12 September 2017
Transcript - #2017179, 2017

Interview with Kieran Gilbert, Sky News

SUBJECTS: Liddell power station; the Turnbull Government’s comprehensive plan to put downward pressure on electricity prices for households and businesses; Labor’s no-coal coalition led by ‘No Coal Joel’; housing

KIERAN GILBERT:

Treasurer, thanks very much for your time. Now, the AGL Chief recognised yesterday in the meeting with the Prime Minister that he did commit, as you said previously, to consider selling that power station. Has he changed his position on that?

TREASURER:

All I know is what was said at the time and I am glad all that is cleared up and I am pleased that he has taken back the proposal to his board to keep Liddell open. That will do a number of things; first it will deal with a real problem in 2022, which I am sure Josh has already outlined. We have that shortfall that needs to be met. Second, that can be done with more affordable energy coming out of an existing coal-fired power station and for workers in Liddell who have been completely sold out by their Labor members up there in the Hunter, we are not putting up the white flag on Liddell but certainly the Labor Party has and I am quite surprised about that.

GILBERT:

There is still a bit of uncertainty about that though isn’t there? There seems from this statement from AGL that they are looking at some other option. Vesey says that, ‘in the short term investment will continue to favour renewables and gas for peaking demand’.

TREASURER:

Well, 85 per cent of what AGL does comes out of coal and they will still be using coal 50 years from now. Of course there will be a transition to a range of whole different other energy sources. We have an all of the above approach. We don’t think you have to choose between coal and all of these other things, particularly existing coal-fired power stations, sweating those assets for longer. That is good for dispatchability, reliability, affordability and we want to see that as a feature of the system. When they shut down Hazelwood, one of the assumptions some in the energy market were making was, ‘if you just shut down Portland it shouldn’t be a problem’. Well, we are not in the business of shutting down Portlands or Whyallas to keep power prices low. We want to see the industries and we want affordable, reliable energy and we want that into the future.

GILBERT:

Do you feel comfortable now where this is at given there is no definitive commitment here? He is going to take it to the board, he is going to come back with options, are you comfortable that they get it?

TREASURER:

We will find out in 90 days whether they get it and they are coming back with an alternative plan also to see how that 1000 megawatt hours in 2022 can be addressed but it has got to be affordable and reliable. We have had some bad experiences so far with people saying ‘she’ll be right mate’ when it comes to this stuff and that hasn’t proved to be the case. When you have got existing assets that are there and can be used and are providing a lot of jobs and support in regional communities then we are not going to allow the rug just to be pulled from that because of either the commercial interests of a large energy company or anything else.

GILBERT:

The people I have spoken to in that industry though, they keep saying that they need a signal, a market mechanism to give them clarity and certainty for investment i.e. a clean energy target.

TREASURER:

And we agree that there needs to be a new investment framework around all of this and that is what we are working to deliver over the next few months and landing that for the long term and we will get that right. I have got to say one of the things standing in the way of that is the ‘no coal’ position that the Labor party is driving. You have got to have energy policy that is driven by, as the Prime Minister has said, engineering and economics. Labor’s policy is driven by emojis for goodness sake. Yesterday, the Shadow Minister was asked, what did you want to see come out of that meeting yesterday? And he says, ‘a better tone of conversation.’ Really? Not Liddell staying open, energy affordability, security, a plan for the future? He is worried about the tone of the conversation. They have got to get off the emojis and get on the engineering.

GILBERT:

A couple of quick ones to finish, on that, is a baseload target something you would look at, in addition to…?

TREASURER:

The Finkel Report has put out a range of recommendations, there is one that remains. The way that renewables are going in terms of their cost over time we have just got to make sure that we get an investment framework which has support and that people can rely on and so the money can continue to flow. We understand that but we understand as well you have got to have secure access to gas, you have got to get a better deal on retail prices, you have got to deal with the Limited Merits Review, you have got to invest in low emission through the CEFC, Snowy Hydro, keeping Liddell open – all of this is our plan, short, medium, long term.

GILBERT:

Finally, this report, front page of the Financial Review today, UBS study which has found that ‘liar loans’ people who inflate their earning capacity has led to mortgages which potentially are based on an overestimated net worth and income by some $500 billion. That is a worry isn’t it, a house of cards almost?

TREASURER:

Credit security and credit testing is very important. When I was with APRA on Friday we were talking a range of issues including their inquiry into the CBA, this is something they look at very closely as an overseer and to ensure that prudent policies are being properly followed. At the moment there is this report, yep, but APRA is the one who will keep monitoring those issues ensuring the banks aren’t getting themselves into a sticky spot.

GILBERT:

And individuals as well.

TREASURER:

Of course.

GILBERT:

You are talking about people having a buffer, some would but some [inaudible]?

TREASURER:

It’s about two and a half years on the official figures. That is why we took the action on credit cards. We are taking action on credit cards to make sure that when people offer higher limits and things like this they are told what the regular repayments are to repay the whole loan, not just the extra bit or the interest. We have got to make sure that consumers are more informed, more aware of what their options are and what the consequences are of taking decisions in the market.

GILBERT:

Treasurer, I appreciate your time as always. Thanks very much.

TREASURER:

Thanks Kieran.