Interview with Greg Jennett, ABC Afternoon Briefing

GREG JENNETT: Well, Assistant Minister for Energy and Climate Change, Jenny McAllister, has been watching some of today's evidence and she'll play a role in shepherding a part of the Safeguard Mechanism through the Senate. She joined us from our Sydney studios.

Jenny McAllister, welcome back to another week and to Afternoon Briefing. We've been watching today the Senate Environment Committee examine elements, or it's only the small part really, of the Safeguard Mechanism that needs to be legislated. And, look, a number of concerns have come forward, some expressed by David Pocock about carbon credits known as ACCUs, and whether they leave an exposure to taxpayers if the price goes above the $75 cap. Does it leave taxpayers exposed if that happens?

JENNY MCALLISTER: Look, it's really important that we have some mechanisms to manage the impacts through the economy and the price cap is one of the ways that we do this. We don't expect that government will be substantially exposed based on the information that we have. But we're trying to balance a scheme that meets a range of objectives. It needs to be effective, it needs to get emissions down, it needs to be simple and relatively easy to implement. It needs to actually be effective and provide a least cost pathway through and it needs to be equitable, to transparently and fairly share the burden of the adjustment. We're balancing a lot of different things in this important reform. It's a good thing that senators are examining various witnesses about this over the course of today, but, you know, we think we've got most of the design features right, but we're of course open to suggestions from others.

GREG JENNETT: And so many have observed in their testimony to the committee that there are a lot of unknowables about this system until it's fully implemented. But as a precaution, because you acknowledge some possibility of taxpayer exposure as a precaution, would you set aside a budget to cover that as a contingent

JENNY MCALLISTER: Look, we're going to have a review of the scheme in 2026/27, so it will start up, we'll have a couple of years to see how it runs. But what's most important, I think, is that we do get all of the input from all of these stakeholders. We've got a chance to examine various aspects of scheme design, but don't forget the overriding imperative here - we need to end the climate wars. We've gone for ten years without a serious climate policy. Investors don't know what's going on, the community doesn't know what's going on. The Safeguard Mechanism offers us the opportunity to take 205 million tonnes of carbon dioxide out of the system up to 2030. I think that's a prize worth chasing.

GREG JENNETT: And there did appear to be, in public comments late last week, some convergence between the Greens and the government, as nearly as we can tell. Are those negotiations progressing to your satisfaction?

JENNY MCALLISTER: Well, there's of course, ongoing discussions with the Greens and other members in the Parliament. Disappointingly, the Liberals have ruled themselves out of the conversation, just saying "no", they don't want to be part of it. But we're willing to have conversations in good faith with all of the other participants in the Parliament who want to see climate action. I understand that conversations are ongoing between the Greens and ourselves and we look forward to the outcome of that.

GREG JENNETT: And no one has flagged that for the vast bulk of this regime - which is done under regulation - I take it no one has flagged that they'll be moving to disallow those regulations in the Senate? No one, including even the Coalition?

JENNY MCALLISTER: Look, I don't think it's going to come to that. I think everyone understands that the Australian people voted to bring the climate wars to the end. We've got the Business Council of Australia, the Australian Industry Group, the Australian Chamber of Commerce and Industry calling over recent months for this reform to go through. I think people want to see it go through and I'm actually looking forward to a very constructive debate in the Senate about it.

GREG JENNETT: Well, I'm sure there'll be one of those. Why don't we move on to another area in your portfolio, Jenny? Snowy Hydro 2.0, over the weekend, the more senior minister in the portfolio, Chris Bowen, said he wasn't in favour of another external review of the blowouts in that project, preferring to let Chief Executive Dennis Barnes get his feet under the desk. What would it take though, for more serious alarm bells to ring in your government requiring external scrutiny, given the cost and time here?

JENNY MCALLISTER: Look, we are concerned about the delays. The previous government set a series of timetables that Snowy was not able to meet and then they hid that from the Australian public before the election. We've got a new CEO, he has an opportunity to really take a good look at this project and work out what's required to get it on track. Snowy has notified the market that they're going to be at least twelve months overdue. Can't rule out further delays. What we really need is for the CEO to get on top of what is going on in the project, work through the implications and provide advice to government.

GREG JENNETT: There has, as you say, always been an element of secrecy. Yes, there are market updates and Minister shareholder updates, but you don't get total transparency about metres made by the tunnel boring machines, for instance. Is that something the government would commit to doing? Just more regular public updates on exactly what is going on up in the mountains?

JENNY MCALLISTER: Look, we do want transparency around the project, but the most important thing is for the project to get going and to get back on track. This is potentially a really significant contribution to the national electricity market. It provides that firmed capacity that we're so often talking about when we're talking about the transition to renewables. We're really asking the Snowy executive to bring more focus to the project and make sure that it's proceeding in the way that all Australians expect it to proceed.

GREG JENNETT: Well, certainly sounds like one that will require ongoing scrutiny. Why don't I take you outside of energy and climate now, Jenny McAllister to super tax concessions? They're inescapable in public debate at the moment. Is the revenue to be gained by capping nest-egg limits for those who enjoy these tax breaks worth the political pain of breaking a promise?

JENNY MCALLISTER: Well, the Treasurer has kicked off a discussion about the objective of super and he's made it pretty clear the reason. We have been through a decade under the last government where there were constant attacks on super, there was a lot of talk about members' best interests, but then attacks on the funds that performed the best. It's been a really strange period under the previous government and we went to the election saying that we need to get the objectives straight.

That means that when a new proposal comes up, you can evaluate it against the overall objective of super, and the Treasurer has proposed an objective. It speaks to the preservation of benefits to allow for a dignified retirement. It talks about sustainability. These are important features of the debate that we have to have about the purpose of super. He's also made it clear that if there are flow-on implications, once an objective like that is adopted, we'd have to work through those.

GREG JENNETT: But Stephen Jones and others have been a little more frank, I'll suggest. They do focus on the words equitable and sustainable and have openly admitted that that does entail an examination of tax concessions and in particular caps. So it looks as though you're going to go there, which takes us back to the broken promise. Is it worth it in revenue terms to go back on the no major changes commitment that was made in the campaign last year?

JENNY MCALLISTER: I think these are conversations worth having. I mean, bear in mind we are at the start of a conversation about the objective for super, but as the Treasurer has pointed out, we're on track to be spending more in tax concessions for superannuation by 2050 than we will on the aged pension. That's one of the many things that we do need to examine in the way that our budget is organised. And if we make reference to things being equitable and sustainable, inevitably we'll have a conversation all of that kind. It seems like a conversation that's worth having.

GREG JENNETT: And one to settle by May - the budget?

JENNY MCALLISTER: I'm not going to pre-empt budget decisions, but, you know, the Treasurer has kicked off the conversation. He's put out a paper, he's called for submissions. These are discussions that a sensible polity needs to have.

GREG JENNETT: All right. Sounds like we're going to have it too. Jenny McAllister will leave it there. Thanks so much for joining us once again on Afternoon Briefing. We'll talk soon.

JENNY MCALLISTER: A pleasure, Greg.