting prices down.
KIERAN GILBERT: But that reliability guarantee though, that will remain?
ANGUS TAYLOR: Well, the focus on reliability absolutely remains…
KIERAN GILBERT: [Talks over] There will be some guarantee in there?
ANGUS TAYLOR: We have to focus on reliability. And the reason for this, Kieran, is that we have a lot of intermittent generation, renewable generation that's come into electricity that makes it harder to keep the system reliable…
KIERAN GILBERT: [Talks over] Keep the lights on, as you say.
ANGUS TAYLOR: Keep the lights on, exactly right. And because of that, it's crucial that we have a focus on reliability, that is absolutely central. There's been great work on that that's already been done and we, of course, will continue to do that work.
KIERAN GILBERT: Do you support wind energy as being part of the mix? You've copped….
ANGUS TAYLOR: [Laughs]
KIERAN GILBERT: …a fair bit of flack, being described as anti-renewables, climate denier. Give our viewers the reality this morning.
ANGUS TAYLOR: [Talks over] Well, there are people who would like to say that because I'm a rationalist. Now, the truth is that I have never been a climate sceptic but I've been deeply sceptical of a lot of the schemes; Cash for Clunkers and Pink Batts and all these sort of crazy schemes we've seen to try and reduce carbon emissions, which just don't make any economic sense. I've been deeply sceptical of those for a long while. And I certainly haven't been anti-renewables. I'm the grandson of the greatest renewable scheme, the project that has reduced emissions more than any other project in Australian history, which is the Snowy Scheme. Solar, wind, they're all part of the mix, Kieran. What's crucial is to not get into this idea that we've got to back a winner. We've got to have affordable reliable power, and that price reduction is crucial while we keep the lights on. That's what we're focused on.
KIERAN GILBERT: Sarah McNamara, the head of the Energy Council - the peak body for the energy retailers - she says that it's cheaper to build renewables with firming capacity - either the gas or batteries - than it is to build a new coal plant. Do you agree with that?
ANGUS TAYLOR: Well, I mean, everyone has an opinion about the economics of these things. The opinion that matters is the opinion of investors, that's what counts. And we'll be backing investment in new generation, in generation that needs to be kept in the market. And that has to have a significant portion of reliable baseload power. Coal will remain an important part of the mix for many years to come, Kieran. But…
KIERAN GILBERT: [Talks over] We're talking about new plans.
ANGUS TAYLOR: …everyone wants us to pick winners, there's some kind of ideological war going on here where you pick a winner but coal will remain part of the mix, renewables will remain part of the mix, it will be an important part of the mix for many years to come.
KIERAN GILBERT: Will you underwrite a coal-fired power plant?
ANGUS TAYLOR: We've said that we will provide backing, guarantees for new generation that will give us more affordable reliable power. Now, that could well be coal. It could be other technologies. Frankly what we want is generation that's going to give us that downward hit on prices and is going to keep the lights on. That's our focus. And frankly, it's a pragmatic focus; it's not an ideological one. Coal has an important role to play and it may well be that the best options we have available to us are expansions of existing coal facilities.
KIERAN GILBERT: Now, you look at the various drivers of price, generation wholesale price, and the network, the poles and wires. Do you accept that it's the poles and wires that has been driving the lion's share of high prices in the last decade or so?
ANGUS TAYLOR: Well, it's played a big role but it hasn't been the factor at work in the last little while. For many years, from about 2006 to 2016, we saw in New South Wales and Queensland, in particular, a near doubling of the network assets and that has to be paid for. It's cost over $1 billion a year to electricity consumers. It has been a big factor. But in recent years, we saw some pretty serious price increases with no cost increases after Hazelwood shut by the wholesale - the generators, that's in the wholesale market, that's a different thing from the networks - we saw them more than double the bids they were making into the market with no change in cost. They took advantage of the situation that came about because of the Hazelwood closure. That's unacceptable behaviour in my view and that has been a big factor in recent times.
KIERAN GILBERT: So what are your levers now? I know the competition watchdog report is underpinning a lot of your approach. What are your levers to drive the price down?
ANGUS TAYLOR: Well, we've already said what a lot of the levers will be. There'll be more obviously.
KIERAN GILBERT: The default price.
ANGUS TAYLOR: The default price is important. Look, a fair price where you know if you don't go in and don't have time to go in and haggle, you're still getting a fair price. That's really important and that you can measure the discounts you're getting versus that default price in a completely comparable way. So that's very, very important. We have amongst the highest margins for electricity retailers in the world, Kieran. In the world. So giving consumers more power, more leverage to get prices down, get their bills down is extremely important. We've said we will back investment in new generation if we have to, to get the supply and competition we need for lower prices and to keep the lights on. And of course, as I said a little while ago, I mean, rip offs by the energy companies, whether they'd be network companies or generators and retailers - that's unacceptable. These are utilities and they haven't been getting utility returns in recent times.
KIERAN GILBERT: But the competition watchdog spent many months in looking into these companies. In terms of scrutiny that's - I mean, I'm not defending those companies - but surely the ACCC's done that job. And the other speculation about other inquiries or commissions, that would be a waste of time, would it not? A waste of money?
ANGUS TAYLOR: Well, it depends on the behaviour of the energy companies, obviously. But I'm confident that we can work closely with those energy companies to get a good outcome but we must get a good outcome. That's clear and I said this in my speech last week, I'm not by nature a heavy-handed interventionist. I don't want to do that. I would rather the industry came to its own…
KIERAN GILBERT: [Talks over] You think they will?
ANGUS TAYLOR: …answers here. Well, look, I think reason will prevail. I think reason usually does prevail but the point I make is that we have said we will put levers in place whether they be divestment powers, whether they be backing new generation ourselves. We will use those more interventionist levers if we have to - our strong preference is not to do that if we don't have to.
KIERAN GILBERT: Finally, Mr Morrison is giving a speech today reflecting on the legacy of Menzies. He established the Liberal Party in 1944 in bringing disparate groups together; and I guess, giving a modern comparison to his challenge of unifying the party. Are you comfortable with your role in the events of the last couple of weeks because you did support Peter Dutton?
ANGUS TAYLOR: Well, it was a bruising couple of weeks. I mean, it's not something I would ever like to be part of again in any way shape or form, Kieran. It's no fun, this stuff. I did feel that there needed to be a shift in the priorities and policies of the government. For me it was about policy, not personality …
KIERAN GILBERT: [Interrupts] But there's no big shift, is there? There's no big shift.
ANGUS TAYLOR: Well, a lot of people are talking about the shift I'm driving in electricity prices, Kieran. And it's pretty clear we are pushing very, very hard on electricity prices. That is a fundamental priority. Nothing will get between me and driving lower electricity prices - that is a firm priority of this government.
KIERAN GILBERT: You look at the GDP numbers and the economy's going pretty well; and people in Goulburn and the country are saying: well, why did you get rid of the [indistinct]?
ANGUS TAYLOR: [Talks over] Well, I think a lot of people are saying to me every day that they're worried about their household electricity bills and they're worried just as importantly about jobs in electricity-intensive industries. If you're in a regional area, industry is still extremely important. It's a big energy user. Jobs in towns like Gladstone or Launceston, they depend on having competitive energy prices, not the least competitive energy prices. It makes the least in the world. They have got to have competitive energy. This is a real priority for electorates like mine and electorates right across Australia.
KIERAN GILBERT: [Interrupts] Will the people who backed Dutton, like yourself, now get on board with the Morrison team 100 per cent?
ANGUS TAYLOR: I am absolutely sure that Scott is and will drive the sort of priorities I believe in. He is doing a fantastic job and I think we're all delighted at what a great job he is doing; what a great start he has made. And I'm privileged to be his energy minister and I'll be driving hard to get a good outcome on lower prices every day, Kieran.
KIERAN GILBERT: He can unify?
ANGUS TAYLOR: Absolutely, no question.
KIERAN GILBERT: [Interrupts] It's hard though, I mean, there's talk of bullying and all - did you hear of that at the time?
ANGUS TAYLOR: Of course no, I didn't. But of course, when these bruising things happen, there's always these things that follow but I'm confident that Scott understands the party well; understands this need that Howard always talked about - to recognise the great conservative tradition as well as the classical Liberal tradition. They're both part of our DNA - Scott understands that and Scott will use that understanding to continue to drive and unify the party.
KIERAN GILBERT: Energy Minister Angus Taylor, thanks for your time. Appreciate it.
ANGUS TAYLOR: Thanks, Kieran.