Doorstop interview, Sydney
JIM CHALMERS:
It's great to be here in Sydney this morning with Kristy Graham, the CEO of the Australian Sustainable Finance Institute, to make some important announcements about how we align our financial system, and our reporting requirements and disclosure requirements to incentivise more investment in cleaner and cheaper energy. We'll hear from Kristy in a moment.
First of all, I wanted to say that the steps that we took on Friday with National Cabinet and the steps that we are taking today aligned with our objective, which is to invest in more capacity in our energy markets, to deal with the near term pressures brought about by the war in Ukraine, at the same time as we put in place the foundations for an energy system driven increasingly, by cleaner, cheaper, more reliable, more renewable energy. On Friday, the steps that we took are all about acting with some urgency to try and take the sting out of these higher energy prices that have the potential to do so much damage to our industries, and to households around Australia. And with our Commonwealth gas cap, the state cap on coal, and the responsible household assistance package, combined with more investment in cleaner and cheaper, more reliable and more renewable energy, we give ourselves the best chance of dealing with the pressures in our energy markets, both near term and into the future as well - and that's what today is really about.
Today is all about more clarity, more consistency, better disclosure, cracking down on greenwashing, and making sure that our financial system aligns with our emissions reduction goals. In our economy, the financial sector, really right around the economy, people understand that the future of our economy will be increasingly powered by cleaner, cheaper, more renewable, more reliable energy. And we need to make sure that we have the clarity and the consistency to feed that investment in new energy capacity in our system. So we're acting in the near term with a degree of urgency to take the edge off these energy price rises. And we're acting as well to lay the foundations for an energy market increasingly dominated by cleaner and cheaper sources of energy. I wanted to really welcome the engagement from the business community, as we've worked up these proposals today. There'll be more consultation to come. I wanted to pay tribute to Kristy and her organisation for the work that they have done.
Australians are paying a hefty price for a year of Russian aggression, and a decade of energy policy chaos - this Government is acting on both fronts simultaneously. And in both respects, we will take the edge off these energy price rises and invest in the energy markets of the future. We can't do that on our own. We want to enlist and empower the financial system and investors more broadly, so that they can invest in the energy sources of the future, so that we can catch up and keep up with the developments we're seeing around the world. I'll throw to Kristy and then take your questions.
KRISTY GRAHAM, CEO ASFI:
Thanks very much. I'd like to warmly welcome the announcements that the Treasurer will make today around the Australian sustainable finance agenda. As he mentioned, there's strong support from across the finance sector, and ASFI has released a statement today with 16 of Australia's largest financial institutions backing in the Government's commitments and agenda in this area. So we've had both large super funds, banks, insurers, all who've recognised the risks as well as the opportunities around sustainable finance. And we look forward to continuing working in partnership with government on this.
CHALMERS:
Thanks very much, over to you.
JOURNALIST:
Treasurer, some members of the gas and coal industry, talked about either near nationalisation or Armageddon. Firstly, are those kinds of claims reasonable, but also on this issue of 'reasonable' - in the Treasury paper there is that discussion about a reasonable price going forward, so is it potentially more than a one year price cap? Is that why that element is in the legislation?
CHALMERS:
Obviously, we wouldn't describe the situation as you've referred to it. There was a lot of pressure on government to come up with a much lower cap on gas, there's a lot of pressure to come forward with proposals like a windfall tax on the industry. And our preference, as we've been saying for about six weeks now, was for a regulatory solution, and that's how we've landed with the help of the ACCC - this price cap which is temporary, and which recognises not just the costs of production, but a reasonable rate of return as well. Now the $12 price cap will be temporary, and there will be an ongoing regime for reasonable pricing. And the legislation before the parliament this week, is not about the reasonable pricing regime, it's not about landing that regime, it's about putting in place the framework to make the emergency temporary cap possible. And it has some enforcement mechanisms as well. So my message to industry is that we've got a couple of months of consultation on the reasonable pricing framework.
We intend to engage respectfully with the industry, even when differences inevitably arise, as they have been. But our intention is to recognise, first of all, these companies are doing incredibly well on global markets, we support the industry, but we don't want these high prices to hollow out local industries and put extra pressure on families if we can avoid it. That's why there'll be a temporary price cap for 12 months reviewed halfway through that, and an ongoing reasonable pricing regime. It's also important to get some perspective on the reasonable pricing regime that we will consult on until February. This is just about making sure that buyers in the market, and sellers too, have a form of arbitration if they feel that they are getting a dud deal. And that is very different to an ongoing price cap. The temporary price gap is there, we're proposing $12 on ACCC advice. That's what the legislation is about this week. And over the course of the next couple of months, we'll consult on reasonable pricing, we do want to make sure that the market works as effectively as it can. We support the industry, it's doing incredibly well on global markets. But we don't want to see it hollow out our industries here, or make life harder for Australian families right around the country. And that's why we're acting in this reasonable way. We do intend to continue to consult and engage meaningfully and respectively, with all of the affected industries. Even when differences inevitably arise.
JOURNALIST:
The Greens and the Coalition are threatening to derail your energy market intervention. How confident are you that it'll pass parliament, and if it does, when will the benefits flow through for households?
CHALMERS:
We will continue to engage in a respectful way with crossbenchers in the parliament, to try and pass our legislation which provides some of the framework for this temporary price cap. Anybody who votes against this in the parliament is voting for higher prices for Australian industry and for Australian families. The Coalition has already indicated they'll be voting for higher energy prices. We will engage meaningfully as we have been already with the crossbench parties and the independents to try and enlist their support. We need to act with some urgency here. That's why we've proposed what we've proposed - a cap on gas, a state cap on coal, some household assistance, and ongoing investment in cleaner and cheaper energy. There is already some of these price rises flowing in the economy right now as a consequence of the price rises that Angus Taylor hid during the election. Our goal is to make a meaningful difference next year to these energy prices, we've put out some numbers on the impacts that we expect to see, what we're proposing. We know Australians are doing it tough, that higher energy prices are a bigger and bigger part of our inflation challenge. We don't want to see our local industries hollowed out, that's why we're acting with some urgency here at the same time as we progress our agenda for more investment in cleaner, cheaper, more reliable, more renewable energy.
JOURNALIST:
You also mentioned that the Treasurers were going to work through the summer to work on how the redistribution of that $1.5 billion is going to work out. At this stage, do you anticipate the states putting up extra money to match that 1.5, because several said they would not at this stage? And secondly, with the reasonable rate of return, is that just for coal and gas? Could that be extended to other sectors?
CHALMERS:
For the second part of your question, our priority in the legislation this week is on gas. The states have got steps that they will take when it comes to coal, they've got the more appropriate levers here - our focus is on gas. It will be a busy summer, as we nail down, particularly, the details of the Household Assistance package. We want to make it easier for Australians to meet these higher energy bills and so we've got a proposal on the table. And states have indicated that they are prepared to work with us to deliver that bill relief before the bills arrive in the letterbox. That's how we take the sting out of some of these expected energy price rises, by partnering with the states and ponying up, up to one and a half billion dollars, as we've proposed to do. I'm looking forward to working with my state and territory counterparts on that aspect of it. I'm looking forward to the consultation and engagement with industries from all parts of our economy, as we nail down the details of the reasonable pricing framework as well.
JOURNALIST:
Energy analysts have described the intervention as reckless, draconian and a declaration of war on the gas industry. What's your response to that criticism?
CHALMERS:
I obviously don't see it that way. We have been engaging with industry, we flagged our intentions for some time that we're looking for a regulatory outcome here, which is meaningful and responsible. And which takes into account not just that these companies are making a lot of money on international markets, but also that they need to make a reasonable rate of return here in Australia as well. And that's how we've landed on the proposed $12 price cap, working with the ACCC. And so no doubt there will be more engagement, even as these differences pop up. But we think this is a really reasonable, really responsible way forward, it recognises these companies need to make a return, and they will continue to do so. Any investment that was a good idea before the war in Ukraine will be a good idea after the war in Ukraine. We're really just talking about taking the price back to something resembling what it was before the war in Ukraine intensified. And so I'm happy to have those conversations with industry and engage with them as we have been.
JOURNALIST:
The other sticks, I guess, in your arsenal include the multinational tax and PRRT. Will you be looking to wrap that together with the consultation with the industry, or are you seeing these as separate issues?
CHALMERS:
I see them as separate issues, we've already got a lot of consultation out there on multinational taxes, that is obviously not directed specifically at one industry or another. And we've got a piece of work that the Treasury is doing on the PRRT, I see this work that we're doing right now, as separate to some of those other considerations. We're on a quicker timeframe when it comes to getting this gas cap in place. That's why the Parliament's coming back. And we've got a couple of months to engage and consult on the reasonable pricing framework. But once again, and I'll wrap up on this point - we can't have a situation where local industry is hollowed out, and Australian families are under more and more pressure. If we can do something about it, we should, we've proposed a way forward here, which recognises not just the pressures on industry and households, but also the needs of the players in the energy market, they will continue to do really well, even once this price cap is put in place. And even under the reasonable pricing mechanism. We just want this market to work better for local industry and local people. We're prepared to work with anyone who shares that objective. There's a period of consultation ahead. And that won't be inconsistent. In fact, it is aligned with some of our other goals in the energy market, which I'm going to go talk about now. Thanks very much.
