Andrew Leigh

ON the day that Industry Minister Ian Macfarlane announced his government would slash the Renewable Energy Target by 40 per cent, I joined Waleed Aly on Radio National's Drive program to defend this important environmental and economic initiative.

E&OE TRANSCRIPT

RADIO INTERVIEW

RN DRIVE WITH WALEED ALY

WEDNESDAY, 22 OCTOBER 2014 

WALEED ALY: You know when you've just given birth to a newborn baby, or your partner has, and you cradle it, and you look at it lovingly this way that says there's nothing more beautiful in the world than this at the moment, or indeed henceforth there will never be anything quite so beautiful? Well, I think today Greg Hunt had exactly that moment as the Environment Minister, when he was gazing adoringly at a 5.1 per cent drop in electricity prices. It's a beautiful set of numbers, Paul Keating might have said, and here he is talking about it in Question Time.

GREG HUNT: At 11 am today the Australian Bureau of Statistics announced the largest quarterly fall in electricity prices in Australian history. The largest quarterly fall in the 34 years of records from which statistics had been kept. And so it is likely that it isn't just a 34 year record, it's likely that it's a record which stretches back to the Second World War. Maybe stretches back further.

ALY: So is that just a payoff from axing the carbon tax? We'll ask our regular number gazers. Josh Frydenberg joins us as Parliamentary Secretary to the Prime Minister, and Shadow Assistant Treasurer Andrew Leigh. Gentlemen, welcome again.

JOSH FRYDENBERG, PARLIAMENTARY SECRETARY TO THE PRIME MINISTER: Nice to be with you, Waleed and Andrew.

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Good to be here, Waleed. 

ALY: Wonderful to hear your voices. Andrew, was it wonderful to look at a 5.1 per cent drop in electricity prices, and say, you know, we could have done that, if only we'd not introduced or axed a carbon tax?

LEIGH: Well Waleed, let's recall what the Coalition was promising. They were promising that electricity prices would fall 10 per cent, not 5 per cent. Of course, when we put in place household assistance we did that on the basis of a 10 per cent increase. And so not unreasonably, the Coalition ought to have delivered a 10 per cent drop rather than a 5 per cent drop.

ALY:  Well, they delivered 5.1 and then you keep the compensation, everyone's happy, aren't they?

LEIGH: Well, it's far from the drop that the Coalition were predicting beforehand. Waleed, it has come on the same day that the New Republic, a major news magazine in the United States, has described Tony Abbott alongside Canada's Prime Minister Stephen Harper as one of the worst climate villains. They’re saying that on the basis that Australia had an effective, efficient way of bringing down our carbon emissions and has now taken that away. So despite being the nation, the developed country with the highest per head carbon emissions, we are now bereft of a carbon price.

ALY: Which raises questions of renewable energy, and I do want to get to that in a moment.

LEIGH: Absolutely.

ALY: I hear the points that you're making there, but I can't help but think that Australia simply is unmoved and doesn't care about those things, because the result in the election was emphatic. They'll pocket this saving, and they'll be grateful for it because of the cost of living issue, which of course Labor has recently been very keen to talk about.

LEIGH: Well, we've certainly talked about the cost of living, and the impact that putting in place a GP tax, a fuel tax, cuts to the pension, cuts to family payments, increasing the cost of universities will have on households' cost of living, and also the quality of life. But at the same time, we do need to do something about climate change, and whether it's talking to my street corner meeting, or talking to people who come into my office, or indeed looking at the published opinion polls — you see Australians are keen to act on dangerous climate change. They're aware that climate change left unchecked could cost us natural assets, like the Great Barrier Reef and the opportunity to go skiing. They recognise the extreme weather events that come from unchecked climate change, and that Australia needs to be part of a solution, rather than part of a problem. Or, in Joe Hockey's language, we need to be a lifter, rather than leaning on countries like India to do something.

ALY: Well, as long as we don't have to vote for a policy [indistinct] implement one of those things. Josh, 5.1 per cent? If you promise 10 per cent, by my calculations you get 51 per cent for the assignment. That's an E my friend.

FRYDENBERG: Well, there's further falls to come, and this is great news, this 5.1 per cent. Importantly, the headline inflation has only risen by 0.5 per cent for the September quarter, which brings our inflation for the year to 2.3 per cent, which is in the Reserve Bank's band of 2 to 3 per cent. But, you know, Andrew Leigh and his party have taken pretty much every position, every position possible. First they were for an ETS. Then they were against an ETS. Then they were for a carbon tax. Now Bill Shorten is telling the Parliament he's against the carbon tax. And now you have Andrew Leigh saying, ‘well, it’s only 5 per cent’. The greatest fall for a quarter in terms of electricity prices on record, is not good enough. It's going to fall even more and…

ALY: Well, you're saying it's half what you said it would be.

FRYDENBERG: It will continue to fall.

ALY: How can you guarantee that? Surely the impact of the carbon tax being axed has already run through the system, hasn't it? That's the point.

FRYDENBERG: Well, you would see the figures…

ALY:  The figures drop down.

FRYDENBERG: No, it continues to run through the system. We're also going to see further benefits in lower prices for consumer goods, and for our manufacturing sector at a lower cost because they're relying on this electricity. With the electricity down five per cent in this quarter, in further quarters it will fall further. This is good news for the consumer.

ALY: I'm just trying to remember where I've heard the phrase every conceivable position on climate change before, and if my memory serves me correctly, Josh, it's actually Malcolm Turnbull describing Tony Abbott's politics on the issue, isn't it? Am I right about that?

FRYDENBERG: Well, as you know, Malcolm Turnbull is a front bencher, an important cabinet minister, and he's right behind our policy and our position. I think the fact is, Bill Shorten, who's now saying he doesn't want a new carbon tax, well, that actually vindicates the position we took to the last election.

ALY: He wants an ETS. Are you prepared to meet him on that?

FRYDENBERG: Well, we actually think he probably secretly wants the carbon tax, but let's just see what they come up with in the lead-up to the next election. The Australian people voted at the ballot box at the last election box. They sent an unequivocal message that they didn't want the carbon tax. We've now repealed it; not with the help of the Labor Party, but with the help of the independents. And we're already seeing flow-on effects for lower electricity prices.

ALY: One thing you are seeking the help of the Labor Party with is the Renewable Energy Target which you now want to reduce by something in the vicinity of about 40 per cent from where it is at the moment. Why? What's wrong with renewable energy?

FRYDENBERG: That's actually not correct, Waleed. What we are saying is that the Renewable Energy Target should represent a real 20 per cent of electricity consumption in this country. What has happened over the last few years since 2009 is there has been a significant fall in electricity consumption. So we want a RET that actually is 20 per cent, not a RET that is 27 per cent. We want to maintain the household solar systems programs as they currently are. We do want to protect the trade-exposed sectors which rely heavily on energy, like aluminium. But we think the Labor Party should come to the table, negotiate with us in good faith for an agreement which will see the continuation of the RET that a real 20 per cent – not 27 or a 35 per cent.

ALY: Okay. Andrew, I will get a response from you in a moment to how that negotiation would go, but I just wanted to clarify one or two things with you, Josh, because you say it's a real 20 per cent. That may well be true or that may rely on projections of what our electricity is going to be, which are uncertain. But in any event, we know you tried to get rid of the renewable energy target. You failed to do that. This is now a compromised position. We already have a target and you're reducing that target in absolute terms by a very significant amount. If that happens to be 27 per cent of some recalculated projection of what we're going to use, well, why not just embrace that? Why not say: ‘so be it, we need to have as much renewable energy as possible’?

FRYDENBERG: With due respect, Waleed, you say we tried to get rid of the RET. Who are you quoting there? That's not Tony Abbott's words, that's not Greg Hunt's words, that's not Ian Macfarlane's words. That's a bit of speculation out there in the Twittersphere or they're the lines that the Labor Party is trying to run because they're trying to distance the Coalition from being supporters of renewable energy. Let's not forget, this was a John Howard initiative, and we want to continue it.

ALY: So was the ETS. The fact that it's a John Howard initiative doesn't mean much.

FRYDENBERG: Well, it has made a difference. This has been a positive reform, the RET. I support it. But it's only sensible that when you see a fall in the reduction of consumption in electricity that the 20 per cent target stays at a real 20 per cent target.

ALY: All right. Andrew, your response to that? What's wrong with keeping 20 per cent as the target, however much the consumption in total happens to be?

LEIGH: Waleed, I know we've become a bit inured to broken promises from the government and, therefore, you know, people say, well, let's not worry about another. But let's be absolutely clear. Before the election, the coalition said that they were committed to the Renewable Energy Target, that they were committed to it in terms of the 41,000 gigawatt hour target, which was a bipartisan position going into the last election. It was on that basis that large scale renewables investors were making their decisions. Under Labor, Australia was ranked fourth in the world in terms of being unequivocally a place to invest for renewable energy investors, and that's slipped way down since the election of the Abbott Government. Large scale solar schemes are, really, at a loss as to what to do, given the investor uncertainty that the government has generated in breach of a pre-election promise. To cut 40 per cent out of the renewable energy target is a huge hit to billions of dollars of clean energy investment. We know we have to decarbonise our energy generation sector. That's the natural path that everyone accepts we need to be on. The question is: are we going to kick the can down the road and then have a wrenching change in the Australian economy, or are we going to bring about steady transition. What both the carbon price and the current renewable energy target do is they ensure a smooth transition on the decoupling of carbon pollution from economic growth. We can continue to grow strongly, but we don't need to keep on putting out the same amount of carbon pollution.

ALY: But after all the criticism there that you've made of the Coalition and its approach to renewable energy, Chris Bowen has come out today, he’s just given a press conference and said: ‘we're happy to sit down and negotiate’, giving very much the impression that the target that is in place at the moment will be reduced as a process of compromise. That's certainly the impression I got just from hearing him speak, otherwise there would be no point in sitting down. So how far do you think you're prepared to go, ultimately? How low can a renewable energy target be that will be bipartisan and ultimately satisfied later?

LEIGH: Waleed, we value investor certainty, and investor certainty is best secured by having a bipartisan position. Now, we had that bipartisan position going into the election. The Coalition is now stepping away from the Renewable Energy Target, from the 41,000 gigawatt hours. We're willing to have sensible conversations with them to ensure we've got this on a bipartisan footing. What we're not willing to do is to simply say: ‘Yes, we're happy to have the Renewable Energy Target cut by 40 per cent’, which would devastate the clean technology jobs that have been created. There’s about 18,000 jobs forecast to be generated in the renewable energy sector by the RET if it's left at its current level.

ALY: All right. Final question to you then on this, Josh: why is it that a mining tax is catastrophic for sovereign risk and is too much investor uncertainty, but changing a renewable energy target this significantly isn't?

FRYDENBERG: Well, we're saying we want a renewable energy target; it just needs to be a 20 per cent one. That was the intention originally and that should be the intention now. We just have to make adjustments based on the fall in the consumption of electricity. The Mining Tax was slapped on an industry which was not expecting it, which was not properly consulted and, as a result, it created a lot of concern and was a deterrent to foreign investment. So they're very different things.

ALY: Now, big day for you, Josh Frydenberg. Repeal day. It's very, very big for you. But I was a little bit underwhelmed when I looked at this, because how many pages did you repeal? 7000 pages of regulation that's going to go? But the original, it was 10,000 pieces of legislation and 50,000 pages of regulation. Are you already running low, Josh?

FRYDENBERG: No, absolutely not. You're right. In the first repeal day we got rid of 10,000 pieces of regulation legislation more than 50,000. This time it's 1000 pieces of legislation regulation and 7200 pages. But the key point, Waleed, is our target of $1 billion a year in red tape reduction has been met. In fact, we've announced today that our over 400 measures have produced compliance savings of $2.1 billion. Now, this is very significant for small business. For example, 32,000 small businesses that don't pay GST will no longer need to submit a BAS statement. The 340,000 small businesses that have minimal income and submit a BAS statement will no longer have to be part of the pay as you go system. There have been changes right across the board. Many of your listeners, for example, may be on the Do Not Call Register; 9 million Australians are. They no longer will have to renew their names on the Do Not Call Register every eight years, because, when they put their name down, they will be there indefinitely. We've got huge numbers of measures which add up to significant compliance savings for families, small businesses and the not for profit sector.

ALY: And how do you get to the figure of – sorry, was it $2.1 billion in savings?

FRYDENBERG: Correct.

ALY: Can I see your working on that?

FRYDENBERG: Absolutely. That is published in, you know, regulatory impact statements. It's work that is detailed in a document we released publicly today of over 50 pages long, with the deregulation measures as part of repeal day two. What happens is the Office of Best Practice Regulation impartially and rigorously submits the analysis by departments to scrutiny, and it's trying to estimate what are the actual compliance savings by particular reforms. Now, the actual economic benefit to the economy will be exponentially bigger than the $2.1 figure, because, for example, with our one-stop shop environmental approvals, Waleed, it may see a resource project get approved six months or a year earlier than otherwise may have been the case. As a result, a billion dollar investment will come forward, whereas previously it may have gone offshore as a result of the delay here in Australia. These are very, very significant reforms that we are determined to pursue. There's a lot more red tape to cut, but we have succeeded where the Labor Party failed.

ALY: All right. I might come back to the environmental one in a moment if I get a chance, but Andrew, this sort of red tape that we're seeing going, it sounds perfectly reasonable. Are there any concerns that you've got?

LEIGH: Well, what Josh won't tell you is that of last red tape repeal stunt there were 39 individual amendments changing the term electronic mail to email. There were hundreds of amendments that changed spelling, grammar, punctuation, and...

ALY: Don’t we need punctuation and grammar to be right in our legislation?

LEIGH: Absolutely. I have no trouble with these sorts of measures, but let's not pretend that in any way they're anything more than the usual business of government. I mean, there's a sense in which Red Tape Repeal Day could well just be called ‘showing up to work day’. Labor did these sorts of measures, we just didn't structure a stunt around them. But then there's the measures that do strip away important protections. So the Future of Financial Advice changes opposed by Choice and National Seniors were part of the last so called red tape repeal day.

ALY: So what worries you about this one?

LEIGH: Well, I'm certainly concerned about giving a blank cheque to state governments in order to approve resource projects in environmentally sensitive areas. I think there's a natural federal role for that. You know, the other thing Josh won't mention to you, of course, is that since his last repeal day there has been more than 600 new regulations put on the statute books. So, you know, the government will claim that its measures are necessary and significant, and they're right. It's just the necessary ones are trivial and the significant ones are unfair.

ALY: I do want to ask about the environmental aspect of this. On that, I mean, the idea of a one-stop shop was actually something the previous Labor government was attempting to do and then it found itself running into trouble with the states, who wouldn't get out of the way at certain times. Have you effectively solved this by saying that the federal government is just not being involved in this process?

FRYDENBERG: Absolutely not. It's a process where we work together cooperatively with the state governments. There's not a diminution in standards, but there's an avoidance of duplication and overlap. That's why Martin Ferguson, the former senior Labor Minister for Resources under the Rudd and Gillard governments, has come out and strongly supported the Coalition's position. That's why Labor's state government, for example in South Australia, have signed on to our one-stop shop. So we again have succeeded where Labor failed and these are really good initiatives because there is so much duplication and overlap. I mean, in one case Waleed, there was a company that sought an environment approval in Australia. It took that company more than two years, cost them more than $20 million to get the approval, it required 4000 meetings, a 12,000-page report, and then when they got the tick there were 1500 conditions attached; 1200 at the state level and 300 at the federal level. Now, capital is mobile in this world. Australia is not the only country that produces iron ore, coal, uranium and elsewhere. Unless we have a red or a green light process which is speedier than that, we will lose good investment opportunities.

ALY:  Agreed. But maybe I need - as an Australian - I need those 1500 or however many it was conditions there because that's the only way that my environment can be protected.

FRYDENBERG: But you don't need 4000 meetings, and that 12,000-page report and that duplication at the state and federal level. There is a much better way. That's why every state and territory has signed on to our approach. But there's also good results for the not-profit sector. I mean, companies that are limited by guarantee tend to be community organisations. They currently don't have to do an audit, but they have to appoint an auditor. So we're saying that with these rules, let's get rid of that requirement that they have to appoint an auditor. Then there’s the 100 shareholder rule. Currently a company like Woolworths, with more than 400,000 shareholders, has to call a special general meeting as a result of the signatures of just 100 shareholders. Those sort of vexatious attempts will cost the company a lot of money, holding a meeting, taking the time of senior management. So we've said 100 shareholders can put an item on the agenda at a special general meeting. They just can't call a special general meeting.

ALY: We’re well over time, so I'm going to give you 30 seconds. Just any reflections you want to share on Gough Whitlam. Of course, we did a lot of remembering of him yesterday and his legacy and a lot of commentary on that, but I thought I would give you, gentlemen, the chance in a week like this.

FRYDENBERG: Well, I was very pleased to see both sides of Parliament come together yesterday to praise Gough Whitlam and to remember his contribution in terms of social policy, no fault divorce, Aboriginal land rights, reaching out to China. They were some important initiatives and he was larger than life, but we shouldn't re-write history. There were problems in his leadership, to say the least: 20 per cent inflation, high unemployment, government spending out of control. Greg Sheridan has pointed out today his position on the Baltics, the Vietnamese, the Taiwanese weren't exactly perfect and as a result you will see a contestability about his legacy. But certainly as far as the Labor Party goes, I can understand they see him as about as close as you can get to a saint and, you know, he should be celebrated for his contribution. In fact, he took the Labor Party, I think, to five elections as leader, which is something very significant, but achievements like the White Australia Policy shouldn't be attributed to Gough Whitlam, or getting rid of the White Australia Policy shouldn't be attributed to Gough Whitlam, more like Harold Holt is responsible for that.

ALY: All right. Well, Andrew, he has left you basically no time. Is there anything you want to say?

LEIGH: Waleed, I was born four months before the election of the Whitlam government and as my mother's belly got bigger, she pinned an ‘It's Time’ badge to the front, so I was Whitlam Labor from the outset. He did have a great ability to combine the best of the Australian traditions with the notion that we had to revitalise and renew the country. He believed deeply in egalitarianism, in the Eureka legend, as I do, and the notion that Australia could play a bigger role on the national stage. I think of that lovely line where he was once challenged in France about whether it was appropriate for an Australian of his stature to be drinking French wine and his response was: ‘once it passes my lips, it's Australian’. And I think that beautifully sums up the best of Australia: taking in the world, the ideas, the migrants and goods and giving the best of Australia to future generations.

ALY: In the best traditions of RN Drive, gentlemen, it's left only for me to say thank you very much. It's wonderful to speak to you as always. I will look forward to doing it again soon. Enjoy the rest of your sitting week.

FRYDENBERG: Thanks, Waleed. Thanks, Andrew.

ALY: Josh Frydenberg, Parliamentary Secretary to the Prime Minister; Shadow Assistant Treasurer Andrew Leigh, my guests.