Topics: Water restrictions; legislating tax cuts; divestment laws for energy companies; reducing energy costs to consumers.

29 May 2019


David Bevan: Let’s welcome our panelists Rebekha Centre Alliance MP for Mayo, good morning to you. Alright now we’ve got you.


Ali Clarke: Now we’ve got you.  Good morning.


Rebekha Sharkie: Good morning to you. I’m calling you from my sick bed.


Ali Clarke: Oh really?


Rebekha Sharkie: Yes I said I would go on Super Wednesdays, so I am on the phone.


David Bevan: How sick are you?


Rebekha Sharkie: Look I had my flu shot, I had a pretty sick person in the office on Monday so I am blaming them, but I feel pretty dreadful.


David Bevan: You’re not just asking us to be nice to you?


Rebekha Sharkie: Be as you are.


David Bevan: Rebekha Sharkie congratulations on winning the seat.


Rebekha Sharkie: Thanks very much.


David Bevan: That’s as nice as it gets.


Rebekha Sharkie: Lovely.


David Bevan: Simon Birmingham Minister for Trade, Liberal Senator, good morning to you.


Simon Birmingham: Well good morning to everybody and best wishes to Rebekha there, we’ll send the chicken soup her way. 


David Bevan: Sarah Hanson Young, Greens Senator good morning to you.


Sarah Hanson Young: Good morning. Good morning everyone.


David Bevan: Can we just begin with a question without notice; it’s come in on the text line. Can somebody tell me why Adelaide is not on water restrictions asks Eric. Now, I think the answer to that is that water restrictions in Adelaide are PR exercise and they don’t achieve anything but Rebekha Sharkie, do think Adelaide should be on water restrictions?


Sarah Hanson Young: I’d just like to see us get some more rain.  Look I don’t know what triggers us to go onto water restrictions, I think we need to talk to the South Australian Government about that. But I think overall most people, well certainly my community are incredibly frugal with water.


David Bevan: Fair enough. Simon Birmingham, do you agree? Those water restrictions that we had a few years ago in the drought, they were a PR exercise all that it did was it killed our lawns so Adelaide looked like a dust bowl and it achieved nothing in terms of savings for the water from the River Murray because Adelaide takes such a small proportion of the Murray.


Simon Birmingham: Look the benefits are marginal David, I think that is fair to say but there’s a place for water restrictions at a time of extreme threats to water security and they are though in terms of urban water environments, decisions made by the State Government and SA Water looking at the security of the water flows that they have available to them to service metropolitan Adelaide in that sense. So the reasons why at present, obviously presumably the State Government and SA Water believe they have sufficient security for the next couple of years at least, and clearly there’s a desal plant that they could switch on and use if they needed to as well.


Ali Clarke: Sydney’s going onto water restrictions in the next couple of days. But Sarah Hanson-Young Greens Senator what do you think?


Sarah Hanson Young: Well I think last time we had those severe water restrictions I think it did play a role in how people thought about their use of water and it may have been marginal in terms of course the amount of water that we use out of the Murray because of course South Australia doesn’t take the bulk of water, we’re left with the trickle that the upstream states leave us.  But I must say if this State Government is going to move ahead with turning on the desal plant, you’ll see people reducing their own water use because it’s going to be bloody expensive. And you’ll become, we’ll have to start using water more wisely and being more water efficient. I’d like to see more money being spent on water harvesting projects perhaps we should be focusing on that rather than just restrictions, actually looking at how we recycle our water use.


David Bevan: Okay, at 20 minutes to nine. Rebekha Sharkie are your Centre Alliance colleagues in the Senate going to stop the tax cuts from going ahead?


Rebekha Sharkie: Look what we have said is we are doing our due diligence at the moment, we want to meet with the ACCC, we want to meet with the Governor of the Reserve Bank and Treasury officials because at the end of the day the Government wants to do all three tranches of it at once. I think the most logical thing would be for them to break up the bill, but with $158 billion over ten years we need to make sure, and that big structural change we need to make sure that that’s a responsible thing to do. So at the moment we haven’t said yes or no, we are just doing our homework.


Ali Clarke: Gary from Yankalilla says on the text line, I wonder how Centre Alliance will fair in Mayo at the next election if they do reject these government proposed tax changes in the Senate. How much stock do you take in those thoughts?


Sarah Hanson Young: Look I think that overall people want to see the tax cuts for lower and middle income earners and the government promised that we would have them before the end of this financial year. Now it looks like we’re not going to return to the Parliament until the first week of July. But the concern that we have is with the tax cuts for high income earners which don’t take effect for many years but that they would be legislated in this parliament, we just want to make sure that we do our homework.


David Bevan: Simon Birmingham.


Simon Birmingham: David, firstly I mean I hope it doesn’t come to Centre Alliance, we of course will work as we will right throughout the life of this Senate with the Centre Alliance Senators as closely as we can, to secure their support for legislation and to provide them with information and briefings that they need. But I hope that the Labor Party actually listened to the electorate, listened to the fact that they need to get more in touch with aspirational Australia’s and hardworking Australians, and support the plan we took to this election, that Australians backed in terms of delivering tax relief. Sadly of course there’s no Labor person for you to ask that question to today. But I hope that somewhere out there the Labor Party are listening to this broadcast and think long and hard about what the message it would send if Mr Albanese’s first act as the leader of the Opposition was to vote against tax relief for hardworking Australians. Can I also just say in terms of what the tax cuts do for the highest income earners, it actually increases the share of personal income tax that they pay. So for those on the top tax bracket around five per cent of Australians, there is no cut to the rate of that tax bracket and the share of the income tax that they pay will go up from around 32 per cent of the total income tax take, to around 36 per cent of the total income tax take. So we really have targeted this at low and middle income earners, to make sure there’s incentive to work an extra shift, work an extra day, get a promotion and know you’re not going to be pushed up into a higher tax bracket.


David Bevan: Sarah Hanson Young, maybe the Greens could come on side and you’ll pass them?


Sarah Hanson Young: Look we’re really worried about the idea of locking in tax cuts for the wealthiest Australians for something that is just being pushed off into the never never. I mean, these tax cuts to the high income brackets aren’t even going to take place until 2024, that’s after the next election. It’s a bit ridiculous that the government continues to bang on that they’ve somehow got to get this done now when in fact, we could have the next election and we could be in the midst of the fight for the one after actually before these take place. We think the tax cuts to low income Australians are probably warranted and we’re happy to talk about that. But if the government wants to get this through, they should split the bill and stop playing politics. The vast majority of the Senate would be willing to tick off on those low and middle income tax cuts, people could have them as of 1st July and we could get on with that. But the idea of locking in massive amounts, billions of dollars of spending on tax cuts which is going to come at the cost of cuts to health, cuts to hospitals, cuts to schools, it’s economically reckless and when the majority of tax payers earn less than $70,000 a year, those people should get their thousand bucks and the wealthiest Australians, they’re not going to get anything until 2024, let’s not sabotage government spending it and public service budgets.


Ali Clarke: Simon Birmingham, well why not do that?


Simon Birmingham: To begin, there’s no savaging of public service budgets or indeed funding for schools, hospitals, roads, the NDIS all continues to grow and guarantee into the future under these plans. In terms of what we want to legislate, we want to legislate the policies we took the Australian people at the recent election and I suspect that’s what most Australians expect us to do as well, to bring forward to the Parliament those policies that we took to the election and said we would implement if elected and to get on and do that. We want to do so in a way that provides some long-term plans around tax reform in Australia, so people can plan for their future, not just do it in piecemeal year by year, but actually have something that is a plan that works out over a series of years and I think when Centre Alliance sit down and talk to economic commentators and those such as the Reserve Bank Governor and Treasury and others, they’ll find firstly that the funding for future services is guaranteed and locked in because that’s what the independent pre-election fiscal outlook released by the Treasury and Department of Finance demonstrated. But secondly, they will also hear that there is a real desire to see these tax cuts legislated to help boost consumer confidence, business confidence and to make sure that they play a key role as they will in keeping our economy strong and generating jobs for Australians.


Ali Clarke: Well one of our texters just wants it, it would be great, if on the bank statements that they got it just said if you’re a high income earner, a middle income earner or a low income earner. But we’re heading up or in fact we’ve just past a quarter to nine and this is Super Wednesday. That was the voice of Simon Birmingham, Minister for Trade and Liberal Senator, Rebekha Sharkie is off her sick bed, just as Centre Alliance MP for Mayo and Sarah Hanson-Young, Greens Senator as well. 


David Bevan: Simon Birmingham, can you explain to us what the government’s big stick divestment laws are? There’s a story on the front page of The Australian today saying that your government, the Morrison government is preparing to revive the big stick divestment laws which relate to energy companies? 


Simon Birmingham: So these laws seek to ensure that retail energy providers don’t engage in price gouging activities that rip off consumers but actually deliver the best possible price that they can to Australian consumer, to households, businesses to keep prices as low as possible and try to drive them down over the coming years. So they build on reforms that we have already put in place such a new benchmark pricing that starts on the 1st of July this year. But they also have penalty provisions so if retailers do happen to engage in price gouging and rip off consumers, you want the government to be able to respond to that. Now those penalty provisions are gradiated, they start with financial and administrative recourse but eventually if you were to have an energy retailer thumbing their nose at the government and continuously and repetitively engaging in poor behavior well there is potential a power there to say, actually we think one of the factors driving this is the market dominance of that retailer and therefore we will force them to divest some of their assets, to split themselves up so that there’s more competition in the market and to reduce that market dominance.


David Bevan: Now you talk about retailers but are we also do a generation assets, so for instance if a company refused to sell its coal fired power station and said no we are going to close it down, it’s not the future and we don’t want it in the market after us, so we’re going to close it down, could the government use these same laws to force that company to sell the asset?


Simon Birmingham: No these laws don’t work in that way. There are what are known as gentailers in the market, those who have significant generation capabilities as well as a big retail profile. But these laws are looking at consumer pricing arrangements in terms of the contracts and arrangements that households and businesses interact with an energy retailer and how that retailer behaves in the marketplace, and that’s the end that it’s focussed on in terms of ensuring effective competition at that retail end.


David Bevan: Because we had a situation where I think AGL wanted to close down its coal fired power station and the federal government said, look this was back when Malcolm Turnbull was your leader, a long time ago I know, but we remember him.  


Simon Birmingham: Fondly, David, fondly.


David Bevan: And he was flagging well maybe we could make you sell it rather than close it down. You’re absolutely sure that these divestment laws, because they pertain to generation assets as well, it couldn’t be used to force a company to give up a coal fired power station to another operator that is prepared to keep it running?


Simon Birmingham: No I don’t believe that is the intent or would be the outcome of these laws.  What we did do in relation to that circumstance was we took some action around the notice period that generators have to give if they are intending to close down an asset, so that we can have a lot more planning that then goes into the energy generation system rather than face the abrupt shock of an asset closing down in the space of one or two years, and therefore facing potential shortages and price spikes of that generation end.


Ali Clarke: I just want you to listen to something that we all heard during AM, it’s the Lowy Institute researcher Herve Lemahieu, he spoke to AM about why Australia isn’t making an impact in Asia after they did their Asia Power Index, and in fact they’re very very static in the Asia power rankings.


Herve Lemahieu (Lowy Institute): The huge changeover, the churning in Canberra, the spills that we’ve experienced over the last several years have impacted the ability of Australian leaders to form lasting relationships with their counterparts in Asia.


Ali Clarke: Rebekha Sharkie, Centre Alliance MP, would you agree?


Rebekha Sharkie: Well look I think it has been very challenging for us to have those long term relationships because we’ve had so many Prime Ministers, we’ve had, so many changes of ministers  at the top and it would be very difficult for other countries to see they have relationships and bonds with us. Certainly when I was travelling with a delegation last year with the Speaker, much was made was made of the number Prime Ministers that we’ve had in recent years, it was sort of small talk. But look I think that Australia sits in a fantastic place within the Asia Pacific region, I think it’s interesting with the rise of Indonesia and obviously I think we have slipped from sixth to seventh, but hopefully we can still be an important part particularly because of the growth of the population in Asia, we essentially have the potential to be the food bowl for that.


David Bevan: Simon Birmingham, you are the Trade Minister, you have to deal with these people. Do you agree with the analysis that Australia is at best static perhaps sliding down the rankings because we’ve had such a churn?


Simon Birmingham:  Look I don’t know if I accept all aspects of the analysis I think Australia still carries significant influence through the Asia-Pacific region.


David Bevan: But not as much as it could?


Simon Birmingham: But I think it will be important in the life of this Parliament given the changes to the rules that Scott Morrison made early as Prime Minister, that we do not have confidence in stability of leadership that Scott will be Australia’s Prime Minister all the way through until the 2022 federal election at least, and I think that confidence will not just encourage the Australian people in terms of the confidence they have in our government, but also in terms of our engagement in the region. And I’ve been in touch with many of my trade ministerial counterparts since my appointment was reconfirmed, and certainly the many relationships that I’ve built up over the last nine months provides an important platform on which to build over the next three years now.


David Bevan: And Sarah Hanson Young, just very quickly, getting back to the issue of power, do you accept what some Simon Birmingham says that the Morrison Government will not use these divestment powers to keep old coal fired power stations going?


Sarah Hanson Young: Well no, that’s precisely what the Greens are concerned about and that’s why we’re going to move amendments, we’ve already tabled amendments to this legislation that would stop the government pouring public money into either prop up coal or indeed build a new coal fired power station as some of Simon Birmingham’s Queensland colleagues would like the Australian taxpayers to do. If the government doesn’t have a problem with this then they should accept the amendments and lock it down. But I suspect David you are on the money, there is a quid pro quo going on here, the government wants to look tough on electricity prices, meanwhile spending public money and giving a wink and a nod to their climate deniers in their own party and the pro-coal brigade in Queensland to say here is some public money to keep your failing assets alive at a time when we need to be reducing emissions. The government’s energy policy is in a shambles and until they have a proper plan to reduce carbon pollution we are not going to get lower electricity and we are not going to get action on climate change.