6 September 2017
Transcript - #2017171, 2017

Interview with Ellen Fanning, ABC 730

Subjects: National Accounts June Quarter 2017; The Turnbull Government’s comprehensive plan to put downward pressure on electricity prices for households and businesses.

ELLEN FANNING:

Treasurer, thanks so much for joining us. 

TREASURER:

Thanks Ellen.

FANNING:

How frustrating is it for the Treasurer to have been forecasting better times ahead, you've got the RBA Governor coming in behind you yesterday saying wages growth, we're nearly there, only to have the whole operation mugged by rising electricity prices?

TREASURER:

Well, this is frustrating and this is why we're doing everything in our power to put downward pressure on rising electricity prices, but what we saw today with the National Accounts is we have come in ahead of what the forecasts were for the 16/17 year. We had forecast 1.75 per cent, and it's come in at 1.9 per cent and nominal growth has actually come in at 6 per cent which is bang on the forecast that we announced in May.

FANNING:

Jobs growth is good but I wonder if the Australian population are as optimistic as you are. We’ve got the weakest wage growth in 25 years. 1.8 per cent is pretty anaemic economic growth overall and you know, in your electorate throughout New South Wales, in South Australia, up to 20 per cent increases in power prices this year. I mean, it's only getting harder for households, isn't it? 

TREASURER:

You've got jobs growth and that's where it starts. In the last financial year, we had 240,000 jobs created. That was the strongest jobs growth we've seen, since before the global financial crisis and in the six months to the end of July, that was the strongest growth in full-time jobs we have seen in almost 40 years. So the jobs growth comes because businesses are investing and putting more people on. The figures today also show for the third successive quarter an increase in business investment, particularly in things like machinery and equipment, and that investment along with the investment by governments and infrastructure, big defence spending up 26 per cent in the quarter, that's driving the economy. Now, when you get profits starting to move forward consistently, you’ve got the investment, then as the Governor has said, that does flow into wages as the pressure builds in the system.

FANNING:

Well, let's talk about electricity. The Prime Minister as we know is trying to extend the life of the oldest coal-fired power station, Liddell in New South Wales, which is due to shut in 2022. He says AGL is prepared to discuss the sale of the power station to a responsible party, well that's not what AGL boss Andy Vesey says. He says to the stock market today, no commitment to keep it open, no commitment to sell it. That's not looking very promising given that we need that baseload power in New South Wales? 

TREASURER:

I find that puzzling. I was actually in the room when that commitment that he would sell it to a responsible party was given. I was there. The Deputy Prime Minister was there. As was all of his competitors in the retail sector.

FANNING:

That's a bit worrying. Are you saying he's misleading the stock market?

TREASURER:

Well, all I know is that he indicated that they would sell it to a responsible party. And it's important that we do keep Liddell open as well as the other major coal-fired power assets because those assets are the ones that provide the baseload power. And what we find amazing is that the Labor Party, and ‘No Coal Joel’ as the Prime Minister called him today, is happy to put the white flag up on coal-fired power stations. It is necessary to keep these assets sweating and running for longer. That is what will give us greater certainty on prices.

FANNING:

Mr Vesey is going to come down to Canberra on Monday and he's going to talk to the Prime Minister. What is the Government prepared to offer AGL for what the company itself thinks is a worthless asset? They were prepared to lock it up and walk away from it in 2022?

TREASURER:

If you're selling it for $0, I suspect there'll be many takers. 

FANNING:

Is that what you're offering on Monday? 

TREASURER:

I don't...

FANNING:

I mean, is that what it's worth? 

TREASURER:

I don't think he thinks it's a worthless asset at all. And, look, there is no shortage of people, I understand, who would seek to take out the position on that, on the Liddell power station. 

FANNING:

No shortage? I mean there's only one today as far as we can see, and that's Delta Electricity who are hinting pretty strongly, Treasurer, that they want Government support because in five years' time they'd be taking on all that responsibility that AGL had to close the jolly thing down. That costs a lot of money. 

TREASURER:

Well, Delta's already taken on the Vales Point Power Station and they are making a very good go at that as well because they understand, particularly for the medium term, that coal-fired power stations and existing ones is where the baseload and dispatchable power is going to come from. I mean we've got the AEMO report, which we have done the homework on, to demonstrate that we'll have this shortage over the summer and now we're setting about the task of ensuring that that shortage can be met. So, we're dealing with things in the very short term. But the medium to long-term also has to be addressed.

FANNING:

And this is about 2022. 

TREASURER:

Yes. 

FANNING:

And that forecast shortfall for New South Wales. So, can you tell us how much taxpayer funds are you prepared to commit to Delta Electricity or anybody else to take on Liddell? I mean we're talking about tax breaks, concessions and loans. How much will you throw at them to take on what AGL reckons is a worthless asset? 

TREASURER:

Well Ellen, I think, that's a very premature question. 

FANNING:

Is it?

TREASURER:

Yes. We're not, we're not at that stage at this point at all.

FANNING:

Treasurer, why aren't we at that stage? Forgive the interruption. They said, you came to Government in 2013, I mean my power bill has been going up long before that. AGL said in 2015 they were going to jolly well shut this thing down. Why is it a premature question to ask a pretty basic question about how you're going to keep it open? 

TREASURER:

We're not at a stage where there's even any discussions about how that might take place. There may be private operators themselves who will take this on. There could be other investors who would show that interest. There has certainly been a number that have come through my office over the last year or so. And we're talking about something shutting in 2021-22. Now I think this is a good time for these discussions to be held, because it gives us the time to actually ensure that it doesn't shut at that time. Now, we're committed to ensuring that we have a continuation of these important assets supporting our energy market. The Labor Party, happy to put up the white flag, shut down the coal. That's what they're saying, so there's a clear distinction. We're happy to see them keep running because we know it's important for the stability of the system and the reliability of the system which the other sources cannot deliver at this point.

FANNING:

It sure seems like a scramble. I mean it's pretty clear it's going to cost money, somewhat one way or another, to keep Liddell open for another five years. To what extent is this a problem of the Coalition's own making? I mean the only reason you need to keep these old clunkers open, nearly 50 years old, this coal-fired power station, is because the Coalition scrapped the carbon tax, didn't come up with new energy policy and industry has been screaming at you for four years, we can't invest, we can't give you the new power stations you need unless we got an investment framework. 

TREASURER:

The certainty of the investment framework is something we're planning on delivering over the next few months and towards the end of the year and landing some key decisions, particularly off the back of the Finkel report. But I don't accept the position that having a carbon tax would have solved this.

FANNING:

No, no that wasn't – to be fair that's not what I proposed. I wonder, you've got a pet rock, and it's a piece of coal, and so I imagine you're kind fond of coal. Do you reckon that you'll land with the Clean Energy Target? Industry needs certainty in order to get more baseload power and certainly consumers need more supply to stop these blackouts and rising prices. Can you land a Clean Energy Target by Christmas? 

TREASURER:

I believe we can land the investment framework which is going to provide the certainty for investors not just in traditional sources but also in the renewable sources over time. It's not a choice between coal and renewables. 

FANNING:

No, no, that's not what the Clean Energy Target is. Can you land a Clean Energy Target?

TREASURER:

What I'm saying is we can land an investment framework which will deal I think with those challenges to deliver certainty but it's not because I have any particular fondness for coal. I tell you who does have a fondness for it though, that's the thousands upon thousands if not tens of thousands of jobs that depend on it in places like the Hunter Valley where the Labor Party is deciding to sell those workers out by putting the white flag up on coal.

FANNING:

Treasurer, we are out of time. Thank you so much for your time. 

TREASURER:

Thanks a lot, Ellen. Good to be with you.