Doorstop at the UBS Australasia Conference, Sydney

Transcript

18 November 2019

E&OE

ANGUS TAYLOR: I'm delighted to be here at this UBS conference, and I've talked about the progress we've been making over the last 12 months in delivering Australia affordable, reliable energy. We've seen three consecutive quarters now of price reductions in the CPI. This is the first time this has happened since records began. It means many Australians are now seeing a fairer deal on electricity, when they were getting, even three quarters ago when we started to see the turnaround in prices. We're also seeing a reduction in gas prices. We saw prices as high as $20 when we go back a couple of years. We've seen in the latest quarterly dynamics report, prices down below $8. Substantially down from only a few months ago where they were $9 or $10. So this is good news, and it means that Australians are starting to see the benefits of extra supply coming into the marketplace, the benefits of the Government's policies to put customers first.

Now, we want to consolidate this and work from this in the coming 12 months, and that means working closely with our state colleagues as well as working through COAG. Individually, we see enormous potential to work bilaterally with states on State Deals. That means working with states to make sure there can be investment in place, that extra supply, the reliable supply that's needed to put downward pressure on prices. We are seeing that the forward prices in the market are well down in the coming years, but we need to make sure that becomes a reality, and that means working closely with the states to ensure that happens. It also means investments in transmission, and already we're working with the New South Wales Government on a major new transmission project between Queensland and New South Wales.

These state deals are an important step forward in how we ensure all Australians get the affordable, reliable supply of energy, but at the same time we are also seeing reductions in emissions and there's scope for us to work very closely with state governments on those policies as well.

JOURNALIST: So Minister, you mentioned that the prices are going down but according to the ASX's energy site, prices for 2020 are up to $90 megawatt versus $70 just a few months ago. Plus, the last three months, AEMO's lifted the price forecast for every state except South Australia which has the most renewables. So may consumers be a bit surprised to hear you say prices are falling when they're seeing those things coming?

ANGUS TAYLOR: You shouldn't confuse seasonal factors with longer-term trends. What we've seen in the last three quarters in the CPI is reductions quarter-on-quarter. Now, we haven't seen that since records began back in 1980, CPI records on this data began back in 1980. So this is good progress. Now, some Australians are seeing the benefit of this. We want to see all Australians seeing the benefit of it - whether they're households, whether small businesses or whether they're workers in industries that are energy intensive and that require access to affordable energy. That’s good progress. We know there's further to go, and of course the CPI is a very fair judge of what we're seeing in energy prices. As we look forward, we are seeing significant reductions expected in forward markets over the coming years. But as I said, we want to see that come to reality and that means working closely with state governments to ensure there is enough supply in the market and that customers always come first.

JOURNALIST: Minister, all the share market expenditure that you need to do for distribution - how do you intend to keep your promises of prices coming down when you have to spend so much money to connect all the power from Snowy to the distribution grid?

ANGUS TAYLOR: We think in each market there is some sensible investments that can be made by the private sector with appropriate facilitation by government that will put downward pressure on prices. We're already starting to see that happening. As I said, I've already explained and given some examples of that. I stood with AGL just a couple of weeks ago opening a new gas generator, a dispatchable gas generator, flexible generator in South Australia, over 200 megawatts and that's a significant addition of capacity to that market. We'll continue to see those very well targeted investments. We're going to make sure that happens. We'll work closely with the private sector and our state colleagues, state governments to make sure that does happen.

JOURNALIST: Would customers have to pay for that or is it taxpayers' that will have to pay for that?

ANGUS TAYLOR: What we've seen in this market, as the ACCC has pointed out pointed out repeatedly, is a need for more competition as well as more supply, and that puts downward pressure on prices. It is a market where there is potential to put very targeted investments into the marketplace to make a real difference to price, and that's exactly what we're stating since.

JOURNALIST: You mentioned that there's supposed to be collaborative states-

ANGUS TAYLOR: Yes, yes.

JOURNALIST: Are there any states that are not being collaborative? You did mention that there was a dangerous cocktail forming in Victoria, and you always did criticise Victoria about their gas ban. Are they not being collaborative?

ANGUS TAYLOR: We're open to work with all states and we would like all states to be collaborative, and this is an offer that's been out there with some time to start working with states. Some states have taken us up on that, and we hope all states will take us up on that because we do need close working relationships between the federal government, state government and the private sector in order to get the outcomes that we know are achievable, and the outcomes that we know will deliver a fair deal on energy for all Australians.

JOURNALIST: Is it helpful, though, to describe a dangerous cocktail in Victoria and basically criticising them for an aggressive renewable energy target? Does that help the collaboration?

ANGUS TAYLOR: As I said, we've been very clear about our view on that policy and the policy combination in Victoria for some time. That's not new. But there's potential to address those issues, and we look forward to working with all governments across Australia to address the issues in the electricity market. It does require state, federal, and private sector all working together, putting all of our collective resources together to make sure that we get a good outcome. We're working with states that are willing to do that.

JOURNALIST: When it comes to Victoria, is onshore gas a bargaining tool there?

ANGUS TAYLOR: We've made no secret of the fact that we want to see more gas supply in the market and the southern markets is where that is hurting us the most - in Victoria, and to a lesser extent, New South Wales. We've seen that because they've got to transport gas at a significant expense down from Queensland or Queensland becomes the price cap for Victoria, and the cost of transport is factored into that. So it is absolutely essential that we see more gas in the market. That won't just bring down gas prices for those direct gas units like manufacturing, households, and small businesses that use gas, and there's been a particularly heavy use of gas by households in Victoria, but it will also put downward pressure on electricity prices. We've seen some reductions in gas price in recent months, that's good news, but we want to see that sustained and the key to that is more supply.

JOURNALIST: What about this summer, Minister? How do you see the situation in Victoria, given that [indistinct] manufacturers moving there, making plans to move operations outside the state?

ANGUS TAYLOR: There are very real risks. We've said that all along. You can see that from the work that AEMO has done. There's real risks. Of course, I know AEMO and others are doing everything in their power to try to make sure there is enough capacity available to deal with the situation that's faced in Victoria but the key now is to do everything we can to minimise those risks - and I know AEMO is doing that - but also make sure we're not in this position in future summers. That means making sure there's enough dispatchable supply for those peak demand times that can ensure that there's downward pressure on prices and we keep the lights on. Those two goals work closely together and they are supported by making sure that supply is in the marketplace.

JOURNALIST: What would you say to those who are saying that the terrible bushfire season we're having highlights the need to rely more on renewable energy and reduce our support for fossil fuels?

ANGUS TAYLOR: Look, in the past, bushfires united Australia. It's sad to see some attempting to divide. I think it's crucial that we stay united to support those communities that are affected by bushfires. As someone who is a regional MP, I spent much of my life in regional areas facing the prospect of bushfire, all Australians affected by bushfire want to see a united country working together to ensure that they are kept safe in very, very difficult circumstances. The truth is, we have a strong emission reduction policy that is delivering results. We're going to achieve our 2020 targets by a significant margin. We're seeing very rapid reduction in emissions in the electricity grid. 25 per cent or more of the generation in recent months has come from zero emission sources and that is bringing emissions down in the electricity grid, and we'll continue to see that from the investment we know that is in the pipeline and that's already committed. The key is to make sure we've got balance in our grid. But as I say, Australia will continue to perform well and deliver, and that's the key to our emission reduction policies. It is a focus, very strong focus - strong targets, clear plans and a track record of delivering.  

JOURNALIST: If it's a strong target, why is Australia going to use the Kyoto carryover credits which will halve Australia's abatement in the next decade?

ANGUS TAYLOR: Because we've met and beat our targets. I mean, look there are very few countries in the world that can say what Australia can say which is both the Kyoto one and Kyoto two targets we will meet and beat. And not by a small margin, by a significant margin. Now that the result of that is that there is less carbon in the atmosphere because of the work, hard work that Australians have done. I believe - and this government believes - that Australians should be given credit for that extraordinary outcome and performance. Of course, our goal is to meet and beat or 2030 targets as well.

Minister for Energy and Emissions Reduction