Andrew Leigh

E&OE Transcript
TV INTERVIEW
SKY AFTERNOONS WITH KIERAN GILBERT
THURSDAY, 23 NOVEMBER 2023

SUBJECTS: Inflation; Capacity Investment Mechanism; Consultations on merger reform.

KIERAN GILBERT: Joining me live in the studio is the assistant Minister for competition, Charities and Treasury. And the assistant Minister for employment, Andrew Leigh. Thanks for your time.

ASSISTANT MINISTER FOR CHARITIES, COMPETITION AND TREASURY ANDREW LEIGH: Pleasure, Kieran.

GILBERT: Lots to talk about today. Let's start with Julia's report there on the comments by the RBA Governor on homegrown inflation. We're above comparable nations now internationally. Are you hoping that, like the US, like Europe, ours will track down over coming months? That's the hope is it? The anticipation?

LEIGH: That's what we're anticipating, Kieran, and that's certainly what we're seeing. Australian inflation peaked lower and later than other countries, so it makes sense that its trajectory will take a little longer to come back into the target band. Based on forecasts, both the Reserve Bank and Treasury have inflation returning to the target band. Inflation is pernicious. It damages savings, it decreases the incentive to invest. The Reserve Bank even says it can worsen inequality. So, it's important that we get inflation back under control. And on Michele Bullock’s speech, her comments also reflect the very strong employment performance we've seen. We’ve now had 20 months in a row with unemployment below 4%, and of course, 17 of those 20 months have been under this Labor government.

GILBERT: Yeah, it's a resilient economy, but it's one that a lot of people are doing it tough in right now, aren't they?

LEIGH: Absolutely.

GILBERT: And you'd be hearing that as a local member.
LEIGH: Yeah, that's a story I get from a lot of people, particularly those on lower incomes. You have this situation now, Kieran, where people on lower incomes are feeling the squeeze, switching to home brands and shopping in multiple supermarkets, while those on the top part of the distribution are crowding airport departure lounges. And we're seeing big increases in international travel. So, there's a bit of a two-speed economy we have going on as well.

GILBERT: The Capacity Investment Mechanism, it's been announced by the Energy Minister today. I interviewed him earlier in the day and we've got that interview coming up a bit later in the programme. But one of the things politically that looks like a difficulty is the fact that while you don't want to show your hand in terms of this it is basically an auction to the private sector.

LEIGH: That's right.

GILBERT: To give the best possible deal for the taxpayer. So, you don't want to show your hand on the one hand, but politically on the other, you're likely to face a scare campaign from the Opposition.

LEIGH: Kieran it would be a scare campaign from an Opposition that had 22 energy policies and never landed one, for an Opposition that saw four gigawatts of dispatchable power leave the grid and only one go back in. So, I don't think I'd take that scare campaign particularly seriously. This auction is about ensuring that we've got a guaranteed rate of return for renewable energy projects in order to shore up the grid. We have this spate of coal fired power stations closing and we know that those unpredictable closures, these are plants whose average age is 33 years, can throw the grid into a tailspin. So, it's important that we have the capacity investment mechanism in place and Chris Bowen's announcement shores that up for the future.

GILBERT: On to one last thing I want to ask you about. You've released a discussion paper on mergers. Mergers between companies sometimes can achieve economies of scale. I read the lead into your discussion paper earlier and there are positives from mergers. What are your concerns? Why are you looking at reforming them?

LEIGH: Kieran, I don't want Australia to become the land of the duopoly. We want Australians to have choice about where they shop and where Australian workers have choices about where they can work. But over the last couple of decades, we've seen a rise in market concentration and an increase in markups and an increase in the gap between cost and price. In that environment we're keen to ensure that we've got a more dynamic economy. With other countries reviewing their merger settings, it makes sense for Australia to do the same.

GILBERT: So, it's to get the balance because obviously there are merits to some.

LEIGH: Absolutely.

GILBERT: You are worried about concentration elsewhere?

LEIGH: Absolutely. We want to make sure that we've got the right set of merger laws now going into the future with the US, UK, Europe reviewing merger laws, we should do so as well. To give you one specific example notification. Most advanced countries require notification of a merger. Australia is not a compulsory notification jurisdiction, so sometimes we don't even find out if there's a big multinational merger taking place.

GILBERT: Assistant Minister Andrew Leigh.

LEIGH: Thanks.

GILBERT: Talk to you soon.

LEIGH: Pleasure, Kieran.