12 September 2017
Transcript - #2017181, 2017

Interview with David Koch, Sunrise

SUBJECTS: Liddell power station; the Turnbull Government’s comprehensive plan to put downward pressure on electricity prices for households and businesses

DAVID KOCH:

Were you disappointed a more concrete agreement didn’t come out of that 90 minute meeting?

TREASURER:

No, that wasn’t my expectation out of yesterday. My expectation yesterday was to directly deal with this issue about keeping Liddell open, which is obviously what we would like to see happen to fill that gap, but also, for the many workers up there in the Hunter Valley and on top of that, those existing coal fired power stations are going to mean more dispatchable, more reliable power and more affordable than the alternatives.

KOCH:

Yeah but they’re not the future and this Liddell power station keeps breaking down, it’s so old. It broke down a couple of times over last summer when the heat was on. It’s just not going to be reliable, and that’s what AGL are saying.

TREASURER:

AGL would say that, I’m older than it, and so are you and I think we’re still doing alright mate…

KOCH:

(Laughs) we’re not power stations. And they’re the experts who are saying it’s not the future.

TREASURER:

They’re the current owners and they have an interest in their position in the energy market and so you’ve got to take that with a grain of salt. So they will consider that. They’re also coming back within 90 days with an alternative plan about how that gap can be filled. So we’ll have a look at that. I remember when Hazelwood shut down everyone said it wouldn’t have that bigger impact, but one of the things people were counting on is that the Portland aluminium smelter would be shut. Now we’re not going to go round shutting industries to keep power prices down. That sort of defeats the purpose.

KOCH:

But you’ve got to take advice from all the power providers, they’re the experts. They are not like putting [inaudible] out the back. These are big multi-billion dollar projects, they take years to do, and they’re saying energy policy, only for the previous Government, but your Government is a schmozzle, they can’t invest ‘cause there’s no certainty.

TREASURER:

Well getting the new investment framework in place is something that is a priority, and we are working to deliver that over the next few months…

KOCH:

You’ve been in power for years. Why don’t we have one?

TREASURER:

We’ve already taken action on gas, to make sure the gas stays home. We’ve already taken action on the retail policies and the competition of retail…

KOCH:

I know. But we’re talking about production.

TREASURER:

I know and that’s why we’ve taken action Snowy 2.0, the biggest storage project, which is the most renewable project you can imagine of that scale, that we’re already moving on. That work is already underway. The tunnels are already happening. We’ve already taken action on $3 billion worth of investments in lower emissions technologies through the Clean Energy Finance Corporation, and we’re…

KOCH:

But you don’t have a renewable energy target, and when…

TREASURER:

Well we do have a renewable energy target.

KOCH:

Then you go and kick South Australia because you reckon they’re putting too much into renewable energy, the power bosses are going ‘what are they doing that for’ because that’s the future. Where are we?

TREASURER:

South Australia’s energy policy cannot be the future. It’s a disaster. It was one big experiment that massively failed. We need a new investment framework David, you know that, and we’re looking to land that over the next few months…

KOCH:

The experts are saying the opposite.

TREASURER:

Pardon, I couldn’t hear you?

KOCH:

The experts are saying the opposite.

TREASURER:

Those who run power companies are saying something different. What we’ve got is our advice which is telling us you’ve got to use all of the above…

KOCH:

Who from?

TREASURER:

From the Government, our sources. And that includes others who run power stations as well. So we take a broad field of advice, not just the advice of those who have an interest in shutting down power stations so they can charge electricity users higher prices because there’s less of a supply or less supply at more affordable generation. So coal is 85 per cent of what AGL does today…

KOCH:

I know and it’s saying it’s not the future.

TREASURER:

It’s going to be there for another 50 years on their own plans. So they’re going to keep using it for another 50 years. That’s their own plan.

KOCH:

Yes they are but they’re going to phase that because that’s not the future. It is in renewables, it’s in battery, new technology and they’re saying we’re not getting any clear direction on that.

TREASURER:

We’ll land that investment framework over the next few months. But what we’ve got to deal with is what’s going to happen…

KOCH:

[inaudible]

TREASURER:

Well David we’re going to land this in the next few months but what matters is in five years’ time, at 2022 thereabouts, there’s going to be a gap, and we need to make sure that’s filled. Now the best way to fill that right now is to keep that power station running, and that’s a short to medium term plan. Our longer term plan is all the things I’ve just mentioned and landing that investment framework is key to that.

KOCH:

So we’ve got to do knee-jerk reactions like Liddell because we’ve stuffed it up for decades, not just you, but the previous Government as well. Both sides of politics have just been running in circles on this.

TREASURER:

Well I wouldn’t say knee jerk is actually trying to take actions from five years before we actually hit this issue. We’ve actually done the homework and worked out when the problem is going to hit. We also have a problem this summer, where we’re going to have a shortfall, and so there’s a strategic reserve policy which has been put in place now with the states to ensure that those risks are mitigated for the summer period. So we’re taking action now David and we’re taking action for the long term. Snowy 2.0 demonstrates that better than anything.

KOCH:

Alright mate, thank you for joining us. Appreciate it.

TREASURER:

Thanks David.