19 June 2024

Address to the Australian Energy Nation Forum, Sydney


Paving a path to prosperity in the new net zero economy

Thanks Michelle for the invitation to speak today on Gadigal country. I pay respects to elders, customs and traditions.

It’s a welcome opportunity and it’s a timely one.

You’re marking 60 years of The Australian.

It’s just over 2 years since the government was elected.

A month since the Budget.

And about 7 months since you last hosted us in a forum like this, down in Melbourne, where I was able to expand on some of our thinking on the energy transformation and what it means for grasping Australia’s net zero opportunity.

We talked then about further action to get capital flowing towards our priorities.

By securing more investment in renewable energy generation, transmission and storage.

And by maximising our economic and industrial advantages in the global energy transformation.

Only a few weeks after that, we expanded the Capacity Investment Scheme, which will help incentivise billions of dollars in additional investment in renewables.

In May, we announced new reforms to strengthen and streamline our foreign investment regime.

We finalised our Future Gas Strategy, to help firm up the energy transition and ensure our reliability as a trading partner.

And we outlined our Future Made in Australia package in the Budget, which is all about growing our economy by making us a renewable energy superpower, and ultimately indispensable to the global net zero transformation.

Our goal here is to power the future, not manufacture the past.

Our strategy is to engage and invest not retreat and protect.

Our emphasis is on attracting private investment, not replacing it.

We recognise public money can only be a sliver of what we need.

Renewable energy is our path to prosperity, and private capital will pave the way.

Because it’s investment from our wealth‑generating private sector that will progress our transition to renewable power.

That will open up new industrial opportunities.

And that will make energy the foundational enabler of growth in our economy.

This is why we’re establishing a new ‘front door’ for investors, which will concierge private capital and help unlock the opportunities that flow from cleaner, cheaper, more reliable renewable energy.

And it’s why I want to flesh out this investment agenda even further today, focussing on 2 key pieces of new work.

First, new details about the Future Made in Australia Act which will impose rigour and robustness on this agenda.

And second, a new Sustainable Finance Roadmap, which will help guide the private investment we need.

But before I get into that, let me start by putting energy policy in its proper economic context.

Balancing the near term and longer term

Energy is the common feature that unites our near term, medium term and longer term economic goals.

In the near term we’re focused on fighting inflation and repairing the budget, without smashing the economy.

Working towards a soft landing characterised by sustained growth, inflation coming back to band, unemployment with a 4 in front of it, rising wages, and a budget buffering us against substantial global and geopolitical uncertainty.

As part of this we’re rolling out energy bill relief which is directly reducing inflation without adding to broader price pressures.

And while overall growth is weak, we see in the data that investment in renewable energy projects is supporting near term activity.

Over the medium term, we’re getting migration back to normal levels by making the system more targeted – with some progress reflected in last week’s figures.

We’re building more homes – by getting supply online, slashing red tape and training more construction workers.

And we’re accelerating and better integrating renewables into the grid – encouraging the uptake of cleaner energy by Australians in homes and businesses.

Over the longer term, we recognise that nothing is more foundational to our prospects for growth, or more fundamental to the broader and deeper industrial base we need than the energy transformation.

Right now, around 97 per cent of our trading partners have net zero targets.

So, if we’re to achieve our objective of another long term expansion, then we need to become an indispensable part of the new net zero economy.

We are incredibly well‑placed.

We have access to the abundant renewable power which will underpin success in this new economy.

But to maximise our advantages, and to build new ones, we need much more private investment – in the energy transition and the new industrial opportunities that rely on it.

By one estimate, we’ll need an additional $225 billion by 2050.

That’s why ours is an investment strategy and a growth strategy.

Because so much of our long‑term growth is contingent on our ability to secure the energy transition.

That’s why we are modernising our electricity grid, by Rewiring the Nation.

Encouraging more renewable investment, through the Capacity Investment Scheme.

And why we legislated net zero targets, in the interests of certainty.

It’s also why we’ve designed our Future Made in Australia plan to better deploy and enable private investment.

Take our production tax incentives as one example.

Treasury estimates the $6.7 billion hydrogen production incentive could support 20 large renewable hydrogen projects, attracting $7.50 of private investment for every $1 of tax incentives over the next decade.

And the critical minerals production tax incentive is expected to help us produce 10.5 million tonnes of refined critical minerals by 2040 – making Australia a globally significant producer.

These numbers make clear that by building on our comparative advantage in renewable energy, and by encouraging private capital flows into these new industrial opportunities –

We can also create new sources of growth in new ways.

And systematically:

By supporting innovation and helping to commercialise renewable energy technology.

By getting projects off the ground faster, via special investment vehicles that help de‑risk financing and reduce upfront costs.

By scaling up foundational industries through production incentives.

And by introducing a Guarantee of Origin scheme to make it easier for our businesses to trade their products, here and overseas.

Future Made in Australia Act

The Future Made in Australia Act will tie it all together – embedding into law the discipline and the rigour that we need to succeed, in a few important ways.

By legislating the National Interest Framework outlined in the Budget.

And through new elements I’m pleased to announce today.

These are:

Setting out a robust process to assess the barriers to private investment in key sectors.

And outlining a set of community benefits that we want to realise through the transformation of our economy.

Last month at the Lowy Institute, we spoke about the basis of the National Interest Framework.

And later this afternoon, the Treasury Secretary will give some more detail – making clear that value for money, discipline, analysis and rigour will underpin our approach.

This will be supported by another 2, equally critical parts of our Act.

First, the Bill we introduce into Parliament will mandate independent analysis be done by Treasury, on the best ways to unlock and mobilise private investment.

This will be made public too, creating a source of insight that encourages rigorous decision making, and delivers value for money.

Second, the Act will outline our new community benefit principles.

Just pumping capital into the transformation won’t be enough if we don’t pay attention to how we deploy it.

It won’t be enough if skill shortages remain.

If the benefits aren’t realised in the regions and the suburbs.

That’s why the principles in the legislation will focus our attention and action, so local communities are engaged –

Local supply chains are strengthened –

Local workforces are built –

Secure, local jobs are created –

And we achieve our ambitions in a way that leads to strong returns and stronger communities.

As part of the Future Made in Australia package, we’re also establishing the Innovation Fund – to lock in long‑term funding for new low emissions technologies.

And the new domestic National Interest Account, that will make targeted investments to attract private capital – administered by Export Finance Australia.

Sustainable Finance Roadmap

The new Act is critical to unlocking the private investment we need to build a new net zero economy because it will help impose Treasury‑style rigour.

But it won’t be enough without well‑informed and well‑structured markets that can measure progress, manage risk and allow capital to be deployed with confidence.

Industry have been promoting and developing sustainable finance initiatives for a long time now.

In April, major peak business and investor bodies, including the Business Council of Australia, the Financial Services Council, and the Australian Institute of Company Directors –

Representing over 900 Australian companies, with over $80 trillion in assets under management –

Publicly urged Parliament to pass our climate disclosures legislation.

Business leaders want these initiatives in place.

They understand we can make Australia a world leader in sustainable finance, newly align profit and planet, and take a bigger slice of the growth opportunities on offer.

That’s the motivation behind the new Sustainable Finance Roadmap I’m releasing today.

The Roadmap sets out how we’re going to implement our sustainable finance initiatives.

It identifies the next steps on climate‑related financial disclosure.

It lists the actions needed to finalise the Sustainable Finance Taxonomy.

And outlines steps for net zero transition planning and disclosure.

The roadmap also identifies additional priorities.

Dealing with greenwashing.

Better understanding climate risks.

Assessing and improving access to climate and emissions data.

And rolling out green bonds – building on the success of the first $7 billion issuance this month.

In all of these ways, the Sustainable Finance Roadmap I’m releasing today will help enable and incentivise private investment through more efficient, effective capital markets.

It also complements other initiatives that will help the net zero transformation to unfold.

Next week, the Australian Energy Market Operator will release Australia’s next Integrated System Plan.

We’ve also started consulting on initiatives to boost demand and local supply of low‑carbon liquid fuels.

We’ve released a paper to advance our future in green metals.

And a certification scheme for renewable hydrogen, low‑carbon liquid fuels and green metals is underway as well.

A fork in the road

I want to make sure we’ve got enough time for some questions from Chris but let me make a couple of final points.

In the last 2‑years we’ve made significant progress leaving a decade of delay and denial behind.

We’ve helped unlock the private investment that’s led to a 25 per cent increase in renewable energy generation in the National Electricity Market.

We’ve seen record capital flows in batteries and large‑scale energy storage.

More than 330,000 rooftop solar installations last year alone.

And 280 GW of projects in the pipeline – 4.5 times today’s National Electricity Market capacity.

Now, some of you have heard me give enough of these kinds of speeches to know that I’m often reluctant to mention our political opponents.

But what I’ve outlined is already so transformative and so important –

The stakes for investment and growth so high –

That I want to make an exception today, but briefly.

Our plan for net zero is mainstream and middle of the road.

It recognises a role for gas in supporting the transition to renewables.

It relies heavily on mining and resources, especially critical minerals.

It works with, not against, the ambitions and aspirations of private investors and employers.

It relies on better informed and designed markets for capital, and tax breaks for production, more than it relies on grants.

In all these ways it couldn’t be more different to the economic madness peddled by our opponents.

Today we’re expecting to hear a bit more about the Coalition’s nuclear road to nowhere.

With Australia’s advantages and opportunities, nothing could be more economically irrational or fiscally irresponsible.

Nuclear takes longer, costs more, and would waste Australia’s unique combination of geological, geographical, geopolitical and meteorological advantages.

This might be the dumbest policy ever put forward by a major party.

It is the worst combination of economic and ideological stupidity.

To make matters worse, our opponents would tear up the 2030 targets that give investors the certainty they need.

That would be a stupendous act of economic self‑sabotage which puts political differentiation ahead of investor certainty and Australia’s national economic interest.

This economic vandalism we see on energy from the Coalition should be disqualifying for a major party seeking to govern.

We are taking a different, more responsible, more economically sound approach.

We prioritise more investment, sooner, they push less investment back further.

Under this Albanese Government, private capital will pave a new path to prosperity in a world of net zero.

Because we won’t deliver another long expansion without making ourselves indispensable to the global net zero transformation.

We won’t nail the energy transformation without lots more private capital.

We won’t attract heaps more capital without better incentivising, enabling and deploying it.

That’s what a Future Made in Australia is about.

It’s what our Sustainable Finance Roadmap is about.

And why this is a very welcome opportunity to flesh it out.

Thanks very much and I look forward to taking some questions.