Bill's Speeches

ADDRESS TO THE FINANCIAL REVIEW’S NATIONAL ENERGY SUMMIT - SYDNEY - MONDAY, 9 OCTOBER 2017

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Good morning, everybody.

I was just thinking as I was coming here that this was the scene of the Malcolm Turnbull's election night party, I hope this is a happier and more productive event for all involved. .

I acknowledge the traditional owners of this land, I pay my respects to elders past and present.

I'd like to acknowledge the Chief Scientist among other guests here, I think the current Minister for Energy and the Environment is here as well.

While talking about Ministers for Energy and Environment, in 2007, the Minister for the Environment issued the following statement.

It was under the heading, and I quote: “Australia Leading the World on Climate Change”

The Minister went on to say:

“The Australian Government will commence work on a world-leading greenhouse gas emissions trading scheme with careful analysis on a long-term goal for emissions reduction.

Australia’s emissions trading scheme will be the most comprehensive in the world.”

Well, so what, you might say.

Current Labor Leader quotes former Labor Press Release. Big deal.

What I didn’t say to you is that this statement I read out, "world-leading greenhouse gas emissions trading scheme", "most comprehensive in the world" - that statement comes from July 2007.

This was John Howard’s policy - and those quotes belong to his Minister for the Environment, Malcolm Turnbull.

So, ten years ago there was bipartisan consensus over the need for emissions trading and climate action.In fact, the political contest was actually about which party would do more on climate change.

Ten years on, instead of the world’s most comprehensive emissions trading scheme, Australia has some of the world’s highest power prices and the world’s worst pollution per capita.

How on earth did we arrive at a state of affairs in this nation, that an energy super-power has such high prices?

To be fair, there’s no shortage of blame to go around – politicians, including the Greens political party, the media and business. I think we can all claim a little bit of responsibility.

But there are plenty of sliding-door moments in the past decade, roads not taken, agreements not struck, defeats cunningly snatched from the jaws of victory.

But in 2017, there's a Groundhog Day feel to the energy debate which is driving Australians out of their mind.

People are sick of the schoolyard insults, they’re over the alphabet soup of acronyms: CPRS, ETS, CET. They’re desperate for relief from power bills that have gone up, and up and up.

And – I think to their great credit- Australians trust the science of climate change. Australians are genuinely worried about handing-on a worse environment to their children than the one they inherited from their parents.

But my first point today is that the past decade demonstrates the consequences of weaponising energy policy:

- The consequence of record power prices

- The consequence of record levels of pollution

- The consequence of a looming shortfall in generation

- And the consequence of crippling uncertainty for jobs and investment

For the sake of our economy, for the sake of our environment, for the sake of family budgets and manufacturing jobs - and for the sake of credibility of politics itself – we need to stop spoiling for a fight and start seeking a solution.

Because one thing above all is clear: the scare campaigns and hyper-partisanship that got Australia into this mess, will not get us out of this mess.

That’s why, a bit over four months ago now, before the Chief Scientist released his final report, I wrote to the Prime Minister offering an olive branch.

I said Labor was prepared to move from our preferred position of an Emissions Intensity Scheme and negotiate a fair-dinkum Clean Energy Target. I said it was time for us to put away the weapons of the climate change wars and work together to find a way forward.

Now, this offer was greeted with some cynicism in the parts of the conservative media.

But let me be crystal clear – I made that offer in good faith, and that offer still stands.

This does not mean, obviously, compromise at any cost. A framework that isn’t fair-dinkum will not receive our support.

But surely there is enough capacity in Canberra to find a way through.

I don’t imagine Labor will get everything it wants, and the Liberal Nationals may not get everything they want.

But we cannot just simply throw up our hands, ignore the Finkel Report and its key recommendation, return to our trenches and resume hostilities.

It cannot mean choosing slogans over policies or bringing props to parliament instead of a policy.

And let me say this in an entirely non-partisan way: I understand that Mr Turnbull has a majority of one in the House of Representatives. As someone who has tried to take away that majority all together, I'm acutely conscious of its existence.

I also appreciate there are some conservative members of Mr Turnbull's government, who will never ever vote for a Clean Energy Target in just about any meaningful form.

But Labor has 69 votes currently in the House of Representatives - and we are ready to vote for a Clean Energy Target.

It is troubling to see reports of anonymous sources in the Financial Review, saying that because of the unrest in the backbench over renewables, the Prime Minister may well give up on a Clean Energy Target altogether.

The same Clean Energy Target that he previously said:

[had] Very strong virtues.

A lot of merit.

[And] Would certainly work.

Walking-away is the worst possible option.

It would:

- leave investors in the lurch

- sentence business to more uncertainty, more chopping and changing

- It would make Australia's job harder to reduce emissions.

And if Turnbull caves in to Tony Abbott and a rump of conservative backbenchers, and walks away from a Clean Energy Target, it will mean continued higher prices for Australian families and Australian industry.

It is a simple choice that Mr Turnbull faces - work with Labor to deliver a Clean Energy Target that is meaningful, or lock in higher power bills for businesses and families.

And I for one, don't believe that Australia can afford to waste any more time.

- Families are being squeezed by wages growth at record low levels and electricity bills at record highs.

- Industry and our whole economy are being hammered by out-of-control gas prices.

- And there are billions of dollars of investment in renewables and thousands of high-skilled, high-wage jobs up for grabs.

So I'm here today not to fight old battles, but to put forward some new ideas.

- Here and now, to resolve the current gas crisis.

- And also in the medium-term to deliver policies which will drive investment in renewables, and deliver cleaner, cheaper, more reliable electricity for all Australians.

The first proposition I want to put forward to you today is immediate and straightforward: restrict gas exports until prices come down.

I'm fully conscience of the scale and scope of this decision. It's not a course of action I recommend lightly.

Out-of-control gas prices are a direct threat to thousands of jobs - and the consequences reach beyond that.

Industry and manufacturing are on the front line, but the increased prices they pay invariably are passed on to every single Australian business and household.

It is why we need a national response and we need it now.

Back in April, Mr Turnbull promised to halve wholesale gas prices from about $20 a gigajoule to under $10 a gigajoule. Australians will not forget that.

Australians do not understand why it has been cheaper to purchase Australian gas in Japan than it has been here in Australia. As long as this absurd situation persists, jobs and prosperity are in jeopardy.

We need more than a cosy gentlemen's agreement with the gas exporters that everything will be fine.

If Labor were in government, we would immediately pull the trigger, activating export controls with the clear objective of lowering the price of gas. And we would keep these controls in place until there is downward pressure on prices.

This is not a hypothetical, it is not hindsight - the window for action is still open.

The Government has until the 1st of November to put export controls in place for next year.

What was the point of introducing new regulations which would allow you to develop and implement export controls if you're too afraid to use them?

And the crisis in industry is not a future prospective concern, it is an immediate concern.

I've travelled to 10 different manufacturers since April: it is positively frustrating to hear successful businesses, big and small, who have worked hard to gain every margin they can in the business, from productivity to labour relations, to investment in new technology, yet still have to play the gas game of Snakes & Ladders.

Every time individual enterprise climbs that ladder of reducing costs, of developing new markets, of innovating new product, they hit that gas snake and go back to the start where they get new contract prices which are simply unsustainable for Australian industry.

So let me say that if the Prime Minister changes his mind on export controls, we will be the first to congratulate him.

But there is another step we can take right now for manufacturing jobs and the broader economy.

We should be fast-tracking through COAG, the Council of Australian Governments, reforms to improve gas market accountability and transparency, so that when it comes to contract negotiations, Australian firms get a head start, not a handicap.

Gas prices, volumes, costs and reserves, they are not state secrets.But the big gas companies treat them as such.

Plenty of industrial users and manufacturers tell me they are only receiving single contract offers from one supplier, at prices they can't sustain, putting profitability and jobs at risk.

We should be doing everything we can in our power to improve the bargaining position of Australian gas users, so we can get prices down, protecting jobs.

Implementing the export controls and boosting transparency for Australian industry are two things that the Government can do right now.

But energy policy cannot be about holding press conferences and putting out fires reacting to immediate crisis. Australia needs a framework for the future, for the next decade. Otherwise when existing export controls lapse, we could easily end up back in the same position.

It is why the next Labor government will introduce a National Interest Test:

- For all new LNG export facilities.

- And for significant expansions of supply, including from domestic supply, to existing export facilities.

The current government loves to criticise the previous government for not reserving domestic gas, but they also want to attack us for proposing stronger controls on exports. When we proposed a National Interest Test at the last election, they called it sovereign risk.

Labor's plan will help guard against a repeat of the current crisis and it will also guarantee an adequate supply for the Australian domestic market in the future.

And in terms of future supply, let me be very clear about this, Federal Labor supports the responsible development of onshore gas.

Of course, we fully understand and respect the arguments of farmers, environmentalists and communities concerning fracking, in particular in regions such as the Liverpool Basin on the North Coast. And I understand it is primarily a state issue and subject to the rules of each jurisdiction, but I believe federal leadership is central to securing community consensus and confidence around development.

We build that confidence with clear processes, rigorous rules and the unequivocal statement that gas development does not come at the expense of water quality.

In government, Labor introduced a water trigger for coal seam gas. And at the last election, we proposed expanding that protection to shale gas.

This gives the community the assurance that the Minister and, more importantly, an independent scientific body, will carefully consider the impact on water resources for every project before the development is approved.

At the national level, we also have a responsibility to be measured in our language, considered in our actions.Not opportunistically wading into fights with premiers.

I have been impressed by the approach taken in Queensland by Annastacia Palaszczuk and in South Australia by Jay Weatherill.

I think that the comprehensive study being undertaken by the Victorian Lead Scientist will show that there is room for the state government to:

- Reconsider its moratorium on conventional gas exploration

- To put downward pressure on prices

- And to do this with community consensus.

But finger-wagging from Canberra will only serve to get the backs of states up.

I'm encouraged, for example, by what we're hearing from the Northern Territory in its independent review into onshore gas development. And whilst resources developed in the Territory will help boost supply in the south, they must also be made available for use in the Territory itself in conjunction with forming community support.

Reducing the price of gas is essential to ease the burdens on businesses and families today. It's also central to enabling Australia's move to renewable energy, locking in the reliable, dispatchable power we need.

Labor's plan for 50 per cent renewables by 2030 is designed to position Australia to seize the massive wave of jobs in investment that are up for grabs.

Bloomberg has estimated $7.4 trillion of global investment in renewables between now and 2040. $7.4 trillion.And in our region, the Asia-Pacific, it will be home to as much investment and generation as the rest of the world combined.

Nearly one in four households have their own solar powe, tens of thousands of small businesses are following suit - and it's easy to see why.

And I'm pleased that the current Minister for Energy has confirmed what Labor has been saying for quite a while now: that renewable energy, if not the cheapest form of energy already, is amongst the cheapest and becoming cheaper every day.

So Labor's commitment to 50 per cent renewables recognises that future, including the reality outlined by the Government.

Embracing renewable energy is a race for the jobs of the future and Australia has been given a dream barrier draw.

We are the sunniest continent on Earth, one of the windiest places in the world. We are home to universities and research centres that set global standards for efficiency in solar-cell technology and we have massive potential to couple renewables with peaking gas, pumped hydro and battery storage.

So when it comes to renewables, and those reduced costs which make them so attractive as a source of energy, we should unapologetically aim for the best.

- The best generation technology.

- The best storage technology.

- The best, most complete connections to the grid.

- And the best methods of boosting overall efficiency and reliability.

But success isn't guaranteed, it won't just happen – we need to invest in it and we need to prepare for it. We need to send a signal that Australia is open for renewable energy business.

So as a starting point, we must modernise the rules that govern the National Energy Market. This is a framework that was drawn up in the early 1990s, for a system built around large centralised generation.

When these rules were written:

- Solar and wind generation accounted for less than one half of a per cent of the market

- The number of houses with rooftop solar were simply too small to measure

- and large-scale storage for renewable generation was simply science fiction.

The existing NEM rules are biased in favour of big generators, designed to help them recoup the cost of purchasing government assets, and the rules are stacked against households and consumers.

It is another example of how the ideological privatisation agenda has delivered some massive short-term profits for companies, but not the improvements or the incentives to ensure reliability and affordability that Australians deserve.

Now, of course, 20 years ago, no-one spoke about selling household power back to the grid.Today, nearly one in four households could be doing just that.

But because this kind of innovation wasn't contemplated when the rules were drafted, Australians don’t receive anywhere near fair reward for putting power back into the grid.

It's the story as a whole: instead of helping new technologies interact with the grid to deliver win-win outcomes, the current system is exacerbating the problem.

What's more, the existing NEM rules do not even acknowledge the link between emissions and electricity.

Cutting pollution is a fundamental objective of good energy policy and our national energy market rules should recognise this.

Modernising the rules has to be part of a more national, more system-wide approach to assessing the public benefit of new energy infrastructure.

For too long, companies have been allowed to gold-plate existing poles and wires, rather than focus on connecting new sources of generation to the national grid.

And the cost of inefficiency, moving the energy from the generator to the retailer, has been passed directly onto Australian families and Australian businesses.Power companies have jacked up bills for households and then blamed the added costs on infrastructure upgrades.

Yet for all their overcharging, not a single new interconnector has been built since the National Energy Market was created.

We need a truly national approach to transmission and distribution – and under a Labor Government, that would include a new emphasis on funding and upgrading essential infrastructure like interconnectors and gas pipelines.

Taking a national approach doesn’t mean centralising generation and storage, far from it – it means making decisions that benefit the nation, not one state or one corporation.

For a long time, Australians have been told that the size of our country is a disadvantage, that the ‘tyranny of distance’ hinders our economic development.

But with renewables, we have the advantage of geographic diversity. Our national borders are the edges of a continent - and Australia has a far greater variety of weather conditions than most nations.

With smart transmission planning we can put this diversity to use in the national interest – moving energy where it is needed, at the fastest speed and the lowest price.

As recommended by the Chief Scientist, a Labor Government would organise Australia into a series of Renewable Energy Zones.

These zones would be based on both existing generation and storage in the area – and the potential for future development.

Identifying these zones – for example, from eastern Queensland, north-east NSW, western Victoria, the Eyre Peninsula in South Australia and the entire state of Tasmania – will also plant a flag for investors, signalling future sites for job-creating projects.

Now, boosting the efficiency of the grid and upgrading our interconnectors is a good start – but it’s not enough.

As I’ve said before: storage is the future of reliability.

Storage plus renewables moves the whole renewable energy proposition into a conservative space.

Renewable energy; sun and wind - it's there for free. Combine it with storage and it becomes the conservative solution.

That’s why Labor will free-up the Clean Energy Finance Corporation to invest in more generation and more storage.

Last year alone, every dollar of CEFC commitments was matched by more than $2 from the private sector.

I believe it is an admirable standard for the creative and strategic approach we need in energy infrastructure – not command and control, not government trying to row every oar – but a combination of public interest and commercial rigour.

Under Labor, the return benchmark for the CEFC was set at the weighted average of the Australian Government bond rate.

Under this government, it was initially increased to the weighted average plus 4 to 5 percent and is now set at the average plus 3 to 4 per cent.

The former chair of the CEFC, Jillian Broadbent said at the time of the adjustment, she was concerned this was an:

‘unrealistically high return target for this market’.

Setting the return benchmark too high defeats the driving purpose of the CEFC and it holds-back the crucial investment Australia desperately needs – right now – in new generation and new storage.

It's why a Labor Government will restore the original benchmark return of the Clean Energy Finance Corporation, to invest in more generation, to invest in more storage and to invest in more jobs.

Boosting investment in storage also means broadening our definition of ‘storage’ beyond a feasibility study of the Snowy Hydro, no matter how exciting the Prime Minister finds those aerial tours of the Snowy Mountains.

We need to recognise that batteries will play a big role in our storage future, helping to power everything from the family home to commercial industry.

In 2015, there were 500 battery installations in Australia. This year, we’ll surpass 20,000 installations.

We’ve also seen a doubling of efficiency in only a few years – and by the end of next year, South Australia will be home to the world’s largest battery.

Pumped-hydro obviously has a big role to play – but I don't think we should fixate on just one project.

People may be aware that a recent report from the Australian National University mapped-out 22,000 potential pumped-hydro sites, in every state and territory.

22,000.

From the North West of Western Australia to the Flinders Ranges to the Burdekin in Far-North Queensland – and right up and down the east coast as well.

That’s a storage capacity equivalent to more than 33 Snowys.

Bringing less than 1 per cent of the combined capacity of these sites online, would set Australia up for 100 per cent renewable energy by 2030.

The crucial point here is that we shouldn’t be pinning all our hopes and all of our money on the renovation of one, 60 year old facility 400km from Sydney and 500km from Melbourne.

Especially when, technology is changing and adapting all the time and completion is up to a decade away.

For me, it’s simple - it's all about the numbers. If there are other pumped hydro projects that are faster, that are cheaper to build, we should get on with them – right now.

In conclusion, I started today by talking about the lost decade of Australian politics on this issue.

Rather than assigning blame for the last ten years, because I think Australians judge all of politics poorly over the last 10 years - I am prepared to take responsibility for the next ten years.

The policies I’ve put forward are what Labor would do if we were in government, tomorrow.

They’re concrete proposals, components of our energy agenda for the future. But I also made it clear, that we recognise the need for certainty and the value of co-operation.

If the Government is prepared to move, prepared to work with us on priorities to deliver the best set of policies for the transition to renewables, then I repeat: we are willing to find common ground.

One of the main reasons I accepted the invitation today to speak was because many of the people best able to pursue the Liberals and the Nationals are sitting in this room.

And if I could just express a note of frustration, I recognise how absurd it is trying to have a serious policy discussion while Tony Abbott is attempting to blow-up the energy policy debate every day, yet again.

- He spoiled the consensus in 2010.

- For a so-called leader of a market-based party, he doesn't trust the market when it comes to climate change.

- He promised to bring down power prices and yet they’ve doubled instead

- And he is now hell-bent on destroying whatever chance there is of rebuilding a renewable energy sector.

And you have to ask why? I think it's because he is a wounded ideologue with no awareness of what is he doing to the nation he says he loves.

If he prevents Malcolm Turnbull from arriving at a fair-dinkum Clean Energy Target, he is destroying Australian industry.

Now, when I call out this behaviour out, you might say it's political. I do not know if the Prime Minister can call this behaviour out.

So it is actually up to the rest of you, the rest of you in this room and those of you here from the media – you've got to demand a bit of common-sense.

Compromise in energy policy doesn't mean if Malcolm can get it through his party room. Compromise is when the two great parties of Australian politics work together using the best science.

But I need - and Australians need - you in this room to start to demand some common-sense, some common-decency in this debate.

We need to get this right – because the implications of getting it wrong and missing yet another opportunity put forward by the Chief Scientist, the implications are clear – aloss of jobs and the prices that keep going up and up and up.

Good morning and thank you.

ENDS


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