FRAN KELLY: Angus Taylor is the Federal Minister for Energy - he joins me in the Parliament House studios. Minister, welcome back to RN Breakfast.

ANGUS TAYLOR: Thanks for having me, Fran.

FRAN KELLY: I'll come to the NEG in a moment. You've been forced to amend this legislation - the divestment legislation - to get it through the party room and to address some constitutional questions. But business still have concerns, grave concerns, they say the Bill: “Remains terrible policy and a significant overreach by government” - that's Origin, energy company. Very strong opposition across the board. So, why are you going ahead with it?

ANGUS TAYLOR: Well, it is strong reform, Fran. It is strong legislation.

FRAN KELLY: So, are you saying they would say that, wouldn't they?

ANGUS TAYLOR: Well, they would. I mean, the energy companies have been responsible for dodgy practices in recent times - price gouging, loyalty taxes - there's a long list here. There needs to be culture change in those companies and in that industry, and it requires strong legislation. Now, the important thing about this legislation is it is strong but it has checks and balances. It's targeted, it's energy specific, it's time limited, it goes through 'til 2025, and the ultimate sanction here - which is asset divestment in the most extreme cases as a last resort - is court ordered. So, these are balanced proportionate responses to what's been a very significant problem, making sure that we hold the energy companies to account for behaviour which has been unacceptable, for behaviour change which is required and for culture change which is required within the sector.

FRAN KELLY: We spoke with the Energy Council earlier in the week and their major concerns were that they thought this brought in sovereign risk and would also discourage investment. Does this reworked Bill address their concerns?

ANGUS TAYLOR: Well, let's be clear, in the UK and the US - the Sherman Act and the Enterprise Act respectively - both have industry or economy-wide divestment powers, UK and the US. We're talking here about very targeted time limited divestment powers. So, I never hear any investor saying I'm not investing in the UK or the US because they have the Sherman Act and the Enterprise Act-

FRAN KELLY: And you have adjusted your bill to deal with that because they have court imposed.

ANGUS TAYLOR: Of course - and it is court imposed. So look, this is far narrower than we see in the UK and the US, it's targeted on the energy sector. As I say, I don't see any investor saying, well, I'm not investing in the US and the UK for that reason. So, really, look, you would hear this kind of noise from the energy companies but what we really need to see from the energy companies is an acceptance that change has to happen, that the customer has to start coming first, not the record profits that we've seen in recent years.

FRAN KELLY: Sure, but we also need certainty and we all need to know what the new rules are. If under this bill if the ACCC suspects misconduct in the wholesale market, the Treasurer can apply for a divestiture order. What would constitute energy market misconduct? Can you define that for us?

ANGUS TAYLOR: Well, there's a range of different misconducts or prohibited conduct that is in the Act. The first is price gouging - when the retail price is not following the wholesale price in a sensible way. The second is misconduct in the wholesale market, so this is as you say, withdrawal from the market to hike prices, price manipulation. And the third is-

FRAN KELLY: We have regulators already to govern this, this is what the market is supposed to-

ANGUS TAYLOR: Well, the powers need to be strengthened because we've seen - we've seen in the past-

FRAN KELLY: Well, maybe the regulators need to be strengthened.

ANGUS TAYLOR: Well, the powers need to be strengthened, Fran - this is why we're doing this because we have seen unacceptable behaviour in the past, we need to make sure that powers are there for both the ACCC and the Treasurer with the right checks and balances to hold the big energy companies to account when they do the right thing- the wrong thing, sorry. Most of all what we want to see is a change of culture to focus on the customer. If the companies get on and do that - we're starting to see the first signs of that with the price cuts which are coming through now, up to 15 per cent price cuts for the most loyal customers, we need to see a lot more of that, that root and branch culture change focus on the customer has to happen.

FRAN KELLY: How does this fit with the liberal beliefs and values of free enterprise and small government? Because there was a significant push-back in your own party room led by Julie Bishop yesterday, backbenchers with strong philosophical objections to the Government forcibly breaking up private companies.

ANGUS TAYLOR: Well, we strongly believe in free enterprise but we strongly believe in small businesses getting a fair deal from big companies. That is a central value for the Liberal Party. We have seen in the past that small businesses and hardworking families haven't got the fair deal they deserve. When there is unacceptable behaviour in a market as important as electricity - this is an essential service, Fran, every Australian business and household buys this service - so it's essential that it be fair and that the culture in the industry be one which is focused on giving the customer a fair deal under all circumstances. Now, that hasn't been the case. Lots of your listeners out there will have seen behaviour from the energy companies that they think is unacceptable - dodgy, sneaky, late payments.  I mean, the way late payments have been imposed on customers where if they pay a day or two late, they end up seeing a huge hike in their bills. I mean, this is the sort of stuff-

FRAN KELLY: But is that the sort of stuff that would force divestment? Surely not.

ANGUS TAYLOR: No, I've said the divestment power is focused on the most heinous of misconduct.

FRAN KELLY: Okay.

ANGUS TAYLOR: And in particular withdrawal of supply from the market in order to hike prices and we have seen supply being withdrawn and the impact that's had on prices in recent times. We need to make sure that we have the supply in the market to meet the needs of customers and to keep prices down.

FRAN KELLY: You're listening to RN Breakfast. It's 7.42. Our guest is Federal Energy Minister - I've forgotten you're name for a moment…

ANGUS TAYLOR: Angus Taylor.

[LAUGHTER]

FRAN KELLY: Angus Taylor! I knew your first name, it was your second name that escaped me! To get these laws through, you're going to need two votes from the crossbench. The Greens are on board to some degree with divestment but they won't support this unless you abandon the plan to underwrite new coal-fired generation. They've got a Private Members Bill supported by Labor, to stop you giving financial assistance to coal plants. Are you willing to do that trade?

ANGUS TAYLOR: Well, look, the crucial question with getting this through the Parliament is which side of the table does Labor sit on? Because if Labor joins with us, this will go through.

FRAN KELLY: Well, they don't join with you, they won't join with you.

ANGUS TAYLOR: Well, let's be clear, they've got to make a decision-

FRAN KELLY: Well, they've made their decision.

ANGUS TAYLOR: Well, let's see. They've got to decide whether they sit on the side of the big energy companies or the side of customers, hardworking families and small businesses that I've been talking about. Now, that's a big decision for them. It's also a decision for every other member of the Parliament, but as always with these things if Labor decides to join with us to hold the big energy companies to account then this legislation will pass through the Parliament without any trouble.

FRAN KELLY: Well, to some degree that might depend on whether the Government decides not to underwrite new coal. Your former prime minister Malcolm Turnbull said, yesterday, renewables are cheaper, to claim anything else just means: “You're living in fact-free zone”. Do you accept that?

ANGUS TAYLOR: Well, we've said - we've said-

FRAN KELLY: Do you accept that?

ANGUS TAYLOR: Look - I don't try to pre-empt decisions of investors, I let investors make decisions.

FRAN KELLY: No, but I'm sure you've had the good look at the market and electricity prices.

ANGUS TAYLOR: Fran, at the end of the day, I have been an investor in the past. It is not the role of commentators and experts to tell investors what to do. They'll make their own decisions and they should make-

FRAN KELLY: Of course.

ANGUS TAYLOR: That is what a free enterprise economy is all about.

FRAN KELLY: Yeah.

ANGUS TAYLOR: So they'll make their own decisions. What we have said is that we want a shortlist of projects together by early next year, which will be balanced. I'm not going to pre-empt now, speculate what's going to be in that shortlist, other than to say we've got to have balance in this system. Now, the International Energy Agency has come out in the last 24 hours saying across the world we need balance. The system has to have balance. You can't have a head long rush to renewables without having balance in the system. We've got a lot of renewables coming into our system - 250 per cent increase in solar and wind in the next three years-

FRAN KELLY: Because it's cheaper.

ANGUS TAYLOR: Unprecedented, unprecedented - but balance has to be maintained, Fran, and Labor's 45 per cent emissions reduction target and their attitude towards this is one which is not balanced and will take us to where South Australia has been, with the highest electricity prices in the world and a struggle to keep the lights on. Now-

FRAN KELLY: But Minister didn't the Chief Scientist come up with this? Didn't Alan Finkel say: well, any renewables must have storage? And everyone supported that, so that's the new rule, isn't it?

ANGUS TAYLOR: Well, Bill's batteries - Bill's pink batteries don't get anywhere near giving us the storage we need. You need time, you need balance.

FRAN KELLY: Yeah.

ANGUS TAYLOR: And this is the craziness of what we're seeing from Labor and the Greens. There's no sense of balance, there's no sense of patience, there's no sense of-

FRAN KELLY: But is there not? Is Labor saying we'll have renewables without batteries, without pumped hydro, without storage?

ANGUS TAYLOR: Well, they want all the coal to go and you can't lose balance in the system and-

FRAN KELLY: Just to get perspective on this though, the call and what I was talking to you about was not wanting all the coal to go, it's where the Federal Government, at this point, will underwrite new coal, use taxpayers' money to underwrite new coal, will you?

ANGUS TAYLOR: Yeah, no, I understand, but let's be clear about what the Greens and Labor are saying. Greens do want all coal to go and Labor has been clear they want a 45 per cent emissions reduction target, which is frankly, completely unachievable without losing balance in our system. That's just the way it works. So in terms of what we will do with the- making sure we've got enough of the right balance in the system, having the shortlist of projects in the New Year. I'm not going to speculate about what projects are going to be in there but I will say is that the system has to have enough 24/7 reliable power to keep the lights on and keep the prices down.

FRAN KELLY: So, you're certainly not ruling out underwriting new coal?

ANGUS TAYLOR: Well, I'm just saying there needs to be balance and I can't emphasise that enough. The IEA itself has said that in the last 24 hours and policies need to be sensible in this space. Look, we are seeing enormous investment in renewables, $15 billion committed now. People talk about not enough investment, there's enough investment. There's a huge amount of investment but balance is our challenge now.

FRAN KELLY: Angus Taylor is the Federal Energy Minister. Angus Taylor just finally, Malcolm Turnbull has urged the Government to revive the National Energy Guarantee, reminding us all the NEG has the support of industry, of the states, of the Cabinet, of the party room. Now Julie Bishop wants the Government to really embrace the NEG. Labor's offered a bipartisan approach on the NEG. Why is the Government rejecting its own energy policy? It has overwhelming support.

ANGUS TAYLOR: Malcolm Turnbull pointed out that the real choice for Australians coming up at the next election will be between Labor with a 45 per cent emissions reduction target and us for the 26 per cent target, which is achievable in the National Electricity Market without further intervention. That's the real choice, Fran. Now, you ask about the NEG-

FRAN KELLY: I was asking about an energy policy that you supported.

ANGUS TAYLOR: Let me be clear about what the NEG is, that reliability obligation - which we are doing, which we are doing and we need the states to step up in the coming weeks at COAG to support that - and a 26 per cent emissions reduction target which we will achieve without further intervention, without further intervention. We'll be there in the early 20-

FRAN KELLY: Now, you keep telling us that but the NEG had a mechanism. We have no mechanism, do we?

ANGUS TAYLOR: You know, Fran, you don't need to intervene if you're going to get to the outcome anyway. That's the point. Mechanisms aren't created for the sake of it. They're created because you are not going to achieve the outcome you would otherwise achieve. 26 per cent we will achieve in the early 2020s. So we've got breathing space. The key now is balance, getting prices down and keeping the lights on. That must be the emphasis. That's our emphasis and that's why we'll be holding the big energy companies to account with this legislation. It's why we need to have a balanced set of investments going into the industry and it's also why we're so focused on getting rid of the loyalty tax, getting prices down. We've seen very significant reductions in standing offers in recent days.

FRAN KELLY: Minister, thank you very much for joining us.

ANGUS TAYLOR: Thanks, Fran.

FRAN KELLY: Angus Taylor is the federal Energy Minister. You're listening to RN Breakfast. Apologies for forgetting your name there for a moment - there's a lot going through the head.

[LAUGHTER]

ANGUS TAYLOR: That’s alright.