FRAN KELLY:
The Treasurer Scott Morrison joins me in our Parliament House studios, Treasurer thanks very much for joining us again.
TREASURER:
Thanks Fran, good to be here.
KELLY:
Tony Abbott says your policy, the National Energy Guarantee, is 'seriously bad policy'. How long are you going to put up with this, this sniping from your own sidelines? When does he deserve a public rebuke or at least a public correction?
TREASURER:
The Partyroom this week was very clear in their support for the National Energy Guarantee, but not just the National Energy Guarantee, but the additional measures that will be taken in response to the ACCC report. The National Energy Guarantee and the modelling and support that's been done around that, which was done by the National Energy Security Board, all of that shows that this model will takes prices down by $150, that's widely regarded by every expert in the country from…
KELLY:
But you say that and then Tony Abbott says it's not true, it's wrong.
TREASURER:
He's entitled to his view but he's also entitled to not be correct. The Partyroom I think has had a very clear view on those issues. What we're focusing on now Fran is working through the constructive issues still being raised by a number of members and they go to a couple of key points. The first one is to ensure that the energy companies in terms of how they behave, don't play the system to force prices up. The ACCC goes into a number of recommendations to address that and the Government is very serious about ensuring they don't do that. The second issue that is being raised are issues around ensuring that the prices and there's a support for those prices to keep coming down. That's very related to that point I just made, but in the ACCC report there's a Recommendation 30 which builds on the work we've been doing with retail pricing. That's to ensure that standard offers, which is where people default to which are usually higher than what they're paying anyway at the end of discount periods, and having a default price that's in the market that ensures people go to the better deal not a worse deal. There's the sovereignty about it's Australia who should set what our emissions reductions target is and that's what we've had now for four years and indeed it was kicked off by Prime Minister Abbott.
KELLY:
I want to come back to some of the issues that stem from the ACCC recommendations, because you and Josh Frydenberg are preparing the options to send to the Partyroom on that. I know some in your Partyroom have some ideas but just to stay with this notion of public criticism from within your own ranks on this. The rebels aren't backing down, the Australian reports today that they're on a mission now to get some frontbenchers to withdraw their support for the NEG and perhaps join those up to eight MPs threatening to cross the floor if it comes to it. If a swag of MPs, not to mention frontbenchers, cross the floor, that amounts to a major challenge to not just your policy but the PM's authority doesn't it?
TREASURER:
I think all this is being overly dramatised Fran, frankly.
KELLY:
Were there eight MPs who threatened to…
TREASURER:
Fran, what we're doing is working through the issues that colleagues have raised that remain outstanding for them in a very constructive and consultative way. Along with what I just said, and that's ensuring that… price targeting is not necessarily price control of the sort of 1970s economic policies that we've spent the last 30 years getting rid of…
KELLY:
Let's talk about that, let's talk about price targeting though.
TREASURER:
Sure.
KELLY:
Barnaby Joyce, he wants a price guarantee attached to the NEG, that's one of the conditions he's talked about, that the big retailers be compelled to reduce prices or face sanctions like forced divestment of assets. That's if the NEG doesn't work. Would you attach a guarantee like that?
TREASURER:
What the ACCC has recommended are very strong measures to ensure that the big energy companies behave to exactly the ends that Barnaby's talking about. I have a lot of sympathy with that view. You have price regulation here in the ACT and this year, the prices are going up in regulated price markets, and they're going down in the markets that aren't regulated. So price regulation doesn't necessarily mean prices go down. What matters is using that powers that you have or attracting additional powers that ensure that the big energy companies don't use the regulation in their favour and we make sure the regulation works in the favour of customers. So to that end I think we can do some really constructive things here which will address the concerns which have been raised. So that's what we're doing Fran. We're just working the issues that have been raised respectfully with colleagues and just taking that process through. I think that's what parties should do.
KELLY:
I'm just trying to understand what you're talking about, how would that look, a government using the policy itself and the power within the policy to set some kind of minimum price.
TREASURER:
I've already told you about Recommendation 30 of the ACCC report which would mean that the default price, if you like a basic stock-standard product which is offered by energy companies. That would be set at a particular price and that is what people would default to rather than the standing offer which is often higher which is used by energy companies frankly to pump up the volume of what they're earning. You've got to keep these big companies under control. They're not operating in a free market nirvana. The energy markets are highly regulated, but you've got to get the balance right on regulation otherwise all you end up doing is driving up prices. The issue that is being raised is one that needs serious attention. The ACCC agrees with that, the Government agrees with that, so I'm sure we can get to a reasonable position that I think addresses the concerns.
KELLY:
What about recommendation 4 of the ACCC which says that the Government invests in more dispatchable baseload power. I understand some Queensland Nationals including Keith Pitt and others are urging the Government to establish a $5 billion fund to help build at least three new coal-fired power stations to ensure greater investment in baseload generation. Would the Government consider any direct investment in new coal?
TREASURER:
That's not what Recommendation four puts forward. What Recommendation four puts forward is that where investment, let's say in a coal-fired power generator has been brought forward, they've got some customers, but they don't have contracts that would run out over the course of what they're seeking finance for. Then the Government can take a position to ensure they can get that finance by guaranteeing what happens over the back end of their contracts. That means what is legitimate private investment, bringing forward investment in coal-fired power stations, or it could be hydro, it could be solar, it could be anything. That those new projects, that new generation supply coming into the market, will get the financial support from the normal sources to make sure they go ahead. What this is all about, Fran, at the end of the day, is about certainty about investment in new energy generation in the market.
KELLY:
That's right, at the same time though…
TREASURER:
That's what it's about.
KELLY:
Do you need to be careful not to jeopardise the investment that's already there? Labor, Mark Butler told us this morning, they've been raising it in Parliament all week, that the Snowy Hydro people have told Senate Estimates that entry of a new coal-fired power generator would undermine their model.
TREASURER:
This is why it's all got to be done on a commercial basis. Snowy Hydro 2.0 is a commercial investment. That's what it is.
KELLY:
Well the Government's spending a lot of money on it.
TREASURER:
Yes but it is being done on a commercial basis Fran. Any commercial investment has to take into account the potential entry of other players but those players should be entering on commercial terms too.
KELLY:
Yes, but why would our Government be giving money to a player that would undercut the huge investment it's already made on our behalf…
TREASURER:
Well, who's suggesting that?
KELLY:
Well, I'm asking you. That's what I'm asking you…
TREASURER:
Well, you're suggesting and I'm not suggesting it. The ACCC isn't suggesting it so…
KELLY:
No, I'm asking you would you consider it given the threat it proposes to Snowy 2.0?
TREASURER:
What we're doing is ensuring that where private investments in new energy supply have difficulty in getting finance because of the backend of their contracts then the ACCC is recommending that you fix that problem by guaranteeing to take out price for those investments so they can satisfy their financiers and that applies to any energy source at all but it's still a private investment, it's still a commercial investment and that's what we need more of in the market, not less.
KELLY:
Scott Morrison, can I ask about corporate tax cuts because that bill presumably is still slated to come into, to be debated in the Senate next week – is that the Government's plan – and voted on?
TREASURER:
Yeah, that is our plan and this, of course as you know, goes back to the last election. We took this policy to the last election, we were successful, we had a mandate to implement that in this Parliament and we're keeping that promise and that matter has been through the House, we've already been able to legislate half of that plan that we took and the promise that we made and we'd like to implement the whole plan.
KELLY:
So, when you're bringing it in for a vote next week, will it be the same bill and is the Government prepared to compromise, for instance, to drop the top end of that package – tax cuts for businesses with turnovers of over $500 million, say? Or to use that money, drop that plan all together and use that money to bring in those tax cuts for lower – for smaller businesses more quickly?
TREASURER:
Well, Fran, what we're doing is we're putting forward what we've taken to the Australian people and what we've taken to the House of Representatives. We've been having long discussions with the crossbenchers in the Upper House, in the Senate for some time now. They've continued over the course of this week, prior to that bill being considered next week, and we'll see what happens there and then and I'll leave those discussions of what's been put about in those negotiations in that room and that will present itself to the Senate at the appropriate time but what's important here is none of this would be necessary if the Labor Party actually held true to what they once said was the right thing for the Australian economy. It's still the right thing for the Australian economy, it's still the right thing to have competitive business taxes in this country so people can have higher wages, be more certain about their job and there can be more investment. That's still the right policy but politics sometimes can get in the way of that.
KELLY:
And just in terms of Labor's support, the Government's going to need Labor's support if it wants to get the National Energy Guarantee through by the looks of things, given the disquiet on your own side, Tony Abbott…
TREASURER:
Well, that's an assumption though, Fran. That's, I think, an early assumption that's being made by some which I would caution them to maybe just take a chill pill on that because we will still work through these issues respectfully with colleagues, we're listening very carefully to what they're saying and the areas where they've expressed concern – particularly about ensuring the big energy companies are kept in check to ensure that we are taking prices down, that's important and that's what needs to happen. Remember, in the June quarter, electricity prices under the consumer price index came down 1.3 per cent. Now, they're starting to turn, they are turning, we want to see them turn further and the National Energy Guarantee is important. Now, what's Bill Shorten doing? He's trying to play up the politics, rather than solve the problem. He is a wrecker of the Australian economy by playing politics with these issues rather than actually trying to get a solution that will reduce energy prices in this country and give certainty to investment and the business community who employ people in this country and pay their wages.
KELLY:
Scott Morrison, thank you very much for joining us.
TREASURER:
Thanks very much, Fran. Great to be here.