Interview with Patricia Karvelas, ABC Radio National

PATRICIA KARVELAS: During the election campaign, Labor promised you cheaper energy prices. Now energy prices around the world are spiking, and the forecasts in the budget show your bills are set to go up by 56 per cent. It's pretty staggering.

Today National Cabinet is meeting to try and find a solution, a virtual meeting, as the Prime Minister battles COVID. Climate Change and Energy Minister Chris Bowen joins you now. Welcome back to the program.

CHRIS BOWEN: Good morning, PK. Good morning everyone at home.

PATRICIA KARVELAS: There are reports this morning that you're close to a deal which would deliver energy rebates for households and businesses. Is that what's on the cards today?

CHRIS BOWEN: Oh, look, Matt Kean said publicly yesterday that the engagement between the Commonwealth and New South Wales has been very positive and constructive, and he regarded things as very close. Far be it from me to pre empt the result of the meeting between the Prime Minister and the First Ministers this afternoon, PK, but the situation remains. The Albanese Government is not going to just sit by and watch the impacts of these global spikes in fossil few prices just flow through to industries and consumers in Australia without a response.

As we've said, we've been looking at our respective powers and the respective powers of the states, particularly those states with black coal production, which is New South Wales and Queensland, and talking to them about the most effective response. Those conversations have been going on for quite a while, they've been in very good faith, and they'll continue during the course of the day, and the Prime Minister will have more to say later in the day. But this is what the work of government is, adults in charge, working through the issues, as hard as they might be, as difficult as they might be, as not the fault of the Australian people as they might be. These are global issues which everyone government in the world, whether they are right of centre or left of centre, is dealing with at the moment.

PATRICIA KARVELAS: Okay. But obviously we're getting very close to Christmas. Do you expect you know, you're speaking to us in the morning, we've got this National Cabinet later that a deal will be done and dusted today?

CHRIS BOWEN: Well, certainly we've been very clear that we want to get this sorted out before Christmas.

Again, I'm not here to pre empt what the Prime Minister and the Premiers and Chief Ministers will sort through today. Obviously, there's been plenty of speculation I've read in papers, much of it ill advised. I just ignore all that and get on with the job of engaging with the states, engaging with the Prime Minister and the Treasurer, senior colleagues, and putting together the most effective package possible to put to the states, and that's exactly what we've been doing.

PATRICIA KARVELAS: Okay. Well, I've confirmed that certainly people will see a reduction in their bills, that essentially the reduction will happen, not in a hand out, but, you know, when they get their bill, it'll be baked into the bill.

The question I'd like answered, if you can give me at least the parameters, is what will get that? Will it be means tested?

CHRIS BOWEN: Well, PK, again, I'm not going to pre empt an announcement, but as we have consistently said, we won't do anything to fuel inflation, that remains the case, so anything we do will be seeking to reduce the bills before they arrive at the letter box of the consumers, to reduce the impact of the global situation. There's a number of ways we can do that, obviously, it's no secret we've been looking at the cost of the inputs, coal and gas, looking at the cost of those inputs to generators, 'cause that's what's driving this, let's be frank, it's the cost of coal and gas, it's not renewables, it's not anything else, it's the cost of those inputs, so of course we sensibly look at the cost of those inputs. The cost of production hasn't gone up, but the value of these inputs because of the war has gone up, and that is not the fault of Australian industry or consumers.

In addition, of course, we look at other responses that we can sensibly engage with the states on, including how we interact with energy retailers to ensure that the sting is taken out of these impacts when bills hit later next year.

PATRICIA KARVELAS: Look, New South Wales, as you say, confirmed it on the record, Matt Kean, they're close. Queensland looks like they're playing hardball. Is that what's been happening?

CHRIS BOWEN: I'm not here to provide a running commentary on discussions, PK, I mean that's not what we're about. As I said, again, you know, there's a daily sort of diatribe in the media, "Somebody said this," or "Someone's doing that," “Somebody’s scratched their nose.” None of that matters. What matters is that states and the Commonwealth, particularly the black coal states, are engaging in this conversation, they're meeting this afternoon, as is the job of the federal government to get the best possible arrangement to take the sting out of these price impacts and to work with these two states, in particular, with all states, but these two states in particular, you know, at the pointy end of black coal, that provides certain challenges. And in one way this is complicated, Patricia, because these are complicated markets in another way. It's very simple.

PATRICIA KARVELAS: Yeah.

CHRIS BOWEN: Australians didn't decide to invade Ukraine, Australians didn't decide that the price of coal and gas should spike around the world, Australian industrial workers going to work today in plastics facilities and facilities which are heavy users of gas didn't create the situation. The Prime Minister's made it very clear we're going to leave nothing on the field to make sure that this is dealt with, and that the sting is taken out of these impacts, for industries, for workers, and for consumers.

PATRICIA KARVELAS: If you do cap prices on coal and gas, which is expected, what level of push back are you expecting from coal and gas companies?

CHRIS BOWEN: Oh, look, you know, again there's been engagement, but you know, there is no secret that some people in the coal industry are very happy with the current situation, but the Australian Government and State Governments and the Australian people are not happy with the situation that coal and gas has led to these big spikes in energy prices, and you know, that is to some degree to be understood and respected, and accepted, that there are different perspectives on that.

But our job is to put the national interest first, and the national interest is that everything is done as possible to ensure that industry and consumers are shielded, because you can't have the situation, PK, where industries start to become unviable next year because of a temporary, to some degree, we don't quite know how long the situation is Europe's going to last, but to some degree it's temporary, a big spike in coal and gas.

I mean coal and gas companies were making healthy progress in December before these spikes. Nobody wants to see coal and gas companies not continue to make, you know, decent returns based on investment decisions they've made, but the prices have spiked since this December. That's not the fault of the Australian people, and nor are we going to exploit that situation.

PATRICIA KARVELAS: Can you give me an idea at least about how quickly people will see the relief? Are we talking the second half of next year, or earlier?

CHRIS BOWEN: Well, the process is, of course, we had what's called I don't want to get too nerdy and technical here, but we had the Default Market Offer last May, which the previous government hid, of course, until after the election, changed the law to hide. The next draft is February, and then there's another round of that Default Market Offer in May. Now, the Default Market Offer doesn't apply to everyone, obviously, but it does set, if you like, the sort of standard that people should expect.

PATRICIA KARVELAS: So which is the first bill, if you can make it for consumers to understand listening, driving kids to school -

CHRIS BOWEN: We're already seeing - 
 
PATRICIA KARVELAS: When?
 
CHRIS BOWEN: -- look, we're already seeing the impacts of a few things. We saw this in last July, June and July when the government first took office. When we were sworn in, you were sort of starting to see the impacts of a culmination of Australia losing four gigawatts of energy generation over the last decade, with only one gigawatt coming on. Now, of course, that leads to a supply in price crunch, and then you add on to that the war in Ukraine and the big spike. Of course we're already seeing some impacts, and you're going to see, as the budget was crystal clear and upfront and transparent, unlike the last mob who hid it, this is a big challenge, and it's already had some impact on bills, there will be other impact on bills in the quarterly bills next year, but the May DMO, next year, the Default Market Offer, is probably what we are most focussed on in terms of the impact and trying to reduce the impact of this increase on that.
 
PATRICIA KARVELAS: Just let's turn to the energy grid. Yesterday when you met with your State and Territory Energy Ministers, you decided to rule out coal and gas from being part of this capacity mechanism that you'll introduce next year. Why?

CHRIS BOWEN: Because the future is renewable, Patricia, we need to get 82 per cent of our grid renewable. The fact of the matter is, let's just be very blunt and frank coal fired power stations are going to close, that is a statement of fact. We need to replace them. Our transition to renewables has been too slow and too disorderly under the previous government, and so what we are doing is ensuring that we have the stability and certainty of policy to encourage that renewable investment. So I'm delighted that the renewable industry has pointed out that yesterday is probably the biggest step forward we have seen ever in this transition for the transition to renewables.

This is a huge step forward. I want to thank my State and Territory colleagues, Labor, Liberal and Green, all of them, who endorsed this approach that I talked to Energy Ministers yesterday for a capacity market which will unleash renewable investment. It must be firmed renewables, so we need dispatchable firmed renewables, it must be stored and able to be called upon. That's the key point. In this transition, it will unleash billions of dollars in investment, at least six gigawatts of renewable investment across the country. This is a huge deal. I've talked, I'm sure to you, Patricia, about the capacity mechanism.

PATRICIA KARVELAS: You have, but this is my question. The Energy Security Board previously supported the inclusion of coal and gas generators. What changed?

CHRIS BOWEN: Well, State and Federal Ministers agreed that we would work on a model which would generate and unleash renewable investment, at least 10 billion, and that's what we delivered yesterday. So what's the task here? The task here is to ensure that new energy comes on, not after coal fired power leaves, because that's too late, but before. Before coal fired power leaves, so that when it does, not only are we creating jobs in investment across the country to provide work, but also providing the energy generation we need. We need more electricity, as we electrify more and more things, including transport, we need to make that electricity renewable.

This is a huge step forward yesterday agreed at State and Territory ministers with me, it was unthinkable that this would have happened under the previous government. I'm very pleased, this is sort of, it caps off six months of progress on climate and energy policy, our first six months, we've achieved a lot. I'm not satisfied what we’ve achieved, of course we've got a lot more to do, but I'm pleased that we've achieved this much in the first six months.

PATRICIA KARVELAS: There are reports that Labor in Victoria refused to be part of it if coal and gas was in. Is that right?

CHRIS BOWEN: The Victorian government's position has been crystal clear all the way along. They have views about this, there's no surprise there, and there were different views expressed around the states. But yesterday, Patricia, we managed to get a unanimous agreement. So at the State Energy Ministers, this is no small thing, there are Labor Ministers, there are Liberal Ministers, and there's a Greens Minister.

I think, you know, this is fairly unique amongst ministerial councils. But if you walked in, you would have seen yesterday, Team Australia at work on the renewable energy transition. I'm very pleased with the support I got from all my State and Territory Minister colleagues who unanimously endorsed this approach. This doesn't happen by accident. A lot of hard work has gone into this. This is a big step forward for renewables in Australia, and importantly, Patricia, this is a keeping the lights on mechanism. I mean what this is, is the safety net under this transition to ensure we have reliable energy, that the cheapest form of energy, i.e. renewables has a safety net under it and transition is carefully and sensibly managed, which is what we are doing in a Federal Government.

PATRICIA KARVELAS: Chris Bowen, haven't heard the term "Team Australia" for a while, so thanks for bringing that back on air.

CHRIS BOWEN: There you go, oldie but a goodie.

PATRICIA KARVELAS: Oldie but a goodie, Chris Bowen there, Climate Change and Energy Minister. Thank you for your time.