WEDNESDAY, 26 JULY 2017
SUBJECTS: ENERGY CRISIS, ELECTRICITY PRICES, CLEAN ENERGY TARGET, MANUFACTURING.
LISA CHESTERS MP, SHADOW ASSISTANT MINISTER FOR WORKPLACE RELATIONS, SHADOW ASSISTANT MINISTER FOR RURAL AND REGIONAL AUSTRALIA: Thank you all for turning out. I’m very proud to have with me two of our senior Labor Shadow Ministers to talk to the Bendigo Manufacturing Group about manufacturing and the growing energy crisis that we have in our country. I’ll first introduce Mark Butler, who will speak about the energy crisis and what is going on within our regions and he’ll hand to Kim Carr who will speak about manufacturing. We’ll then hand over to the Bendigo Manufacturing Group. Shadow Minister Mark Butler.
MARK BUTLER MP, SHADOW MINISTER FOR CLIMATE CHANGE AND ENERGY, MEMBER FOR PORT ADELAIDE: Thank you Lisa, it is great to be back in Bendigo. Your great balmy weather here in the middle of July. I was here earlier in the year with Lisa and we talked to manufacturers and a range of other community groups about the energy crisis that is gripping not just Victoria, but really he whole of eastern Australia from South Australia right over to the eastern seaboard. She invited Kim Carr, who has responsibility for industry and manufacturing policy for the Federal Labor Party, and me, to come and have some deep discussions, particularly with the manufacturing sector in the Bendigo region about solutions and ways forward to deal with what, as I said, is a fully blown energy crisis in this country.
She invited Kim Carr, who has responsibility for industry and manufacturing policy for the Federal Labor Party, and me, to come and have some deep discussions, particularly with the manufacturing sector in the Bendigo region about solutions and ways forward to deal with what, as I said, is a fully blown energy crisis in this country.
Over the last three years we’ve seen wholesale power prices double in Australia. According to the Chief Scientist, Alan Finkel, this is because of essentially two things. The first is the gas crisis, which has seen gas prices skyrocket. Gas is increasingly setting the spot price for electricity which is feeding through to households and to big industrial users. The second thing that the Chief Scientist recommended to state and federal governments several weeks ago is that we’ve got to end the policy paralysis in Canberra. For four years now, after Tony Abbott removed and dismantled the Labor Party’s clean energy mechanism we have not had a federal policy on energy. As we’ve seen large, aging generators exit the system like Northern and Playford in South Australia and Hazelwood here in Victoria, there hasn’t been the investment coming through because investors say they simply don’t know what the rules are.
Now the Federal Labor Party has said we are more than willing to sit down with the Federal Government as soon as possible and start to talk about the central recommendation from the Finkel Report, which was to develop a Clean Energy Target for Australia. Industry has supported that, the Business Council has supported that, the electricity industry from the renewables sector to the big thermal generators have all called on the two big parties of the federal parliament to sit down and do that. But at the moment we can’t do that because of the internal divisions in the Coalition party room, preventing the Prime Minister and the Energy Minister Josh Frydenberg, from sitting down and really dealing with this energy crisis.
I’m really pleased to be here again with Lisa Chesters and my shadow cabinet colleague Kim Carr, to have these really detailed discussions with manufacturers in the Bendigo region about what we can do as a responsible opposition to lift the level of debate in the nation and really start to deal with this energy crisis. Which is not only hitting households but it is really threatening the viability of jobs across Australia in our vibrant manufacturing industry.
JOURNALIST: Mr Butler last time you were here you did call for a coherent framework, have you seen any headway since making those calls?
BUTLER: We haven’t, and since I was last here, Alan Finkel and his panel, which did some fantastic work over the last several months, bringing together all of the different strands of debate in energy policy, made the clearest possible recommendation. Not just to the federal government but to state governments as well. That was that the government needs to put in place a federal energy policy in the form of a Clean Energy Target.
Alan Finkel and his panel said that there was an urgent need to have a clear and early decision on this matter but still it is beholden to Tony Abbott and his insurgency in the Coalition party room.
In the meantime, households see their power bills skyrocket and big energy users in the industrial and manufacturing sector, as they come to renegotiate their contracts are seeing contract quotes that are more than 100 per cent higher than the contracts that they are just coming to the end of. This is a genuine crisis and frankly Malcolm Turnbull has to take control of the Coalition party room, follow the recommendations of the Chief Scientist and sit down with the Federal Labor Party and start to bring this crisis to an end.
JOURNALIST: Minister Frydenberg has previously blamed the moratorium in Victoria on gas extraction (for rising energy bills). Is this a possible reason behind the delay?
BUTLER: Let’s be clear that ending the moratorium on gas here in Victoria, the challenges of getting gas out of the ground in New South Wales, even if that was brought to an end later this week you would not see new gas coming out of the ground for some years. We think it is time to have a responsible discussion about onshore gas development across the country. I’ve said time and time again that it is not good enough for Malcolm Turnbull to wag his finger from Canberra and try to wish away, or threaten away, the community opposition that exists in a range of different communities in New South Wales and Victoria regarding gas development. The Commonwealth needs to bring something to the table to allow that discussion to happen. That’s what we did when we were in government. Working with Tony Windsor, Rob Oakeshott and other rural independents to put in place a framework that would nurture community understanding and community consent, not aggravate it, which is what we’ve seen from Tony Abbott and Malcolm Turnbull over the last four years. But I would make the point, that even if moratoria across the nation were lifted today, that would not deal with the energy crisis we have gripping manufacturing right now. We need an investment framework, we need to deal with the fact that too much of our gas, that we are already getting out of the ground, much of it exported from Victoria to the rest of the nation, and my own state of South Australia, is going straight up to Gladstone and being shipped over to Asian countries overseas. We need to get those exports under control to make sure enough of that gas is going into our own manufacturing workplaces, our own households, and our own power plants to meet that domestic demand.
JOURNALIST: Does the Labor policy include coal?
BUTLER: The Clean Energy Target is quite clear that it is technology neutral. Under the Clean Energy Target recommended by Alan Finkel, there is no prohibition on either existing coal-fired power stations or even the building of new coal-fired power stations. The National Electricity Market in Australia currently gets about 76 per cent of its electricity from coal. We are one of the most coal intensive electricity systems in the world. There is nothing in the Clean Energy Target that would seek to expedite the shutting down of those power stations. The other issue is Finkel says you have to put in place an energy policy framework that brings forward investment, that brings together the key drivers of policy, which now are a reliable supply, affordability for consumers, whether they are households or big businesses, and a need to make sure that our policy aligns with our commitments to drive down carbon pollution.
JOURNALIST: Your home state of SA recently had quite a big development in this area with the announcement of the Tesla battery. Is this an example of the type of leadership you would like to see from the federal government?
BUTLER: This is, and we’re not seeing it from the federal government. So instead we are seeing it from state governments both in my own state of South Australia but also here in Victoria where Dan Andrews’ government is also really driving a process to bring in some of the really exciting storage technologies into Victoria.
Our country has led the way in the solar revolution. We have more households with rooftop solar than even America, which has 321 million people. We can be a leader in this revolution but we need state governments, and a federal government working together to be able to give consumers, whether they are industrial users or households access to these exciting technological revolutions. There will be an enormous storage revolution in South Australia as the Tesla battery, 100 MW, more than three times the existing largest battery in the world as it is bought online in about December this year. But we are also seeing this exciting development here in Victoria as well.
CHESTERS: I’m just going to hand to Kim.
Senator Kim Carr, Shadow Minister for Innovation, Industry, Science and Research: Thank you very much. It’s terrific to be here in Bendigo again, to discuss with major manufacturers from this city – an important industrial city for Australia – the serious challenges facing industry in regard to the crisis in the Australian energy market. The roundtable being held today allows the Labor Party to hear directly from major manufacturers in this city; their concerns and their suggestions for what can be done.
We are having these roundtables around Australia, and these concerns are being expressed to us the length and breadth of the country. What we are seeing now are major manufacturers saying that if we do not act urgently then industry will be forced offshore. The failure of the federal government to deal with this energy crisis is costing jobs. It’s costing prosperity. It’s costing opportunities for the people of this nation. The energy market in this country is simply not working. It is not fit for purpose, and the consequences of that have been that companies like Dow Chemicals, like Bluescope, like Rio, like our aluminium smelters, are now saying that they are laying people off if they can’t get a solution urgently.
So we’re calling on the government in Canberra to face up to its national responsibility to the people of this country to deal with this problem urgently – not just to talk about it, but to act. We’ll be looking forward to taking the suggestions that come from today’s roundtable to the Labor Party so that we can ensure that the voices of local businesses are heard in Canberra.
JOURNALIST: Would Labor seek to have the gas that is currently being reserved for local consumption extended for industrial use as well?
CARR: We’ve made it very clear that we want to see a national interest test put in place. We’ve got to ensure that more gas is made available for Australian industry. We’ve got to put Australia first. For too long we’ve taken the view – we’ve accepted the great con job – that energy won’t be deprived from our local suppliers. Now we’ve discovered that that’s not the case.
So we want to make sure that Australian manufacturers have access to proper, reliable arrangements for our gas. But we also want to make sure that we have electricity supplies so that our smelters can maintain their production, maintain the growth that they need. We want to see our steel mills be able to operate. We want to see our chemical works and cement manufacturers maintain their operations. We want to ensure that all manufacturers are able to secure the future of employment in this country.
This is a prosperous nation. It is simply unacceptable for us to export jobs the way we are because of the policy failure from Canberra.
CHESTERS: I’m just going to hand to Mark from the Bendigo Manufacturing Group.
MARK BRENNAN, BENDIGO MANUFACTURING GROUP: We’ve been invited here to sit down and have a roundtable on energy and what that means to the impact of Bendigo. Manufacturing in Bendigo is by far the largest economic sector in the community, twice more than any other sector. We’ve got 400 manufacturers here locally that the Bendigo Manufacturing Group represents. We are here to talk about the energy crisis and what opportunities there are to address that.
JOURNALIST: What has been the impact so far, that you have seen on the Bendigo Manufacturing Group, because of the energy crisis?
BRENNAN: Of the members we have people have come to us and talked about accelerating costs that are driving competitiveness down. That is our major issue. We’ve got significant growth happening over the next few years and more than $250 million is going to be invested in capital investment here. We want to attract that and make it a more attractive opportunity for Bendigo.
JOURNALIST: So in short, what are you calling for today?
BRENNAN: We’re looking for a review of what the costs are and what the government is going to do to address the ongoing rise of energy costs.
JOURNALIST: Is it costing jobs already?
BRENNAN: I believe it is, yes.
JOURNALIST: Do you think you need more females working in manufacturing because it doesn’t look like there are many in there today?
BRENNAN: There are females, this is only a representative of group, and there are women on our board. There is certainly openness to diversity and we would welcome women to come and join. Of the 400 manufacturers in Bendigo, we have a broad representation.
JOURNALIST: What needs to change, what needs to improve?
BRENNAN: What needs to improve, I think there needs to be more consultation which I think what today is about. And to engage and listen to what our concerns are.
JOURNALIST: Mark, where is that $250 million in capital going?
BRENNAN: It’s investment into expanding footprints of existing businesses that are here in Bendigo –
JOURNALIST: Over what timeframe?
BRENNAN: That $250 million is between 2017 and 2020.
JOURNALIST: Have you looked into renewables and what role they could play in terms of energy?
BRENNAN: We are all individual business operators so everybody has looked for schemes and opportunities to reduce their costs – so yes we have.
JOURNALIST: Which renewables?
BRENNAN: There are announcements today about some wind opportunities with one of our members, Hofmann Engineering; they are planning to talk about that later this afternoon.
JOURNALIST: So are you saying that there are more wind farm opportunities in the region
BRENNAN: What Hofmann is suggesting they may be able to do is look to manufacture here locally in Bendigo, wind turbines.
JOURNALIST: At Mark Butler’s last visit, Keech Australia was calling for more support for being able to use a mix of solar and gas. Is the support there or is it something you would like to see more of?
BRENNAN: We’d like to see more of it. Keech are in our group and they are heavily challenged, there is no doubt about that, and we are here to try and support them.
CHESTERS: We’ve got really great manufacturers here that are already innovating and have great ideas. We need a government that gets behind them and that is what we don’t have right now. The federal government is not partnering and is not working with our manufacturers.