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Interview with ABC774 Melbourne

19 December 2016

Interviewer: 
Steve Martin

Subject: Meeting with Alcoa CEO in New York to help secure jobs at the Portland aluminium smelter; sustainable power solution for Alcoa; Clean Energy Finance Corporation

E&OE

STEVE MARTIN:  

Greg Hunt joins me in the studio this morning. Minister, good morning to you.

GREG HUNT:         

Good morning Steve.

STEVE MARTIN:  

Thanks for your time. Why go see Alcoa?

GREG HUNT:         

Very simply because it’s about working in deep cooperation with the State of Victoria, as well as the company, as well as the unions, to put the best case forward for the long term retention of jobs and the smelting plant in Portland.

These jobs are fundamental to South West Victoria, but they also help Victoria’s gross state product.

In other words, it’s Victoria’s largest exporter. So we think there is a long term future, but the power outage coupled with the renegotiation of two contracts has made this a very risky time, and we’ll work with everyone to do everything we can to fight for and preserve those jobs.

STEVE MARTIN:  

Clearly, you’re worried about the future of this facility, the two of you going over to the US.

GREG HUNT:         

Oh look, it is a serious issue. I am optimistic, but I am not giving any false guarantees, and I think that’s the honest place to be.

I know that the local member Dan Tehan, really one of our outstanding Members of Parliament nationally, has worked incredibly hard on the ground with the company, with the unions, with the state, and I’m obviously doing the same thing, and we’re in what I describe as genuine deep cooperation with the Victorian Government.

Some things are just so much more important than any partisan differences.

STEVE MARTIN:  

What incentives do you take? Is there a bucket of money going on this trip to entice Alcoa to stay?

GREG HUNT:         

Well, what we’re looking at, and we have made available and indicated to the company, is what’s called the Clean Energy Finance Corporation could be available for them to establish in the medium term a lower emissions power source than the brown coal they currently have.

It would probably halve emissions, but it would give them an approach which reduced or abolished their transmission costs, which is a very large part of that challenge they’re facing, and potentially gives them a very stable, secure energy supply.

Victoria is looking at the issue of long term support. I’ll leave that to the Victorians. In fact, we’ve said…

STEVE MARTIN:  

That’s the power contract you’re talking about.

GREG HUNT:         

That’s the power. I’ll leave that to them, because that’s their side of it.

So we’re working in cooperation, and what I want to see is the company commit to restarting, as you say, the near three-quarters of production which is not occurring at the moment, and if that is restarted, then we can all look at medium term options.

STEVE MARTIN:  

So Clean Energy Finance Corporation potentially to help fund a new power station in the south west of the state, and a gas-fired one.

GREG HUNT:         

Well it’s not for us to determine. What we do is we make the facility available, and it provides lower interest loans on a long term, patient basis.

So it’s the Commonwealth providing cornerstone loans. So it could be gas, or it could be a gas hybrid with renewables, but all of the advice I’ve got is that you would need some form of gas as a part of it.

But that would probably halve emissions to the plant, as well as dramatically reduce what are called transmission costs, as well as give them stable energy supply, which is what really matters to them.

STEVE MARTIN:  

Alcoa uses about a quarter of the state’s electricity supply. Hazelwood is closing. I just wonder if, and that produces about 25 per cent of the state’s power supply.

Ultimately, for Portland Aluminium, and I know better than most because normally I’m based in Ballarat and Portland is part of my normal broadcasting area.

So I know how important this facility is to that community. But ultimately, is it worth it? Is it worth doing all this for one company in one port town?

GREG HUNT:         

That is an important question in my view and in the Government’s view. Clearly, yes, and this is because it’s the state’s largest exporter. It can have a sustainable future.

What matters for them is electricity prices and reliable electricity.

Now, one of the ways of doing that potentially is either partial or full electricity production from their own plant or a regional plant, and the type of that would be a matter for the company.

So we’re simply saying that here’s a perfectly placed Commonwealth facility which can help you finance on a long term basis stable, reliable, secure energy at half the emissions of what might otherwise be the case.

STEVE MARTIN:  

Do you know the timelines the company is working to at the moment?

GREG HUNT:         

Look, I think they are seeking to try to resolve this before Christmas, but nobody’s giving any false guarantees. What we’re doing…

STEVE MARTIN:  

What do you mean resolve before Christmas? Make a decision on the future of the plant?

GREG HUNT:         

On whether or not they will restart now.

Now, I know that the Victorian Government, with whom we’ve been speaking on an almost daily basis and sometimes multiple occasions during the day, has just decided to work with the Commonwealth, and we’ve decided to work with them on something which is not just of Victorian state importance, but I regard national importance.

Because we can have a manufacturing future, but we’ve got to be world-class competitive.

And what all of the manufacturers say to me is (a) they need gas suppliers, (b) they need long term, reliable energy at an affordable price.

STEVE MARTIN:  

Alright. Minister, I know you have to get to the airport quite literally soon to fly to the United States. Before you go, MYEFO comes out today.

GREG HUNT:         

Sure, of course.

STEVE MARTIN:  

AAA credit rating is at risk, apparently. You read all the different articles that are around today. It sounds like we are going to lose our AAA credit rating.

GREG HUNT:         

Well, I won’t speculate on any of that. What is MYEFO, for people who are wondering? It’s the Mid-Year Economic Forecast.

I know that Scott Morrison and Mathias Cormann, the Treasurer and the Finance Minister have been working incredibly hard.

A huge proportion of Government expenditure is legislated. Therefore, we’ve made $20 billion- $21 billion of savings since the election, working very well with the crossbench, and we’ve also had one major piece go through with the Labor Party.

And our job is to make sure we don’t leave the bill to the next generation.

We’ve got to deal with it in our time on our watch, so we will fight to get this budget back to a long term, sustainable basis. That’s what being in Government’s about. Difficult decisions, but the right decisions.

STEVE MARTIN:  

As former Environment Minister, the Green Army looks like it’s going.

GREG HUNT:         

Again, I won’t speculate on that. There are many, many good environment programs, but we always have to live within our means.

STEVE MARTIN:  

Minister, thanks for your time this morning,

GREG HUNT:         

Thanks a lot.

STEVE MARTIN:  

Greg Hunt is the Federal Industry Minister, and heading to the United States today to talk to Alcoa along with Wade Noonan, who is the State Industry Minister as well.