Interview with Andy Park, ABC Radio National Drive

ANDY PARK: Your home and business power bills and a multibillion-dollar bid to secure industry and manufacturing in Australia. These are the cornerstone elements of the Federal Government's big spending budget last night, detailing it as a manifesto to tackle cost of living pressures and to create a more independent Australia.

It will see hundreds of dollars in energy bill relief funnelled to households, although probably not ones that are off the grid, and will support Australia's ambition to become a renewable superpower.

Chris Bowen is the Minister for Climate Change and Energy. Welcome back to Drive, Minister.

CHRIS BOWEN: Good on you, Andy. Sorry, there's a Senate division going on here so there's a bit of background noise.

ANDY PARK: You obviously won't be called for that, but, yeah, thank you for letting me know.

Let's start with one of the largest spending items in the budget, a $300 energy discount for every household. So if I have three homes, I get more relief, that doesn't seem fair.

CHRIS BOWEN: Well, everybody who gets an energy bill needs relief, and if you’re a tenant, for example, you rent, but you still, you pay the energy bill, you get the relief. This is, I think, appropriate. If there's an energy bill, there's energy relief that goes with it regardless of who the owner of that energy bill is, it follows the bill. It will be provided directly to the bills.

ANDY PARK: But surely Gina Rinehart and Andrew Forrest who own multiple homes don't need more Government help? Why isn't it means tested?

CHRIS BOWEN: Well, we just applied a tax cut to every Australian who pays tax. We're applying energy bill relief to every Australian who gets an energy bill. And yes, that's appropriate.

You know, you can always come up with extreme examples, but also we wanted to maximise the impact on reducing inflation. You do that by spreading it across as many bills as you can, and you do that effectively by spreading it to every energy bill in the country.

It's the way you maximise the impact on inflation, which will help the Reserve Bank in their job, and we've designed this very carefully as to how it will maximise assistance to the Reserve Bank to ensure that they can do their job and the fiscal policy and monetary policy are working hand in hand.

ANDY PARK: Do you worry that this will affect power pricing, because if the Government's topping up my energy accounts, you know, the temptation to leave the heater on must be there, and therefore the emissions that result from them, so have you factored that in?

CHRIS BOWEN: I really don't think that's going to be a factor. I mean nobody's suggesting that energy bills are going to disappear. This is important support, but it's not – it's not going to, for many people, have that impact. I really don't think that Australians are going to be sitting around saying, "Oh, well, I've got this energy bill relief, so I can leave this heater on unnecessarily, or these lights on unnecessarily".

I think Australians both for reasons of reducing their bills and emissions are becoming increasingly energy efficiency conscious, and that's a good thing. So no, I really don't think that's a valid concern, Andy.

ANDY PARK: The $22.7 billion over the next decade for the Future Made in Australia plan or policy, nearly 7 billion of that is subsidies for green hydrogen. Where do you plan for this hydrogen to go? Where's the demand coming from, especially if exporting it is still costly and difficult?

CHRIS BOWEN: Well, the demand is coming from overseas as well as the need to decarbonise domestic industry, so for our listeners who might not have followed green hydrogen closely, and fair enough, it really is the ultimate key to replacing gas in areas which can't be electrified. So electrification, you know, is great where you can convert gas to electricity, you can do that in houses, you can do that in some businesses and industry, but not all. You can't do that for cement making, for example, and brick making and other things.

So domestically there's going to be strong demand if we're going to decarbonise industry, we're going to need green hydrogen, and there's going to – and there's huge demand internationally.

The best example I can give you, Andy, is Germany. Germany, the industrial powerhouse of Europe. They know they can make some green hydrogen; they can not make enough for their needs. They clearly acknowledge that. They see Australia as their preferred key partner.

The economics of exporting green hydrogen are actually very good. The cost is in the making it, less the transporting it, so it's a massive export opportunity for our country.

ANDY PARK: I mean you're effectively picking winners though, aren't you, by giving tax breaks to green hydrogen?  I mean I think I want you to kind of confirm that, are you not?

CHRIS BOWEN: Well, what we're doing is confirming that we want Australia to have a green hydrogen future. Now, we also know that we have great natural advantages in making green hydrogen. Green hydrogen must come from renewable energy, that's why it's green.

We have the best renewable energy resources in the world. But they will not compete alone when you've got things like the Inflation Reduction Act.

Before we did this, we were seeing green hydrogen projects leave Australia and go to the United States, projects that were planned for Australia be cancelled and move to the United States.

We've got proponents saying to us, "Look, we'd love to do it in Australia, but there's no way we can in all good conscience do it when we've got these massive incentives under the Inflation Reduction Act". And it's not just America, Europe has the new green deal, Canada's got an $80 billion policy in this regard, India's doing it, obviously China's doing it.

So, you know, the idea that we would just say to Australian industries, "We're going to be the only sort of major economy in the world which is not going to bother with this sort of policy, so we don't mind if you operate in Australia but, you know, we're also happy for you to go to these other countries to create these jobs and investment", it doesn't really pass any test that I'm aware of.

ANDY PARK: When it comes to subsidies in general though, the Productivity Commission Chair, Danielle Wood, says that even if you're giving incentives to the most successful companies, perhaps in the green hydrogen sector, for want of a better example, you're still effectively propping up businesses through subsidies. So what's the exit strategy here? Will these subsidies just continue into the future like the ones that the Australian Government gives to the fossil fuel industry?

CHRIS BOWEN: No. I mean Danielle Wood is making the point that there's absolutely a role for industrial policy when you're setting up new industries. That's what this does. And of course, you know, things like our Hydrogen Headstart and Solar Sunshot and Battery Breakthrough initiative do supply support over a decade, and that gives the opportunity for the businesses to get up and running, and that's very appropriate.

ANDY PARK: But infant industries grow up to be hungry teenagers, like we saw with the car manufacturing industry in Australia. So is there a risk that the Government will just have to keep on subsidising these industries long into the future using the example of competition as the excuse?

CHRIS BOWEN: Well, there are a number of reasons under our policy framework which we've released, including in a very detailed policy paper last night, which has been very well received by experts in industry policy as to the tests that we apply.

You know, we're not suggesting we're going to make everything, and we're not suggesting we can compete in every element of the global renewable energy supply chain. What we are suggesting, and we don't make any apologies for this, Andy, is that Australia has many advantages.

I've talked about our natural renewable energy advantages; I haven't yet mentioned our innovation ecosystem. I mean the modern solar panel was invented in Australia. The most efficient solar panel was invented in Australia, and none of it's being made in Australia.

You put all that together there's a very strong case, in our view, for an appropriately designed investment by government which then unleashes much more private sector investment.

I mean I don't want to leave your listeners with the impression that anybody thinks government investment is going to be the majority or anything vaguely approaching the majority of investment in the renewable energy transformation. But it can be the important link to make final investment decisions more likely, to help de-risk investment decisions and to help boards when deciding whether to invest in Australia or say the United States, to compare the two regimes, the Inflation Reduction Act versus the Future Made in Australia Act, and then let natural resources and natural advantages and comparative advantages do the rest.

That is an appropriately appropriate place for industry policy and energy policy to coincide.

ANDY PARK: Your Government has really made a surprise pivot back to gas with its Future Gas Strategy. Is this something that you personally advocated for, and how important will gas be in achieving net zero, 'cause some argue that of course this undermines – you know, unlimited new coal and gas approvals are undermining our emissions reduction policy.

CHRIS BOWEN: I don't quite agree with the way you've framed it there, but I do accept this is a very legitimate public debate.

What the Future Gas Strategy did, and I understand why people sort of looked at it in a different way to what I'm about to describe it, when you actually – if you actually read the Future Gas Strategy, it outlines the case and the need for gas as we build this massive renewable transformation.

I mean we're getting from 30 per cent renewables when we came to office to 82 per cent renewables by 2030. That's actually a massive job, a massive lift, right, in just those seven years, to move from 30 per cent to 82 per cent is a big job. But still at 82, you've still got 18 per cent fossil fuels in the system, and coal is leaving the system.

So that's the role for gas, and gas is also very flexible, you can turn it on and off, which is a very important scaffolding for renewable energy and buttress for renewable energy. You can't turn coal on and off, you can't turn nuclear on and on off, but you can turn a gas-fired power station on and off.

So that means, you know, if we've had a day where perhaps renewable resources haven't been as good as we might have hoped, and we need extra support, AEMO can call a gas-fired power station and say, "Can you turn on?" It can be turned on in two minutes' time, it can help get the grid through the night.

So that's very important, and we've also got industry which needs gas. We talked about green hydrogen and the industries which can eventually move to green hydrogen, but they're not ready yet; cement making, steel making, plastics making. We need to keep the supply of gas to them while green hydrogen is coming forward.

And, Andy, Bass Strait is depleting, you know, we're getting less and less gas from the Bass Strait, the Bass Strait's been exploited since the 1970s. We're getting less and less gas out of the Bass Strait, and we've got 5 million Australian homes on gas, you know, heating and cooking on gas.

So what the Future Gas Strategy has just outlined is that actually we are going to need gas for quite a while to come. Gas is, if you like, an insurance policy, you know, as you're making the transition to renewables. And like most insurance policies, hopefully you don't need them very often, but when you need them, you really do need them. And I understand, you know, some people would prefer no gas in the system, and you know, you can say that, but our job is to manage this transition realistically and the gas-led recovery was a fraud. No new gas is an equally unhelpful slogan, these are just slogans.

Now government doesn't have the luxury of engaging in slogan policy. We have to engineer this massive transformation to renewable energy, and gas is an important part of it.

We're also just being honest with people, that yes, as the Bass Strait runs out we do need to look at new supply to keep the supply of gas to those 5 million Australian homes. It is not an easy job or a quick job to get them off gas and onto electricity. That's being honest with people, Andy.

ANDY PARK: We'll have to leave it there. Chris Bowen is the Minister for Climate Change and Energy. Good afternoon to you.

CHRIS BOWEN: Good on you, mate.