Sally Sara:
Jim Chalmers is the federal Treasurer and joins me now. Treasurer, welcome back to Breakfast.
Jim Chalmers:
Thanks very much, Sally.
Sara:
The government says new economic analysis shows that if the Coalition won the next election and kept all coal‑fired plants open for 10 years from 2028, it will cost the budget more than $17 billion. How have you arrived at that figure?
Chalmers:
What the Coalition is proposing with this harebrained approach to net zero would push up power prices and swing a wrecking ball through the budget and the economy. And that’s because what they’re proposing to do is to subsidise the extension of these ageing and increasingly unreliable coal‑fired power assets, and so you take some of the subsidies that have been necessary to extend the life of these power plants in the past. you apply what are some of these planned closures from 2028 and you arrive at a multi‑billion‑dollar cost to the taxpayer. That’s why their approach to energy policy is a recipe for higher power prices, less investment and more debt and this is the madness at the core of their approach to net zero.
Sara:
Is the predicted cost of keeping coal‑fired stations open realistic given the Coalition hasn’t promised it will keep all the 8 plants open?
Chalmers:
Well they have said that they’ll extend the life of the least reliable parts of our energy system. What your listeners might –
Sara:
But that’s not all, is it?
Chalmers:
Well they’re saying that what we need to do in the power system is extend the life of these power plants which have been slated to close for some time. And as your listeners might appreciate, Sally, the thing that’s putting the upward pressure on energy prices in our grid is not the new, cheaper, cleaner, renewable, reliable energy that we are introducing, it’s the fact that the older traditional sources of energy are becoming less reliable as they get closer and closer to closure. I think from memory yesterday we had parts of 6 major power plants out of operation, and that puts upward pressure on prices.
And so what the Coalition is proposing to do for internal, party political reasons, not for economic reasons, is to turn our back on the big opportunity with cleaner and cheaper renewable, reliable energy and to extend the life of these ageing coal‑fired power plants.
Now the reason that doesn’t make sense from an economic point of view is it will cost the budget billions of dollars to do that, but it also means higher power prices for people in communities right around Australia.
Sara:
But we do need that, is it correct to say we do need that base load though in the transition and we’re already seeing some state governments support, and others, to keep these coal‑fired stations open because they are needed in the transition?
Chalmers:
Governments like New South Wales have made exceptions, but what the Coalition is proposing to do is to rely on extending these coal‑fired power plants as their policy, this is their approach. And the reason why that is insane from an economic point of view is because it says that the most expensive part or the biggest part of the upward pressure on power prices, which is the unreliable ageing fleet, they want to extent that for longer and put people under pressure for longer in a way that would swing a wrecking ball through the budget, through the economy, through investor confidence, and the consequence of all of that would be power prices which are higher, not lower.
Sara:
But what’s the point of this modelling given the Coalition doesn’t have a detailed policy here, they’re unlikely from what we can understand on current indications to win government next time, should your focus be elsewhere on managing the economy?
Chalmers:
That is our focus. Our focus is on managing the economy, making sure that this energy transformation works for people, not against them, and making sure that we introduce cleaner and cheaper, more renewable, more reliable energy into the grid, encouraging people with subsidies to take up home batteries. All of these ways that we are focussed on modernising our energy grid in the interests of our [inaudible]. But as you rightly pointed out, Sally, in your introduction, Ted O’Brien is at the National Press Club today and there are all these unanswered questions about their energy policy. They can’t tell us how you can be in Paris and out of Paris at the same time, they can’t tell us how much it will cost to extend all of these coal‑fired power plants, they’ve made all of these commitments which are contradictory, and the reason why they are in such a mess on energy is because their approach to energy is driven 100 per cent by internal party politics of the Coalition party room.
Our approach to the energy transformation is driven by the national economic interest. That is our focus. But there are serious unanswered questions about the Coalition’s approach, and the Shadow Treasurer has an opportunity today to answer them.
Sara:
If the government, if Labor is on the right path here, why have power prices for consumers gone up rather than gone down as the Prime Minister promised that they would?
Chalmers:
Well as I’ve tried to explain a couple of times now in this interview, Sally, and on other occasions as well, the upward pressure on prices comes from the ageing part of the fleet, and the cheapest way to replace that increasingly unreliable part of the system is with renewable energy.
If you think about the last decade or so under the life of the Coalition government, I think 4 gigawatts of power came out of the system, they only put one back in, so we’ve been playing catch up. We’ve been introducing a lot of [inaudible] energy but it takes time to turn this around. And that’s because, as I’ve said a couple of times, the upward pressure on prices comes from the ageing part of the fleet, not the new part of the fleet.
Any government would have to make decisions about how they replace this power which is coming out of the system. The smartest, cheapest way to do that is with renewables and that’s the main focus of our approach.
Sara:
You’re listening to Radio National Breakfast, my guest is the Treasurer Jim Chalmers. Treasurer, your colleague, the Finance Minister has confirmed that she’s asking federal departments and agencies to find savings, but she’s rejected that there’s a 5 per cent savings figure. What is the figure?
Chalmers:
Well what we’ve asked departments to do is what we ask departments to do before every budget, which is to identify and suggest areas of lower priority spending so that we can redirect it to higher priority areas. That’s not just been something we’ve done on this occasion, we’ve done it in the past 4 budgets, we’re doing it in the lead up to our fifth.
But as Katy rightly pointed out, we are not asking departments to cut their staff or to cut their budgets by 5 per cent, what we’re asking them to do is to identify areas of spending which is lower priority so we can redirect it if we want to.
And to give you an example of where we’ve done that in the past, we’ve found $100 billion of savings in our budgets and that’s helped us make the room to strengthen Medicare, increase bulk billing, build Urgent Care Clinics, cut income taxes 3 times. That’s just a feature of responsible economic management, to work out areas which are lower priorities, to redirect that spending to higher priority areas, to get the debt down by almost $200 billion since we came to office, at the same time as we’re doing all these things to strengthen Medicare and provide cost‑of‑living help.
And so it’s not unusual or controversial for finance ministers and treasurers to ask departments to identify those areas, to see if that spending can be redirected elsewhere to areas which are higher priorities.
Sara:
Treasurer, in the federal election campaign the government campaigned against the Coalition’s proposed cuts to the public service. Opposition Sussan Ley has had this to say a short time ago.
[Audio plays]
Sussan Ley:
Labor promised this city that there wouldn’t be any cuts. They made that promise before the last election. So are they backing away from the promise or have things got [inaudible] that they actually have to address savings as a matter of urgency? So either they lied to you at the election or they really, really have mismanaged the budget.
[Audio ends]
Sara:
That’s Opposition Leader Sussan Ley speaking in Canberra this morning. What do you make of those remarks?
Chalmers:
Well the Coalition wouldn’t know the first thing about managing the budget responsibly. They are the last people that we would take lectures from on responsible economic management. They went to the last election with a policy to cut tens of thousands of jobs.
They went to the election with a policy for lower wages, higher taxes, bigger deficits and more debt to pay for nuclear reactors and so I don’t think anybody takes the Coalition seriously on the economy.
Our Labor government is defined by responsible economic management. In our first 4 budgets, we found savings, we redirected spending and we got the Liberal debt down by almost $200 billion, we delivered 2 surpluses and got the third year’s deficit down to a fraction of what we inherited.
We’re managing the budget in the most responsible way that we can. If the Coalition had won the last election and had their way, Australians would be paying higher taxes, they would be earning less, the deficits would be bigger and there’d be more debt – we know that from the costings document that they provided in the lead up to the last election. We won’t be taking lectures on responsible economic management from Sussan Ley or Ted O’Brien.
Sara:
Just finally, it’s about 100 days since the government held its Economic Roundtable. Since then you’ve [inaudible] progress on speeding up approvals. When can we expect to see more reform? Will it be in this term of parliament or after the next election?
Chalmers:
First of all, we’ve done much more than what you’ve suggested in your question since the roundtable. We’ve cut tariffs, we’ve frozen the construction code, we’ve approved more homes, we’ve fast‑tracked the EPBC legislation, we’ve got 400 ways to make better regulation in the financial sector, we’ve [inaudible] AI strategy, we’ve embarked on another stage of foreign investment reform, we’ve opened the single front door for investors, I’m convening the states and territories on Friday to advance our agenda on federation reform and national competition policy.
And so there has been a heap of progress in the 100 days since the reform roundtable. There is an absolute mountain of work going on behind the scenes and it will be one of the major influences on the budget that we hand down in May. The mid‑year budget update next month won’t be a mini‑budget.
The main game will be in May and one of the biggest influences on the budget that we hand down in May, the government’s fifth budget, will be the substantial progress and the substantial consensus that we reached at the Economic Reform Roundtable 100 days ago.
Sara:
Jim Chalmers, thank you for your time this morning.
Chalmers:
Thanks so much, Sally.