LAURA JAYES, HOST:
Energy and the cost of it is sucking up most of the Government’s energy at the moment, just two days after Labor’s first Budget in about a decade. There are now urgent calls to do something about the explosion in costs. Jim Chalmers says he is working on curbing the gas price and he knows that time is of the essence. I spoke to the Treasurer but began by asking: When will Australians get their promised $275 savings in their energy bill?
JIM CHALMERS, TREASURER:
I think we need to recognise that that number was a number produced in modelling in 2021. It referred to an outcome in 2025. And in between then, we’ve had a war in Ukraine, which is causing havoc on the global energy markets and pushing up the price of electricity here. That is the unfortunate reality that we confront. It remains the case that renewable energy is not just cleaner energy; it is also cheaper energy. It remains the case for the time being that what’s happening around the world will push up electricity prices here. And it’s also a fact that a decade of energy policy failure from our predecessor hasn’t helped. It’s made us more vulnerable to some of these global price shocks.
JAYES:
Okay sure, but let’s be upfront, they’re not going to get that $275 saving, are they?
CHALMERS:
That number refers to 2025. I think we’ve been pretty upfront in the Budget, that’s why we’re talking about it now, in saying that this year and next year we do expect substantial increases in electricity prices. Some of it is already flowing through. Some of it is the price rise that Angus Taylor hid during the election, already flowing through. But we presented those forecasts in the Budget because we wanted to be upfront with what’s happening as a consequence of the war in Ukraine and a decade of energy policy chaos. It remains the case and it remains our objective to get more renewable energy in the system because it’s cheaper. That will bring prices down over time, but there’s no use pretending that there won’t be pressure on household budgets from high electricity prices in the interim.
JAYES:
It’s a bit of a joke to cling to these $275 savings in about three years’ time when energy bills are going to go up $1,000 next year. You can see that.
CHALMERS:
Well, all I’m pointing out is the fact of that number –
JAYES:
Eventually renewables will be cheaper.
CHALMERS:
Yeah, but that number you’re referring to is a 2025 number produced in 2021 and in the middle we have had the war in Ukraine.
JAYES:
Sure, but the war in Ukraine happened before the election.
CHALMERS:
Yes, but the impact on the electricity market is being felt now. These numbers that we’re receiving now from the regulators and from the relevant government agencies we didn’t have before the election. This point about the war in Ukraine, that we knew it would be 20 and 30 per cent over the next couple of years, we didn’t receive that advice until quite recently, but it remains the case it’s cheaper if it’s renewable. The war in Ukraine is causing the problem and ten years of stuffing up energy policy has made the problem worse.
JAYES:
Well, you’re in charge now. You’ve been in charge for a couple of months now. What are the options available to you? Will you put a cap on the price of gas?
CHALMERS:
First of all the Energy Minister, Chris Bowen, has been working with his state and territory counterparts already. Some of these issues, some of the turbulence in the energy markets, has been a focus of Chris and his counterparts in state and territory governments. So, there’s been some good work done there already. In the Budget we did more with the ACCC and the regulators. We funded them more substantially to do some of this work. I’ve asked the ACCC not just for some more monitoring work in gas markets but also input into our policy thinking. That’s on a relatively short time frame and they will provide some advice to me relatively soon and we’ll consider those options. What I don’t want to do given it involves multiple ministerial portfolios, and a lot of the regulatory levers are held by the states when it comes to energy markets, is I don’t want to unnecessarily limit or pre-empt the outcomes of the work that’s happening now, but there is work happening now. I’m responsible for working with the ACCC on my part of it. Other ministers are doing their bit as well, and the states and territories will play a role too.
JAYES:
Let’s talk about time frame. You say relatively soon. Industry, the AWU, says factories are going to close so something needs to be done more immediately; jobs will be lost. So, when you say this relatively quick time frame, are you going to make a decision and put something in place within weeks?
CHALMERS:
I’m not prepared to put a time frame on it yet. I want to be careful and cautious about this. We do have to weigh up here a number of competing objectives. We do care about the contracts that have been signed with international partners. We do care about the investment that some of these companies have made, but we need to take seriously, and I do, comments from Innes Willox, comments from Dan Walton and others, about the substantial pressure that Australian industry is under when gas prices are this high. When I was waiting to come on to talk with you this morning, I’m corresponding with Innes Willox about this. I’ve met with and toured some of our manufacturing sites. We know that this is a big issue.
JAYES:
So you get it?
CHALMERS:
We get it. We need to strike some balances here. We need to make sure that anything we do in this space is responsible and sensible, and that’s why there’s a lot of work that still needs to happen.
JAYES:
The AWU has a five-point wish list, if you like, of immediate action. One of those is bringing government, manufacturers, gas companies, unions and consumers to a point together to find a solution. Are you going to do that?
CHALMERS:
Certainly we’ll consult with all of those parts. The benefit of what Dan is saying there is to recognise that there are a number of moving parts here, and there are different stakeholders with different views. But I think in our Cabinet certainly there’s an understanding and an appreciation that local industry, particularly local manufacturing, gets absolutely punished when gas prices are as high as they are. So, if there’s more that we can do in a sensible and responsible way, obviously we’ll consider it.
JAYES:
So, just to wrap this up and tie it in a bow, is it your inclination to make sensible market intervention, rather than direct subsidy to taxpayers? Is that where you’re sitting right now?
CHALMERS:
I definitely think it’s worth exploring the first before we resort to the second.
JAYES:
You wouldn’t do the second until the Budget in May?
CHALMERS:
I got asked about this yesterday as well. I don’t want to close off options here because what we’ve seen in energy markets has been such extreme volatility with such consequences for ordinary Australians, and for Australian employers as well. You don’t want to close off your options. Some of the things that might contemplated in these conditions now wouldn’t have been contemplated in years gone by. That for me is a lesson that you want to keep your options relatively open, if you can. Our message to everyone involved in this market is that we understand the pressure; we understand the competing pressures that different parts of the market have. We take that seriously. If there’s more that we can do, we’ll do that. We need to do that in a collaborative way, not just within our show but more broadly as well – states and territories and industry too.