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Transcript of interview with Leigh Sales: ABC TV-7.30: 24 October 2012: Inflation Figures; Carbon Pricing; Electricity Prices; Craig Thomson; Election T-Shirts

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THE HON GREG COMBET AM MP Minister for Climate Change and Energy Efficiency Minister for Industry and Innovation


GC 290/12

24 October 2012


SUBJECT: Inflation Figures; Carbon Pricing; Electricity Prices; Craig Thomson; Election T-Shirts.


SALES: Today's inflation figure shows that prices have gone up more than anticipated. The consumer price index rose 1.4 per cent in the September quarter, and fruit and vegetable prices were up around 10 per cent. The biggest price rise was for electricity, up 15 per cent. Part of that is due to the carbon tax but the Australian Consumer and Competition Commission says the bulk of the hike is due to unnecessary actions by the energy industry. To discuss that, I was joined in the studio a short time ago by the Climate Change Minister Greg Combet.

Mr Combet, thank you for coming in.

COMBET: Pleasure Leigh.

SALES: The figures today show a 15 per cent surge in electricity prices. Some of that is due to the carbon price, as we know. As for the rest, are consumers being gouged?

COMBET: In relation to electricity prices? Well, the chairman of the ACCC today made some remarks about that which back up observations made for quite a period of time now, and that is that the essential driver of higher electricity prices is investment in poles and wires, and some inefficiencies in the way the electricity market is operating. So, we think there's certainly scope to try and take pressure off electricity prices by improving the system.

SALES: So, he said today that the rules governing the setting of electricity prices aren't working. Would you agree with that?

COMBET: Oh, we think there's some inefficiencies in it for sure. We don't have a fully mature national electricity market on the east coast of Australia. It's been building for quite a period of time. Essentially the driver of higher electricity prices in recent years has been investment in poles and wires. And arguments have been made that there's been some gold-plating of that investment, you know, large investors in essentially monopoly distribution networks with high costs and that's contributed to a 50 per cent increase in electricity prices over the last few years. Nothing to do with carbon pricing, but that's really what the driver of higher prices is.

SALES: So what can be done about that then?

COMBET: Well I think the chairman of the ACCC today is making some observations about how the rules might be improved and the Government will certainly take account of that, but this is a matter that the states need to be engaged in. Essentially, the electricity systems are still very state-based. There are state regulators in each jurisdiction and there's a lot of improvements to be made. So the Federal Government is essentially staying to the states, ‘Let's all come together and get our act together to take pressure off prices.’

SALES: As you say, there have been these substantial price rises because of the gold-plating of the system, but there's also the carbon price rise on top of that. Australians really wouldn't be thanking you for adding that extra impost?

COMBET: Well I think the important point to make about this is that the figures out today on inflation absolutely confirm what the Federal Government's been satisfying about the effect of the carbon price. Inflation is at two per cent, the bottom of the Reserve Bank's inflation target range. That's a pretty good result. We've got the economy growing at well over three per cent. So, it's bang on what we argued would be the case and we've got to remember that the majority of the revenue from the carbon price is being used to increase the pension, cut taxes for low and middle income households and increase Family Tax Benefits and the average benefit that we're providing to household across the country is $10.10 a week, so we're looking after people.

SALES: But is the problem for you that regardless of what you've just explained there, people will get their electricity bill or they get to the checkout at the grocery store, they see what they have to pay and they blame Government immediately, they think, "Well, bloody Julia Gillard"?

COMBET: Well there have not been - let's be clear about this - the unimaginable price rises that Tony Abbott has forecast. These figures today confirm that Tony Abbott has been deceitful, has lied to the Australian community about the effect of carbon pricing in relation to the price impacts. He said towns would disappear, regions would die, the coal industry would collapse, hundreds of thousands of jobs would go. It's all rubbish. And what we find today is that inflation is bang on the bottom end of the RBA's target range. The economy's growing, interest rates have been coming off, unemployment's at 5.4 per cent. By international standards we're in good shape and we've been able to make an important reform to cut pollution to send a price signal through our economy to reduce our greenhouse gas emissions and manage the economy well.

SALES: As Climate Change Minister you are trying to reduce Australia's carbon footprint, so therefore you must be happy that electricity prices are high because it discourages energy use?

COMBET: No, we're wanting to encourage investment in renewable energy and we're anticipating $20 billion of investment in renewable energy over the next eight years or so to 2020. We're providing a price signal to reduce what's called the emissions intensity of our electricity system. And the figures for the first three months for the carbon price in

electricity generation came out last week and they showed that the amount of pollution per megawatt hour of electricity produced has fallen by 7.6 per cent in that period. The system is working. We're producing less pollution for the same amount of electricity generated and we'll see very large investment in renewable energy in the years to come.

SALES: On the Craig Thomson matter today, do you share the Victorian police's concern that the media seemed to know about that raid as it was underway?

COMBET: Well it's a bit odd, but it's not unknown is it - that these things happen? But at the end of the day the important things here, is that the proper police investigative processes are followed and allowed to be followed independently and that Mr Thomson is accorded natural justice and he's presumed innocent until proven otherwise. Remember he's got no criminal charge against him. He's not been found guilty of anything. And we should just let proper processes be conducted.

SALES: Do you think that anyone in voter land believes that Craig Thomson would still be an MP if the Parliament weren't on such a knife edge?

COMBET: Oh look, it's not for me to prejudge or to interpret what the community is thinking about the issue. I think the thing that I can make clear, particularly as I've got a union background myself, is that the nature of the allegations that have been made of course are quite disgusting to me. I always stood up as a union official for, I think, proper and ethical behaviour and conduct. And so I'm naturally concerned about it. But the allegations have been denied and proper processes have to be followed by the police and ultimately if there is any action stemming from that, Mr Thomson's entitled to natural justice.

SALES: Before you go, the backbencher Kevin Rudd is having a competition among voters to come up with a T-shirt slogan for the next election campaign, hoping to find something to rival "Kevin '07". What do you reckon should be on the next T-shirt?

COMBET: Oh, I think we've just got a lot of hard work to do to be honest, so I won't make up a T-shirt slogan on the run.

SALES: There won't be any special Greg Combet T-shirts out there?

COMBET: I've got some really good ones if you're interested that I use in my electorate, but I'll keep it for there.

SALES: You can wear one on the show next time. Greg Combet, thank you very much.

COMBET: Thanks Leigh.