Andrew Leigh

With reports this morning that the Coalition Government is preparing to scrap Australia's Renewable Energy Target, I joined Kieran Gilbert and Simon Birmingham on Sky's AM Agenda to talk about why that would put $11 billion of clean tech investment at risk. Here's the transcript:

E&OE TRANSCRIPT

TV INTERVIEW

SKY AM AGENDA

MONDAY, 18 AUGUST 2014

SUBJECT/S: Coalition plants to abolish the Renewable Energy Target; federal Budget “reboot"

KIERAN GILBERT: With me now on the program, the Shadow Assistant Treasurer, Andrew Leigh and also the Parliamentary Secretary for the Environment, Senator Simon Birmingham. Senator Birmingham, is the government getting rid of the Renewable Energy Target altogether?

SIMON BIRMINGHAM, PARLIAMENTARY SECRETARY TO THE MINISTER FOR THE ENVIRONMENT: Good morning Kieran, and good morning to your viewers. The government is doing what we promised to do before the election and that is having a thorough and independent review of the Renewable Energy Target. It's a statutory review which is built into the existing legislation. We said we'd go through and we would make sure that we've assessed whether it was working in Australia's national interest, in terms of providing Australia with competitive power prices with efficiency, and whether the system of the Renewable Energy Target is working as effectively and efficiency as it should. That's exactly what we're doing. That review is yet to provide a final report to government, but when it does of course it will be properly considered. What's important to realise here though is that as a government, we are absolutely committed to ensuring that Australia is as competitive as possible when it comes to having cheaper electricity prices. That's why we voted to repeal the carbon tax, providing real pressures to drive down electricity prices, something the Labor party opposed. But that's something they've said they will reintroduce in government...

GILBERT: But you've heard Erwin Jackson say this morning, and what this report from the Climate Institute, their modelling suggests, is that even scaling back the Renewable Energy Target won't reduce consumer prices, it won’t have that long-term impact.

BIRMINGHAM: Well Kieran, the independent review that's commissioned by the government is undertaking its own modelling. Of course, all of that will be available once the report of that review is released. So we'll have independent modelling out there that everyone can have a look at. It's important to understand when you're talking through these issues – and  your question to Erwin was quite important in this – that yes, there are pressures on wholesale prices that come from the different types of energy and the different costs of generating those at different times. But of course, the subsidy element of the Renewable Energy Target comes through the retail price level. So you have to look at the entire package to be able to assess exactly what the price impacts are, and that's exactly what the modelling feeding into our independent review will do. The government will respond from there.

GILBERT: The report in the Australian Financial Review this morning suggests the government is considering abolishing it. I guess, grandfathering those currently within the scheme out to 2020, is that a real possibility? And if so, if that was to happen, would that not see the sidelining of the Environment Minister on this important issue, given that he is repeatedly argued the case for the Renewable Energy Target?

BIRMINGHAM: Well Kieran, the government isn't into commissioning independent reviews then pre-empting the outcome of them. We've commissioned this review, we've asked it to have a look at how the Renewable Energy Target is operating. To have a look at certainty of investment and sovereign risk-type issues, have a look at the impact on electricity prices, to weigh up all of the different factors that are relevant to consumers and businesses, that are relevant to investors in the renewable energy market, and to come up with considered findings. Now, they'll present those to government, and government will respond accordingly. But what the Australian public should know is that as a government, we're unashamed about wanting to support measures that keep a lid on electricity prices and drive them down wherever possible. That's why we repealed the carbon tax, that's why we're having a look at the efficiency of the Renewable Energy Target.

GILBERT: Andrew Leigh, your response to what you've heard this morning from the Climate Institute, but also Senator Birmingham who's saying we need to await the outcome of the independent review?

ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Well I'll happily take independent work by the Climate institute, which talks about the benefits of the Renewable Energy Target, before I'll accept work by Dick Warburton, who let's face it is a climate change sceptic, who disagrees with the 97% of scientists who say that climate change is happening and humans are causing it. We've seen big benefits from the Renewable Energy Target: another million solar panels on roofs, tripling of wind generation, tripling of jobs in the sector and it's important that Australia maintains this policy which has enjoyed bipartisan support since its inception. We've got Andrew Robb saying today that Senate democracy is posing a sovereign risk to Australia; well frankly, the biggest sovereign risk to Australia at the moment is a government which is putting a climate sceptic in charge of a Renewable Energy Target review which is imperilling $11 billion of clean tech investment. That clean energy investment is vital to generating jobs in Australia, but also moving us to a low carbon future. Everyone knows that in a century the vast bulk of Australia's energy will be produced by renewable sources. The question is whether we get there on a smooth path, with minimum economic costs, driving down power prices as the modelling suggested, or whether we put it off and then endure a wrenching transformation of the energy sector late in the piece.

GILBERT: Senator Birmingham, the analysis released today by these groups suggests that energy providers like Origin Energy Australia and AGL would all reap billions of dollars in additional profit if the target was to be scrapped. Are these organisations arguing their own book?

BIRMINGHAM: Like any type of government intervention, when you have a government intervention like the Renewable Energy Target it shifts the profit incentive from one category of business activity to another category of business activity. If you change it, it will shift it in a different direction. That's just the reality when governments intervene in markets and of course, some people are currently making very big profits out of the Renewable Energy Target, if there is a change to it then somebody else might make a profit out of it. But that's not what we're looking at here. We come back to core principles here, and the core principles are: is it working efficiently and effectively? Is it delivering the aims that were talked about? Is it providing low-cost energy for Australia now and into the future? They're the principles that our government wants to work on. We're very conscious of the fact that you've got to look at the investment risk scenario as well, that's why that's a term of reference of the review and was specifically included within that. But that doesn't stop us from undertaking a review that this is working effectively.

GILBERT: You know that your senior minister has repeatedly expressed his support for the role that the Renewable Energy Target has played. Does the government still support this?

BIRMINGHAM: We want to know that the Renewable Energy Target is working as efficiently as possible, as effectively as possible. We want to make sure that everything we do as a government makes Australian business competitive and that means placing as much of a cap on electricity prices as is possible. It's all very well for Andrew Leigh to talk about how many jobs are generated, but let's understand this: electricity is an input cost to every other element of the Australian economy. So you don't actually want thousands and thousands of jobs generated in the electricity sector, because that makes it so much harder for the rest of the economy to function.

GILBERT: Your minister has repeatedly said that he supports the role that the Renewable Energy Target has played. Does the government still support this role?

BIRMINGHAM: Kieran, the government has been clear about this pre-election – as was Greg Hunt – that we would have a review of the Renewable Energy Target. Greg promised that pre-election and we are at one on this position to review it, to make sure it's operating efficiently and effectively and to keep a cap on electricity prices as much as we can which is why we abolished the carbon tax.

GILBERT: Ok, Andrew Leigh, finally to you on this issue.

LEIGH: Well Kieran, you look around the world and there's a review done by GLOBE International looking at 60 countries accounting for about nine-tenths of global emissions: of those only two are backsliding on climate. That’s Japan because it is shutting down nuclear power plants in the wake of Fukushima, and Australia because it has a government filled with climate sceptics who aren't serious about tackling this issue. We just had the biggest drop in emissions in a quarter of a century as a result of the carbon price. A policy which was working to reduce emissions and took between 11 and 17 million tonnes of carbon out of the atmosphere, according to Frank Jotzo of the Australian National University. And now we have the government putting a climate sceptic in charge of a review into the Renewable Energy Target. It's very clear where this is leading, Kieran. And it's leading to a position where future generations of Australians will pay the cost of climate change in much larger amounts.

GILBERT: A quick break on AM Agenda, back in just a moment.

GILBERT: This is AM Agenda, thanks for your company this Monday. With me this morning, Andrew Leigh and Senator Simon Birmingham. Senator Birmingham, on the budget issue now, Andrew Robb is warning that potentially the Senate jam could be a sovereign risk. Is that overstating it?

BIRMINGHAM: We are open for business as a country and we've demonstrated that. Andrew Robb has been at the forefront of this, demonstrating that we can get deals done overseas, we can work to make Australia a better place to invest, there are new trade deals with Japan, with South Korea, there’s work being done with China. All of that in Andrew's portfolio is incredibly important to being able to get more jobs and investment here in Australia. But of course, we need to be able to provide a level of confidence and certainty about the implementation of government measures and the budget going forward. Now, we're working through what's really a normal process of dealing with the Senate and that of course involves a bit of backwards and forwards, a little bit of negotiation to implement measures. But it's really important that we do get the bulk of the budget through because it's important that we give Australia a sound fiscal underpinning in the future. That we deal with Labor's debt and deficit disaster. On a day when the former Labor treasurer is releasing his book, Wayne Swan's ‘Little Book of Excuses’, or ‘Big Book of Recriminations’ perhaps, we of course are reminded of the fact that the previous government left us with $123 billion worth of cumulative deficit stacked up, with gross debt heading towards $667 billion dollars in total. We've got to turn things around to put a sound and stable and sustainable fiscal position in place for Australia and that's what our budget measures seek to do.

GILBERT: Andrew Leigh, on the issue of sovereign risk, what's your view on this, which is apparently being expressed to Andrew Robb by business figures and various investment roundtables around the world in recent months?

LEIGH: Ridiculous. I think when Simon talks about Wayne Swan, I mean Wayne Swan is somebody who stared down a real Global Financial Crisis, not a confected budget emergency like this government is focusing on. But Kieran, when I'm out in the community over recent weeks, the comment that keeps on coming back to me is the concern from regular members of my electorate that the government is out of touch. They don't understand that normal people jump in their car to drive large distances to a low wage job. They don't understand that Australians think that someone that works in the supermarket ought to get the same level of parental leave as somebody who works in a law firm. They don't understand why the government is spending so much time looking up discredited 1950s research on abortion and cancer when instead it should be focusing on the problems faced by low-income Australians. They don't understand why the government thinks it's fair to give a billion dollars back to multinationals at the same time as they're taking one dollar in every ten from the wallets of the poorest single parents. It's a government which seems out of touch with ordinary Australia and I think needs to take the entire budget back to the drawing board.

GILBERT: Is it fair to say, Senator Birmingham, that the government has recalibrated it's message, and that it's going to be a lot more flexible in terms of the agenda now and as the talks continue this week with the crossbench?

BIRMINGHAM: Kieran, this is a normal process of dealing with a Senate where you have a disparate bunch of independents that you have to bring along to pass any type of measure. Of course we were always going to have to negotiate with them. Of course we were going to have to sit down and talk, and explain the merits of our measures to them. That's what we're doing and that's what we'll continue to do. We didn't for a moment think that it would all sail though very easily within the first couple of days of the new Senate. We knew that it would take hard work and consistency and working with them, and that's what we're doing.

GILBERT: There's been a few gaffes and stumbles along the way that hasn't made the task any easier has it?

BIRMINGHAM: Look Kieran, it was never going to be an easy task, dealing with this Senate. It has a record number of crossbenchers on it, we need six extra votes. Of course really, the Labor Party should be owning up to their mistakes and they should be making this process a lot easier. Instead the Labor Party are blocking budget savings measures that they themselves proposed when in government. It's a remarkable turnaround from them but it just goes to show how irresponsible their approach is. And on this day when Wayne Swan's book is being released, Andrew can proudly stand by Wayne Swan if he likes and they can throw rocks at Kevin Rudd and other members of the Labor Party if that's their desire, to maintain the division and recrimination of the previous government. But Wayne Swan is not just the author of this book today, he's the author of the budget woes this country is in today. They are real problems and they should be tackled and it is completely irresponsible of the Labor Party to underplay them. I'll give Swan one thing, he used to talk about surpluses, we don't hear any commitment from Bill Shorten or Chris Bowen or indeed Andrew Leigh today to actually getting the budget back into surplus. Our government wants to do that, where's the opposition commitment?

GILBERT: We're almost out of time, but quickly, eventually the focus does turn to Labor on all of this and whether or not it's being responsible in terms of blocking savings which you had proposed in government.

LEIGH: Absolutely Kieran. But we need to look at the true budget situation - compared to the state of the books when the government took over. The budget deficit is bigger, not smaller, as a result of decisions this government has made since coming to office. Yes, it has a smaller deficit than in Joe Hockey's first budget update, but still a bigger deficit than when they took over. Labor in office would have made responsible savings such as seeing multinationals pay their fair share of tax, seeing a fair share of tax being paid by those with more than $2 million in their super accounts. We wouldn't have slugged the poorest and most vulnerable in the community, we wouldn't have had cut pensions, health, education as the government has done - in breach not only of all of their promises, but also the very Aussie fair go.

GILBERT: Andrew Leigh, Senator Birmingham thanks for your time this Monday. We've got to go to a break and we'll catch you soon. 

ENDS

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