JOSH FRYDENBERG:
Good morning. It's good to be here with my friend and parliamentary colleague, Angus Taylor, the Minister for Energy. The Liberal and National Government are standing side by side with Australian families and businesses, not on the side of the energy companies, as we are determined to prohibit misconduct in the energy sector.
The Bill that we'll be introducing into the Parliament this week prohibits misconduct in three key areas.
In the retail market, where retailers fail to pass on to consumers sustained and substantial reduction in energy prices; in the contract market, where the ACCC has identified that illiquidity in that market is a recipe for higher prices.
And in the wholesale market, where we have seen companies and their artificial bidding practices and withholding supply actually impacting consumers again with higher prices. In these three areas in the Bill, there are a range of remedies that are outlined, from warning notices to infringement notices, and to fines and other penalties.
When it comes to the wholesale market and misconduct there where energy companies deliberately manipulate the market to distort prices, there will be a power of divestment.
This power will be on the advice of the ACCC to the Treasurer, and then the Treasurer will make a referral to the Federal Court. The Federal Court will then be empowered to make that judicial order. There's also a sunset provision in the legislation to 2025, which is consistent with the referral and the commission that was given to the ACCC to monitor the energy market up to that time with the review in 2024.
I want to point out that when it comes to this divestment power, it's industry-specific; it's targeted; it's sunsetted; and it's based on a judicial order. And we've also seen a similar divestment powers in the United Kingdom and in the United States.
This legislation is all about putting consumers first; getting lower energy prices for Australian families and for Australian businesses.
It's now up to the Labor Party. This is now a test for the Labor Party. Whose side will they be on? Will be they on the side of the Australian consumers as the Liberal and National Government is or will they take the side of the energy companies?
ANGUS TAYLOR:
Thanks, Josh. It's great to be here with Josh on what is a good day for Australian families and hardworking small businesses, who deserve a better deal on their electricity prices.
Of course, this is part of our strong plan for affordable reliable power for all Australians, for all Australians. We've seen in recent weeks the energy companies passing through significant reductions in standing offers - up to 15 per cent reductions, hundreds of dollars of savings, for those Australians who don't have the time to negotiate their bills every year. We will also see in the coming months a short list of 24/7 reliable power that will add to supply in the market and drive down prices in the coming years.
We're looking forward to passing through the reliability obligation through COAG towards the end of this year, ensuring that we have enough supply in place years ahead, and holding the retailers to account to make sure that's the case.
This big stick legislation, this legislation, which is designed to hold the big energy companies to account, has gone through the party room today. Now, this is strong legislation. It is designed to hold the big energy companies to account.
We have seen practices that are inappropriate in this market - an essential service for all Australians - and it has all the appropriate checks and balances that you would expect for an important piece of legislation like this.
Just before I finish, Labor has a choice. Whose side of the table does Labor sit on? Does it sit on the customer's side of the table, the hard working small businesses and families of Australia? Or does it sit on the side of the big energy companies generating record profits?
Well, we know which side of the table we sit on - that's those hard working families and small businesses.
JOURNALIST:
Treasurer, you said that this package is industry-specific, targeted, and sunsetted; it's only those things because backbenchers insisted on it. Now, a number of people in your own party says that we’re liberals, we don’t break up private companies. Now, why are they wrong?
And the Energy Minister, you said you will have a shortlist of projects for underwriting of what you described as 24/7 projects, basically at the end of January. Is the Government intending to strike contracts with any of these proponents ahead of the election or not?
JOSH FRYDENBERG:
Well, Katharine, this outcome today is the result of actually consultation with colleagues, but also, importantly, with stakeholders and the industry. Both Angus and I have talked to a number of CEO’s and chairmen in the energy sector.
We had a consultation paper that was out a few months ago. There's been submissions that the Government has received. There was a draft bill that was circulated recently and of course, we've gone through our internal processes.
So, this policy is actually better for this consultation. This policy is actually the product of proper consultation and feedback and input. This is about putting in place the right checks and balances.
We now have a court order requirement around divestment - that is important. The question will be for the Labor Party. Why is Australia going to be different to the United States and the United Kingdom where these powers actually do reside?
So, this is why we think this policy is good for Australia, but also, it will be a test for the Labor Party.
JOURNALIST:
Minister Taylor, are you planning to strike contracts, binding contracts with proponents ahead of the election?
ANGUS TAYLOR:
Katharine, we've been very clear - the objective is to have a shortlist of projects in the New Year and I look forward to having more supply in this market which can keep prices down and keep the lights on. Supply is absolutely crucial to achieve that.
JOURNALIST:
Do you envisage contracts?
ANGUS TAYLOR:
Well, I've been very clear that our goal, our next goal in this process is to have a short list of projects in place by early next year, and then we'll take the next steps from there.
JOURNALIST:
When are you going to sign the contracts?
ANGUS TAYLOR:
I've been very clear about the next step.
JOURNALIST:
Do you have any concerns that Julie Bishop might cross the floor and bring this to a vote?
JOSH FRYDENBERG:
No, I don't. There was very strong support in the party room for this bill, recognising that we face real challenges in the energy market; recognising that the ACCC has called out the misconduct and the problems in the retail and the wholesale and the contract market.
Now, when you talk about Liberal values - our founder, Sir Robert Menzies, made it very clear that as a party, we don't support unfettered capitalism, what we do support is at times, stringent obligations on companies to ensure that they meet their social and industrial duty.
That was one of his quotes from The Forgotten People. So, we are actually on the side of the Australian families, and Australian consumers, and Australian businesses.
JOURNALIST:
Treasurer, isn't it a fact that the original legislation was, in fact, unconstitutional and why you’ve introduced this new judicial order? And what do you say to the electricity sector who say that your big stick won't reduce prices but increase prices?
JOSH FRYDENBERG:
Well, it wouldn't be a surprise to you, Andrew, that the electricity sector wouldn't want this level of scrutiny and this level of prohibition on misconduct. That's a statement of the obvious. As for your first question, the answer is no.
JOURNALIST:
Treasurer, Malcolm Turnbull today says that because you don't have a NEG, electricity prices will go up and emissions will go up, is he wrong?
JOSH FRYDENBERG:
Well, emissions are at the lowest level on a per capita and GDP basis in 28 years, and I was very proud to be part of his Government which introduced policies which help reduced emissions.
When it comes to electricity prices, as Angus has outlined, we've actually started to see reductions in prices. Prices came down in the Queensland, New South Wales, and South Australian markets from July of this year.
AGL has already announced a significant reduction in their standing offers, with other companies to follow suit and we've prevented a shortfall in the gas market that the Labor Party left us when they missed the warning signs and ignored the advice.
So, the things that we're doing in the electricity market are designed to ensure a smooth transition where the lights stay on and prices come down and that plan is working.
JOURNALIST:
Treasurer, as you said, you were part of Malcolm Turnbull's government. You spent a year putting the NEG together, how can you credibly say to us the plan that you've come up with in the last couple of months is better than plans you told us was the only credibly way forward?
JOSH FRYDENBERG:
Well, I've said publicly in the past no one was more disappointed than myself that the National Energy Guarantee didn't proceed.
But, Chris, the key point is we have put in place policies, policies that were announced by Malcolm Turnbull, policies that have been announced by Scott Morrison, policies that our Liberal and National Government are putting in place which are putting downward pressure on prices.
And that is in the gas market, that's with the passage of legislation through the Parliament to abolish the Limited Merits Review which if Labor had done it previously, would've saved consumers $6 billion. Why didn't they do that is a question only they can answer? As well as the other activities that we are implementing, including setting a default offer.
JOURNALIST:
But what you’re telling us now is this is a second or third rate option.
JOSH FRYDENBERG:
I'm not saying that at all. That's your words. What I'm saying is that we are putting in place policies that are putting downward pressure on prices. Now, if you want to know what the contrast is with our political opponents, it's very clear.
They have a recklessly high 45 per cent emissions reduction target. They haven't produced any modelling to say what the costs on the economy will be, but the Business Council of Australia has said that it will be an economy-wrecking target.
So don't let Labor off the hook here. They are the alternative government of Australia. Bill Shorten is the alternative prime minister of Australia.
He has to explain to the Australian people what the true cost of his recklessly high, virtue signalling emissions reduction target. We know when they were last in government, electricity prices doubled. If they got their chance again, it would also increase substantially.
JOURNALIST:
Your fellow NEG architect, Malcolm Turnbull, says that renewables are now unambiguously cheaper than coal. Could I ask you and the Energy Minister, do you agree with that, and will there be any support for coal-fired power stations under the- underwriting plan?
JOSH FRYDENBERG:
I will throw to Angus, but the key point here is renewables are becoming increasingly competitive in price, that's obvious, and we've seen a flood of investment.
We've seen more investment in renewables under the Liberal-National Government than we ever saw under the Labor Party, so again, that's an inconvenient truth for Bill Shorten.
When it comes to the price of coal, you've got to distinguish between new coal and the existing coal. Existing coal is actually very cost-effective, and Labor's plan and their targets is going shut down coal-fired power stations around the country and drive up costs, particularly for households and industrial customers.
So, they are selling out their blue collar workers. They are selling out their union base. They are selling out the people of Australia because they are torn between their left-leaning, Green-leaning voting base, as well as the blue collar workers on the right of that Party.
ANGUS TAYLOR:
So, just to answer that question, fuel sources, the investment in different in fuel sources, they're investment decisions that are made by commercial people and they will make them as they see fit.
The important thing to keep in mind here is that for many years to come we need balance across our electricity market, a balance of different fuel sources. That balance will change.
There's enormous investment happening, $15 billion of investment happening right now in renewables, but coal will play a roll, as will gas, in our electricity market for many years to come.
Balance is the key, and that will ensure that we have the affordable, reliable power, 24/7 power, that can keep the lights on and keep prices down.
JOURNALIST:
Mr Taylor, on the negotiations you're having with power companies about providing 24/7 power for the shortlist, are any of them telling you they don't want to sign a contract until after the election?
ANGUS TAYLOR:
So, I'm not going to talk about the discussions I have with individual companies. What I will say is there's no shortage of interest in getting more supply into this market. A lot of it's already happening.
We've got $15 billion of investment happening right now in the National Electricity Market and that's good to see. We're going to need to ensure that we have enough of the reliable, 24/7 power that can keep the lights on and keep prices down, and that will be about keeping a balance. That's what we want to see in the coming years.
JOURNALIST:
Treasurer, your dear former colleague, Malcolm Turnbull, asked you guys to reconsider your opposition to the NEG. After the election, is there any chance, should you win the election, is there any chance that you might revisit the NEG proposal which you so furiously fought for?
JOSH FRYDENBERG:
Well Andrew, we've made it clear, the NEG is not the Government's policy. What is the Government's policy is the Reliability Guarantee which Angus is pursuing effectively with the states.
At the same time, Bill Shorten said of the NEG at the time, when the Coalition was talking, was putting it forward,was saying it was a Frankenstein policy. That's what the alternative prime minister of Australia said, a Frankenstein policy. So, he was purely playing politics. He was purely playing politics.
Now, he's looking for the NEG to give him cover for a recklessly high target. The issue in question is Labor's recklessly high 45 per cent target. Don't give them a free kick, Andrew. Actually ask them the question, what is the cost of their policy?
Where is their modelling? What will be the impact on agriculture? What will be the impact on the industrial sector? What will be the impact on the transport sector? And how high will the electricity emissions reduction need to be in order to get an economy-wide 45 per cent target? Thank you very much.
ANGUS TAYLOR:
Thank you.