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Transcript of doorstop interview: Canberra: 25 October 2018: Health and business groups calling for climate action; default price; divestment; new coal; Rod Sims; negative gearing

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SUBJECT/S: Health and business groups calling for climate action, default price,

divestment, new coal, Rod Sims, negative gearing.

MARK BUTLER: Just this morning we’ve heard the broadest possible base of calls for this

Government to start taking serious action on climate change.

We’ve seen this morning an open letter from the nation’s leading health experts, including

Nobel Laureate Peter Doherty, Australian of the Year Fiona Stanley, and many others who

have called the Government’s response to the IPCC Scientific Report on Climate Change,

to use their words “unacceptable.”

We’ve also seen the regular biannual survey of company directors for the first time place

climate change, or action on climate change, at the top of the list of challenges that

company directors think the Federal Government should be acting on.

We’ve also seen this morning a very broad coalition of business and welfare groups, big

user groups, so those businesses who have been suffering through the energy crisis Scott

Morrison has presided over as Treasurer and now Prime Minister. The BCA, the AiG,

Energy Users, and many others as well as welfare groups and energy suppliers, all calling

on this Government to bring emissions reduction policy back into the broader energy

policy framework.

Last but not least, we’ve heard Senator Dean Smith add his voice to the list of moderate

Liberal MPs, or so-called moderate Liberal MPs, who have over the last several days been

calling on their own Government to take climate change seriously; in Dean Smith’s case

lest the Coalition lose any more faith among the younger generation of Australians.

The failures of this Government on climate change extend across all sectors of the

economy, but the most important thing, the most significant thing Scott Morrison could do

today to respond to all of those calls across the economy, across society is to return to the

table with Labor on the National Energy Guarantee. All we have seen instead this week is

a grab-bag of reheated recommendations from a very good report released by the ACCC

several months ago. The central recommendation, the central announcement this week

was a default price. Now Labor under Bill Shorten accepted that recommendation first up

ten weeks ago. That was followed up by Malcolm Turnbull and Josh Frydenberg a couple

of days later. So that has been bipartisan energy policy in this country for at least ten

weeks - nothing new at all.

The only new thing in the announcements from Scott Morrison and Angus Taylor this week

has been the so-called divestment policy. This has nothing to do with consumers. If it did

the ACCC would have recommended it in their report. They considered the question and

they clearly rejected it because it has no benefit for consumers at all. I’ll hand over to Chris

Bowen to talk a bit more about this aspect of the Government’s policy.

CHRIS BOWEN: Thanks very much Mark. Of course in this last week we’ve seen the 17

or 18th version of the Abbott/Turnbull/Morrison Government’s energy policy. As Mark said

part of it is just a reheated announcement of something Labor announced weeks ago.

Another part of this grab-bag of thought bubbles is this so-called divestment power.

Now a few things about the divestment power. It has nothing to do with lowering power

prices. As Mark said the ACCC considered it and rejected it. A few moments ago we saw

the revelation in Senate Estimates that not only did the ACCC not recommend this power,

the country’s competition regulator, but the Chairman of the ACCC read about it in the

newspaper i.e. he was not consulted by the Treasurer, not consulted by the Prime

Minister, the Energy Minister certainly didn’t go near the ACCC. He opened his newspaper

in the morning, eating his breakfast, and found that we are going to have divestment


Now what’s a divestment power about, it’s a stunt. This is a sop to the climate change

deniers who want to be able to force companies to divest coal-fired power stations, like

Liddell. The Government brings in energy companies and gives them a very good talking

to on a six monthly basis. What this is about is just a sop to the right-wing of the Liberal

Party and people who don’t want to believe action is necessary on climate change.

We need, in Australia, more investment in power generation. That is what we need. That’s

the solution to this problem. That’s why we need a bipartisan energy policy. As Mark said

we are prepared to go back to the table with the Government but instead we see the

creation of sovereign risk and investment uncertainty with this floating of a divestment


Labor believes in good policy. We’ll always back good policy when we see it from the

Government. If the Government comes up with a good idea we will back it but when they

come up with a silly idea we will call it out. This is just a silly idea.

Now Australia currently does not have an energy policy. This grab-bag of thought bubbles

that we’ve seen over the last week is not an energy policy. We don’t have a climate

change policy. The Government won’t even say the word “Paris,” won’t even utter the

word, it won’t leave the Prime Minister’s lips. When was the last time he talked about our

commitments under the Paris Accord? He talks about Kyoto and Kyoto 2 and other

commitments but this rump of climate deniers in the Liberal Party won’t even let him utter

the word “Paris”. And, of course, we don’t have a policy that will generate the certainty

necessary for investment in renewable energy and other forms of energy which is so vital

for getting energy prices down.

So the time for the games is over. The time for the thought bubbles and the policy crisis,

lurching from one crisis to another is over. It is time for the adults in the room to sit down

and develop a proper energy policy for Australia. It is quite clear the

Abbott/Turnbull/Morrison Government is just not up to it. A Shorten Labor Government will

have to deliver it but in the meantime, as Mark has said, it is time for the Government to

return to the table to offer bipartisanship on proper energy policy. The Labor Party was

prepared to do that with the Clean Energy Target, the Emissions Intensity Scheme, the

National Energy Guarantee, all of which the Abbott/Turnbull/Morrison Government has

tried and failed at every opportunity. This is important for the economy, important for the

future of the country. This Government just continually fails.

JOURNALIST: On energy one of the other things Angus Taylor suggested is that using

this recommendation to underwrite the investment in new plants, either through a loan or a

purchase guarantee, that they’ll have a shortlist of projects early in the New Year which we

understand could be as early as January. If any of these projects are contracted before the

election would Labor reserve the right to reverse any contracts? I know it is a bit

hypothetical but you can see where the Government is going here, would you be locked

into any coal-fired power stations if that is what the Government contracts?

BUTLER: Maybe if I can deal with the recommendation and then go to Chris about our

policy in relation to contracts. We need to be clear that the announcement from the

Government earlier this week does not reflect the ACCC recommendation. The ACCC

does not talk about loans. Mr Sims, again, made it very clear in the Senate Estimates

hearing this morning that no one raised with him through the development of this

recommendation the possibility of new coal-fired power stations when we actually know

that is what the Coalition is all on about. When they say ‘fair-dinkum power’ that is code,

that is signalling to the right-wing of the Coalition party room that this Government wants to

put taxpayers money on the line to build new coal-fired power stations that the industry

itself says for very obvious reasons are “uninvestable.”

So this does not reflect the ACCC recommendations. I know they are trying to cloak it in

recommendation four, but as to whether or not this Government is able to rush this

through, they’ve got expressions of interest running through summer, whether they want to

try and conclude contracts is difficult to see. But I might throw to Chris about our policy in

relation to that generally.

BOWEN: Thanks. As Mark said this is policy on the run and if the Liberal National

Government wants to engage in such poor policy that they are prepared to risk the

national interest in doing this quickly, in a haphazard way that is on them. Labor honours

contracts, we don’t create sovereign risk. That has been our consistent position across the

board when it comes to any matter in the economy. We honour contracts, we don’t create

sovereign risk. But I call on the Government to be sensible and not to engage in this sort

of cheap stunt.

A Labor Government will deliver energy policy certainty. The Abbott/Turnbull/Morrison

Government is just lurching form crisis to crisis - but don’t do so at the expense of good

government. To answer your question our position has always been consistent on a range

of matters, an incoming Labor Government honours contracts even ones that we

thoroughly and completely disagree on.

JOURNALIST: Does that extend to if any of these projects are indemnified against a risk

of a carbon price or some other policy?

BOWEN: I think you’re really asking us to get into hypotheticals now Phil.

BUTLER: If I could just add to that, Chris has outlined the principles in relation to contracts

but I think people need to take a breath and consider what is involved in indemnifying for

example a new coal-fired power station against carbon price risk for a 30 or 40 year

period. Just applying the sorts of arrangements that exist in the UK, for example, under a

conservative government or are being rolled out in Canada under a conservative

government, you are talking about billions and billions of dollars in indemnity for just a

single coal-fired power station. So I call on Angus Taylor and the Treasurer to be open

with the people about quite what an indemnity would involve for taxpayers to foot.

JOURNALIST: In terms of Labor’s opposition to divestment powers, I mean this is a policy

that has worked overseas and has been in place overseas for a long time and the sky

hasn’t fallen in. Why is it not right for Australia?

BOWEN: Well with respect we are talking about different things. Some countries have a

divestment power as a penalty under competition law - as a penalty if a competition law is

breached. Some countries have that, it is not universal but some countries have it. This is

very different.

This is very different, this is a sector specific policy which would only apply to energy. I

know that some in the National Party want to apply it to banks and supermarkets but the

policy before us only applies to energy and it would not be a breach of the law, it would not

be a breach of competition law, it would be because a Minister doesn’t like what a

company has done. That’s what the divestment power that has been brought forward by

the Government is. If a Minister takes a dim view of the way a Chief Executive has spoken

or the companies policies, they can just order a divestment of an asset. With respect, that

is not reflected in the law of other countries, it is just not.

Now there have been multiple reports into the energy policy of Australia. We’ve had the

Energy Security Board, we’ve had the Chief Scientist, the ACCC, I’m sure there are others

that I have missed Mark.

BUTLER: Many, many.

BOWEN: Many, many more. Not one of them has recommended this power. Angus Taylor

or Josh Frydenberg need to come and front you, and the Australian people and say who

recommended it. Did the Energy Security Board recommend it? Did the ACCC

recommend it? Did the Chief Scientist recommend it? Has the Treasury recommended it?

The Chairman of the ACCC read it in the newspaper. The competition chairperson read it

in the newspaper, didn’t even get a curtesy call to let him know that it had been

announced let alone consulted if it should be announced. This is a rolling farce of poor


JOURNALIST: Would you be open, in response to Nicole’s question, would you be open

to anti-trust provisions if they were?

BOWEN: Completely different question Phil. As I said, there are some countries that have

divestment powers as part of the suite of penalties that are available in terms of

competition law. That is not what is before us here. It is just not.

JOURNALIST: Mr Bowen, Rod Sims has just been appointed another five year term. Do

you support that and what should be his focus?

BOWEN: I’m not going to comment particularly on Rod Sims, obviously he is a respected

regulator. I have no quarrel with him as such and that is an appointment I have no quarrel

with. More broadly, on important government appointments we’ve made points about the

Secretary of the Treasury in recent days and the trashing of the bipartisan or the non-partisan conditions of the Treasury. We will continue to make that observation and as we

get closer to the election, seriously important economic appointments, it would be

appropriate for the Opposition to be consulted.

JOURNALIST: The Finance Department has released new Budget figures this morning

and shows that the Budget is about $9 billion up on where it was supposed to be. Does

that give you confidence about your spending promises and how that money may be

deployed by a Shorten Labor Government?

BOWEN: We stick to our budget rules unlike the Government. The Government changes

its budget rules and the Prime Minister says yeah we’ve got rules but we’ll let you know

when we are not complying with them. Now of course there is an internationally

encouraging economic situation, the world economy is going well, and that is reflected in

Australia. But we don’t see think the need for budget responsibility has gone out the

window. We do think the need for bigger budget surpluses in the short-term is maintained.

We saw concerns overnight about Australia’s household debt something I have been

talking about consistently. Second highest household debt in the developed world, not a

record we should be hankering for. We need bigger budget surpluses in the short-term

and we need to be hitting one per cent of GDP more quickly than the Government is

projecting. Now of course any improvement in the Budget figures is welcome, that lies for

both sides. It implies to the Government and to us the Budget has improved regardless of

who the incoming Government post-election is. But we will maintain our budget discipline.

JOURNALIST: Mr Butler could I just clarify something, if Labor wins office at the next

election to meet the 45 per cent emissions reduction target that you have set. Your

preferred mechanism to do that would be the National Energy Guarantee that Mr Turnbull

and Mr Frydenberg were working on to meet that target?

BUTLER: Well certainly in the energy sector, the Paris Targets are applied across the

economy but the debate has been about the energy sector and our very clear view is that

bringing together the different strands of energy policy, reliability and emissions reduction

together in the NEG is the best way to do that.

We’ve supported that process, every single business organisation in the country supported

it, Scott Morrison himself when Treasurer said he had not encountered a single measure

in his ten years in Parliament that had a broader base of support than the NEG. Now

we’ve said the Government needs to reconsider its position, reconsider its capitulation to

Tony Abbott and others of the hard-right in the Coalition party room and do the right thing

in the national interest and come back to the table and develop a bipartisan policy.

The statements from all of the business groups this morning reflect that. I make the point

that, around the NEG or around divestment, big business groups that are energy users,

not the energy companies, but users of energy that have been suffering through this

energy crisis that Scott Morrison has presided over as Treasurer and now as Prime

Minister have said two things: come back to the table on the NEG and reconsider this

reckless measure around divestment.

BOWEN: Mark and I have a meeting to get to; we can probably take one more question.

JOURNALIST: Can you give us an idea of your emissions reduction target on energy. I

know you are going to go to an independent board but there have been speculation it

could be around 60 per cent to meet your overall national target. Would you consider

something around that level?

BUTLER: We’ve been very clear that the different modelling and the process that I think

has been a very orderly and developed process through the Energy Security Board and

others has been effectively modelling two targets, the Government’s target of 26-28 per

cent and a 45 per cent emissions reduction target in energy. That is what we’re working


JOURNALIST: Mr Bowen can I just ask you on negative gearing. So given the current

state of the housing market with house prices falling are the negative gearing changes still


BOWEN: Absolutely, this is a policy that we announced two and a half years ago to

improve housing affordability but also to improve the Budget and deal with financial

instability and high household debt. Now, in fact, in Sydney and Melbourne in particular

some of the heat has come out of the housing market that means our policy can be

implemented even more smoothly. Because despite the rhetoric of the Treasurer

yesterday our policy is fully grandfathered, a fact he misled the Australian people about

yesterday, quite shamefully. Quite shamefully, the Treasurer misled the Australian people

in the tradition of Scott Morrison who as you would recall latched onto dodgy modelling

about negative gearing, the BIS Schrapel report. Sat on Treasury modelling which said

there would be a modest impact on house prices, refused to release it. And now this

Treasurer has latched onto modelling, which does not model Labor’s policy.

Now the fact that investors in many instances are leaving the market in an orderly fashion

because of macro prudential regulation means that that price impact is already being

factored into the market and means that Labor’s reforms can be implemented even more

smoothly. They were careful with design, carefully grandfathered for a range of market

circumstances. You don’t write policy for what is happening in the market on one particular

day. You write it to be fit for purpose for any range of market circumstances because when

we implement it it’ll be in place for many years and the market will go up and down and it’ll

be different for different parts of the country. Our policy is the right one. We are seeking a

mandate for it as we sought at the last election, and if we get that mandate we will

implement it.

Thanks everyone.


JAMES CULLEN (BOWEN) 0409 719 879

LUCY CARUSO (BUTLER) 0408 803 428