Interview with Patricia Karvelas, ABC Radio National Breakfast

PATRICIA KARVELAS: The development of renewable energy across Southeast Asia isn't just crucial to reduce carbon emissions, it's also going to be big business. But concerns around transparency and sovereign risk have dampened private sector enthusiasm.

Enter Australia, which yesterday announced a $2 billion finance facility to help fund green energy and infrastructure investment in Southeast Asia. Chris Bowen is the Minister for Climate Change and Energy and our guest. Minister, welcome.

CHRIS BOWEN: Good to be back with you, PK, good morning.

PATRICIA KARVELAS: There's $2 billion on offer here. Can you provide us some examples of the sorts of projects this fund will finance?

CHRIS BOWEN: Oh, well, there will be a plethora of projects that will be looking at the financing ability made available yesterday by the Prime Minister. I mean this is about economic development in our region, and the first, second, third and fourth orders of business for that economic development are green energy. And when I'm talking to my ministerial counterparts, whether it be in Indonesia or Singapore, or Malaysia, or indeed the private sector, or indeed international bodies like the International Energy Agency, it's very clear that Asia's – Southeast Asia, in particular, energy needs are going to sky rocket over the coming decade as part of their economic growth, and making sure that growth is fuelled by renewable energy is a challenge for the region. And we can help. And there are economic opportunities for our country, and opportunities of massive corporations.

So this is a big step forward. It was one of the key recommendations of Nicholas Moore's report to the Government last year about deepening economic engagement with Southeast Asia, and as Nicholas said, this is the main game for economic development in our region.

PATRICIA KARVELAS: Okay. So what will the return on investment be for Australian taxpayers?

CHRIS BOWEN: Well, of course there will be – every applicant will be assessed against the return. This is a very standard measure of government support; government support persuasions have deployed vehicles like this over the years for various reasons. None of them have, you know, developed into a problem for taxpayers, they have delivered a return to taxpayers, but the standard sort of assessments about bond rates and plus returns will be given to every single applicant, and there will be a rigorous process on each approach. But we'll be working closely with governments in the region to ensure, not only value for the Australian taxpayer, but real value-add for the economic renewable energy transformation in our region.

PATRICIA KARVELAS: Many of the Southeast Asian countries this fund seeks to assist have authoritarian governments and problems with corruption. What rules will be in place to protect and ensure the money is well spent?

CHRIS BOWEN: Well, we have strict – in our existing interactions with Southeast Asia, PK, Australian laws and guidelines are very strict about our interactions with the private sector in Southeast Asia, and those same rules will apply.

PATRICIA KARVELAS: I want to move on to another topic, another thing you've been working on, and that's the fuel efficiency standards you're planning to introduce. Can you tell us exactly what this policy will do to the car market?

CHRIS BOWEN: Well, what it will do is give Australians better choice. Now we are, with Russia, the only major economy without these standards. They've existed in the United States since the mid-1970s, for example, and as anybody who's been to America or watched American TV shows knows, they have a wide range of choice of large cars.

But what your listeners might not realise, PK, is that cars in the United States, for example, are 20 per cent more fuel efficient than Australian cars. Despite the size of their fleet, they are 20 per cent more efficient than our cars. That is because we do not have vehicle efficiency standards. We are really a very large outlier. As I've said, only Australia and Russia. So Europe, China, Japan, United States, Canada, New Zealand, Saudi Arabia, India, have all had these standards in place for several years, and as a result, surprise, surprise, car manufacturers send more efficient cars to those countries which require it as a matter of law.

So Australians have been missing out on choice. And it's about EVs, yes, there's a much broader range of choice of EVs in other countries than Australia, but it's not just about EVs, there are existing models of petrol and diesel cars for which there are more efficient models available overseas.

Now this is about choice for Australians, it's a way overdue reform, it's been talked about in Australia for 20 years or more – 

PATRICIA KARVELAS: I understand all that. But there are questions about its implementation, which I think are reasonable. You haven't released any modelling on what car brands and what car models will be most impacted. When will you release the modelling?

CHRIS BOWEN: We've released 80 pages of analysis, PK.

PATRICIA KARVELAS: But you haven't released the modelling. Why not?

CHRIS BOWEN: Well, because there's confidential – there's commercial in confidential matters in some of the documents we have, but we we've released –

PATRICIA KARVELAS: But won't it settle some of these questions, but there are lots of questions –

CHRIS BOWEN: Have you – well, PK, I invite you, if you haven't, to read the 80 pages of analysis that Catherine King and I released a month ago, which is very substantial, which is also in keeping with the approach that Paul Fletcher took when he, to his credit, was trying to reform; he tried this in 2015, 16 and 17 when he was a Transport Minister. 

He made all the points that we are making. He released analysis, not modelling, as did Josh Frydenberg who was partnering with him on this. It showed – their analysis showed no increase in Australian car prices. Our analysis shows no increase in Australian car prices. There has been no increase in Australian car prices – sorry, in car prices in any country where this has been introduced over the last 50 years or so. What the Opposition and some others want us to believe is that Australia would be the exception.

Now Australians deserve these better choices, it is way overdue for Australia, and that's why this Government, in a careful, deliberate way, we've consulted very widely, and consultation on our preferred model closed on Monday, we have taken a very considered approach. But it is a reform way overdue, PK, for the interests of Australian motorists.

PATRICIA KARVELAS: You're currently consulting on it, right? The industry says the current model that you prefer is unworkable. Are you prepared to look at a scheme which is implemented over a longer period of time?

CHRIS BOWEN: Well, let me make a couple of points, PK. With respect, you just made a sweeping statement about industry. That is not actually correct, if you look at Hyundai, Volkswagen, BMW, Kia, Volvo, they've all supported the model we've put out, very strongly, strong statements of support from those manufacturers. People like the NRMA, Australia's peak motoring group, has supported our model. Choice, Australia's peak consumer group, have called for standards like this.

Now there are some other companies who say, "Look, this is going to be" – yeah, there are other companies that have said they would prefer a lighter model. I think inadvertently, PK, I think inadvertently, that argument is actually making the case for reform. That argument is pointing out that actually they are sending Australia cars that are not as efficient as the cars they are sending elsewhere, and they have a lot of catching up to do, and they are asking for longer to catch up, inadvertently making –

PATRICIA KARVELAS: Oh, there's no doubt that we've been getting the less efficient cars. I don't think anyone's contesting that. It's about the price ramifications. So there are obviously other options you could look at. Would you look at a longer implementation timeframe?

CHRIS BOWEN: Well, as you said, PK, we have put this out in a very considered and deliberative fashion. We had several consultation papers last year, of which there were hundreds and hundreds of submissions, Catherine King, the Transport Minister and I worked carefully through those. We then put out a preferred model. There were three models we put out; we put out our preferred government model. Consultation on that closed on Monday. You don't put out consultation without reading the submissions and considering the points made. Where people have made good points in good faith, and where they've made sensible suggestions, of course, Catherine and I will consider those – 

PATRICIA KARVELAS: And what do you consider so far – I just want to get a sense of the direction you're going in, given some of the criticisms, what are some of the sensible ideas, because they've suggested there are other ways to help consumers, super credits, cash incentives; are they sorts of things that you are willing to consider?

CHRIS BOWEN: We have incentives in Australia already. Our electric vehicle tax cut, for example, is by some analysis the second most generous tax concession on a permanent basis in the world for taking up EVs, so let's not have the argument put that there are no incentives in Australia for more efficient vehicles today.

I'm not going to pre-empt the submissions we've received or the work that Catherine and I will do, but Catherine and I have taken a very consultative approach; we'll continue to do so, but nobody should doubt our commitment and our determination to ensure better choices for Australians, and finally, taking this reform, PK, from the too hard basket where it's been for years, and putting it on the to do list. Australian motorists deserve nothing less, and we intend to do that.

PATRICIA KARVELAS: And so the implementation is meant to be at the beginning of next year. Are you considering a later start date?

CHRIS BOWEN: No, we want to see – we want to be getting on with this, PK, because this is coming about 20 years too late.

PATRICIA KARVELAS: It certainly is the case that we are in the category with Russia; there's no dispute about that, but obviously when you've got some car companies, and I take your point, it is not universal, but some who are saying that they're going to jack up prices, that's an issue, isn't it, because people will hear that message and they'll be worried.

CHRIS BOWEN: Well, I understand there's a scare campaign underway. I mean we're used to that. This is, you know, this is 2019, this will end the weekend stuff from the Opposition. They [indistinct] –

PATRICIA KARVELAS: Isn't the problem though it may work if it's coming from the companies saying, "We're going to increase our prices if this goes forward"?

CHRIS BOWEN: Well, again, PK, it hasn't increased prices anywhere in the world. What some people are asking us to believe is that Australia will be the only country where it would increase the price of any particular model. That is not what our analysis shows, it's not what the previous government analysis showed; Paul Fletcher was very clear about that in his public statement. He made the point, you know, that cars and utes in the United States are for the introduction of efficiency standards. I'll quote him for you, PK. This is Paul Fletcher, a member of the Opposition who said, "So when fuel efficiency standards were introduced in the US, the most popular models before introduction stayed the most popular models after introduction, there wasn't a material change in price, and we don't expect there would be a material change in price here." 

That was the Liberal Party – not ancient history, not 15 years ago, just a couple of years ago. The only thing that's changed is that they are now in Opposition, and they opposed not only our policies, but policies they were advocating for just a couple of years ago.

PATRICIA KARVELAS: They do have a different policy, and now some of the car companies too, as I say, and as you pointed out, absolutely accurate, it's not all, but Toyota's saying that the standards will mean people will hold on to their older and dirtier vehicles for longer. Does that concern you?

CHRIS BOWEN: I understand that not every car company welcomes new and better regulation. But we would expect all car companies to act in good faith, put in their submissions, by all means, and we will consider them. We will consider sensible suggestions which keep the Government's policy intention of better choice, cheaper to run cars, lower emissions, cars that are healthier, you know, there are big health impacts for Australians of having cars that are more efficient on our roads, there will be very strong and positive impacts on respiratory health.

We will deliver this reform. Again, we had two consultation papers last year, we put out a preferred model, it's the way Catherine and I do business, we consult, and we listen, but nobody should doubt our determination to act in the national interest, not in the interest of any particular car company, PK, that's not our job. 

PATRICIA KARVELAS: I understand that you think that this is the right thing to do, and we are the last cab off the rank, I mean really, at least in the world of –

CHRIS BOWEN: Well, it's not generally a company that we seek to keep in policy terms, we've got governance terms, PK.

PATRICIA KARVELAS: I understand that, I'm just trying to work out –

CHRIS BOWEN: [indistinct] with Russia.

PATRICIA KARVELAS: What the consultation entails, how prepared you are to listen to some of these critiques in your final model.

CHRIS BOWEN: Well, as I've said, you know, we don't do consultation to not read the submissions, we do consultation to read the submissions. Where somebody has made a good faith suggestion, which is in keeping with our intent to give Australians better choice and better cars, of course we'll consider it. If people are saying – 

PATRICIA KARVELAS: And will your longer implementation, is that within the spirit of the intent?

CHRIS BOWEN: Well, PK, as I said, this is a reform that should have been delivered to the Australian people at least five years ago when the previous government tried it. I mean John Howard actually took this policy to the 2001 election and then failed to implement it.

What we're not interested in is delay for delay's sake. There's no point saying, PK, let me just be very frank, there's no point people saying, "We support a vehicle efficiency standard as long as it doesn't work." I mean that is effectively what you could argue for by saying, "Sure, an efficiency standard's fine, as long as it doesn't change our behaviour or make us bring more efficient cars to Australia." 

That's not an argument we're interested in. If there are sensible suggestions in keeping with the approach we've taken so far, of course we'll consider them, but we will be delivering better choices, cheaper to run cars, lower emissions cars for Australians, which previous governments should have done years ago.

PATRICIA KARVELAS: Thank you for joining us this morning.

CHRIS BOWEN: Always a pleasure, PK. Good on you.