Transcript - Commonwealth Parliamentary Offices, Perth
The Hon Greg Combet AM MP; Minister for Climate Change and Energy Efficiency, Minister for Industry and Innovation
15 June 2012
Subject: Clean Energy Regulator, carbon price, electricity prices
Combet: Thanks very much for coming. Well I've been in Western Australia over the last couple of days having discussions with various groups. I've been at the Chamber of Minerals and Energy this morning talking about carbon pricing. Yesterday I was at Bayswater Aquatic Centre with the Eastern Metropolitan Regional Councils discussing carbon pricing and energy efficiency, and in fact we've announced some grants to the Eastern Metropolitan Regional Councils, a Federal Government grant of $650,000 matched by a contribution from those councils. That, for example in the Bayswater Aquatic Centre, will lead to energy cost savings of $100,000 a year. I've been down in the Henderson precinct as well speaking to manufacturers and others in my capacity as the Industry Minister, and talking about the way in which manufacturing and steel fabricators can participate in the enormous investment that's going on in resource projects. So, I've had an interesting couple of days working through portfolio issues.
But, we're a couple of weeks away now from the implementation of the carbon price and, of course, we're working extremely hard to ensure successful implementation of that and I'm continuing the dialogue with business to achieve it. On that front, the Clean Energy Regulator that the Government has established to oversight the mechanics of the carbon price mechanism is publishing today an updated list of entities within Australia that will have a liability to pay the carbon price.
And, of course, I've been saying for some time that we anticipate that list to come in well underneath 500 entities. Today the Regulator is publishing an additional 46 entities that will carry a liability under the carbon price mechanism, taking the list to a total of 294. There was an initial list of 248 published in May. So we're now at a point, a couple of weeks from the introduction of the carbon price, where the Clean Energy Regulator has confirmed a list of 294 entities having liability under the mechanism. That's the principal list that will occur before the implementation of the carbon price from the 1st of July.
Of course, there are circumstances where the list will be updated from time to time by the Clean Energy Regulator, for example, as some businesses may even be able to apply technology to reduce their greenhouse gas emissions so that they come off the list, they get underneath the threshold. Others might expand production and end up above the threshold and come on to the list. Some new businesses may start up that mean that they are added to the list. Some businesses are still looking at how they might be able to split their liability where there are joint venture partners, and that may lead to an update of the list by the Clean Energy Regulator. Others, there might be some clarification of information in coming months and years that lead to their inclusion in the list.
We've said it would be well underneath 500. The regulator now has published 294 - so in the region of 300. As I said, there may be additions in coming months as the Regulator updates the list, but that's a matter of business for the Regulator. So, it's a very important clarification, and what it underlines is that it is a finite number of entities within our economy, particularly within the energy generation sector, that will carry the carbon price liability. That has a price impact across the economy that is quite modest, of only 0.7 per cent expected increase in the CPI. That has been the subject of very extensive modelling by the Treasury.
The principal commodity that is affected by the introduction of the carbon price in relation to these 300-odd entities, of course, is electricity prices. And it is the case now that electricity prices are being clarified by regulators around the country. The Federal Government had modelled an electricity price impact of $3.30 a week averaged across households. What are we finding? In Western Australia the price impact of the carbon price averages around $2.50 a week for households in the West. In South Australia yesterday it was clarified that the electricity price impact is just around $1.50 a week averaged across households in South Australia. In New South Wales it was clarified this week that the impact is about $3.30 averaged across households in New South Wales, exactly what the Treasury said it would be. And it's the same in Queensland. So that what we're finding is that the electricity price impact is either bang on what the Treasury indicated it would be, or well inside it as we've seen in the South Australian regulators clarification yesterday.
Now, of course, to help households meet that price impact, the Government is providing tax cuts, pension increases, increases in Family Tax Benefits and many other Commonwealth payments that will lead to an average level of assistance for households across the country of $10.10 per week. So if you just think about it in Western Australia here, $2.50 a week impact on electricity prices, $10.10 a week average assistance. Nine out of ten households will receive some assistance, but the most important thing is that the assistance is targeted at low and middle income households and in fact on these figures many, many households, millions of households, around Australia will be better off once this is introduced and once the tax cuts take effect along with the pension increases and the other forms of household assistance. On top of all of that the Federal Government has started paying the School Kids Bonus - $410 for a primary school child, $820 for each high school child. That is being rolled out now to families that are eligible for Family Tax Benefit assistance. And many of my colleagues today have been outside school gates around the country making sure that parents are aware of the rollout of this extra assistance.
All of this assistance added up for some families, for example that might earn as a household income in the region of sixty to eighty thousand dollars a year, might mean assistance in the order of two to three thousand dollars a year extra cash assistance depending on the family circumstances. This is very real help with cost of living pressures for Australian families and households and pensioners. And when we're looking at the issue of electricity prices, it is really only the Federal Government that is assisting people with these costs. And on top of what I've already described, of course, the Federal Government also made provision for particular people on Youth Allowance and some other unemployment benefit payments and the like to have access to an extra utilities payment and we did that in the Budget this year.
So, we're being very responsive to the cost of living pressures that families are experiencing, and we're doing that at the same time as we're introducing the carbon price. Upon introduction of the carbon price many households will be better off because of the assistance we're providing. The number of entities that are going to have a carbon price liability is identified by the Clean Energy Regulator, there's 294 of them now listed on the Regulator's database. That will just be updated as a matter of course from here on.
But, the implementation is proceeding and the one thing that is extremely clear, and that will become clearer every day after the 1st of July, and that is that Tony Abbott has gone around deceiving people about the impact of carbon pricing. He's tried to terrify pensioners in an extremely gutless performance. Pensioners will receive 1.7 per cent increase in their pensions to meet the 0.7 per cent CPI impact, and a lot of that has already been paid upfront for the first year in advance. He's tried to terrify people about their jobs. He's stood in front of coal miners and told them they're all going to lose their job.
But what do we see? We see a hundred billion dollars of investment coming into the coal industry; Coalition MPs increasing their investments in resources companies, historically large levels of investment in the resources sector and other parts of the economy, the economy performing very strongly, annualised GDP at 4.3 per cent, unemployment at 5 per cent, budget surpluses, triple A credit ratings. We do have uncertain times internationally, they are of course impacting upon our economy, but our economy is out-performing the rest of the world. This is a time when we can make important reforms. It is important for us to do so. We are doing so and we are spreading the benefits of the mining boom throughout the Australian community, through many of the measures that we have made. And we will hold Tony Abbott to account for the way that he has misrepresented these things and in particular the way that he has misrepresented the introduction of the carbon price to the Australian community because it has been a campaign of deceit. I'm happy to take any questions that you might have.
Journalist: There's been a lot of anger in the West about rising electricity prices and successive increases, are you concerned that your Government will end up copping the blame for that after the carbon tax comes in and we'll forget who put the increases through?
Combet: Well, this will be part of the argument that goes on, but we've always got to look at the facts with these things. It's very important that the community gets access to the facts. Electricity prices in Western Australia have gone up by over 50 per cent since Colin Barnett came to power and that has nothing to do with carbon pricing, nothing. There will be an electricity price impact from carbon pricing, averaging $2.50 a week for Western Australian households, but against that the Federal Government's providing an average of $10.10 a week in Household Assistance, plus the School Kids Bonus and plus other measures we've taken. So we're helping people. We're the Government that's helping people with these costs. Colin Barnett's had more than a 50 per cent rise in electricity prices and that's the fact of the matter. And I think the community in Western Australia will recognise what's gone on.
Journalist: Are you aware that (inaudible)
Combet: I'm aware of that and of course the Federal Government's going to be making sure that there are no misrepresentations of these issues. I'm sure the Australian Competition and Consumer Commission will be having a good look at what sort of information is provided to people about the impact of carbon pricing. It's been very active having a look at these issues. We'll tackle misrepresentation where it occurs. I'm not suggesting that that's Synergy's intent, but let's just have a look what's done. On our part, the Federal Government plans providing information on electricity price impact of carbon pricing, and all the other impacts on electricity pricing, we'll be providing that information factually to the community as well.
Journalist: How disingenuous do you find the Premier's activity? He was literally jumping up and down in Parliament on Tuesday shouting about the carbon tax and (inaudible)
Combet: Well of course there's been, by the Coalition, the Liberal Party and the National Party around the country, just a campaign of deceit about this issue. Now, Colin Barnett can jump up and down all he likes, but he can't escape the facts. He's put up power prices in Western Australia by more than 50 per cent, and that has nothing to do with carbon pricing. He's put up power prices by more than 50 per cent - that's a pretty heavy slug on Western Australian households. The carbon price has quite a modest impact, and it only averages $2.50 a week for households in the West, and the Government's providing - the Federal Government - $10.10 a week in assistance. This argument will go on, but you can't escape the facts.
Journalist: What sort of reception did you get in the Henderson and other industrial areas? Is it pretty hard sell to some of these companies that are big energy consumers?
Combet: No it's not, actually, because what companies are turning their minds to is how they can improve energy efficiency, and the Federal Government, of course, is using some of the carbon price revenue in a competitive grants program to provide grants that are done in contribution, in partnership, with contributions from manufacturers to reduce their energy costs and to improve their energy efficiency. And so there's an increasing recognition, I think, in the manufacturing sector that the way to respond to rising energy prices generally, and remembering the carbon price is just a small component of overall price rises, is to improve energy efficiency, apply new technology, apply information and communication technology to manufacturing processes, get your costs down. And I think we'll start to see innovation on that front from many manufacturing firms that will get their energy costs down. It is also something that as new projects start up in the West and in other parts of the country, with a carbon price in place businesses start to think, well, how can we design this project so that it's far more energy efficient than it might otherwise have done. How do we keep our emissions below the threshold that attracts carbon price liability? I spoke with one company this morning that's doing exactly that.
Journalist: There has to be some pain, though, doesn't there? Otherwise (inaudible).
Combet: I wouldn't describe it as pain. What the carbon price is, is an incentive for businesses to reduce their greenhouse gas emissions. What it will drive in our economy is innovation and more efficient power generation in our electricity generation system, more investment in renewable energy so that we bring cleaner energy into our system, greater efficiency in the poles and wires, the transmission and distribution system of electricity, and it will drive energy efficiency improvements in businesses, and other consumers, households, of electricity. And, I think, all over the country electricity prices have been increasing significantly in recent years. Nothing to do with carbon pricing, everything to do with investment that's needed in electricity generation and in its distribution. We've got to update our system, that's what's driving price rises and, of course, it's also driving investments in energy efficiency and that's increasingly what we'll see.
Journalist: Are you worried about the thing I think is in the back of a lot of people's minds, that we are a drop in the ocean in terms of world emissions? And that's obviously something that's been capitalised on by the Opposition. So, are we a drop in the ocean? Will we make a big difference (inaudible) China, the US?
Combet: It is very important to understand this point so thanks for the question. We are one of the top 20 greenhouse gas emitters internationally. That's Australia's position. We are in the top 20 of all nations in absolute terms in greenhouse gas emissions. It's not insignificant, we are similar to the United Kingdom, for example, and other advanced economies. But as a per person measure, as a per capita measure, we are the highest emitter of greenhouse gases per person amongst all of the advanced economies, greater than the United States for example. So when I am in the international community representing Australia discussing carbon pricing, discussing climate change, of course there is an expectation of us as there is of other nations to play our fair share, to play a fair part in tackling what is a difficult issue. There is an agreement internationally now that all the major emitters, including Australia and the United States and China, will reduce our greenhouse gas emissions and that that will be a binding obligation from the year 2020. We have to start now making a sensible and gradual adjustment to those obligations that will become legally binding from 2020. So, I spend a good deal of time in discussion with other countries about those issues. In particular, with our number one trading partner, China, a very important trading relationship to Western Australia, and China expects Western Australia, and Australia, as a nation to play its part in tackling this problem. And, of course, what the Government has designed is something to do it in an economically efficient way that will be environmentally effective and we are doing it in a socially fair and equitable manner as well by helping households. That's a good policy formulation. You can run all the scare campaigns you like, that Tony Abbott and Colin Barnett might do, but the facts ultimately will speak through. We will keep arguing our case.
Journalist: (inaudible). New Zealand's carbon price is just over $6. The New Zealand government halved the price when they came to government. Why can't you halve the $23 price to bring it in line with the international price?
Combet: I see the Sky News bureau has got the facts a bit distorted there. It was actually $25, halved to $12.50. So you've halved it once again. Let's draw a little bit of attention to the facts, it's pretty important in these things. Look what we have done, when you are talking about the international comparisons of carbon pricing, you've got to take into account that we are providing almost 95 per cent of the permits that are necessary for the entities that have an obligation under carbon pricing, we are providing almost 95 per cent of their permits for free. So if you think of alumina refining in Western Australia, the average carbon price that they will pay is only $1.30 a tonne of greenhouse gases emitted because we are providing nearly 95 per cent of their liability for free to make sure that we support the jobs in alumina refining and that those businesses remain competitive, but they also retain an incentive to improve their efficiency and reduce their greenhouse gas emissions. And that is the important comparator when you are talking what is the carbon price in other economies. For our trade exposed, emissions intensive parts of our economy the average carbon price is about $1.30. Within the domestic economy a $23 a tonne price is an entirely manageable reform and one that will drive down greenhouse gas emissions over time.
Journalist: (indaudible) 50 per cent increases in power prices, bearing in mind that the main driver our price rises is increased cost of generation and distribution, as you say.
Combet: Well, the State Government here takes responsibility for regulating electricity prices and if you put it up by over 50 per cent don't you have to take responsibility for that? That's fair isn't it?
Combet: Well, then he shouldn't be jumping up and down in Parliament trying to blame someone else should he, if that argument is correct? Thanks very much.
Stay up to date
02 6277 7920
Before you download
Most publications are available as PDF files. Adobe Acrobat Reader is required to view PDF files.
If you are unable to access a publication, please contact us to organise a suitable alternative format.
Links to another website
Opens a pop-up window