PATRICIA KARVELAS, HOST: The Government will today formally pledge to the United Nations its commitment to cut carbon emissions by 43 per cent by 2030. Prime Minister Anthony Albanese joins us now. Good morning, Prime Minister.
ANTHONY ALBANESE, PRIME MINISTER: Good morning, Patricia. Good to be with you. And good that Warwick asked me the first question, which is that I was there in 1971 to see Souths beat St George on the SCG Hill.
KARVELAS: I know you were.
PRIME MINISTER: Had to get that in, Patricia.
KARVELAS: know you were. I know that's all you want to talk about. And long may it continue that you love the Rabbitohs. Now let's talk about the serious issues that I know have been consuming you. Australian households are being told to turn the lights off. Is it a matter of national shame, Prime Minister, that it's come to this in a country with such abundant energy sources?
PRIME MINISTER: Well, it should be a source of incredible embarrassment for the occupiers of government over the last nine years that we've had this situation arise. This is a direct result of a failure to invest and the failure to have an energy policy of having 22 policy announcements, but not landing one. And as a result of that, we have the circumstances that AEMO dealing with through the National Energy Market. The suspension of the pricing mechanism temporarily was considered the best way of simplifying the operation of the National Energy Market as a result of the unplanned withdrawal of generators from the wholesale market. So we support the action that has been taken. We are cooperating, of course, with industry, with the states and with the Australian Energy Market Operator, and they're going to be making an assessment on a day by day basis to make sure that those who need energy, particularly not just households, but of course industry, are able to continue to operate.
KARVELAS: Prime Minister are we now seeing a complete market failure in the electricity sector?
PRIME MINISTER: Well, what we've seen is a failure of policy that has led to a market failure, and that is why AEMO have stepped in here. They have this tool at their disposal and they're using it and we support them using it because quite clearly, if the market was just left to operate, there were vulnerabilities that have been exposed. But this has been warned about for a long period of time. This is what happens when you don't have investment certainty, when you don't have the transmission grid fit for purpose for the 21st century, which is why there aren't simple one day or even one week fixes to this, but AEMO are doing their job and we support them in their actions.
KARVELAS: There may be a perfect storm of reasons why the sector has reached crisis point, but doesn't it essentially come down to the way the market is designed? And will you, as Prime Minister, and your Cabinet, end the incentives on offer to generators which encourage them to price gouge by withholding supply?
PRIME MINISTER: Well, there are weaknesses, clearly, that have been exposed. And all of the lessons of what is happening will be examined, and if there need to be any policy adjustments, then they'll be made. But essentially what we're seeing here is a problem with a failure to invest in supply. A failure to ensure that the transmission is available. That the grid essentially takes in renewables and is able to operate effectively. And it's beyond my comprehension why, when in my first Budget Reply, we announced the Rewiring the Nation plan. It was based upon the Australian Energy Market Operator's Integrated Systems Plan. We didn't sit in a room in Parliament House and work this out. This is what the energy security leadership was saying was necessary. This is what AEMO had planned for. And yet, we saw no action from the Federal Government. All we saw was a continuation of a rhetorical wars between Barnaby Joyce and others.
KARVELAS: There was a rhetorical wars but now you're in charge.
PRIME MINISTER: We are. And we will be implementing our plan.
KARVELAS: So are you going to change the rules? Are you going to change the rules of the way the electricity market operates?
PRIME MINISTER: What we'll be doing is implementing our plan, Patricia, that we outlined very clearly before the election. I's a plan that has the support of industry, including at this morning's event, you will see the wide support that it has from business because they know that you need that certainty to operate. AEMO have used the existing rules in their intervention yesterday.
KARVELAS: Because they were basically being gamed by the industry.
PRIME MINISTER: Yes, that's right.
KARVELAS: So should that brinkmanship, that ability to play the game, be stopped by the rules being rewritten?
PRIME MINISTER: Well, it was stopped yesterday. That's the point of the intervention.
KARVELAS: So does that mean you think the rules are working? Or do you think they need to be rewritten?
PRIME MINISTER: No, it means that we'll continue to monitor if there any policy lessons to be learnt from what is occurring right now.
KARVELAS: What your instincts.
PRIME MINISTER: We won't hesitate. My instinct is to not make policy on the basis of a radio interview. My instinct is that after ten years of knee-jerk reactions responding to the politics rather than responding to appropriate policy settings, based upon proper advice that my Government and Chris Bowen, as the Minister, will act in a considered sober way to make sure that as we go into the future, anything that can be learnt from what has happened this week will be. But we won't hesitate to take action that's available, and in this case AEMO had the power under the existing rules and that is exactly what they have done.
KARVELAS: How long do you expect the market to be suspended and could this drag on for months?
PRIME MINISTER: Well, it's a day by day decision by AEMO they want the market to be able to operate, but they'll make these decisions on a day by day basis.
KARVELAS: The energy regulator recently ruled that basic household electricity bills would be allowed to increase by as much as 8.2 per cent above inflation, which is now expected to top 7 per cent, as you know, this year. Consumers will also be slugged with the compensation to be paid to wholesalers. Is there anything the Government will do to help with the looming price shock?
PRIME MINISTER: Well, we know that there is massive cost of living pressures out there, Patricia. But we know also that there are limits to what the Government can do, we're inheriting a trillion dollars of debt. And there are already, of course, some measures which Labor supported from Opposition were in the Budget, including the LMITO measures for low and middle income workers, the one-off payments that were included in the Budget in March and the changes that were there temporarily to petrol taxation as well. So we know that there are some measures already in the Budget and we know that the Budget is under enormous pressure, but we are very conscious of the pressure that families are feeling from rising prices.
KARVELAS: Labor wants to say 82 per cent of electricity generated by renewables by 2030. The Opposition Leader, Peter Dutton, says you have spooked the market by rushing the process. That why we're seeing this crisis. What's your response to that?
PRIME MINISTER: Just it's a breathtaking response from a bloke who's been part of the Cabinet for the last almost a decade, that hasn't landed a single policy. You know, you had a circumstance whereby Josh Frydenberg, under Malcolm Turnbull's leadership, had an energy guarantee that they wanted to implement, instead of implementing the policy they rolled the leader. And you've had chaos in the sector. Peter Dutton needs to speak to people in the Australian Industry Group or the Business Council of Australia or the Australian Chamber of Commerce and Industry, about exactly the circumstance where business has found itself with a failure to invest. I was yesterday up in Gladstone, we were at the alumina refinery run by Rio Tinto. They're looking at billions of dollars of investment and you know what they're saying? It's good that there will be an actual policy framework going forward and that there will be the certainty which is a precondition for investment. The market won't operate in terms of attracting investment. If you have a change of policy every few months and if you have ministers at a senior level fighting and contradicting each other. You don't run good policy by having knee-jerk statements, trying to get a headline in the newspaper on a day by day basis. You run it by having an effective policy that's properly costed, that properly planned, and that is what our policy will do.
KARVELAS: Prime Minister, on the 5.2 per cent increase in the minimum wage, you are claiming political ownership of the decision, but is there a risk that this could fuel inflation which is tipped to reach 7 per cent.
PRIME MINISTER: Well what Ian Ross has said is that he took into account the economic circumstances and the pressure which particularly low wage workers were feeling. Patricia, I just spoke about the support that was provided in the March Budget on a bipartisan basis because of the pressure that particular groups were feeling. But you have a circumstance whereby when you have inflation rising, the cost of everything going up except for people's wages. I was asked during the election campaign would I welcome not having a real wage cut for the lowest paid workers? And I said, absolutely. And I stand by that. And that's why I welcomed the decision yesterday.
KARVELAS: And will the Government keep arguing that wages should match inflation even if inflation reaches the Reserve Bank's forecast of 7 per cent?
PRIME MINISTER: We've made it clear, Patricia, that this was a particular circumstance at this time for the national wage case, for minimum wage workers in the context as well, of those minimum wage workers being hailed as heroes during the pandemic. So they deserve a bit more than just our thanks and our applause. They deserve a real wage increase. And that is why the Fair Work Commission, had taken into account issues like the state of the labour market, what the rate of unemployment was, they take into account all of their economic circumstances and they agreed effectively with the Government's submission that the lowest paid workers who were on just $20.33 an hour will now have that increased by just $1.05 an hour, didn't deserve a real wage cut. You've got to look at the opportunity cost here, Patricia, and do people who are struggling to get by with the cost of living, with inflation rising, deserve a real wage cut? And my answer to that is the same as the Fair Work Commission, that when you take into account the economic impact of this decision, it is the correct one.
KARVELAS: Prime Minister, I look forward to many conversations now that you have become Prime Minister. Congratulations. I don't think I've said congratulations to you. So congratulations and thanks for joining us.
PRIME MINISTER: Thanks very much, Patricia, and my apologies, I understand you've got the dreaded COVID.
KARVELAS: I got it after you, though. So I studied yours first.
PRIME MINISTER: I thought you might have got it at the election night.
KARVELAS: I did. I got it at your event.
PRIME MINISTER: That's why I'm apologising, though. It's a bit of a super-spreader that event, I'm afraid.
KARVELAS: It certainly was, but I don't regret going. It was quite a night. And your speech was quite extraordinary. Thank you for joining us.
PRIME MINISTER: Thanks very much, Patricia.
KARVELAS: Prime Minister Anthony Albanese.