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Transcript of interview with Hamish Macdonald: 12 April 2018: National Energy Guarantee; market concentration; emissions reduction; COAG Energy Council

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SUBJECT/S: National Energy Guarantee, market concentration, emissions reduction, COAG Energy Council.

HAMISH MACDONALD: Shadow Energy Minister, Mark Butler, joins us from Adelaide this morning. Good morning to you.


MACDONALD: Let’s start by being very clear about this, does Federal Labor support the NEG in its current form or not?

BUTLER: We very much support the idea of a bipartisan solution to the energy crisis that has emerged under this government; we have for some years and we’ve been at the table with every previous iteration of energy policy this government has put forward. We’re still open to the National Energy Guarantee; we still hope that it comes forward in a form that the industry, stakeholders, states and Federal Labor can support.

MACDONALD: With respect Mark Butler I don’t think that answers the question. Do you support the NEG in its current form or not?

BUTLER: We think there are elements of the current design of the NEG that need to be fixed. That reflects the almost unanimous consensus of the written submissions from the industry, from stakeholders, from business groups, consumer groups and people at arm’s length like the consumer watchdog which has said if these design flaws are not fixed there is going to be real harm to the system, real harm to the economy and prices will likely go up rather than come down. Now these design deficiencies can be fixed. For example, the way in which it is designed will inevitably give more power to the big three retailers, not less. The ACCC says that will likely cause prices to rise. Now this can be fixed, but it requires Malcolm Turnbull to stand up to the hard right of the Coalition party

room because the design flaws have basically been put in there to pretend that this is something that it isn’t.

MACDONALD: Forgive me though, Josh Frydenberg did talk about that in his speech yesterday and signalled that they wanted the ACCC to look at the power that the three major providers have - that it was not the desire of the Federal Government to give them any greater dominance in the industry then what they already have?

BUTLER: Well it might not be the desire but everyone, including the big three themselves, have said that will be the effect of the design. Now this can be fixed.

MACDONALD: So the ACCC wouldn’t be capable of carrying out some sort of investigation to provide some further guarantees to ensure there is no greater market dominance?

BUTLER: Because the problem here is the way in which they have designed the Energy Guarantee, where the big three retailers would be the gatekeepers for the system. It would essentially close the market to smaller retailers and it would also smash the depth and liquidity in the contracts market. Now I’m not just saying that, the ACCC has, the stock exchange has said that. And that contracts market is a very important price stabiliser or hedging opportunity for retailers and big energy users. This will cause real harm to the economy, not just to the electricity system. These things can be fixed but it requires some honesty and courage from Malcolm Turnbull in his party room.

MACDONALD: So given your commitment to bipartisanship, if the Federal Government can get a deal done with the states and territories at COAG next week, and satisfy them on whatever the complaints or concerns are, would you then continue to fight to change things?

BUTLER: Next week is very much a high-level discussion. I expect that the state governments will reflect the unanimous views of business groups and consumer groups about these concerns - and the government will be sent away to do further work before, what I believe will be, a meeting in August. So this thing is not at its final stage next Friday. I hope the government listens to the concerns expressed by all of those bodies and will do some work over the next few months, because we want this thing to work.

MACDONALD: But just trying to understand what your position would be if COAG reaches some kind of deal - if there is agreement from all the states and territories that is included in this, would you be supportive of that process going forward even if it meant just an agreement to look at market dominance, for example?

BUTLER: We support this thing going forward. We support it going forward in a way that takes account of the submissions that have been made by all of the bodies that I have mentioned to ensure that this is a design that will not do harm to the economy, and does not do harm to consumers. We recognise that Federal Labor and the Federal Government are not going to agree around things like the ambition needed in emissions reduction, or the deployment of renewable energy over the 2020s. We accept that we

are going to have to fix those things when we come to government, whenever that is. What we are not going to do is agree to elements of the design that will bake in real things that do harm to the economy, particularly other sectors of the economy that aren’t involved directly in this discussion, and real harm to consumers through the threat of power prices going up even further than they have under this government.

SPEERS: So you, Labor, would not vote this down if it comes to Parliament then?

BUTLER: That obviously remains to be seen depending on the response to all of those submissions about the deficiencies in the current design.

MACDONALD: So even if all the states and territories agree to an arrangement with the Federal Government, you would still consider voting this down when it gets to Parliament?

BUTLER: The issues that I have raised are essentially issues that will be dealt with within COAG; they’re not going to come before the Parliament. What is going to come before the Parliament, as I understand it, the Federal Parliament rather than the State Parliaments is going to be around the degree of ambition in cutting pollution. There is obviously a very serious problem with that, which a whole range of different bodies have raised. The pollution rates proposed by this policy, the National Energy Guarantee, don’t even come close to doing what we need to do to combat climate change. What they also do is shift the responsibility, not just to future generations, but to other sectors of the economy like manufacturing, mining, transport and agriculture, which will have to do, under Malcolm Turnbull’s policy, a much larger share of the national work to cut our pollution than has previously been thought to be the case.

MACDONALD: So you accept Josh Frydenberg’s word that if Labor is to get into government, and we if believe the last sixty Newspolls that’s pretty likely, then you would be able to adjust the emissions targets once in government?

BUTLER: That is certainly going to be a condition of any support we give to the proposal, it must be scalable.

MACDONALD: Sure but the question is do you accept Josh Frydenberg at his word that you could?

BUTLER: I accept that that is his intention and that is the intention of the Energy Security Board. Now we haven’t got a finely detailed proposal before us to be fully satisfied of that, but I accept the government and the Energy Security Board, and I hope the COAG Energy Council, are making it a very clear condition that this policy must be able to be ratcheted up in the future to match, firstly, what the community wants in the way of renewable energy deployment, but also our commitments, our obligations to the rest of the world and future generations to do what we need to do to combat climate change.

MACDONALD: So what would Labor move the target to - from 26-28 per cent would you go as high as 45 per cent as is being reported?

BUTLER: That is our policy. That is the policy we took to the last election.

MACDONALD: So the more specific question pertaining to you being in government and the National Energy Guarantee, if there is a commitment from all the states and territories, if you win government would you then seek to move the target to 45 per cent?

BUTLER: Our position is that you need, in accordance with the advice from the scientists; you need to get a 45 per cent cut in carbon pollution by 2030 if you are to have any hope of doing what we need to do to keep global warming below 2-degrees. That is the advice, that is the commitment that Malcolm Turnbull made when he signed onto the Paris Agreement on behalf of Australia in 2015. So we will follow their advice rather than come up with some target out of the air which is what Tony Abbott did with his 26 per cent figure, which doesn’t reflect any scientific advice or any advice from economists.

MACDONALD: So that is an absolute rock solid guarantee from Labor that if you were in government you would shift the emissions reduction target to 45 per cent?

BUTLER: That’s right, we’ve been very clear about that and I think the industry understands that very clearly.

MACDONALD: And you understand you could do that with the National Energy Guarantee?

BUTLER: That’s been the assurance given to us from the Energy Security Board and also by the government. We also hope the COAG Energy Council is keeping an eye on that but as I say that is not the only concern we have about this policy. They must fix the competition and the transparency issues which are going to do real harm to the economy and real harm to consumers.

MACDONALD: Regarding the ACT being the holdout state and territory in this whole COAG arrangement, there is reporting that the ACT may be prepared to accept the 26-28 per cent emissions reduction target in return for a national calculation of its renewable energy investments - because most of its investments are outside the territory. Do you think it is likely now that the ACT will sign up?

BUTLER: Again that really depends on the detail of the proposal exchanged between the ACT and other parties. Obviously they’ve made a substantial investment in being one of the leaders of the nation in renewable energy deployment and they want to make sure those investments are protected. I think that’s a completely reasonable proposition and I wouldn’t have thought it is beyond the wit of people to design something that makes sure the ACT investments are protected.

MACDONALD: Alright Mark Butler we will have to leave it there, we appreciate your time as always.

BUTLER: Thanks Hamish.



Authorised by Noah Carroll ALP Canberra