Interview with Ticky Fullerton, Your Money, Sky News Business


20 March 2019


TICKY FULLERTON: Well, let's kick off with energy tonight. The federal Energy Minister Angus Taylor has been out and about all this week, fired up by very well timed peer review report by BAEconomics' climate economist Brian Fisher, also a former head of ABARE. Now, that report has Labor's 45 per cent emissions reduction target, saying it would push electricity prices 50 per cent higher, cost workers up to $9000 a year in lower wages, and wipe $472 billion from the economy over the next decade. It would cost 336,000 jobs as opposed to 78,000 under Labor- sorry, under the Government's 26 to 28 per cent. Now, needless to say, Labor rejects this and questions the credibility of Dr Fisher. But Labor is keeping its cards close to its chest. Business claims there has been an unacceptable lack of detail into the impact of climate policies on industry and has singled out Bill Shorten, Labor leader, questioning how his mooted cap and trade scheme for large polluters would actually work. Well for more on this, I'm delighted to be joined by the Minister for Energy himself, Angus Taylor, who is in Brisbane today. Minister, welcome there. Nice to talk. You're armed with this Fisher report. Labor say it's rubbish modelling and a climate change scare campaign.

ANGUS TAYLOR: Well, Ticky, they would say that. I mean, Brian Fisher is one of the most credible modellers and economists in this area. He's advised Hawke, Keating Governments as well as the Howard Government in this area. He's been around a long while. He's well-known. He's very credible. And he makes a very simple point, which is that you can't get carbon abatement for free. Now, you've reeled out the numbers for Labor's climate policies. That, by the way, is assuming they use- they carry over the credits from Kyoto. We've beaten the Kyoto targets. You're assuming with those numbers that we actually use those. They haven't actually said they will do that. We've laid out our policies very, very clearly - the Prime Minister did in his speech over two weeks ago - the costs associated with it. We're not saying it's free. But what we do know, Ticky, is that when you push at a pace faster than the natural uptake of technology, the natural efficiency gains that business can get and households can get - and business people really understand this - when you push faster than that, the only way to reduce emissions is to cut activity. And we're talking, in the Labor target, just about halving emissions.


ANGUS TAYLOR: You've got to cut activity and that means mining, agriculture, manufacturing and transport, and so on.

TICKY FULLERTON: Can I start by, though, talking about the author? It's no secret that it's much harder to find climate economists, climate change scientists, on your side of the debate than it is on the Labor side of the debate. Now, even Warwick McKibbin, who was quoted this week by Guy Debelle no less, as a climate economist that he respects, he's actually tweeted- he said: check out the 2015 report on the DFAT website on the 45 per cent target when he looked at it, and he said: look, doubling the target should slightly more than double the costs, not increase it by a factor of more than 10. I mean, he's basically saying that the Fisher report is exaggerating this considerably. Why shouldn't people think it's a bit of a scare campaign?

ANGUS TAYLOR: Well, because it's the most comprehensive report and modelling that has been done. It covers all emissions. 100 per cent. McKibbin has never done that. It doesn't just cover the electricity sector, which is only a third of emissions, which is the report's work that Labor likes to quote. It's done the lot and it's done it sector by sector, very detailed modelling...

TICKY FULLERTON: But it comes from somebody who's done work for the-

ANGUS TAYLOR: All the detail that you need to be able to work it out.

TICKY FULLERTON: It comes from somebody who's done work also for industry. It's been peer reviewed by a fellow who- I mean, there are reports today suggesting that John Weyant- I mean, he's an eminent academic also but he's been hired by the Trump administration as a defence expert in a case brought up by a group of children, reportedly, against the US Government over climate action. So, it just puts people on opposite sides of the debate and it goes to the credibility of the reports that you're relying on, I guess.

ANGUS TAYLOR: Well, I completely dispute that, Ticky. This is peer reviewed by a Stanford academic. But put that aside for a second. Brian Fisher, as you know and you've been around agriculture and resources for a long, long while, he's a very credible player. He's contributed to three IPCC reports and let's take the modelling on its merits. There is no other modelling that has gone through sector by sector, laid it out very clearly, in the way that Fisher has. And the real issue, the real issue, is that Labor doesn't like the results. I mean, they would like to think that there's fairies at the bottom of the garden and that you can get 45 per cent emission reductions without significant cost. I mean, they're kidding themselves...

TICKY FULLERTON: Well, they would say-

ANGUS TAYLOR: They certainly shouldn't kid the Australian business.

TICKY FULLERTON: Yeah. They would say...

ANGUS TAYLOR: Yeah. Go on.

TICKY FULLERTON: That you're assuming a lot about their policies, which they will reveal before the election. But they haven't revealed them yet, but you're just assuming a whole lot of assumptions.

ANGUS TAYLOR: Hang on, Ticky. They announced this target in November 2015. They announced it in November 2015 and their excuse for not revealing their policies is they're still consulting. They're still consulting. Now, having announced it in November 2015, they've had a lot of time to consult and they're still not explaining to the business community whether they're going to use carryover; whether they're going to use international credits; who's going to be exempted; what will the impact on fuel prices be, gas prices; diesel prices; are farmers going to get hit? Are manufacturers going to get hit? They're explaining none of it, Ticky, and they've had since November 2015. So, to say well, hang on, you haven't modelled our policies is, I think, extraordinary, given that they haven't actually- they've had so much time to lay this out. We have reason to be suspicious about their policies because they've refused to lay them out.

TICKY FULLERTON: Alright. They have flagged that they may look at exemptions for agriculture. They've talked about a credit scheme for the heaviest polluters. They've talked about exemptions for those which are trade exposed. There are also issues like, for example, the Snowy Mountains Scheme, which is not included in this Fisher modelling, which could make a very big difference to reducing the cost of firmed up renewable energy. I mean, if Labor starts putting in those sorts of assumptions, I mean, it starts becoming less of a sort of scary scenario than you in the Government are putting out?

ANGUS TAYLOR: Hang on. I would actually argue the exact opposite. So, if they're going to start exempting large parts of the economy and of course, I don't want to have big taxes imposed on agriculture and mining and so on. But if they're going to exempt large parts of the economy, then to get to 45 per cent, they've got to ramp up the impacts on the remaining bits. So if they exempt half the emissions-intensive trade-exposed parts of the economy, that could be as much as half depending on what they exempt - then they've got to double the impacts on the rest of the economy. That means no emissions from the rest of the economy. So, this is the point - if they're going to start exempting, they've got to lay it out and they've got to lay out then the impacts that we'll see on the rest of the economy, because they've set that target. They've locked it in. They've made it very clear. They've had since before the last election to lay out what will happen, to do their own modelling, to make sure that they've actually got all this adding up and frankly, Ticky, they're not doing it. And this is...


ANGUS TAYLOR: Good reason to believe-

TICKY FULLERTON: Yeah. They also suggested that, I think - or others have - that you're talking about Labor assuming this moving to target of 45 per cent reductions consistently and now they may choose to back end it. They may choose to do all sorts of different things, which would have quite a different impact on the economy.

ANGUS TAYLOR: Well, I mean, it's very standard. Once you pick 45 per cent under the standard protocol with the Paris Agreement, you just pick a straight line to 45 per cent. So we know exactly how much carbon you've got to abate. It's over 1.3 billion tonnes, 1.3 billion tonnes. That's what 45 per cent implies versus the 328 we need to abate, which is less than a quarter, Ticky. So, they've got to explain how they're going to find that 1.3 billion tonnes. Now, you're right in saying we don't know whether they're going to carry over from Kyoto, whether they're going to use international credits...

TICKY FULLERTON: Just to offset, yeah...

ANGUS TAYLOR: How much they're going to hit diesel prices, petrol prices, gas prices. I mean, they haven't explained that. Well, they need to because businesses out there are going to be severely impacted by these targets. Until now, we've been talking about much lower targets. When you get to 45 per cent, you're almost halving.


ANGUS TAYLOR: That has very, very real impacts. It is time for them to come clean. I spent my career, as you know, before I went into politics, in business.


ANGUS TAYLOR: This is as big an impost as I have ever seen being proposed and there are no details. I would be very concerned if I was doing what I was doing before I went into politics. And I'm very concerned for industries that I care deeply about like agriculture, like the resources sector, like manufacturing, like transport, construction sector because of the flow-on impacts there we see in Fisher's modelling - very, very big impacts. It all needs to be explained. They've got to come clean.

TICKY FULLERTON: Alright. One of these- I mean, you've got this report. It's very helpful. You're out there pitching it. Of course, you would be. But it is all about picking numbers out of the air at the moment and using various experts at will to support yourself, whether you're on side or the other. I mean, watching you go two or three rounds with Barrie Cassidy there on Insiders last weekend and you're both talking about two different things really. It's very hard as a punter watching you both and not really very helpful to the energy debate. Would you agree?

ANGUS TAYLOR: Well, hang on, Ticky. Well, let's just take it back to common sense, which is, I think, the best way to look at this. What Labor is proposing here is to almost halve the emissions in the economy within a little over a decade, 2030. We're in 2019 now. Eleven years they've got to do it. That means in transport, in agriculture, in manufacturing, in mining, in...


ANGUS TAYLOR: A range of other sectors. I mean, just explain...

TICKY FULLERTON: Well, you yourself have been surprised. I have and I know you-

ANGUS TAYLOR: How that can be...

TICKY FULLERTON: Well, let me give you one thought. You have been surprised. I have been surprised...

ANGUS TAYLOR: It strains credibility, Ticky.

TICKY FULLERTON: As to how much renewable energy costs have gone down. The world has been surprised...


TICKY FULLERTON: At that trajectory. Now, what is to stop that increasing, for example?

ANGUS TAYLOR: Yeah. So let's look at that. Remember that electricity is 30 per cent, just over 30 percent of emissions.


ANGUS TAYLOR: 30 per cent of emissions. So, that's only helping one part of the economy. We're already getting it. And the great challenge now, as you well know, is we've got to firm that up. We've actually got to turn it from intermittent generation into reliable generation. We've got a huge challenge to do that. So that's our challenge in that sector. We're getting the emissions down. Now, you've got to go and find massive emission reductions in agriculture. What are we going to do about flatulence from cows? How are we going to take the emissions out of...

TICKY FULLERTON: Well, now, that is really scaring the horses and the cows.

ANGUS TAYLOR: Manufacturing. I mean, but this is the truth, Ticky. I'm not making this stuff up. I mean, the thing is it is...

TICKY FULLERTON: That's putting Bill Shorten at [indistinct].

ANGUS TAYLOR: Extraordinary.

TICKY FULLERTON: Yeah. Yeah. No. Alright. Well, look, I do hope-

ANGUS TAYLOR: Well, this is what he's got to do.

TICKY FULLERTON: I do hope you'll be able to come back before the election when you've got a firmer target and Labor's come out with their policy...


TICKY FULLERTON: To talk us through that. That'd be great. Angus Taylor, thank you very much.

ANGUS TAYLOR: Sorry. We have a very firm target, Ticky, and I'd be delighted to come back.

TICKY FULLERTON: Good on you, Minister. Thank you very much.

Minister for Energy