THE HON JIM CHALMERS MP
TREASURER
MEMBER FOR RANKIN
E&OE TRANSCRIPT
TELEVISION INTERVIEW
SKY NEWS FIRST EDITION
THURSDAY, 2 JUNE 2022
SUBJECTS: Energy prices; Australian Energy Market Operator; Powering Australia Plan
PETER STEFANOVIC, HOST: A cold front on the east coast and a shortage of coal at Australia’s largest power station are threatening to create the biggest energy crisis in five decades. Let’s go to Canberra because joining us live is the Treasurer, Jim Chalmers. Treasurer, thanks for your time this morning. So, for the folks at home and businesses who are watching now, what emergency measures are you considering?
JIM CHALMERS, TREASURER: Good morning, Peter. This is a very serious challenge to employers, to households and to our national economy. We do have a very dangerous spike in gas prices at the same time as we’ve got substantial increases in electricity prices and petrol prices as well. So, there’s no use tiptoeing around this or pretending away this challenge. It is a big and serious challenge. I will be in discussions, obviously, with my colleagues Chris Bowen, the Energy Minister; Madeleine King, the Resources Minister; and others. I’ve already spoken to Chris Bowen this morning about this challenge, and we’ll engage with the companies and the employers who are most affected by it. I don’t want to pre‑empt those discussions and those deliberations, but to assure your viewers that we take this situation very seriously. And we’ll only get through this difficult period if we work together and get to the other side.
STEFANOVIC: Are you looking at price controls and curbs on gas exports to preserve supply?
CHALMERS: First of all, the Energy Market Operator, earlier this week, imposed a price cap at the urging of the New South Wales Government, which is an important step and one of the tools at our disposal. I’m not prepared to commit at this point to pulling the trigger. That is the subject of some discussion and deliberation, but we need to be up‑front with your viewers, Pete. Whether it’s the trigger, whether it’s the price caps, whether it’s other policy levers at the disposal of federal and state governments. This is not the sort of challenge that you can flick a switch and solve overnight. This is the consequence of some near‑term pressures that you just ran through. It’s a consequence of cold weather, international developments, changes in our domestic market. But above all, these are the costs and consequences of almost a decade now of energy policy chaos. And our responsibility as the new Government is to make sure that we inject some certainty, some resilience, some robustness into the energy market, improve transmission, and to introduce more cleaner and cheaper energy. The failure of the last ten years, or nine years, to do that, has been a big part of arriving where we are today.
STEFANOVIC: In the short-term, though, can you guarantee gas supply to homes and businesses?
CHALMERS: That’s part of the discussions that we’ll have with the businesses and the companies who are involved in our gas market. Again, we need to resist the temptation to think that there is some kind of simple solution here. That’s just being upfront with people. This is a big, serious challenge. It’s a consequence of not just developments in the last few weeks or last few months, but the consequences of energy policy chaos for nine years. And the chickens are coming home to roost. So, we will responsibly engage with relevant people in our economy, and we will put in place our Powering Australia plan to try to inject certainty, and that cleaner and cheaper energy, and better transmission, that’s been missing for the best part of a decade.
STEFANOVIC: When it comes to stopping or curbing gas exports to reserve that supply though, I note that gas producers have said that 90 per cent of the market is covered by long‑term contracts which are set at lower prices. So, if you were to go ahead with that, you’d be upsetting a lot of people, right?
CHALMERS: Well, that is one of the challenges that the Government and others would have to grapple with if we went down that path. I’m not suggesting necessarily to your viewers, or to you Pete, that we will go down that path. I’m saying that that’s part of the discussions or deliberations that need to happen now. That’s one of the challenges, you’re right to identify. But the trigger would not have immediate effect either. There’s a whole series of processes that we’d need to go through there. So, let’s just be honest and upfront about that. I know there’s an appetite in the Australian community, and certainly among the manufacturers, for some kind of quick fix. In the medium-term and the long-term, the only thing that would avoid this situation is a decent, sensible, collaborative energy policy. We haven’t had that for the best part of a decade. It’s one of the highest priorities of this new Government. We intend to implement it.
STEFANOVIC: Are you expecting energy retailers to collapse, just as many have done in the UK?
CHALMERS: That’s not been part of the briefings that I’ve had so far, that’s not been part of the discussion. Obviously, we need to be vigilant - whether it’s the impact of this inflation in our energy markets, whether it’s the impact of inflation for building materials amongst our major builders and constructors. This cost of living crisis and this skyrocketing inflation will get worse before it gets better, which will lead to interest rate rises according to the independent Reserve Bank. All these challenges are wrapped up in each other. That’s why, when I hand down a Budget in October, one of the central elements of that Budget will be a cost of living package that makes medicine cheaper, and child care cheaper, and deals with some of these issues around cleaner and cheaper energy, and tries to get real wages moving again. Because this is an enduring problem. It’s particularly difficult right now in the energy market and with building supplies. It’s particularly difficult for ordinary Australian families who are falling further and further behind because their real wages aren’t keeping up. All of these challenges are interrelated and the hard work of addressing them has begun.
STEFANOVIC: Treasurer Jim Chalmers, a busy time for you no doubt. Thank you for your time this morning. We’ll talk to you again soon.
CHALMERS: Thanks, Pete.
ENDS
